Rolling coverage of the latest economic and financial news

As households face the biggest drop in living standards since the 1950s, five images show the scale of the cost of living crisis

Labour asks if Boris Johnson was playing ‘fast and loose with the truth’ over his threat to to take P&O Ferries to court. For the latest on Russia’s invasion of Ukraine, please follow our dedicated live blog

Exclusive: Ngozi Okonjo-Iweala says impact of conflict on food prices and hunger could be substantial

Services sector growing rapidly after Covid disruption but manufacturing slips as Ukraine invasion dents optimismBritain’s recovery from the Covid-19 pandemic is being put at risk by the escalating price pressures and blow to business confidence caused by Russia’s invasion of Ukraine, the latest snapshot of the economy has shown.The flash estimate of activity from S&P Global and the Chartered Institute of Procurement and Supply (Cips) found the UK’s service sector growing rapidly but optimism about the future at its weakest in almost 18 months. Continue reading...

Resolution Foundation says it will be first large increase in number of people pushed into poverty outside of a recessionRishi Sunak’s spring statement will push 1.3 million people – including half a million children – below the poverty line next year while raising tax to the highest level since the second world war, according to leading economists.The chancellor’s spring statement on Wednesday offered some tax cuts, such as 5p-a-litre off fuel duty and a £3,000 increase in the threshold for national insurance contributions, but came in for widespread criticism for failing to support poorer families and other vulnerable groups from the soaring cost of living. Continue reading...

Chancellor responds to highest inflation in three decades with lower fuel duty and vow to cut income tax

Faced with runaway food and energy bills, people in work and retirement see little relief in chancellor’s tweaks to NI and fuel duty

Under all likely scenarios, millions of people will still face energy bills that are unaffordable

How Rishi Sunak’s changes on national insurance, fuel duty and income tax affect consumers

Find out how chancellor Rishi Sunak’s tax and spending plans will affect your personal financesThe chancellor delivered his spring statement just over a week before households are set to see energy prices go up by more than 50%, and on the same day official figures showed inflation running at 6.2% in February.Rishi Sunak was under pressure to address the cost of living crisis, and announced several measures he said would help struggling families. These included a 5p cut in fuel duty and an increase in how much people can earn before they start making national insurance contributions. Continue reading...

This live blog has now closed, you can read more coverage of the 2022 spring statement here

Hodge Hill has the highest fuel poverty rate in England, and many were looking to the chancellor for a lifelineIn the nine years she has volunteered at the Ward End Elim church food bank in Birmingham’s Hodge Hill, Pat Woolridge has never known so many people to be struggling.The constituency in the east of Birmingham has the highest fuel poverty rate in England at 27.4%, much higher than the national average of 13.4%, so many were hoping for a lifeline in Rishi Sunak’s spring budget announcement on Wednesday. Continue reading...

Chancellor offers only modest relief to households facing a £20bn hit to disposable incomes

Rolling coverage of the latest economic and financial news

Pact ends months of tensions but talks on full free-trade agreement remain far offThe UK has struck a deal with the US to remove tariffs on British steel exports, although trade experts warned a broader trade deal between the two countries remains far off.The agreement was struck after UK’s international trade minister, Anne-Marie Trevelyan, met her counterpart, the US commerce secretary, Gina Raimondo, on Tuesday evening in Washington. Continue reading...

Conditions unlikely to return to pre-Covid levels until at least 2024 despite Sunak’s intervention, warns Office for Budget Responsibility

In spring statement, chancellor raises threshold at which workers pay national insurance by £3,000

Rishi Sunak has delivered his mini-budget – here are the main points, with political analysis

Analysis: the country suffered its worst recession in a century and inflation made an unwelcome return

February figure from ONS is higher than 5.9% predicted by economists, underlining cost of living squeeze

CBI calls on Rishi Sunak to use spring statement to help firms facing high energy bills and other pressuresRecord numbers of UK manufacturers are raising prices as the war in Ukraine gives an added twist to inflation, the latest snapshot of industry has shown.Adding to fears that Britain is set for a prolonged period of cost-of-living pressures, the employers’ lobby group, the CBI, said 82% of firms were expecting to raise prices in the coming months against just 2% predicting a fall. Continue reading...

Exclusive: Britons struggled even before winter rise in energy prices and benefits cut, research showsThe number of UK households struggling with large debts increased by a third in 2021, even before the winter rise in energy prices and the removal of the £20 uplift in universal credit payments, research suggests.Analysis of Bank of England research carried out by the Jubilee Debt Campaign found that in September 2021 almost 10% of households reported that loan and interest repayments were a heavy financial burden, a 35% increase on the previous year’s figures. Continue reading...

