Rolling coverage of the latest economic and financial newsThere are three things to watch out for from the Bank of England's interest rate decision and its latest monetary policy report (MPR), reports Simon French, chief economist at City firm Panmure Liberum:What the qualitative comments from MPC [monetary policy committee] members tell us about whether the disinflation bias remains intact? It probably holds - but a good MPR will always throw up some interesting analysis;What is the latest estimate for Q2 inflation? A sharp drop from 3.0% YoY to 2.4% YoY will be largely be the result of base effects, and one off policy measures. Any sign of a growing output gap weighing on core inflation forecasts?Politics could have a big say around the 30 April MPC - coming a week out from the local elections. Does the MPC seek to manage (down) market expectations for a rate cut in Q2, or would it have one eye on the June meeting instead when politics will be clearer (and two more months of CPI data will be available).The yield gap between two- and 10-year gilts hit the widest since 2018 as a fresh round of UK political turbulence weighed on government bonds.The 10-year yield rose as much as four basis points to 4.59% at Thursday's open, pushing the gap over the two-year to 85 basis points. Continue reading...

Rolling coverage of the latest economic and financial newsBen Barringer, head of technology research at wealth manager Quilter Cheviot,says investors are shunning' the software market due to uncertainty over AI's potential, and the disruption it could cause:All innovation means there is going to be disruption at some point, and we appear to be at a significant point in that journey for software and IT services companies. The launch of the Claude Cowork agent has sent share prices of these companies into a spin, and this is hurting other tech names too.We are not yet at the point where AI agents will destroy software companies, especially given concerns around security, data ownership and use, but this market rout suggests the potential disruption that is on the cards for markets in the coming days, weeks and months. There is a lot of uncertainty around exactly what AI agents can do, and as such investors are choosing to shun the software market altogether, leaving nowhere to hide. Continue reading...

Longest period of job shedding' in 16 years taking place as business activity grows at fastest rate since August Business live - latest updatesCompanies in the UK's services sector cut jobs last month, as they turned to automation" rather than hiring new staff, a closely watched survey showed.The monthly purchasing managers' index showed employment numbers fell more sharply in January compared with December, continuing a trend that started in October 2024. Continue reading...

Jump of 37bn in budget deficit by 2040 would force government to increase taxes, NIESR predictsThe UK economy would be 3.6% smaller by 2040 if net migration fell to zero, forcing the government to raise taxes to combat a much bigger budget deficit, a thinktank has predicted.The National Institute of Economic and Social Research (NIESR) said falling birthrates in the UK and a sharp decrease in net migration last year had led it to consider what would happen if this trend continued to the end of the decade. Continue reading...

Decaying town centres are fuelling a sense of disillusionment with mainstream parties. Labour's regeneration strategy must be bolderIn the 60s it was a fabulous place to live," sighed one resident of the north-east English town of NewtonAycliffe, in an interview published last week as part ofour investigation into the state of Britain's high streets. The town centre was absolutely beautiful...You would be ashamed to bring someonehere now.It's unrecognisable."Similar perceptions of decline are now the norm across the nation. In postwar Britain, high streets became the thriving hubs of a more affluent society and a source of local identity and pride. But almost 13,000shops closed in 2024 - an attrition rate of around 37 a day, which particularly affected the north of England, the Midlands and deprived coastal areas. The emergence of superstores and retail parks, and the postpandemic boom in internet shopping, has hollowed out the centres of towns and left a gaping sense of loss.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

Rolling coverage of the latest economic and financial news

Last August, to the relief of many homeowners, the Reserve Bank's governor, Michele Bullock, announced a cut in interest rates and expressed confidence that inflation was heading in the right direction. But on Tuesday, the RBA hiked rates for the first time in over two years, raising the cash rate by 25 basis points to 3.85%.Guardian columnist and chief economist of the Australia Institute, Greg Jericho, talks to Nour Haydar about what the rate hike means, why he sees it as cowardly' and what it all has to do with the AshesRead more: Continue reading...

