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Updated 2025-01-28 02:30
Rachel Reeves has to come up with some novel ideas if growth is going to happen | Observer Editorial
Engaging with councils, universities and developers will be key to bringing the economy back to lifeIt has been a tough beginning to the year for Rachel Reeves. The chancellor has found herself in the spotlight as debt interest costs spiralled, while consumer and business confidence fell. Manufacturers, hampered by high energy costs and the consequences of Brexit, are struggling, while Donald Trump's threats against those who dare to trade with the US are unsettling.It's not a completely new situation. Since the budget, Reeves has been criticised for the mix of tax rises and higher borrowing needed for what is only a modest rise in government spending over the next couple of years. Businesses are angry that much of the tax burden has fallen on them. Consumers, uncertain about the nation's prospects, hunker down. If they spend big, it's on a foreign holiday to escape the gloomy atmosphere at home. Continue reading...
Donald Trump will huff and he’ll puff, but if Europe’s leaders rise to its defence, their house will stand | Simon Tisdall
The EU is facing a torrid year ahead from enemies both within and without. But it is still far from a lost causeEurope is in trouble. Multiple, long-simmering external and internal challenges are coming to the boil. Taken together, they comprise the modern EU's biggest existential test since its creation in the early 1990s. But strong, united leadership is lacking. Questioning Europe's will to survive, Poland's prime minister, Donald Tusk, warned last week of a spiritual crisis", of a palpable mood of uncertainty, of loss."The EU's borders, democracies, laws and liberties are threatened by an aggressive Russian nihilism. Relations with the US, transatlantic blood brother and key Nato partner, are coming under unprecedented strain. China, an expansionist, authoritarian superpower, circles like a predatory foe. The economies of leading countries, notably Germany, are contracting or stagnating. Continue reading...
UN development chief urges UK to rethink ‘brutal’ cuts to aid budget
Achim Steiner calls for ministers to discuss reversals to overseas aid squeeze imposed by Rishi SunakThe UN's development chief has urged UK ministers to have a public debate about reversing the brutal" cuts to the country's aid budget made by the Conservative government.Achim Steiner, the administrator of the UN Development Programme, told the Guardian he found it a little bit sobering" that Labour had not yet promised to undo the squeeze imposed by Rishi Sunak. While chancellor, Sunak suspended the UK's commitment to spend 0.7% of national income on overseas aid during the pandemic in 2021, citing budget pressures, switching instead to 0.5%. Continue reading...
Signs of returning UK inflation give Bank of England interest rate dilemma
Survey signals private sector firms charging higher prices and cutting jobs at fastest rate since 2009 bar pandemic
‘I was a multimillionaire, I had a beautiful girlfriend, I was unhappy’: the ups and downs of a supertrader
Gary Stevenson grew up poor, got rich in the City - then found himself wrestling with depression. Now he says he's the only person on the left who really understands the British economy - and the people who wield the powerI've interviewed Gary Stevenson three times. First in 2020 about global finance being screwed with a capital S"; again in 2022 about the cost of living crisis; and then last year when he published The Trading Game, his compelling memoir about life as a trader at Citibank. Now I'm meeting him for the first time in the flesh, ahead of the book's appearance in paperback, and we're talking about yet another crisis.Have you seen the news?" is the first thing he asks, presenting it like a challenge even before he says hello". I rack my brain distressingly slowly, like a librarian using a card index for the very first time, thinking: which bit of the news? LA is on fire; Gaza is on fire; Ukraine is on fire; a bunch of Teslas are on fire. Seriously, we've all seen a lot of news. Continue reading...
Reeves to instruct national wealth fund to work with mayors to boost growth
Chancellor says scheme aims to bridge gap between Whitehall and local leaders to avoid previous top-down approachRachel Reeves will instruct bosses of the national wealth fund (NWF) and the new Office for Investment to work with regional mayors for the first time, as part of a package of initiatives to boost growth.After a meeting of combined authority mayors and civil servants in Rotherham on Thursday, the chancellor said a deeper relationship between Whitehall and regional leaders would enhance her push to enhance growth nationally. Continue reading...
Are Rachel Reeves’s efforts to win business confidence ‘fiddling while Rome burns’?
Pro-growth charm offensive aimed at getting Labour back on the front foot has drawn concerns and questions
Trump uses Davos address to accuse oil producers of prolonging Ukraine war
President also threatens tariffs on imports to US and repeats call for Nato countries to increase defence spending to 5%
Davos day three: Donald Trump demands increase in Nato defence spending, and sends oil price sliding – as it happened
New US president shakes up World Economic Forum with call for lower oil price, interest rate cut, increase in Nato spending, and criticised EuropeJavier Milei then takes a swing at feminism, telling delegates at Davos that it's wrong to make femicide a seperate crime with tougher sentences than for murdering a man.You are legally making a woman's life worth more than a man, he argues. Continue reading...
