Rolling coverage of the latest economic and financial news

Pensions triple lock should also go, says Ruth Curtice, a former civil servant who says it's nice to be allowed to say what you think'She clearly has to fix the problem. I think it's one thing to come back twice. We don't want to be here a third time." Bluntness served Ruth Curtice well in her past life as a senior Treasury official. These days, she deploys it publicly, as chief executive of the Resolution Foundation - urging Rachel Reeves to think the unthinkable before November's crunch budget.In the course of half an hour's conversation in her bright white Westminster office, Curtice says the chancellor must be ready to ditch Labour's manifesto tax pledges, scrap the pensions triple lock, lift the two-child limit on benefits - and forget the idea that a new wealth tax is the answer to anything. Continue reading...

Prime minister seeks to make best of difficult state visit by US president with package of commitments by US firmsKeir Starmer has sought to navigate a politically treacherous state visit by Donald Trump with an announcement of 150bn of US investment in the UK, as the president was kept safely within the confines of Windsor Castle.As thousands of protesters voiced their anger in London at a Stop Trump Coalition protest, the US president was escorted by the king and queen through a first day that ended in a state banquet but kept him out of reach of his critics. Continue reading...

Rates now stand at a range of 4% to 4.25% as reduction comes amid concern of political pressure on independent central bank from Trump

Central bank moves to set rates at range between 4 and 4.25% but decision unlikely to satisfy Donald TrumpThe US Federal Reserve cut interest rates on Wednesday, its first rate cut since December, as the central bank moved to stabilize a wobbling labor market even as Donald Trump's tariffs continue to push up prices.Rates are now at a range of 4% to 4.25% - the lowest since November 2022. But the decision is unlikely to satisfy Trump, who has lambasted the Fed for acting too late" and called for a far bigger cut. Continue reading...

Food prices rise at fastest rate since January 2024 with vegetables, milk, cheese and fish going up; US Federal Reserve widely expected to cut rates later todayThe pound is little changed versus the dollar following the inflation data, at $1.3636, but hovering at a two-month high.Victoria Scholar, head of investment at the investing platform interactive investor, said:In light of today's data, it still looks like the Bank of England is on track to keep interest rates unchanged at tomorrow's decision meeting. While inflation is clearly stuck significantly higher than target, there was nothing too surprising in this inflation report - CPI came in line with forecasts, and consequently there wasn't much of a reaction from sterling.Elevated inflation, notably higher than the 2% target makes it harder for the central bank to continue on its monetary loosening path, raising the likelihood of a higher-for-longer interest rate environment which could have negative effects on borrowing and the housing market. Continue reading...

Poor cocoa harvests have triggered multiple rounds of shrinkflation while luxury brands struggle to make profits

Annual August rate released as Bank of England considers holding interest rate at 4% to tackle rising prices

Tom Athron says stricter rules on country of origin and end of de minimis' exemptions are up and sales downThe boss of upmarket retailer Fortnum & Mason has said Donald Trump's trade war has hit sales of its luxury tea exports to the US and forced up prices.Tom Athron, the London-based retailer's chief executive, said Trump's stricter country of origin rules and the end of the de minimis" cost exemption for parcels worth less than $800 (587) had hit customers across the Atlantic. Continue reading...

Former Bank chief economist Andy Haldane says left-behind communities need investment to stem populist tideDefeating far-right populism will require Labour to radically overhaul its arid" approach to raising living standards in left-behind communities, the former Bank of England chief economist has said.Andy Haldane warned that Labour's growth plans were failing to support parts of the country where voters feel neglected and disenfranchised. Continue reading...

Weaker growth outlook would set chancellor on course to break her fiscal rules without significant action in budgetThe Office for Budget Responsibility is expected to downgrade its key productivity forecast, the Guardian understands, setting Rachel Reeves on course to break her fiscal rules without significant action in the budget.The government's independent watchdog has carried out a stocktake" of its forecast models over the summer, and Treasury officials privately acknowledge the result will inevitably be a weaker growth outlook. Continue reading...