Valdis Dombrovskis says bloc is ready to engage' amid meetings with ministers including Rachel Reeves

A whistle-stop tour of the greatest hits of progressive policy fails to take account of a central conundrumIf you've written a successful book based around one big idea, what do you make the next one about? Back in 2009, Kate Pickett's The Spirit Level (co-authored with Richard Wilkinson) argued that inequality was the ultimate cause of almost all our social problems, from obesity and teenage pregnancy to violent crime; more equal societies, they claimed, had better outcomes across the board. While criticised - as most big idea" books are - for overstating the case and cherrypicking evidence, they struck a chord, and some aspects of their thesis are now mainstream.However, when it comes to the UK, there is an awkward problem, both for Pickett and for economists like me who, while not entirely convinced by The Spirit Level, would still like to see a more equal society. In the first chapter of Pickett's new book, inequality is once again the root of all (social) evils: if you know a country's level of inequality, you can do a pretty good job of predicting its infant mortality rate, or prevalence of mental illness, or levels of homicide or imprisonment". By contrast, she argues that GDP or GDP growth are very poor measures ofoverall welfare. Pickett then goes onto list the ways in which the UK has become a worse place to live since 2010 - higher child poverty, flattening life expectancy and child mortality, more people in prison. Continue reading...

January 2026 report to be rescheduled after BLS has already been faced with major delays from last year's shutdownThe US's closely watched jobs report will once again be delayed, the Bureau of Labor Statistics (BLS) announced on Monday, amid a government shutdown.The January 2026 jobs report, originally scheduled to be released on Friday, will be rescheduled when federal funding resumes. Data collection for the report has been completed, but the shutdown has forced a delay to releasing the report, which will provide crucial jobs data on the US labor market following the weakest year for job growth since 2020, with the addition of only 584,000 jobs in 2025 compared with 2 million in 2024. Continue reading...

Trump's pick of respected central banker' Kevin Warsh as Fed chair prompts investors to sell safe haven assetsGold and silver prices seesawed on Monday, after a meltdown" in the metals market deepened and rattled investors around the world.Gold prices tumbled by as much as 8% to $4,465 an ounce on Monday, ending a run of record highs that took it to nearly $5,600 last week. It later recovered some ground, but was still down by 3.5% at $4,700 in afternoon trading. Continue reading...

Gold and silver prices recover early losses, after choice of Kevin Warsh as next Fed chair triggered heavy losses in precious metal prices

Auditor calls renewable energy targets unrealistic' unless EU ups its game' in mining, refining and recycling of metals such as rare earthsThe EU is struggling to free itself from dependence on China and countries in the global south for critical minerals and rare earths needed for everything from smartphones to wind turbines and military jets.A damning report by the European Court of Auditors (ECA) in Luxembourg found that the bloc's targets for 2030 were out of reach" because of lack of progress in domestic production, refining and recycling. Continue reading...

Greater optimism in PMI survey, adding to signs Bank of England will keep interest rates on hold this weekBritish manufacturers enjoyed one of their best months since Labour came to power in January, according to a closely watched survey, adding to signs that the Bank of England will decide to keep interest rates on hold this week.The purchasing managers' index (PMI), which measures activity in the private manufacturing sector, rose to 51.8 in January from 50.6 in December, the best reading since August 2024. Any reading above 50 represents growth. Continue reading...

CIPS warns of cracks' in global supply chain affecting computers, electrical machinery and transport equipmentThe price of consumer goods including computers, electrical machinery and transport equipment could surge this year as a result of soaring shipping costs, an industry body has said, adding that cracks [are] forming in the global trading system".The cost of transport, energy and raw materials continues to rise and prices remain volatile, which could feed through to businesses and consumers during 2026, according to a study by the Chartered Institute of Procurement and Supply (CIPS). Continue reading...