What is the pan-Europe customs area that the EU is open to the UK joining?
Trade chief has said membership of Pan-Euro-Mediterranean convention could be part of reset' discussions
EU trade chief says it ‘could consider’ UK joining pan-Europe customs deal
Maro efovi says the ball is in the UK's court' as British ministers reportedly consult businesses
With the knives out on development spending, have we reached ‘peak aid’? | Nilima Gulrajani and Jessica Pudussery
From Trump's Project 2025 to a huge aid cut by the Dutch, donors are turning their backs on the developing worldForeign aid spending reached a record high of $223bn (180bn) in 2023, new figures released this week from the Organisation for Economic Co-operation and Development (OECD) confirmed.Yet, in 2024, eight wealthy countries announced $17.2bn in cuts to official development assistance (ODA), and three others hinted at reductions, all to take effect over the next five years. Continue reading...
Davos day two: Rachel Reeves says she’s ‘absolutely’ relaxed about wealth creation and defends budget tax rises – live updates
Rolling coverage of the second day of the World Economic Forum in DavosRachel Reeves has also revealed ministers want to increase higher skilled migration by creating with more visas for people working in AI and life sciences:She told attendees at Davos that the government will publish an immigration white paper later this year.He recognised that this government has got a different strategic approach when it comes to regulation, and he recognised it was time for him to move on and make way for somebody who does share the mission and the strategic direction that this government are taking." Continue reading...
UK to review visas to entice more AI and science workers, says Reeves
Chancellor tells World Economic Forum in Davos she absolutely' supports wealth creation
Wall Street shrugs off Trump after he vows Mexico and Canada tariffs
S&P 500 and Nasdaq Composite largely unmoved as it opened for trading for first time after inaugurationFinancial markets largely shrugged after Donald Trump outlined plans to impose punitive tariffs on Mexico and Canada as soon as next month while signing scores of executive orders on his first day in office.The US president told reporters in the White House Oval Office he was thinking about introducing 25% US tariffs on imports from Mexico and Canada as soon as 1 February. Continue reading...
‘Animal spirits alive’ as Wall Street bankers anticipate Trump boom
US president is expected to slash financial controls and prompt wave of dealmakingWall Street bankers say they are at the beginning of go mode" as they expect Donald Trump's return to the White House to lead to a boom in the industry.Trump's second term is expected to result in a bonfire of regulations, including across financial services, with the president having promised during his election campaign to slash 10 existing regulations for every new one created in an attempt to spur economic growth. Continue reading...
Davos day one: German chancellor Scholz says Putin must not win Ukraine war, as Greenpeace protesters disrupt WEF – as it happened
Rolling coverage of the first full day of the World Economic Forum in DavosThere's drama inside the Congress Centre here at Davos, where two Greenpeace International activists have held a protest calling for wealth taxes.Two Greenpeace activists unveiled a banner reading Tax the Super-rich! Fund a Just and Green Future", above the main lobby near the WEF Congress Hall (where the big speeches take place).As the world faces increasing threats to democracy through the collusion of wealth and power, the urgency to tax the super-rich is ever increasing.Having billionaires in positions of leadership, governing with impunity, is a stark reminder of the dangerous intersection of extreme wealth and politics, and its impact on democracy, people and the planet." Continue reading...
UK pay growth rises despite firms cutting jobs after budget
Labour market figures add to dilemma for Bank of England as it considers interest rate cuts
Ursula von der Leyen seeks closer economic ties across EU as new Trump era begins
European Commission president tells Davos that the bloc can no longer rely on rising tide of global trade'
Workers and employers: share your experience of the current UK job market
We'd like to hear from those looking for work in the UK as well as from UK employers about their recent experiences of the labour marketBritain's unemployment rate has risen unexpectedly and the number of workers on payrolls has fallen by the most since the height of the pandemic, according to new figures from the Office for National Statistics (ONS).It estimated that the number of payrolled employees had shrunk by 47,000 in December, the biggest drop since November 2020. The jobless rate meanwhile increased to 4.4 per cent in the three months to November, up from 4.3 per cent in the three months to October. Continue reading...
Is UK jobs market already showing warning lights over Reeves budget?