Manufacturers say new rules on passing on assets threaten investment and future survival of businessesUnassuming wooden crates filled with brake pads and metal springs are piled high in the loading bay of the Broadbent factory close to Huddersfield city centre. Shipping them out to Nigeria and Ghana remains the day job for Simon Broadbent, but the manufacturer's owner has a growing issue nagging at him - the fate of his 160-year-old business in the face of Labour's tax overhaul.Broadbent has emerged as a reluctant challenger to plans by the chancellor, Rachel Reeves, to strip family firms of the ability to pass on their businesses tax free from next April. Campaigners, including the manufacturers association Make UK, say the tax overhaul threatens the backbone of the British industrial sector. Continue reading...

Pensioners will be rejoicing at the prospect of an inflation-busting rise to the state pension from April next year," says analystThere is some relief in the UK's cost of living squeeze this morning - grocery price inflation has slowed.British grocery inflation fell to 4.9% over the four weeks to 7 September, data from Worldpanel by Numerator shows. That's down from 5% the previous month, but means grocery prices are still rising a little faster than wages.Supermarkets' own lines now make up 51.2% of all sales, up from 50.9% a year ago.Sales of these products grew by 5.9% this period, just ahead of brands at 5.3%, but it's the premium own label goods which are the real standout performers.State pensioners look on course to get an 4.7% uplift in their state pension next year as average wage growth remained robust. Such an increase would see a full new state pension rise from its current level of 230.25 per week to 241.05 per week from April. Those retiring on the basic state pension would see their weekly income increase from 176.45 per week to 184.75.However, the hike is not yet set in stone. We are awaiting the final piece of the triple lock puzzle - September's inflation data to be published next month and if this surpasses 4.7% then we could see an even bigger increase. However, given that inflation currently sits at 3.8% it seems likely that wage growth will be the key figure here.Those on the new state pension will receive the uplift but those on the basic state pension will only receive it on their main state pension. Any further top ups such as the state second pension are usually uprated in line with inflation instead, so they won't get the full benefit of the triple lock on their entire payment.Pensioners will be rejoicing at the prospect of an inflation-busting rise to the state pension from April next year as a result of the triple lock guarantee, with the latest ONS earnings growth figure coming in at 4.7% for the period between May and July of this year.Under the triple lock guarantee, the state pension will rise by the highest of average earnings growth in May to July, September's inflation figure or 2.5%. Provided inflation doesn't spike above 4.7% in September, all stars point to these latest earnings figures boosting the new state pension to 12,534.60 from April 2026 - putting it above 12,000 for the first time ever and perilously close to the frozen personal allowance. Continue reading...

An inflation-busting rise in payments is likely to reignite debate about the system introduced in 2011

Increase will put further pressure on Rachel Reeves as ONS figures show pay growth slowing and job losses rising

Firms are reluctant to hire and unemployment is rising, as inflation dulls the impact of higher wages

Senate votes 48-47 to confirm Stephen Miran as Fed governor but court rules Cook may remain in placeSenate Republicans voted on Monday to confirm a senior Trump official to the Federal Reserve's board of governors as the White House raced to strengthen the US president's control over the central bank ahead of its latest meeting.Hours before Fed policymakers convene for their September decision on interest rates, the Senate voted 48 to 47 to confirm Stephen Miran - already chair of Donald Trump's council of economic advisers - as a governor. Continue reading...

Chancellor hosting Downing Street talks with Treasury secretary, which are aimed at securing more US investmentRachel Reeves will host the bosses of top US and UK financial firms in Downing Street on Tuesday morning, as Donald Trump begins his official state visit.The meeting, which will be jointly hosted by US Treasury secretary, Scott Bessent, will be attended by senior figures from BlackRock, Barclays and Blackstone, who will have roundtable talks with officials hoping to highlight economic cooperation between the two countries. Continue reading...

