They might think twice before using such language in front of the general publicTruly, we live in parlous economic times. For proof, consider the warning from the International Monetary Fund last week: “The sovereign bank nexus could lead to a self-reinforcing adverse feedback loop that could force the government into default”, calling the process a “doom loop”. Bewildering or what?I know economists are a rarefied breed, but they’re not doing themselves any favours when they dish up warnings like this. Mind you, “doom loop” is sensible shorthand. After all, consider its full meaning: “The doom loop is the circle of vulnerability where a country’s banking system can be severely hurt by volatility in the price of the sovereign bonds they hold for reserves resulting in a contraction in lending provided by the banks.” Continue reading...

Exclusive The Ukrainian president’s adviser, Oleg Ustenko, tells of his fury at how Europe’s refusal to act is piling more misery on Ukraine• Russia-Ukraine war: latest developmentsBefore Russia’s tanks, daubed with their infamous Z, rolled into Ukraine, Oleg Ustenko’s advice to president Volodymyr Zelenskiy had focused on pension reform, privatisation and coaxing economic migrants to return.Nearly 60 days later, the pair are instead striving to hold together an economy that, even if Vladimir Putin’s brutal bombardment were to end tomorrow, would be left in tatters. Continue reading...

The environment ranks low in polls of the public’s fears, while sickness ranks top. Yet we will all get more ill as the planet heatsArnold Schwarzenegger has the answer to tackling the climate emergency. Don’t hype the economic damage, he says, just say we need to “terminate pollution”.It may seem odd to pick the former bodybuilder and actor turned Republican politician as someone with the answer to the most important issue of the 21st century. But Schwarzenegger’s focus on pollution as California’s governor, and that of his successor, the Democrat Jerry Brown, means that since 2008, by wide agreement, the Golden State has enjoyed the longest economic expansion in its history, while also cutting emissions. Continue reading...

Consumer spending, still partially buoyed by lockdown savings, is about to take a hit. But will it mean recession?Business has been better than expected this year for Paul Askew’s fine-dining restaurant in central Liverpool. He feared for its future amid the worst cost-of-living crisis in a generation, but so far the punters have kept coming.“January is usually the quietest month,” says the chef patron of the Art School restaurant, where menus start at £39 a head. “But people were feeling liberated and came out in large numbers. The start of the year was better than we could have hoped, and that has continued.” Continue reading...

Organisation suggests there is a broader crisis as it revises down its forecasts for economic growthThe International Monetary Fund’s revised World Economic Outlook is sobering. It is rare for the organisation to revise down sharply its projections for economic growth only one quarter into the calendar year. Yet in this case, it has done so for 86% of its 190 member countries, resulting in a decline of almost one percentage point in global growth for 2022 – from 4.4% to 3.6%. Moreover, this forecast is accompanied by a significant increase in projected inflation, and all this bad news is packaged in a wrapping of deeper uncertainty. There is a downward bias in the balance of risks, and inequality is expected to worsen within and across countries.The WEO revision is attracting a great deal of media attention. The focus, understandably, is on the relatively large size of the revisions for the current year, most of which are associated with the detrimental economic effects of Russia’s invasion of Ukraine. The war has disrupted the supply of corn, gas, metals, oil and wheat, as well as pushing up the price of critical inputs such as fertiliser (which is made from natural gas). These developments have prompted warnings of a looming global food crisis and a severe increase in world hunger. Given the scale of the disruptions, it would not surprise me if the IMF issued a further downward revision to its growth projections – particularly for Europe – later this year. Continue reading...

Store becomes latest supermarket to limit customers as conflict chokes off flow of sunflower oil to UKTesco has become the latest supermarket to ration cooking oil as the Russia-Ukraine war chokes off the flow of sunflower oil to the UK food industry, further raising the cost of popular items such as crisps and chips.Most of the UK’s sunflower oil comes from Ukraine and the war has had a devastating impact on availability as exports ground to a halt. With firms left scrabbling to source other vegetable oils, the price of cooking oil in the shops is about a 20% higher than a year ago. Continue reading...

Immediate embargo would cost €165bn but economy may not shrink as much as first year of Covid

Worried consumers rein in March spending as private sector growth slows

From dog food to coffee, readers are reporting some basic goods’ prices are rising by far more than inflationInflation is rampant, and supermarket prices are no exception. Shoppers are returning to stores to find old favourites have leapt in price from one week to the next. The cost of consumer goods is spiralling at such a rate that retail analysts have coined a new term, shelf shock.Nestlé, the owner of KitKat, Häagen-Dazs and Felix cat food, became the latest consumer goods group to warn of more pain to come on Thursday, saying it had raised prices by 5.2% in the first three months of this year and that rising production costs would force another increase soon. Continue reading...