Labour's changes to the student loan system have turned frustration into full-blown fury, which is likely to benefit its opponents at the ballot box

Trump's wounding of the US economy offers Beijing an unparalleled opportunity - if it dials back its overbearing trade tacticsWhen the Canadian prime minister, Mark Carney, took to the podium at the World Economic Forum in Davos last week to lament how great economic powers" were dismantling the international order, it seemed clear that he was talking about the United States. He might have been talking about China as well.Not a week earlier, Beijing had revealed that China's trade surplus ballooned by 20% in 2025, to $1.2tn. Despite Donald Trump's wall of tariffs that crashed Chinese sales to the US, its overall exports expanded more than 5%. Sales to the 11 countries in Asia's Asean bloc increased more than 13%. Exports to the European Union rose over 8%. Chinese imports, by contrast, were flat. Continue reading...

Pick of former Fed governor to replace Jerome Powell comes as White House seeks to tighten grip on central bankDonald Trump has announced Kevin Warsh as his nomination for the next chair of the Federal Reserve, selecting a candidate who has been an outspoken critic of the US central bank.The move ends months of speculation about who the president would pick to replace Jerome Powell, as he waged an extraordinary campaign to influence policymaking at the Fed by repeatedly calling for interest rate cuts. Powell's second term as chair is due to end in May. Continue reading...

Rolling coverage of the latest economic and financial news

US president warns against closer ties with China during British PM's trip to secure lower tariffs and better market accessDonald Trump has warned the UK against doing business with China, just hours after Keir Starmer lauded the economic relationship during a landmark visit to Beijing.The US president said it was very dangerous" for the UK to pursue closer ties with the rival superpower as the prime minister's three-hour talks with Xi Jinping underlined a thaw in previously strained relations. Continue reading...

Choice of former Fed governor to succeed Jerome Powell comes amid attack on central bank's independence

Several deals have been struck so far but there does not appear to be a big bundle of investments worth billionsKeir Starmer will be pleased that he has secured several agreements to mark his visit to Beijing and by the warm tone of President Xi Jinping's remarks about his government. However, No 10's announcements do not put a figure on the value of the deals, and there does not appear to be a big bundle of investments worth billions by Chinese or British firms, which prime ministers have usually tended to hold up as a sign of success. These are the agreements secured by the UK so far. Continue reading...

Experts say factors including Trump's aggressive policies and pressure on the dollar are pushing investors toward safe haven' of precious metalsLast year's extraordinary run in precious metals has only intensified in 2026, as Donald Trump has continued to rip up the rules of the global economy.Gold has been on a tear since last summer, repeatedly breaking records. It has risen by more than a quarter this month and hit a new high of just under $5,595 (4,060) an ounce on Thursday. Continue reading...

PM praised for not pressuring Xi over his ties with Putin on a trip seen as business taking precedence over politics'Keir Starmer's visit to Beijing has been cautiously welcomed by Chinese state media as an act of economic pragmatism by a beleaguered British prime minister.The presence of 50 business and cultural leaders with Starmer, who is the first British prime minister to visit China in eight years, was taken as a sign that the UK was prioritising its ailing economy over political considerations. Continue reading...

Rolling coverage of the latest economic and financial news, as metal prices continue to soarThe weak dollar has helped to drive the copper price to a record high today too.The benchmark three-month copper on the London Metal Exchange jumped almost 8% to a new all-time peak of $14,125 a tonne, before slipping back slightly.Investors are piling into base metals on the Shanghai Futures Exchange on expectations for stronger US growth and more spending on data centers, robotics and power infrastructure. That's spurring global prices higher.Inflation is close to the target of 2 percent.The Swedish economy is growing at a solid pace. The labour market is weak but showing signs of improvement. Continue reading...

Keir Starmer held talks with the Chinese leader Xi Jinping this week and proclaimed Britain should have a more sophisticated' relationship with China. Pippa Crerar, who was with the prime minister on the trip, tells Kiran Stacey what all this means Continue reading...