Reports that government could weaken employment rights bill as NI rise prompts fears of redundancies
Trump signs orders to try to tackle inflation and lower energy prices
President's energy emergency declaration aims to usher in affordable and reliable American energy'Donald Trump signed a memorandum on inflation and multiple orders aimed at lowering energy prices, but the incoming president's advisers offered few details on the policies, raising serious questions about whether the new administration will be able to address one of Americans' most pressing concerns.During a press call on Monday morning, incoming White House advisers pledged that Trump would pursue an all of government approach to bringing down costs for American citizens" but they declined to outline concrete steps that the administration would pursue to lower prices. Continue reading...
UK ‘second most attractive country for investment’, survey finds
The survey of chief executives, published ahead of the World Economic Forum, follows an upgraded growth forecast from the IMFThe UK is the second most attractive country for investment behind the US, signalling a climb up the rankings, according to an annual survey of global business leaders by the consultancy PwC.Published at the start of the World Economic Forum (WEF) in the Swiss ski resort of Davos, the survey of almost 5,000 chief executives from 109 countries puts the UK in second place, ahead of China, Germany and India. Continue reading...
Work-life balance more important than pay for employees worldwide
Annual survey finds workers have multifaceted expectations' after changes cause by Covid pandemicWork-life balance has soared in importance for workers around the world, becoming their top motivator and pushing pay into second place, according to an annual international survey of thousands of employees.It is the first time that finding or keeping a job that fits in with the rest of their lives has outranked salary in the 22-year history of the international recruitment company Randstad's annual review of the world of work, highlighting the corporate revolution caused by the coronavirus pandemic. Continue reading...
Rachel Reeves’s duty is to the people, not the markets | Letters
Treasury orthodoxy is such that the chancellor doesn't seem to think she has a choice, writes Anthony Lawton, while Ros Wain says the government needs to get over the household view of the public finances. Plus a letter from Phil TateYour editorial (14 January) rightly critiques Rachel Reeves's adherence to Treasury orthodoxy. But the persistence of this framework goes deeper than institutional inertia. It reflects a failure to recognise a choice at all - and an inability to imagine and craft better alternatives.Treasury orthodoxy is rooted in the Thatcher-Reagan era. It is not just outdated, but has become invisible to those who wield it. Traditional economic training teaches policymakers to see fiscal discipline and market reassurance not just as good options but as the only ones. This narrow view blinds them to evidence that transformative public investment, targeted redistribution and state-led solutions can be essential to tackle inequality, stagnation and the environmental crisis. Continue reading...
Former M&S boss says working from home is ‘not doing proper work’
WFH has harmed employee productivity, says Stuart Rose, who was also executive chair of Asda
Trump threatens a global trade war. Europe must unleash a radical alternative | Gabriel Zucman
Unlike tariffs, a new form of protectionism could target climate-wrecking, untaxed corporations and their billionaire owners
UK housing market ‘starts new year with a bang’, says Rightmove
Number of homes new to market 11% higher than a year ago, despite uncertainty over interest rates and stamp dutyA record number of new sellers have come on to the UK housing market since Boxing Day, while the average price and the number of sales agreed also increased, pointing to a busier 2025, according to a report.The average price of a property coming to market rose by 1.7%, or 5,992, this month to 366,189, the biggest jump in prices at the start of the year since 2020, the property website Rightmove said in its monthly report. While prices usually bounce back in the new year after a seasonal fall in December, before Christmas, the rise was pronounced this month. Continue reading...
Davos is appealing for ‘collaboration in the intelligent age’. Good luck with that
The annual gathering of the globally minded is looking forlorn in the light of Trump 2.0 and trade rowsThis year's week-long gabfest in the Alpine resort of Davos, which kicks off on Monday, will be held under the banner: A Call for Collaboration in the Intelligent Age".Given that it will open as Donald Trump is inaugurated with a promise to jack up import tariffs, trash the Paris climate agreement and put an anti-vaxxer in charge of the US health system, hopes of either collaboration or intelligence being much on display in 2025 appear bleak. Continue reading...
If Rachel Reeves wants growth, improved community cohesion could be essential | Heather Stewart
A new paper has found that social capital is the cake, not the icing' of a strong, well functioning economyWindfarms, train lines, science labs - when policymakers think about the ingredients for kickstarting the UK's sagging economy, they tend to imagine tangible bits of infrastructure. But two of the UK's most eminent public economists have banded together to urge Rachel Reeves to reconsider another dimension of the UK's makeup: social capital.Andy Haldane is the former chief economist at the Bank of England, now chief executive of the Royal Society of Arts. David Halpern is the man behind the so-called nudge unit, which brought behavioural economics into the policy mainstream. Continue reading...
