A study of ancient coins has shifted the focus of Europe's economic history from the Greeks and Romans to the ArabsDetectorists is great TV. Toby Jones and Mackenzie Crook wander Suffolk's fields, making the case for all of us to take up metal detecting as they enjoy the (implausibly) sun-soaked hills and discover the occasional Roman coin.It's a hobby that helps us understand the past, not just enjoy the present. Historians put ancient coins to good use, but economists are always interested in money. Creative ones can bring methods developed for modern data to bear on these ancient hoards. Continue reading...
The economist behind the Covid furlough scheme has called for unfair' council tax and stamp duty to be axed in EnglandCouncil tax and stamp duty are unfair and unpopular" English taxes that should be abolished, says the economist who devised the Covid furlough scheme.Tim Leunig, who has advised a series of cabinet ministers, including Rishi Sunak during his prime ministership, said it was time for a new and radical approach that would axe the two taxes and replace them with proportional levies. Continue reading...
Democratic nominee's Friday speech gave most specific economic proposals of her campaign so farJoe Biden is out of the race for the White House and Bidenomics" - the agenda he used to guide the world's largest economy - looks like its time is over too. For his replacement, Kamala Harris, it's all about the opportunity economy".At a rally in North Carolina, Harris adopted the new slogan to capture her core ideals. Continue reading...
Rolling coverage of the latest economic and financial news, as PwC becomes the first audit firm to be fined by the FCAThe cost of living crisis remains one of the top issues facing Britain, the latest poll from the Office for National Statistics shows.When asked about the important issues facing the UK today, the most commonly reported issues were the NHS (89%), the cost of living (88%), the economy (68%), housing (60%), crime (59%) and climate change and the environment (58%).Just over half (54%) of adults reported their cost of living had stayed the same in the past month with less than half (45%) reporting that their cost of living had increased.Around a quarter (25%) of adults believed they would be unable to pay an unexpected but necessary expense of 850. Continue reading...
by Richard Partington Economics correspondent on (#6Q1G6)
Alan Taylor takes three-year term on Bank's monetary policy committee and replaces Jonathan HaskelA British American academic who has previously researched the damage to the UK economy from austerity has been appointed to the Bank of England's interest rate-setting committee.Alan Taylor, a professor at New York's Columbia University, will join the Bank's monetary policy committee (MPC) on 2 September for a three-year term after his appointment by the chancellor, Rachel Reeves. He replaces Jonathan Haskel, who is stepping down after six years on the panel. Continue reading...
by Richard Partington Economics correspondent on (#6Q1G7)
Turning to a theory championed by the US Treasury secretary, Reeves aims to upskill the workforce while boosting productivityLong before Rachel Reeves entered the Treasury the challenge facing her as chancellor was clear. Britain's economy had been underperforming for years, not only as the result of successive global crises, but also self-inflicted shocks including austerity and Brexit.The latest figures show some progress to get back on track was being made before Labour's general election landslide: Britain recorded the strongest growth in the G7 in the first half of 2024 - a detail seized on by Jeremy Hunt to argue that the Conservative legacy was not all that bad. Continue reading...
Without a clearer sense of a national destination, the prime minister risks being cast as an agent of continuity instead of changeThere is always a stark contrast between the simplicityof a slogan that wins an election and the complexity of the task that greets an incoming government. For Labour, the challenge is especially acute becausethe headline promise of SirKeirStarmer's campaign was a single word: change". Aside from newfaces in ministerial offices, the reality for most people was always going to feel likemore of the same for some time.Wednesday's release of official economic data, showing inflation up by 2.2% last month, illustrates the point. The increase is on the lower end of analysts' expectations, but high prices, especially for essential groceries, will still shape the public mood. The cost of living crisis that was a major factor in bringing down the Tories is now Labour's problem. Continue reading...
Chancellor hopes to cut state aid for Speke vaccine plant to 40m. But pro-growth Treasury must not let project slip overseas Blow to AstraZeneca vaccine project as Reeves plans funding cutThe international going-rate for state aid to part-fund a large pharmaceutical facility costing a few hundred billion pounds, euros, dollars, or whatever, is hard to pin down. Governments don't publicise sweeteners and a company's thinking will be guided by many factors, including the wider tax regime. But a rough rule of thumb, say industry insiders, is a 15%-25% subsidy for capital costs. Singapore has a reputation for being more generous.Thus, if it is correct, as the FT reports, that Jeremy Hunt verbally offered AstraZeneca 65m towards a proposed 450m vaccine-manufacturing plant in Speke in Merseyside, one could say the last chancellor did OK with 14%. Continue reading...