The US and China have reached a framework deal on short-video app TikTok at talks in Madrid today, US treasury secretary Scott Bessent has saidToday's warnings about higher food prices coming in the UK are likely to cause fresh worries about how long borrowers will have to wait until Bank of England policymakers vote for another cut, reports Susannah Streeter, head of money and markets at Hargreaves Lansdown.Streeter adds:They are set to leave the base rate unchanged on Thursday and aren't expected to make a move until next Spring.The Food and Drink Federation is forecasting food inflation could reach 5.7% by the end of December and still be running at 3.1% by the end of 2026. Higher employer and packaging taxes are being blamed for increasing costs for companies, which they can no longer absorb.I'm delighted that we are on track to deliver yet another period of double-digit revenue growth and a strong profit performance, whilst maintaining our globally leading customer service standards.Our strategy as set out at our full year results is working and we have an exciting pipeline of further value to deliver for customers in H2. Our Five Star membership programme continues to go from strength to strength as our customers realise the exceptional value that it offers. This, combined with our ongoing efforts to broaden our product range, is an increasingly key driver of our performance. Continue reading...

Slowing growth in factory output and retail sales prompts calls for fresh economic stimulus

Discount supermarket's UK boss says potential budget measures may weigh on consumer spending decisions

Agreements include plan to build 12 reactors in Hartlepool with Centrica, creating 2,500 jobs, and fast-tracking UK and US safety checks

Greatest damage from heat, drought and flooding done in Cyprus, Greece, Malta and BulgariaThe violent weather that battered Europe this summer caused short-term economic losses of at least 43bn, according to an EU-wide estimate, with costs expected to rise to 126bn by 2029.The immediate hit to the economy from a single brutal summer of heat, drought and flooding amounted to 0.26% of the EU's economic output in 2024, according to the rapid analysis, which has not been submitted for peer review but is based on relationships between weather and economic data that were published in an academic study this month. Continue reading...

Ex-MPC members say quantitative tightening' should be scaled back or halted entirely, saving the Treasury up to 10bn a yearAndrew Bailey has been urged by former Bank of England policymakers to ease pressure on the government's borrowing costs by cutting back its bond-selling plans.In a crunch week for the economy, four influential ex-members of the Bank's monetary policy committee (MPC) said a change in course was needed. Continue reading...

Recent data shows stagflation, stagnant growth and price inflation, is possible as economy shaken by uncertaintyIt's a strange time for the US economy. Prices are rising, jobs growth has stalled, uncertainty is everywhere and stock markets have soared to record highs. Against this background a scary word last used in the 1970s is being uttered again: stagflation.Stagflation is the term that describes stagnant" growth combined with inflation" of prices. It means that companies are producing and hiring less, but prices are still going up. It's a scenario that some economists say can be worse than a recession. Continue reading...

Economy does feel stuck", says Treasury spokesperson, after UK GDP is unchanged in JulyThe pound has weakened since today's GDP report showed the UK economy failed to grow in July.Sterling is down 0.2% at $1.355 against the US dollar this morning.If the third quarter is not going to be a disaster for the UK economy, then growth in August and September will need to do the heavy lifting.The pound is extending losses on this news and is eroding some of Thursday's gains. For now, GBP/USD is hanging on to $1.3550, however, if bond yields start to rise on the back of this data, then we could see pound weakness later on Friday. The pound is the third worst performer in the G10 FX space so far today. Continue reading...

Official GDP figures confirm widely expected slowdown after strong expansion in first half of the year

Chancellor calls economy stuck, not broken' but there are signs her policies have added to the UK's economic headwinds

Economists say trade war is driving up US prices, as inflation picks up in August

New CPI update shows prices increased 2.9% over the last year, but Wall Street optimistic Fed will cut interest ratesInflation rose slightly in August as companies continued to push the cost of tariffs on to consumers.The newest update to the consumer price index (CPI), which measures a basket of goods and services, showed that prices increased 2.9% over the last year - the highest since January. Core CPI, which excludes energy and food costs, stayed stable at 3.1% after going up in July. Continue reading...