Market turmoil has calmed but Rachel Reeves faces more challenges ahead
Chancellor survives chaos in markets but faces more questions on growth, cuts, public sector pay and fraudRachel Reeves was given a warning this month how the most carefully plotted budget strategy can be blown off track by turmoil in financial markets.Calm has been restored, for the time being, but the lingering effect has been to increase the UK government's cost of borrowing. Continue reading...
Rachel Reeves will go on Davos charm offensive as plan for cuts rattles nerves at home
The chancellor will seek investment in the UK as the Labour government prepares to reduce the benefits billA drive to reduce the benefits bill will be pursued by the government alongside a charm offensive to attract more companies to invest in Britain, amid nervousness in Labour circles over a new round of spending cuts.The chancellor, Rachel Reeves, will travel to the World Economic Forum's annual meeting in Davos this week in the hope of convincing some of the world's largest companies to invest, with allies saying she will use spending cuts rather than further tax increases to meet her own fiscal rules. Continue reading...
Trump versus the bond market: president-elect’s campaign rhetoric puts investors on edge
Some analysts fear ballooning federal debt and a bullish stock market means something will surely snap'Donald Trump's return to the White House on Monday has the world economy on tenterhooks. Could the 47th US president govern broadly as he did last time, when his most extreme threats were ultimately softened? Or is this time different?Corporate America's biggest beasts have cosied up to the president-elect, but there are also serious jitters on Wall Street, amid investor fears that Trump's most colourful campaign rhetoric will soon become a reality: risking a fresh inflation shock in the world's largest economy. Continue reading...
FTSE 100 hits record as interest rate hopes push down UK borrowing costs
Nearly every share on index rose after fall in value of pound helped multinationals listed in LondonThe UK's blue-chip stock index has hit a record high, as hopes of interest rate cuts this year drove down government borrowing costs.Almost every share on the FTSE 100 rose on Friday, the fall in the value of the pound bolstering multinationals listed in London and propelling the index above 8,500 points for the first time. Continue reading...
FTSE 100 share index hits record high; relief for Rachel Reeves as UK borrowing costs fall – as it happened
Rolling coverage of the latest economic and financial news, as Britain's blue chip share index hits new peak of 8533 pointsThe FTSE 100 has hit a record high after a strong start to the year.Since the beginning of January, the index has climbed by 3.75%, adding to the 5.7% it gained during the whole of 2024. Continue reading...
Bank of England delays rules designed to avoid banking crash by a year
Donald Trump's return to White House and Rachel Reeves's call for regulators to help drive UK growth taken into accountBusiness live - latest updatesThe Bank of England will further delay capital rules meant to prevent another 2008-style crash, as it weighs the impact of Donald Trump's return to the White House and the chancellor Rachel Reeves's call for regulators to help drive UK growth.The Bank's regulatory arm said it was delaying the date by which banks had to implement Basel 3.1 rules by a year, to January 2027. Continue reading...
IMF upgrades UK growth forecast and takes swipe at Trump plans
UK economy predicted to grow by 1.6% this year as fund warns of potentially destabilising effect of Trump policy Business live - latest updatesThe International Monetary Fund has upgraded its forecast for UK growth this year in an update to its biannual assessment of the global economy, while taking a swipe at plans by Donald Trump's incoming US administration for the potentially destabilising effect of large-scale tax cuts, import tariffs and weaker regulations.In a fillip to the Labour government, the Washington-based organisation said it expected the UK economy to grow by 1.6% in 2025, up from an earlier forecast of 1.5%. Continue reading...
‘He’s one of the best’: the economist shaping Rachel Reeves’s growth plans
John Van Reenen believes he can help Labour solve the peculiar British problem' of chronically weak productivityThe economist John Van Reenen lacks the public status of Gordon Brown's two Eds" - Balls and Miliband - who ranged across Whitehall in New Labour's first term, enforcing the Treasury's will. But ask today's Labour apparatchiks about Rachel Reeves's approach to growth, which she will set out in a speech later this month, and they often point to the chair of her council of economic advisers.Currently on leave from the London School of Economics (LSE), where he ran the Centre for Economic Performance, Van Reenen has spent his professional lifetime probing the weak spots of the UK economy. Continue reading...
China’s economy hits 5% growth target but rate among slowest in decades
Latter part of 2024 recovered remarkably' after stimulus measures, says National Bureau of Statistics
Cultural figures and royals to boost UK’s global influence in ‘soft power council’
Group led by ministers will include representatives of the judiciary, music industry, BBC and Football AssociationLeading cultural figures will be tasked with working alongside members of the royal family to boost Britain's international influence as part of the government's new soft power council".The group - which will be chaired by the culture secretary, Lisa Nandy, and the foreign secretary, David Lammy - will bring together experts from across culture, sport, the creative industries and geopolitics" to promote Britain globally and provide a boost to the UK economy, according to the Foreign Office. Continue reading...