Prices rose at an annual rate of 2.9% in July, as inflation dipped below 3% for the first time since 2021US annual inflation rate dipped below 3% in July for the first time since 2021, a relief to investors who are expecting the Federal Reserve to cut interest rates next month as a sense of unease has settled over Wall Street after signs of a cooling labor market.Prices rose at an annual rate of 2.9% in July while core inflation, which does not account for the volatile food and energy industries, climbed 3.2% over the previous 12 months and 0.2% since June. Continue reading...
Pharmaceuticals giant has hit a 200bn stock market valuation, a decade after fighting off Pfizer's takeover approachThe slowdown in pay growth in April to June is a big win" for the Bank of England, says Thomas Pugh, economist at leading audit, tax and consulting firm RSM UK.Pugh says the Bank's monetary policy committee (MPC) will welcome the slowdown in wage growth in the private sector [workers may not agree, of course!].Regular private sector pay growth has dropped from 5.6% to 5.2% in June, that's only a fraction above the MPC forecast of 5.1%. Wage growth should continue to trend down over the rest of this year as 2% inflation is factored into pay settlements.If wage growth does continue to fall over the rest of this year, it would give the MPC ample cover to cut rates again towards the end of the year, probably in November, and then be more aggressive in its rate cutting cycle in 2025, so we currently have four cuts pencilled in for next year.Having reached its lowest rate in almost three years in July, August saw inflation nudge up again slightly. While this is noticeable following 17 straight months of falling rates, it actually marks a return to the average levels seen in the five years before the start of the cost of living crisis.With this kind of pricing spread, shoppers will find that the type of product they're putting in their baskets will really dictate how much they pay." Continue reading...
Price rises were bigger for budget foods than expensive varieties during peak years of inflation, research showsThe bill for a weekly shop in Britain's poorest households rose by far more than it did in wealthy homes during the height of the cost of living crisis as the sharpest price increases affected cheaper brands, research reveals.The study by the Institute for Fiscal Studies (IFS) found the least well-off had been hardest hit by cheapflation" in the 2021-23 period - paying 29.1% more for their food, compared with 23.5% for better-off households. Continue reading...
Brent crude hits $80 as tensions betwen Israel and Iran rise, while rouble slides after Ukraine's incursion into RussiaBuilding products supplier Marshalls continues to be hit by the weak UK house-building markets.Marshalls has reported that revenues fell by 13% year-on-year in the first half of this year.Falls in expected pay rises were anticipated now inflation is within a tolerable range for employees.However, many workers will still feel worse off than they did a couple of years ago, so other benefits like providing flexible working, offering benefits that help boost take home pay, and taking steps to improve job quality, are in employers' interest to help both support and retain staff." Continue reading...
Politicians must acknowledge that companies' systematic profiteering is pushing household finances over the edgeWe should care more about being overcharged for the things we buy. After three years when UK shop prices have rocketed by about 20%, it is reasonable to examine whether the extra cost is justified and whether the government should have done more to protect us.From the evidence it is clear that in too many cases the extra cost cannot be justified and governments have failed to intervene, doing much to undermine the foundations of social democracy. At the heart of the problem is the trend towards monopoly that characterises many of our most important industries - those where large companies have acquired huge marketing power and have found ways to cajole, entice and even bamboozle their customers to enhance their profits. Continue reading...
Black to the Future report recommends policy shifts in housing and healthcare as roadmap for systemic' inequityBlack Americans strongly support initiatives that would increase the minimum wage to $17, make affordable housing more accessible and create an equitable tax system, according to Black to the Future Action Fund, a political advocacy thinktank. On Thursday, the group released a 55-page economic agenda based on its 2023 survey of 211,219 Black people across all 50 states. The organization hopes that the report will serve as a roadmap for elected officials to address policy holes, and for advocates to generate campaigns that hold politicians accountable.We have to start imagining what it is that we want and not be so afraid to break out of what is," said Alicia Garza, founder and former principal of Black to the Future Action Fund, at a Thursday symposium in Atlanta. Continue reading...
Sterling records fourth weekly fall in a row despite stock markets largely recovering from Monday's routThe pound has recorded its longest run of falls in almost a year, as financial markets clawed back losses from Monday's sharp sell-off.After a turbulent week on the markets, sterling posted its fourth weekly drop in a row on Friday, the longest run of losses since September 2023. Continue reading...
Historically, crises have often erupted in late summer, which is why this week's mini crash set alarms ringingFears of a recession in the US. The biggest one-day fall on the Japanese stock market since 1987. Policymakers away on their summer breaks, leaving their deputies in charge. All familiar enough territory for August - one of the most dangerous months in the economic and financial calendar.In theory, August should be a month when not much happens and often that is the case. Stock market trading volumes tend to be light and if August starts calm it will tend to stay calm. But bad things can happen and when they do they can have profound consequences. Continue reading...