Slowdown in retail sector feared as public gripped by pessimism about the economy as well as personal financesFears that Britain is heading for a marked slowdown in consumer spending have intensified as it emerged that the public is gloomier about the economy than when banks were on the brink of collapse during the financial crisis of 2008.A combination of rocketing energy prices, higher taxes and a surge in the annual inflation rate to its highest level in three decades meant confidence was in freefall, according to the latest monthly snapshot of sentiment. Continue reading...

Catherine Mann argues that soaring energy and food prices will persist even if consumer demand weakensA senior Bank of England policymaker has said Britain’s central bank could raise rates again next month to combat the risk of high inflation persisting into 2023.Catherine Mann, a former Citigroup economist who joined the BoE’s nine-strong monetary policy committee (MPC) last year, said on Thursday that soaring prices of energy and food will persist next year, even if consumer demand weakens. Continue reading...

KitKat and Nescafé owner blames surge in cost of ingredients, energy, labour and transportNestlé, the owner of KitKat, Häagen-Dazs and Felix cat food, raised its prices by 5.2% in the first three months of this year and has said rising costs will force another increase soon.Mark Schneider, its chief executive, said: “Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year.” Continue reading...

From the supply-chain crisis to Covid vaccines, the past couple of years have brought home the benefits of self-sufficiencyRishi Sunak is in Washington DC this week to discuss the state of the global economy with his fellow finance ministers. But he is clearly keener on listening to some of them than others. Had the chancellor not been on a plane on his way across the Atlantic, he would have joined a walkout by the UK delegation – led by the Bank of England governor, Andrew Bailey – when Russia’s representative started speaking at a gathering of the G20. The protest by the Brits – along with the Americans and the Canadians – at a forum that includes the world’s leading developed and developing economies won’t make the slightest difference to the Kremlin. For all that, it is a symbolic gesture that matters. The International Monetary Fund issued a warning this week about the risk of the war accelerating the fragmentation of the world into rival economic blocs, and here is an example of it. China made it clear it didn’t think Russia should be excluded from G20 meetings, as did the country currently in the chair: Indonesia.The IMF is worried about the risk of a return to the 1930s. It fears the current trend towards deglobalisation will result in trade barriers going up, countries adopting their own technological standards – and rival reserve currencies emerging to challenge the supremacy of the US dollar. Bad all round, in other words.Larry Elliott is the Guardian’s economics editor Continue reading...

Bill Ackman’s Pershing Square fund dumps 7% stake for $400m loss after streaming service’s value plungesThe billionaire hedge fund manager Bill Ackman has sold his shares in Netflix at a loss of about $400m (£305m), reversing his bullish position in the streaming giant after it reported an outflow of more than 200,000 subscribers.The New York-based investor bought more than $1bn of Netflix shares in January, despite grim forecasts about the company’s subscription levels. Ackman said at the time that the subsequent drop in the share price had presented an “attractive” opportunity for his Pershing Square fund. Continue reading...

Elvira Nabiullina says lawsuits aim to release gold and foreign currency frozen amid Ukraine invasion sanctions

Live rolling coverage of business, economics and financial markets as global growth forecasts downgraded amid Ukraine invasion and inflation

Economic gains made after recovery from Covid pandemic could be erased, says expert

Analysis: Fund’s world economic outlook highlights need to protect people such as refugeesGloom at the International Monetary Fund is nothing new. Since last summer the body responsible for stabilising and supporting the world economy has been growing ever more pessimistic.First it was rising inflationary pressures caused by supply-side bottlenecks. Then it was the arrival of the new Omicron variant towards the end of 2021. Now it is the war in Ukraine, something not anticipated when the Washington-based organisation last published its assessment in January but which dominates the IMF’s world economic outlook. Continue reading...

President ‘deeply concerned about developing countries’ amid Russia’s war in Ukraine, Covid and inflationThe World Bank is preparing a $170bn package of financial help in response to the overlapping global crises of war, pandemic and inflation that are hitting the poorest countries particularly hard, its president has said.David Malpass warned that Russia’s invasion of Ukraine had added to pressures caused by the Covid-19 crisis and soaring cost of living, and there was a need to provide assistance quickly. Continue reading...

Inflation will limit UK consumers’ spending power, with energy costs a particular problemBritain’s economy is at growing risk of falling into a summer recession amid the biggest squeeze on household incomes since the mid 1950s, as soaring inflation curtails consumer spending power, forecasters have said.Economists said the double blow from slowing post-lockdown growth and rising living costs after Russia’s invasion of Ukraine could result in a fall in gross domestic product (GDP) for two consecutive quarters, which is the definition of a recession. Continue reading...