Figures improve chances of fuel duty or other tax cuts but inflation drives up cost of government debtRishi Sunak has been handed a boost from figures showing lower government borrowing than official estimates on the eve of the spring statement.The figures come despite a sharp rise in debt interest payments last month amid soaring inflation. Continue reading...

Reluctant to make big fiscal changes, chancellor Rishi Sunak considers tax adjustments and fuel duty cutThe Treasury has drawn up a range of options to help with the cost of living crisis – including a 1p cut to income tax, raising the national insurance threshold and a significant cut to fuel duty.But government sources said Rishi Sunak, the chancellor, was still reluctant to make big fiscal changes. Continue reading...

The government must swiftly implement the Crouch review recommendations and introduce an independent regulator for footballFrom the future of the global economy to energy security and defence spending, the shock of Vladimir Putin’s war in Ukraine is provoking a dizzying rethink of policy priorities and assumptions. The Roman Abramovich-related crisis at Chelsea FC might seem a minor subplot when tectonic plates of such magnitude are shifting. But football’s global reach and modern geopolitical dimensions make it much more than that. The perfectly timed spectacle of last week’s fixture between sanctioned Chelsea and Newcastle United – owned by Riyadh’s sovereign wealth fund – marked a moral nadir for the game, coming one day after Saudi Arabia executed 81 people. It was also shaming for this country. In football, too, a paradigm shift is needed.The tools to effect this – or at least start the job now – are within the government’s grasp. Last April, six leading clubs attempted to join the reviled European Super League project; the horror of their own supporters demonstrated an underlying outrage among fans at the direction the sport has taken. The government set up the fan-led Crouch review on football governance. (As the review panel deliberated on where the game had lost its way, the Premier League waved through the takeover of Newcastle by the fund, chaired by the crown prince, Mohammed bin Salman.) Continue reading...

The chancellor says he sympathises with people struggling to make ends meet. He needs to convert that into actionThe Bank of England’s message to Rishi Sunak was simple. Russia’s invasion of Ukraine is the latest unwelcome shock to the UK economy. It will make people poorer. There is nothing we, the Bank, can do about it. So, over to you, Chancellor.Threadneedle Street is absolutely right. It doesn’t have the tools to respond to rising global commodity prices but the Treasury does. Sunak has all sorts of ways of alleviating the pain: cutting taxes, increasing benefits, reducing excise duties, helping out with energy bills. Continue reading...

Rachel Reeves says millions will suffer if Rishi Sunak does not take drastic action in Wednesday’s spring statementRachel Reeves sees the clearest, tell-tale signs of poverty among schoolchildren in her Leeds West constituency. “You look at the kids and you just think, I know you are poor.“You can see it in the school coats, especially in the winter, and in the school shoes. Kids not wearing the proper school uniform, sort of a bit of mix-and-match, and it is really sad.” Continue reading...

The chancellor made his reputation with his response to the pandemic. Misjudging the cost of living crisis will break it

Inflation is heading to 8% and earnings are rising too slowly – but the chancellor will be hard pushed to help out in his spring statementPoor old Rishi Sunak. Covid hit within weeks of him becoming chancellor. He thought he would now be in a position to start implementing the sorts of long-term policies aimed at stimulating growth and enterprise that he set out in his recent Mais lecture. Instead, he has to deal with a whole new crisis.Inflation is heading to 8% and, according to the Bank of England, possibly considerably well beyond that. Combine that with earnings rising less quickly than prices, a big tax hike coming in next month, and benefits going up by only 3.1%, and you have the ingredients for the biggest year-on-year fall in household incomes in a generation. Even after the £9bn package that Sunak announced in February, people on average incomes could well be more than £800 worse-off next year than this. Continue reading...

As memories are revived of the second world war and the 1970s, it is time for a major rethink of economic strategyThe Australian comedian Bill Kerr used to begin his BBC appearances with: “I don’t want to worry you, but …” Funny how those words came back to me last week as I watched the television coverage of the criminal bombing of homes in Ukraine.Some of us are old enough to remember Hitler’s bombing of London, Coventry and elsewhere, not forgetting Britain’s bombing of Dresden. Kurt Vonnegut’s book about it, Slaughterhouse-Five, is a disturbing classic. Continue reading...