Indices rise days after S&P endured worst day in almost two years amid global stock market sell-offWall Street enjoyed its best day of trading in nearly two years, recovering most of the losses it suffered during a sell-off sparked by US economic fears earlier this week.The S&P 500 rose 2.3% to 5,319.32, its biggest single-day jump since November 2022. The Dow Jones industrial average rose 1.8% to 39,446.49. The technology-focused Nasdaq Composite rose 2.9% to 16,660.02. Continue reading...
Asda, Britain's third biggest supermarket group, has posted a 5.3% decline in underlying sales in the three months to the end of JuneWith volatility high, global markets are settling into a yo-yo pattern" as volatility remains high, says Matt Britzman, senior equity analyst at Hargreaves Lansdown:Markets may have simmered down but this roller-coaster week isn't over yet. UK markets opened lower in a move that unwinds a good chunk of yesterday's gains.Corporate earnings are starting to slow but there's plenty for traders to get their teeth into. Continue reading...
Labour is right to get tough with rioters. But that won't solve the deep-seated problems stoking the disorderRachel Reeves has been in the US this week trying to lure investment into the UK. Good luck with that, chancellor. With racist riots occurring nightly, it is perhaps not the best time to be declaring that Britain is open for business.Rather, the message likely to be picked up on the other side of the Atlantic is that Britain is awash with thuggery, that xenophobia is rampant and that the country's economy is broken. The government seems to have been taken by surprise by the far-right violence.Larry Elliott is the Guardian's economics editorDo 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...
Investors may have got too excited about something they don't fully understand - and are now paying the priceHas the artificial intelligence bubble burst? The question has been on the lips of many this week as they have watched the stock market slide, with billions wiped off the value of technology companies that had boomed since the arrival of large language models. It was the economist Hyman Minsky who thought Wall Street encouraged too much risk and gulled investors into parting with cash for all the wrong reasons. The result was ruinous boom-and-bust cycles. His model began with displacement", which is when investors get excited about something they don't fully understand - something like AI.Last year, OpenAI's ChatGPT chatbot got to 100 million users in two months. What follows displacement, according to Minsky, is boom, euphoria, profit-taking and panic. There's been a boom. It is reported that more than 200 AI startups globally are unicorns - meaning they're valued at $1bn or more. Continue reading...
Niesr forecasts raise doubts over chance of further cuts by Bank of England before end of yearThe UK's economic recovery will accelerate over the next year, forcing the Bank of England to keep interest rates higher for longer, according to the National Institute of Economic and Social Research (Niesr).Signalling that bets on further interest rate cuts before the end of the year could be misplaced, the thinktank said a modest economic recovery and the threat from persistent inflationary trends should make the central bank more cautious about reducing the cost of borrowing. Continue reading...
Senior figures praise repeal of law but privately some want full workers' rights overhaul implemented without delayUnions have welcomed the government's move to formally scrap a draconian" anti-strike law that would have ensured a minimum level of service during industrial action as the legislation had restricted workers' rights.The deputy prime minister, Angela Rayner, and the business secretary, Jonathan Reynolds, have written to government departments with sectors that were most affected by the strikes to give a clear message" the measures will be repealed and have urged all metro mayors to start engaging with local employers on the change. Continue reading...
Share markets around the world saw huge falls on Monday - with Japan's Nikkei sinking by 12% - after questions over the health of the US economyFears of a US recession have gripped global markets, triggering a share market rout that prompted investors across Asia, Europe and North America to all unwind their positions - at the same time.The severe plunge has raised questions over whether investors are facing a historic share market crash - similar to the global financial crisis or 1987's Black Monday - or if it's simply an overdue pull-back after a stellar period of strong returns. Continue reading...
by Richard Partington Economics correspondent on (#6PRNM)
Rise in clothing and beauty marks recovery from washout June, says British Retail ConsortiumThe late arrival of warm summer weather drove a recovery in retail sales last month, industry data shows, despite continuing signs of consumers holding back on big ticket purchases amid the cost of living crisis.Figures from the British Retail Consortium showed that UK total retail sales increased by 0.5% year on year in July, a recovery from the washout month of June when colder weather deterred shoppers from spending on the high street. Continue reading...
Shares in FTSE 250 company slump 37% in early trading after Dubai-based Sidara cites geopolitical riskThe share price of the British oil services company John Wood Group has plunged by more than a third after a Dubai-based suitor pulled out of a purchase amid global market turmoil.In a statement to the stock market on Monday the engineering company Sidara said it had pulled out of a bid for Wood in light of rising geopolitical risks and financial market uncertainty". Continue reading...