The mother of all deals' is as much about the tariff-heavy geopolitics of the Trump era as it is about bilateral tradeThe year was 2007. Steve Jobs had announced the launch of the first iPhone, the sub-prime mortgage crisis was bubbling up in the US, the EU had enlarged to include Romania and Bulgaria, and India had for the first time become a trillion-dollar economy. This was when trade talks between Delhi and Brussels were initiated for the first time. But it wouldn't be until this very week, almost 20 years later, that a deal was signed after a few final months of unusually accelerated negotiations.On Tuesday, the president of the European Commission Ursula von der Leyen, president of the European Council Antonio Costa and India's prime minister, Narendra Modi, announced the mother of all deals", which promises to bring together about 2 billion consumers and a quarter of the world's GDP. The agreement opens parts of India's famously protectionist domestic market with a focus on exporting manufacturing and services; in return, middle-class Indian consumers will find it cheaper to buy European cars and wine. The overarching EU-India comprehensive strategic agenda is really much larger in scope, taking in defence and security, commitments to multilateralism, mobility and cooperation in a range of areas.Ravinder Kaur is professor of Asian studies at the University of Copenhagen and is writing a book about the history of the global south Continue reading...

In today's newsletter: With China now central to the world's green tech and economic future, the UK faces a series of strategic discussions it can no longer postponeGood morning. The Starmer has landed.Yesterday, Keir Starmer became the first British prime minister to make the trip to China since Theresa May's in 2018 (meaning a surprisingly large number of PMs didn't) and has vowed to bring stability and clarity" to the UK's approach to Beijing.Iran | Donald Trump has warned time is running out for Tehran and said a massive US armada was moving quickly towards the country.Assisted Dying | Supporters of assisted dying will seek to force through the bill using an archaic parliamentary procedure if it continues to be blocked by the Lords.UK politics | Centrist ideas are no longer wanted in the Conservative party, Kemi Badenoch has said.Ofsted | A snap inspection of a Bristol secondary school criticised for postponing a visit by an MP who is a member of a group that advocates for Israel has found no evidence of partisan political views".BBC | The BBC has named senior executive Rhodri Talfan Davies as its interim director general, as the corporation continues the search for a permanent replacement for Tim Davie. Continue reading...

Newton Aycliffe was meant to be a model town for a fairer postwar Britain. But unaffordable rents on a high street amounting to 0.12% of its property tycoon owner's holdings have made it a symbol of decline - and a warning for Labour

Experts say business with China is always a double-edged sword let alone when its overheated economy can offer only marginal gains

The package being offered is not insignificant but the hospitality sector is still in troubleWill the chancellor's inevitable U-turn on business rates for pubs be enough to quieten the developing riot behind the taps? Possibly, a bit. After two months of damaging headlines, Rachel Reeves has granted pubs a 15% discount on bills, worth 1,650 on average in the next tax year, then a two-year freeze in real terms, with the promise of a change in methodology in time for the next revaluation in 2029. Live music venues get the same deal. The package is not insignificant, especially as it was the year-three escalation in bills that was causing the most angst.Yet it would be a mistake to think the government's troubles on business rates end there. First, and most significantly, the rest of the hospitality industry got nothing extra in Tuesday's announcement beyond a similar pledge to rethink valuation methods for hotels in future. Continue reading...

Wide-ranging deal will cut tariffs to zero over seven years as Modi hails largest free trade agreement' in India's historyThe European carmakers' association has welcomed the EU's trade deal with India, saying it sent a strong statement of intent by both parties to furthering more open and mutually beneficial trade relations."It will greatly help European automobile exports enter a market of 4 million passenger cars that, until now, has been protected by prohibitively high import tariffs of up to 110%," the European Automobile Manufacturers Association, or ACEA, added. Continue reading...