George Weston, CEO at ABF, also said food price inflation had peaked and would now start to easeThe chief executive of the Kingsmill owner Associated British Foods (ABF) has warned Rachel Reeves not to give consumer sentiment another whack" in her upcoming budget, despite signalling that food price rises had peaked and will now start to ease.George Weston, the chief executive of the ABF conglomerate which also owns the fashion chain Primark and produces sugar and cooking ingredients, said recent food price inflation had been driven by employers passing on increases to labour costs announced in Reeves' first budget as chancellor last year. Continue reading...

Key figures from No 10 and No 11 appointed to group include Torsten Bell, new economic adviser Minouche Shafik and comms chief Tim Allan

Fall to 40.9m in first six months of year pushes share price down, with order book lower than year agoHalf-year profits at Vistry Group, one of Britain's biggest housebuilders, have more than halved as buyer demand comes under pressure from concerns over the economy, affordability struggles and slower-than-hoped interest rate cuts.The company, which owns Bovis Homes, Countryside and Linden Homes, said its pre-tax profit in the first six months of the year fell by 55% to 40.9m. Continue reading...

Rain Newton-Smith tells chancellor the time for tinkering is over' and revisit promise not to raise taxes on working people

The budget must reform structures such as business rates, the VAT threshhold and stamp duty that are holding back growth

Revision highlights recent concerns about the health of the labor market, and follows a lackluster August jobs report

Warm weather and interest rate cut lift sales in August, as food, drink and computers perform stronglyRecord warm weather and a Bank of England interest rate cut lifted retail sales in August, according to the latest survey, but retailers fear that speculation about tax rises could weigh on consumers in the crucial pre-Christmas trading period.Retail sales increased 3.1% year on year as consumer spending on food and drink rose, and sales of computers and related equipment performed well as parents readied children for the new school year. Continue reading...

Europe and US consider further actions to weaken Russia after largest-ever air attack on Ukraine over the weekendThe EU's most senior sanctions envoy is holding talks in Washington with US officials after Donald Trump said he was ready to take further action against Russia over the war in Ukraine.David O'Sullivan, the EU sanctions envoy, is meeting US counterparts on Monday, as Europe and the US look for tougher measures to weaken Vladimir Putin's war machine after Russia launched its largest-ever air attack on Ukraine over the weekend. Continue reading...

Former science secretary promoted in reshuffle to continue UK efforts to revitalise trade relationship with BeijingThe UK's new business secretary, Peter Kyle, will fly to Beijing this week as part of Keir Starmer's continuing efforts to revitalise the UK's trade relationship with China and provide growth to the British economy.The former science and technology secretary, who was promoted in Friday's government reshuffle, is expected to land in China on Wednesday, picking up the schedule of his predecessor, Jonathan Reynolds, who is now the chief whip. Continue reading...

President alters demands on a whim, and although investors are averting eyes for now, risks rise with each chaotic weekDonald Trump observed blithely last week that if his cherished tariff regime is struck down by the US supreme court, he may need to unwind" some of the trade deals struck since he declared liberation day" in April.It was a reminder, as if it were needed, that nothing about Trump's economic policy is set in stone. Not only does the ageing president alter his demands on a whim, but it is unclear to what extent he has the power to make them stick. Continue reading...

Issue creates clear dividing line between left and right, as populists target voters with vow to scrap levyIt is the issue that has set the Norwegian general election alight: whether to keep, cut or abolish the national wealth tax. As the country prepares to go to the polls on Monday, Norway is in the grip of a ferocious national argument that is likely to rumble on whichever party wins.In an economy less then a seventh the size of Britain's, the formuesskatt raises about 32bn kroner (2.4bn). Multiply that by the difference in GDP, and the same rules applied in the UK could raise more than 17bn - serious money in tax terms. Defenders say the wealth tax has another benefit. They see it as the cornerstone of a progressive tax system that has helped to create one of Europe's most equal societies. Continue reading...