Chancellor Rishi Sunak is under pressure to use his spring statement to announce more support as the cost-of-living crisis grows• Six measures Sunak could takeBad news used to arrive in a brown envelope. Now emails and PDFs keep Devon Scott up at night as soaring energy costs and other utilities force the single father of two from Birmingham to cut back.“Everything is going up. The gas bill, phone bill, internet. You think, ‘Wow. I’m not getting enough money to keep paying for these’, so you limit yourself on the other things you’re spending on,” says the 43-year-old. Continue reading...

The chancellor is facing growing demands to tackle the effects of inflation and the effects of the Ukraine invasion

The Ukraine war is sending the cost of energy and food soaring across the world. Price controls may be the only way to stop a devastating chain reactionThe war in Ukraine has gone global. Spiking commodity prices are on track to see their sharpest rises since 1970, sending a shock wave of suffering across the world as the prices of essential goods every human needs to survive are surging upwards. Wheat prices are up 60% since February. Food prices are now higher than during the global food crisis of 2008, which pushed 155 million people into extreme poverty. Cheap Ukrainian wheat that vulnerable nations including Egypt, Libya, Somalia, Syria, and Lebanon rely on lies stranded. If we aren’t careful, the “Ukraine shock” could fast be approaching the awesome scale of the OPEC and Iran shocks that rocked the 1970s.But the “shock” metaphor is deceptive. This is not a momentary blast; all the warning signs point to the fact that this could turn into an avalanche. If that happens, we are just at the beginning of a decade-long deluge. Continue reading...

Rolling coverage of the latest economic and financial news

Energy watchdog says measures could help cut oil usage by 2.7m barrels a day within four monthsDriving more slowly, turning down the air-conditioning, car free Sundays and working from home should be adopted as emergency measures to reduce the global demand for oil, according to a 10-point plan from the International Energy Agency (IEA).Such measures and changes to consumer behaviour would allow the world to cut its oil usage by 2.7m barrels per day (bpd) within four months – equivalent to more than half of Russia’s exports – the global energy watchdog said.Reduce speed limits on highways by at least 10 km/h

Owner DP World should be able to handle £100m crisis in minor subsidiary without resorting to extreme tactics“We believe that businesses can only be successful if they prioritise their biggest competitive advantage – their people.” So said DP World in its annual report for 2021, demonstrating once again that companies will spout any old rubbish in pursuit of a socially responsible halo.The Dubai-owned company, via its P&O Ferries subsidiary, showed on Thursday what its “duty of care” to members of its “corporate family” really means. It sacked 800 UK employees with immediate effect via pre-recorded video message. Employment lawyers wondered whether the action was legal but, even if it is, it’s a shocking way to behave. Continue reading...

We’ve built an economy where life-or-death decisions on prices and wages are driven by investors’ interestsThe UK’s cost of living crisis seems to escalate almost by the day. According to experts, we are facing the biggest fall in living standards since the 1970s. Announcing a phase-out of Russian oil imports, Boris Johnson spoke of “dark days ahead” – as if the days we live in were not already dark enough.This crisis cannot be blamed solely on Russia’s brutal invasion of Ukraine. The return of high inflation may be traceable to short-term supply shocks. But the things that turn it into a crisis have been decades in the making. Continue reading...

Rolling coverage of the latest economic and financial news, including the UK interest rate decision

Mortgage holders, house hunters and savers will be affected by the Bank of England raising rate to 0.75%The Bank of England has increased interest rates to 0.75% in an attempt to tackle rising inflation in the UK. That means the base rate is back to its pre-pandemic level. What does it mean for UK savers and borrowers? Continue reading...

Threadneedle Street reacts to prospect of Ukraine war pushing UK inflation peak to 10%The Bank of England has responded to the likelihood that the war in Ukraine will push inflation to around 10% this year by raising interest rates back to the pre-pandemic level of 0.75%.Threadneedle Street’s monetary policy committee (MPC) voted 8-1 to increase borrowing costs by 0.25 percentage points – the first time the Bank has raised rates at three successive meetings in more than two decades. Continue reading...

Sharon White says Ukraine war will exacerbate cost of living crisis, with CPI already at 30-year highThe boss of John Lewis and the supermarket chain Waitrose has said the UK is facing double-digit inflation as the war in Ukraine exacerbates the soaring cost of living, with prices rising in the supply chain and on shelves.The prediction from Sharon White, chair of the John Lewis Partnership, comes with UK inflation ready at a 30-year high of 5.5%, and expected to rise to almost 8% in April, when household energy bills will soar by hundreds of pounds. Continue reading...