Tariffs cut to zero for many industrial products, including iron and steel, plastics, chemicals and pharmaceuticals

Does Britain have any leverage over human rights or security concerns or is it a decaying nation that cannot risk trade relations?This week, Keir Starmer will reportedly visit China. This will be the first trip of this kind by a British prime minister since Theresa May's three-day visit to Beijing in 2018. Since then, relations between London and Beijing have become increasingly fraught, caught between growing security concerns and deep economic interdependence. Allegations of espionage and influence operations have sharpened political and public suspicion in the UK, even as deep trade links and supply chains on which the country depends make disengagement unrealistic. As fierce debate about the recent approval for the new Chinese embassy has shown, there are strong opinions about how to best manage relations with Beijing - as well as what, precisely, constitutes a threat and what is an opportunity. The result is an uneasy balancing act in which caution and cooperation coexist, often uncomfortably.These security concerns are grounded in recent experience. In December, the Foreign Office disclosed it had been the target of a sustained cyber-attack two months earlier that was suspected to be the work of a Chinese group known as Storm 1849. This followed investigations into alleged espionage involving parliamentary researchers and repeated warnings from security agencies about technology transfer and data exposure in sensitive industries.Peter Frankopan is professor of global history at the University of Oxford. His most recent book is The Earth Transformed: an Untold History. Continue reading...

US president says tariffs on automobiles, lumber and pharmaceuticals will rise to 25%, accusing Seoul of not living up to a trade deal struck last yearDonald Trump has said he is raising tariffs on South Korean goods including automobiles, lumber and pharmaceuticals, accusing the country of not living up to a trade deal struck last year and briefly sending shares in Korean carmakers tumbling.In a post on social media, the US president said the tariffs paid on South Korean exports into America would rise from 15% to 25% because the Korean Legislature hasn't enacted our Historic Trade Agreement, which is their prerogative". Continue reading...

Joseph Rowntree Foundation finds problem is deeper and more damaging than at any point in the last 30 years'The UK's poorest families are getting poorer, with record numbers of people classed as in very deep poverty" - meaning their annual household incomes fail to cover the cost of food, energy bills and clothing, according to analysis.Although overall relative poverty levels have flatlined in recent years at about 21% of the population, life for those below the breadline has got materially worse as they try to subsist on incomes many thousands of pounds beneath the poverty threshold. Continue reading...

Respondents to King's Trust survey cited AI and a lack of work experience as reasons they might fail in lifeMore than seven in 10 teens and young adults in the UK say they wish they were not starting their careers in the current economic climate, according to new research from the King's Trust.The study also found that more than a quarter of people aged 16 to 25 feel they are going to fail in life, highlighting growing anxiety among those entering the labour market. Continue reading...

Latest BRC figures show year-on-year rate of increase was 3.9% in January, up from 3.3% the month beforeRetailers have blamed rising energy bills and the chancellor Rachel Reeves's hike in employers' national insurance contributions for a jump in food prices, as suppliers and supermarkets struggle to absorb higher costs.The British Retail Consortium (BRC), the trade body for retailers, said prices across all goods in shops rose by 1.5% in January compared with the same month last year, up from a 0.7% rise in December and higher than the 0.7% increase economists had been expecting. It is also above the three-month average of 0.9%. Continue reading...

Britain is losing more jobs than it creates owing to artificial intelligence, Morgan Stanley research suggests

Good transport links and the quietly booming nuclear sector are helping the Cheshire town to thrive

Tech could lose its social acceptance unless it makes people's lives better - and trade unions want an urgent conversationWho wouldn't want a robot to watch over your kids?" Elon Musk asked Davos delegates last week, as he looked forward with enthusiasm to a world with more robots than people".Not me, thanks: children need the human connection - the love - that gives life meaning. Continue reading...

Amid the tumult of the WEF in Davos this week, some investors are leading the way by ditching US government bondsThere is a way to file for divorce from Donald Trump and Europe needs to grab the opportunity.To the public it will look as if nothing has changed. But behind the scenes the EU and the UK could close the joint bank account and cut up the credit cards, or at least set in motion a form of financial separation that limits the power of a controlling former partner. Continue reading...