Older people would save anyway if state support was more limited, and overhaul of council tax would net billions moreRachel Reeves could stop giving money away if she wants to close the UK's looming spending gap. And baby boomers could be her first target.At the moment the chancellor gives away more than 50bn in tax relief for pension saving, most of which goes to wealthier boomers and better-paid gen Xers who do not need the money and would save anyway if state support was more limited. Continue reading...

Latest report also contained more bad news - the US lost 13,000 jobs in June, according to latest surveyThe US jobs market stalled over the summer, adding just 22,000 jobs in August and continuing a slowdown in the labor market as businesses adjusted to disruptions caused by tariffs.The latest jobs report also contained more bad news. The US lost 13,000 jobs in June, according to the latest survey, the first time it went into the negative since December 2020.Federal employment dropped 15,000 jobs in August, totaling 97,000 jobs lost since January.Manufacturing jobs went down by 12,000 in August and have tumbled 78,000 for the year.The racial unemployment gap widened in August. Black Americans are seeing an unemployment rate of 7.5%, compared to 6.1% last August. The unemployment rate for White Americans is 3.7% Continue reading...

August's report gave signs of a cooling labor market with negative job numbers for the first time since 2020 - here's what we learnedA closely watched report on US jobs released on Friday gave signs of a cooling labor market.The economy added just 22,000 new jobs in August, coming in below expectations, while the unemployment rate ticked slightly up to 4.3%, according to the Bureau of Labor Statistics. At the beginning of the year, more than 100,000 jobs were being added each month. Continue reading...

Disappointing US jobs report shows hiring slowed sharply this summer

Nigel Farage reportedly plans to overhaul rules governing City of London that were introduced after 2008 financial crash

Textiles, footwear, jewellery, gems and seafood are sectors most affected in trade with US, India's biggest marketIndia has long been one of the world's great garment houses, turning out everything from cheap T-shirts to intricate embroidery. Last year, textile and garment exports to the US alone fetched 21bn, riding a wave of strong consumer demand.Now the trade is in jeopardy. With the stroke of a pen, the US president, Donald Trump, last week slapped a 50% tariff on more than half of India's 65bn worth of merchandise exports to the country's largest market. A supply chain once prized for being cheap suddenly became among the priciest. Continue reading...

Nigel Farage will be wooing corporate guests at the NEC in Birmingham as his party aims to build on recent successesFags, booze, hunting and cryptocurrency: if the brochures for the Reform UK conference in Birmingham are anything to go by, executives turning up to see Nigel Farage's party will find an eclectic mix.Starting on Friday, the party leading the opinion polls will hold its next step" conference at the National Exhibition Centre, with a plan to show UK plc that it is the next party of government. Continue reading...

Officials to investigate claims of mortgage fraud against Cook, who has refused to accept firing by Donald TrumpThe US justice department has initiated a criminal investigation into mortgage fraud claims against the Federal Reserve governor Lisa Cook as a lawsuit she filed against Donald Trump over her firing makes its way through court.Lawyers with the justice department have issued subpoenas for the investigation, according to the Wall Street Journal, which first reported the investigation, which has since been confirmed by multiple news publications. Continue reading...

Prime minister cautions Canadians as Ottawa moves to curb spending to balance near-record military expendituresMark Carney has told Canadians to prepare for austerity measures and his finance minister warned of tough choices" in the coming months, as the government attempts to balance near-record defence spending, cuts to government programs and a trade war with the United States.Carney, the former central banker and economist turned politician, has been meeting senior ministers before the fall budget, and hinted cuts were coming to the federal bureaucracy. Continue reading...