Interest rates will have to rise without jeopardising the green transition. It’s a difficult task, but it can be doneInflation is a disease that disproportionately afflicts the poor. Even before Vladimir Putin unleashed his brutal war on Ukraine, whose byproducts include soaring energy and food prices, inflation was already over 7.5% in the US and above 5% in Europe and the UK. Calls for its taming are, therefore, fully justified – and the interest rate rise in the US, with the same expected in the UK, comes as no surprise. That said, we know from history that the cure for inflation tends to devastate the poor even more. The new wrinkle we face today is that the supposed solutions threaten not only to deal another cruel blow to the disadvantaged but, ominously, to snuff out the desperately needed green transition.Two influential camps dominate public discourse on inflation and what to do about it. One camp demands that the inflationary flames be smothered immediately by the monetary policy version of shock and awe: raise interest rates sharply to choke expenditure. They warn that delaying a little monetary violence now will only necessitate “Volcker shock” levels of brutality later – a reference to Paul Volcker, the Federal Reserve chair who quelled the hyperinflation of the 1970s with sky-high interest rates that scarred the American working class to this day. The second camp protests that this is unnecessary, counter-proposing a steady as she goes stance for as long as wage inflation is kept on a leash.Yanis Varoufakis is the co-founder of DiEM25 (Democracy in Europe Movement), former finance minister of Greece and author of Talking to My Daughter: A Brief History of Capitalism Continue reading...

Leading thinktank raises global inflation forecast to 7.5% as cost of food staples, minerals and energy rises

Fed raises rates by a quarter percentage point from near zero as central bank struggles with inflation, the war in Ukraine and CovidThe Federal Reserve has raised interest rates for the first time since 2018, as the central bank struggles with soaring US inflation, the impact of the war in Ukraine and the coronavirus crisis.The Fed raised rates by a quarter percentage point from near zero, in what is expected to be the first in a series of raises in the coming months. Continue reading...

Analysis: UK faces strong pressure from inflation, but increase could help push economy into recessionThe Federal Reserve has raised US interest rates for the first time since 2018; now all eyes are now on the Bank of England to see whether it increases UK borrowing costs for a third time in succession.Wednesday’s quarter-point increase by the world’s most powerful central bank was never really in doubt. It would have come as a complete shock to Wall Street had the Fed decided to sit on its hands as a result of the war in Ukraine. Continue reading...

Today’s thirty- and fortysomethings are no better off than their parents. The economy is failing its people and the political class has let down votersRemember “Labour isn’t working”? It was the election poster that summed up the tail end of the 1970s and helped to sweep Margaret Thatcher into power. It showed a long dole queue snaking out of an unemployment office, it turned Labour politicians puce (“selling politics like soap powder,” harrumphed the then chancellor Denis Healey) and it made the front pages. There was always less to that photo than met the eye – literally. The supposedly ordinary folk pictured were, in fact, members of the Hendon Young Conservatives group in north London, only 20 of whom had bothered to turn up. They had to be photographed again and again to fill out the space.The jobs market has long shaped our politics, but were that poster to be updated to reflect today’s reality, it would sport a different title. We might call it “Work isn’t working”. Because after four decades of politicians of both main parties promising to “make work pay”, the truth is that it doesn’t – not as much as it once did. A new report from the Institute for Fiscal Studies (IFS) shows that workers born in the 1980s and on the median wage earn no more than those born in the 1960s did at their age. Put bluntly, Thatcher’s children have been diddled. Today’s thirty- and fortysomethings were taught that work was how to get ahead, but they are no better off than their parents. In fact, when you factor in exorbitant house prices, they are far poorer. You could ask for few clearer signs of an economy that has failed its people, and a political class that has let down its voters. Continue reading...

Rising inflation means four-year freeze on income tax thresholds will raise more than budgeted for, says IFSRishi Sunak has been accused of using a “stealth tax” on incomes that will bring in more than double the amount he budgeted for, as the cost of living rises at the fastest rate for three decades.Ahead of the chancellor’s spring statement to the House of Commons next week, the Institute for Fiscal Studies said rapidly rising inflation means the Treasury could raise £13bn more than anticipated by freezing the income tax personal allowance and higher rate threshold. Continue reading...

Historic default on $117m coupons would add to intense economic pressure on Moscow

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