Conservative majority appears eager to hand president greater power - with one exception: the US central bankDonald Trump has tried his usual tactics when it comes to getting the US Federal Reserve to lower interest rates: bully when persuasion doesn't work, and then fire when bullying doesn't work.In an unprecedented assault on the central bank, the president has called the Fed chair, Jerome Powell, stupid" and threatened to fire him for not cutting interest rates as quickly as Trump would like. Most recently, the justice department instigated a criminal investigation against Powell for testimony he gave about renovations at the Fed's headquarters. Even so, the Fed has not budged. Continue reading...

Shift in relations and unpredictability of Donald Trump make it risky to store so much gold in the US', say expertsGermany is facing calls to withdraw its billions of euros' worth of gold from US vaults, spurred on by the shift in transatlantic relations and the unpredictability of Donald Trump.Germany holds the world's second biggest national gold reserves after the US, of which approximately 164bn (142bn) worth - 1,236 tonnes - is stored in New York. Continue reading...

Organizers demand ICE leave state and agency be investigated for constitutional violationsTens of thousands of Minnesotans marched in Minneapolis and otherwise participated in an economic blackout on Friday to protest against the Immigration and Customs Enforcement (ICE) surge in the state.About 100 clergy members were arrested by police during the action, video footage showed. Continue reading...

Megan Greene says apparent end to the decline in wage growth could hinder fight against inflationThe Bank of England may not be able to lower interest rates as much as expected this year, due to strong UK pay growth and expected rate cuts in the US, one of its top policymakers has said.Megan Greene, a member of the Bank's monetary policy committee (MPC), which sets interest rates in the UK, said she was concerned that wages appeared to be growing strongly again this year and this could stop inflation from easing. Continue reading...

Well, maybe not all of us ...

Kristalina Georgieva says research suggests 60% of jobs in advanced economies will be affected, with many entry-level roles wiped outArtificial intelligence will be a tsunami hitting the labour market", with young people worst affected, the head of the International Monetary Fund warned the World Economic Forum on Friday.Kristalina Georgieva told delegates in Davos that the IMF's own research suggested there would be a big transformation of demand for skills, as the technology becomes increasingly widespread. Continue reading...

Sales volume rise of 0.4% in December confounds forecasts as new survey shows sharp rebound in consumer confidence

In today's newsletter: As global tensions rise, this year's Davos gathering reveals a world struggling to adapt to shifting power dynamics and the erosion of old certaintiesGood morning. The annual gathering of political and business leaders in Davos opened against a backdrop of war, trade threats and a rapidly fraying global order - with the World Economic Forum once again struggling to reconcile its talk of cooperation with the realities of great-power confrontation.Above all, one figure has dominated the week more than any theme or panel discussion - Donald Trump. He appears to have been determined to use the Alpine summit as a stage for his own vision of how the world should work.Davos | Volodymyr Zelenskyy has taken aim at Europe in a fiery speech at Davos, accusing leaders of being in Greenland mode" as they waited for leadership from Donald Trump on Ukraine and other geopolitical crises rather than taking action themselves. The day ended with news of trilateral talks to start on Friday in Abu Dhabi between the US, Russia and Ukraine.UK news | The UK government borrowed less than expected in December, official figures show, after record-breaking receipts, giving a boost to the chancellor.Daily Mail | Elizabeth Hurley has accused the publisher of the Daily Mail of bugging her windowsill as well as using information obtained from tapping her landline as she gave emotional evidence at the high court.Climate crisis | Human-caused global heating made the intense heatwave that affected much of Australia in early January five times more likely, new analysis suggests.Immigration | Prosecutors were stunned to learn that federal immigration authorities allowed a suspect in a $100m jewellery heist, believed to be the largest in US history, to self-deport to South America. Continue reading...