But situation needs looking at in global context because it is not a story of British exceptionalismEaster traditionally marks the start of the annual housebuying season, but this year there has been no need for potential sellers to mow the lawn and give the living room a lick of paint because the market’s already running hot.Demand for property has been strong ever since the UK first came out of lockdown in the summer of 2020. Mortgage approvals are up on pre-pandemic levels and prices have climbed ever higher. Continue reading...

Study of 78 countries reveals impact of economic exclusion, including on changing fortunes in UKCountries that allow economic inequality to increase as they grow richer make their citizens less happy, a new study shows.Until now, researchers have believed that inequality was largely irrelevant to levels of life satisfaction, according to Dr David Bartram at the University of Leicester. Continue reading...

The PM’s damaging slogan about leaving the EU is as nothing when compared with his attitude to following his own rulesThe prime minister has fallen out with his chancellor? Happy Easter and please tell me something new. Indeed, tension between Nos 10 and 11 Downing Street is almost par for the course. Margaret Thatcher did not get on with Geoffrey Howe – her chancellor from 1979 to 1983 – and after he was moved on to other departments they eventually fell out completely over Europe, about which Thatcher thought Howe far too enthusiastic.The tension between Tony Blair and his chancellor, Gordon Brown, between 1997 and 2007 was principally about Brown’s desire to take over the reins, but also about – here we go again – Europe. In that case, the argument was about whether or not to join the euro. Continue reading...

Private firms are turning to creative hiring methods, but public sector workers are missing outAverage wage growth in Britain is not keeping pace with inflation, leaving workers facing the biggest annual fall in living standards since records began in the 1950s.Some employers, however, are ramping up bonuses in an attempt to lure new recruits and retain existing staff, as record job vacancies intensify the battle for talent and companies work to support staff hit by dwindling spending power. Continue reading...

Erdoğan’s quixotic policies are putting pressure on prices, but now fallout from Ukraine is pushing the country towards crisisFrom behind the counter in a bakery in Kasımpaşa, a working-class Istanbul neighbourhood, Mustafa Kafadar can see the orange, white and blue banners of Recep Tayyip Erdoğan’s Justice and Development party (AKP) as they blow in the spring breeze.Kafadar has been wrenched out of retirement by Turkey’s economic crisis – his pension is no longer enough to cover his basic expenses. Now he works shifts in the bakery, where he describes living from payday to payday while he sweeps crumbs off a tray. Continue reading...

The last time the jobless rate was this low was November 1974 – but flat wages and job insecurity are still prevalent

Rolling coverage of the latest economic and financial news, as Tesla CEO makes an offer to buy Twitter

Calls to mitigate the effect of higher interest rates on poorer countries may not be enough when debt cancellation is neededInternational agencies saw their influence wane after the 2008 financial crash as the support for multilateral agreements gave way to quick-fix solutions between governments. The International Monetary Fund and the World Bank, which hold their joint spring meetings next week, have suffered like many others.So when the IMF boss, Kristalina Georgieva, wags a finger at the major central banks – the US Federal Reserve, the European Central Bank, the People’s Bank of China, the Bank of Japan and the Bank of England – the question is: are any of them listening? Continue reading...

Inflation shock caused by the invasion and ongoing pandemic is ‘a crisis on top of a crisis’ says IMF chief

WTO and World Bank among those saying richer countries must step in to alleviate effects of rising prices and shortagesRich countries need to provide emergency food supplies to prevent rising prices and shortages triggering social unrest in poorer parts of the world, the heads of four major international bodies have said.Calling for urgent and coordinated action, the World Bank, the UN World Food Programme, the World Trade Organization and the International Monetary Fund warned that the food crisis was pushing millions of people into poverty. Continue reading...

If there’s ever a moment where the PM needs to know the exact unemployment rate without looking at the internet, we’re all truly stuffedLater on Thursday the new unemployment rate will come out, and because of the focus on the number this week (and whether or not leaders know it), it will probably get more focus than normal. Alas, most likely the number itself will get the focus rather than any economic policy surrounding it – including the conditions of those who remain unemployed.One of the annoying things about the Albanese “gaffe” (such as it was) of forgetting the unemployment rate is that it enabled any discussion around economic policy to drift into the trivial. Continue reading...