The Guardian view on Keir Starmer’s economy: no acute crisis, but chronically weak | Editorial
Labour should ask the Bank of England if it can do more to boost growthRecent days of market turmoil have elicited some extraordinary responses. The fact that investors are demanding higher rates to lend to the UK government apparently puts this Labour government in the same position as Liz Truss in 2022, according to some Labour MPs, or as Denis Healey facing the International Monetary Fund in 1976. Others dub the UK's current position as stagflation, a term redolent of the 1970s, with their stagnant economy and runaway inflation.
Pressure eases on Rachel Reeves as UK economy grows by 0.1% in November
Growth weaker than City forecasts but government says it's a step in the right direction'
UK economy returned to growth in November, driven by services – as it happened
Stocks extend rally; with inflation easing and sluggish economic growth, a February interest rate cut looks increasingly likely, analysts sayBritain's economy grew for the first time in three months, but eked out just 0.1% growth.The economy grew more slowly than expected in November, giving the Bank of England more room to cut interest rates this year.We know that in net terms growth remained flat for the three months to November therefore we are clearly far off from a state where the economy has reached escape velocity' and grows on a sustained basis.Given the latest inflation reading yesterday, weaker than expected growth could help pave the way for faster rate cuts by the Bank of England. This could be a helpful tailwind to the economy at a time when the international outlook becomes more unpredictable. Continue reading...
‘TARIFFS all the way!!!’: EU mulls carrots and sticks to counter Trump on trade
Bloc may ward off incoming president's threats by buying more US goods, or impose its own tariffs in retaliationIf there is one thing the EU knows about Donald Trump, it is that he loves tariffs. The incoming president has said tariff" is the most beautiful word in the dictionary" and has threatened to impose them on US allies around the world.On the campaign trail he proposed tariffs of 10-20% on imports from all countries, with a 60% rate reserved for China. Once elected, he tweeted that the EU must buy more US oil and gas otherwise it is TARIFFS all the way!!!" This week, he announced he would create an external revenue service" on the day of his inauguration. Continue reading...
Rachel Reeves summons regulators to Downing Street to push growth agenda
Chancellor calls chiefs for check-in to review plans for industries including road, rail, water, energy and aviation
Unexpected drop in inflation lifts pressure off Rachel Reeves
UK chancellor has had tough week but latest figure sends yield of UK government bonds tumblingRachel Reeves has been handed breathing space after better-than-expected inflation figures raised expectations for a Bank of England rate cut and reduced UK borrowing costs.After a tough week for the government on the economy, official figures showed inflation unexpectedly cooled in December to 2.5%, down from 2.6% in the previous month, meaning prices rose at a slower rate. Continue reading...
No 10 accused of having ‘revolving door’ after new Treasury minister embroiled in China row
Emma Reynolds, who replaces Tulip Siddiq, pressed government over foreign influence rules while at lobbyistNo 10 has been accused of having a revolving door" after it refused to say whether the new Treasury minister Emma Reynolds would recuse herself from policy on China after she lobbied the government on the issue.Reynolds, who worked as managing director for TheCityUK, a lobby group for banks and other financial services companies, had previously pressed the government to make China exempt from the strictest tier of rules on registration of foreign influence. Continue reading...
Dip in UK inflation offers respite for Reeves and paves way for interest rate cut
Unexpected fall last month will help ease Treasury and Bank of England fears after bond market sell-off
US inflation ticks up in December and remains above Fed’s 2% target rate
Consumer price index rose at annual rate of 2.9% and while Trump promised to cut prices he now says it will be hardInflation ticked up across the US last month, according to the last report on consumer prices under the Biden administration.Donald Trump has promised to bring prices down for millions of Americans. But while price rises have slowed sharply since their post-pandemic peak of 9.1%, the pace of inflation remains higher than the Federal Reserve's target rate of 2% per annum. Continue reading...
UK borrowing costs drop as inflation pressures ease, reversing gains after market turbulence – as it happened
Cooling UK inflation paves way for February interest rate cut, economists say; US inflation rises but key core' measure easesIn her response to the inflation figures, Rachel Reeves, the chancellor, vowed to fight every day" to deliver economic growth and put more money in the pockets of working people". She said:There is still work to be done to help families across the country with the cost of living. That's why the government has taken action to protect working people's payslips from higher taxes, frozen fuel duty and boosted the national minimum wage.In our Plan for Change, we were clear that growth is our number one priority to put more money in the pockets of working people. I will fight every day to deliver that growth and improve living standards in every part of the UK. Continue reading...
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