It was good news for homebuyers as interest rates finally went down. But it has raised a lot of tricky questions for themLast week's Bank of England interest rate cut, the first since 2020, spelled good news for millions of homeowners and would-be buyers - but it has also given them lots to think about.If you are looking to buy a home, what sort of mortgage do you go for, and is this going to push house prices even higher? And if your existing mortgage deal is about to end, should you grab another one right now, or hold fire in case lenders launch cheaper products? Continue reading...
Though tiny compared with rivals, English wine trade is thriving as climate crisis fuels flood of new capital from investorsThe largest English vineyards increased their revenues by 15% last year, as wine investors respond to the climate crisis by planting more vines.While the UK still languishes well down the list of the largest wine-producing nations, below countries such as Uzbekistan and Tunisia, the industry's output has soared in recent years, rising by 77% last year to 161,960 hectolitres, equivalent to 21.6m bottles. Continue reading...
Analysts await key services sector metric to gauge US vulnerability to recession as stocks in Middle East fall amid regional tensionGlobal investors are bracing for further turmoil, after fears that the powerhouse US economy could be drifting towards recession sent stock markets tumbling at the end of last week.Investors in Europe, Asia and New York were spooked by US data that include worse-than-expected job numbers on Thursday, prompting concern that the world's largest economy is in worse shape than previously thought. Continue reading...
Trade bodies blame lack of lab facilities at Brexit border posts for longer delays and shorter shelf life of foodImported food coming into the UK through Brexit border posts is being sent back to Europe to be tested due to a lack of laboratory capacity in Britain, food bodies have said.The SPS Certification Working Group, which represents 30 trade bodies covering 100bn worth of the UK's food supply, has written to the government warning that members are being advised that some samples of imported foods are being sent to countries such as Germany to be tested before they can be released at the border. Continue reading...
A 22bn black hole' could be filled overnight if Labour stopped paying unnecessarily high interest on balances at Threadneedle StreetWell that didn't take long. Less than a month after becoming chancellor Rachel Reeves has gone native at the Treasury, putting a red pencil to plans for new hospitals, roads and rail projects that the government says it can't afford.The latest to bite the dust is the 800m for an exascale supercomputer at the University of Edinburgh and a further 500m for the AI Research Resource, which funds computing power for AI. Continue reading...
Rachel Reeves once spoke about long-term borrowing for vital projects. Now she seems to embrace the spirit of ThatcherismCan somebody please tell the Labour party that they won the election? Most people I know are relieved and delighted that the Conservatives have got their comeuppance; but the relief that Labour is finally back in office is tempered by apprehension that the spectre of Philip Snowden is haunting them all these years later.An iron - Labour - chancellor almost 100 years before Rachel Reeves (briefly in 1924 and then between 1929 and 1931), Snowden, after early popularity with the party and the trade unions, became a victim of the Treasury view" of the day: balance the budget at all costs, rather than balance the economy. Continue reading...
Warren Buffett's firm increased its cash reserves to $227bn, sparking concerns about company's view of US economyWarren Buffett appears to have soured on stocks, letting cash soar at his Berkshire Hathaway firm to nearly $277bn and selling a large chunk of its stake in Apple, even as the conglomerate posted a record quarterly operating profit.Berkshire sold about 390m Apple shares in the second quarter, on top of 115m shares from January to March, as Apple's stock price rose 23%. It still owned about 400m shares worth $84.2bn as of 30 June. Continue reading...
When the honeymoon ends, Keir Starmer's team will be judged on its handling of pressure points - from the economy to North Sea oil drillingIn the Britain of September 1939, it became known as the phoney war. Hitler had invaded Poland. War had been declared. For months, though, there was little military action. At home, the country was placed on a war footing. But these were not yet the decisive times. Those would come later; they would last for years and would change the country for ever.In the Britain of August 2024, we are living through something comparable in terms of the arc of Keir Starmer's prime ministership. Labour has been elected. It is settling into government. It has a radically different project from its predecessors, the scale of which is widely underestimated. But these are not the decisive times either. For Britain, these might be dubbed a period of phoney government. Continue reading...
Fed chair urged to cancel his summer vacation' and take action as unemployment rose to highest rate since October 2021The US labor market cooled significantly last month as unemployment unexpectedly rose, sparking fears of a slowdown across the world's largest economy.American employers added 114,000 jobs in July - short of the 180,000 additions expected by economists, and a marked decrease from the 179,000 added in June. Continue reading...
Economics | The Guardian