Lashed by Covid and soaring prices for food and fuel, a quarter of a billion people face falling into extreme povertyThe UK is sliding into a social and economic crisis, the likes of which its people have not seen for decades. Household fuel bills are on course to top £2,400 by this autumn, while the price of a grocery shop is rocketing. Meanwhile, the economy is flatlining and the average employee’s pay keeps falling behind inflation, which hit 7% in March, the highest rate since 1992. No wonder that the charities and analysts that work on poverty and inequality are issuing such dire warnings. On one projection, one in three Britons – 23.5 million people – will be unable to afford the cost of living this year.The rest of the world is being buffeted by the same storms: Covid, followed by soaring prices for food and fuel, and then Russia’s invasion of Ukraine, which has led to another massive rise in the cost of basics. The difference is that most other countries do not have our wealth, or social security system, or infrastructure. So imagine the devastation felt elsewhere, in countries less wealthy, less stable and less powerful. In Somalia, the UN’s Food and Agricultural Organization (FAO) predicts, more than 6 million people will fall into “crisis, emergency, or catastrophic levels of hunger” within the next two months. Continue reading...

Rolling coverage of the latest economic and financial news

Inflation in March rose to 7% but April figures will include 54% increase in energy price cap

Since the Daly family last spoke to the Guardian, they have had to find more ways to cut costs as bills and inflation soarWhen inflation was last running at 7% Margaret Daly was training to be a teacher and bringing up a young family, so money was tight. “In the early 1990s I was studying,” she says. “That was very difficult. I had two small children and I was always trying to make ends meet. When I qualified it took a few years after all that struggling and living frugally to find my feet.”As the 90s wore on, things improved for Margaret, now 60, as she progressed through her career and saved up enough to buy a home. Throughout the rest of the decade and the early 2000s her salary rose, against a backdrop of inflation that was typically 1.5-2.5%. Continue reading...

Latest rise in CPI measure is highest in three decades, coming a month after it hit 6.2%

Concern expressed that figures count Covid vaccines as aid, while Britain is among EU countries accused of ‘gutting’ contributionsOverseas aid reached an all-time high last year as the wealthiest countries responded to the Covid pandemic, according to preliminary figures from the Organisation for Economic Cooperation and Development (OECD).But there were concerns that the war in Ukraine will impact aid spending by members of the OECD’s development assistance committee (DAC) in 2022, as they continue to help poor countries recover from the pandemic and handle the consequences of the conflict. Continue reading...

Funds will help to pay hospital workers and pensions, and continue social programmes for the vulnerable

Rolling coverage of today’s economic and financial news

While the pandemic has not led to a jump in unemployment, its impact on the over-50s and public sector staff is particularly troublingAt first glance, the UK jobs market is in rude health. The unemployment rate is back to where it was before the Covid pandemic arrived two years ago and job vacancies are at a record high.But just as X-rays can pick up health problems not detectable to the naked eye, so a closer inspection of the labour market shows up some hidden damage. The Covid crisis has not led to the sharp increase in joblessness that was feared, but it has still left scars. Continue reading...

War in Ukraine drives up energy costs as figures strengthen expectations Federal Reserve will raise interest rates next monthPrices in the US climbed at their highest rates since 1981, rising 8.5% over the year to the end of March as the war in Ukraine drove up energy costs for Americans, the labor department announced on Tuesday.The latest Consumer Price Index (CPI) – which measures the prices of a basket of goods and services – comes after the index rose by 7.9% in the year through February, the fastest pace of annual inflation in 40 years. Continue reading...

Pressure for more support for households and businesses after consumer prices rise 6.2%

Surge in global food prices, ongoing impact of Covid and rising global inequality threaten the poorestMore than a quarter of a billion people around the world could be pushed into extreme poverty this year amid a surge in global food prices after Russia’s invasion of Ukraine, the ongoing impact of Covid and rising global inequality, Oxfam has warned.Highlighting the knock-on impact of the war for the poorest people around the globe, the aid charity said two decades of progress were in danger of being reversed as the conflict pushes up prices on wholesale markets, disrupts harvests and impedes exports of vital commodities. Continue reading...

Expectations around personal finances over the coming year reach ‘depths not seen since the 2008 financial crisis’Growth in UK retail sales slowed last month as fears over the rising cost of living led to the sharpest drop in consumer confidence since the 2008 financial crisis, according to industry data.The British Retail Consortium said total sales rose by 3.1% in March compared with the same month a year earlier, significantly down on the 6.7% increase in February and 12-month average growth rate of 10.3%. Continue reading...

Rolling coverage of the latest economic and financial news

Chancellor resists demands for more subsidies despite cost of living crisis

GDP rose by 0.1% in February, down from 0.8% in January, says ONS, after City economists had predicted 0.3%

Scheduled 3.1% rise in state pension and benefits fails to keep up with 8% hike in prices of essentials and energy

Brokers warn soaring bills, tax rises and big hike in cost of household basics have forced lenders to recalculate models

Bank says many surrounding countries will suffer severe hardship as result of invasion, with Russia predicted to fall into recession