The true measure of unemployment depends on who you askJust how healthy is the US jobs market? On Friday, the Bureau of Labor Statistics (BLS) released its latest jobs report, showing that the US added a disappointing 194,000 jobs last month while announcing that the official unemployment rate fell to 4.8%, the lowest it’s been since its frightening climb to 14.7% when the Covid-19 pandemic first struck the US.The figures seem somehow disconnected and, for some, September’s headline figure is woefully misleading, as it is every month. What if the “true” unemployment rate is actually closer to 22%? Continue reading...
Boris Johnson’s slogan is so much hot air: ordinary, working people are still paying for the financial crash of 2008Isn’t it time to call out the complete deception that is being peddled as “levelling up”? (“You can’t level up by raising taxes on the poor, Tories tell PM”, News). We know that Boris Johnson is ace at spewing out slogans and phrases that can sound good. Most are devoid of serious content and serve only as a distraction from what is really needed to give everyone who works, has worked, will work or would like to work a really fair chance in life.“Levelling up” was invented only to persuade rich people who keep the Tory party afloat of the idea that fairness and social justice won’t cost them anything. They were never seriously asked to pay for the disaster that befell the world economy in 2008, even though their wealth was hugely bolstered by the abuses that brought that collapse about in the first place. It was whole populations of ordinary people who had to pay through years of austerity when services were cut to the bone and needs were ignored, so that after 11 years of Tory rule we are now on the brink.
by Richard Partington Economics correspondent on (#5QHZV)
Fund set for a gloomy annual meeting as supply chain issues and inflationary pressures hobble global recoveryWeaker global growth, vaccine protectionism and the spectre of 1970s-style inflation haunting large economies. As the International Monetary Fund prepares for its annual gathering this week, the contrast with the spring could not be more stark.Back in April, at the Washington-based fund’s last virtual bash, there were sharp upgrades for global growth amid a sense of optimism for the road ahead, led by stronger-than-expected recoveries in the US, UK and other advanced economies. Vaccines would pave the way for the swift unlocking of pandemic restrictions, fuelling a rapid recovery from the worst global recession since the 1930s Great Depression. Continue reading...
Britain is short of 100,000 lorry drivers, energy firms are sinking, food items are running scarce and employers are scrambling for staff as multiple crises eruptMany of the problems facing the economy relate to Britain’s shortage of 100,000 lorry drivers – 96% of logistics businesses are having problems recruiting, and businesses are starting to run short of warehouse staff, van drivers, mechanics, technicians, forklift drivers and transport managers, according to Logistics UK. It said that19,000 HGV drivers have left the UK because of the pandemic and Brexit and 45,000 new drivers have not been able to take tests due to Covid. Continue reading...
The PM’s Thatcherite conference speech ignored many realities that will have to be addressed in this month’s budgetBoris Johnson threw a mishmash of wishful economic thinking at the Conservative party conference wall last week and his advisers will spend this weekend hunkered down in No 10 hoping some of it will stick. Early signs are not good. Only hours after the prime minister stepped off the podium, the rightwing Adam Smith Institute thinktank called his rhetoric “bombastic but vacuous and economically illiterate”. It was typical of reaction throughout the business community.According to Johnson-omics, Britain will emerge fitter, happier and more productive once the prime minister’s limits on foreign labour have forced domestic employers to ramp up wages. Never mind that academic research finds little correlation between immigration and average pay. More immediately, he is ignoring the factory owners who are slamming on the brakes in response to shortages of key components, and the building firms downing tools for lack of concrete and steel. And what of concerns that rising gas and food prices are likely to send inflation well above the 4%-4.5% peak expected by the Bank of England? Continue reading...
by Richard Partington Economics correspondent on (#5QGSP)
Accord signed by 136 countries will enable them to raise tax on sales made by multinationals within their bordersAlmost 140 countries have taken a decisive step towards forcing the world’s biggest companies to pay a fair share of tax, with plans for a global minimum corporate tax rate of 15% to be imposed by 2023.The Organisation for Economic Co-operation and Development (OECD) said that 136 countries and jurisdictions had agreed to join an accord to impose a two-pillar global tax reform plan. Continue reading...
by Aubrey Allegretti Political correspondent on (#5QGSQ)
Boris Johnson accused of ‘being optimistic and leaving it up to businesses to pick up the slack’Tory ministers have privately expressed fear that government inaction on the emerging cost of living crisis could leave the country facing “a nightmare” by Christmas.Boris Johnson was accused by one frontbencher of trying to resolve struggling supply chains by “being optimistic and leaving it up to businesses to pick up the slack”, while a second called the response so far “suboptimal”. Continue reading...
Analysis: from retailers to farmers, employers have not taken kindly to being told to stop whingeing about the supply crisisThere was a moment in Boris Johnson’s speech to the Conservative party faithful on Wednesday when he took time off from berating business to heap praise on the private sector’s part in saving lives during the pandemic.“It was capitalism that ensured that we had a vaccine in less than a year, and the answer therefore is not to attack the wealth creators, it is to encourage them because they are responsible for the aggregate increase in the country’s wealth that enables us to … level up everywhere,” the prime minister said.Farming, where ministers have been saying this week that UK agriculture should get round labour shortages by emulating Australia’s capital intensive fruit-picking industry. The National Farmers’ Union’s vice-president, Tom Bradshaw, said: “Farm businesses have done all they can to recruit staff domestically, but even increasingly competitive wages have had little impact because the labour pool is so limited – instead only adding to growing production costs. A solution to this crisis will need the right people with the right skills and training available in rural areas, where many roles are based.”Retailing, where the counterattack was made more potent by being led by the Brexit-supporting Tory peer Lord Simon Wolfson, the chief executive of Next. Noting that there was “a real panic and despondency” in some sectors, Wolfson rejected the idea that business needed a shock to wean it off cheap labour. “That approach leads to queues at petrol stations and pigs being unnecessarily shot,” he said.Hospitality, where another prominent Leave supporter, Tim Martin, chair of the pub chain JD Wetherspoon, said it was “cobblers” that living standards would rise if draconian immigration controls were introduced. “Brexit decided that immigration policy should be decided by those we’ve elected, not what the policy should be.”Manufacturing. The trade body that represents UK industry, Make UK, said it was already a high-skill sector with a good record for training through apprenticeship schemes. While the average annual salary across the economy was £29,000, in manufacturing it was £32,000.Food processing, where pigs are being culled because of a shortage of abattoir workers. The British Meat Processors Association said the industry was short of 15,000 people, including 9,000 butchers, and that there were no unemployed or furloughed meat workers. A spokesperson said: “We need skilled butchers in our plants today. They only way we can possibly do that in the short term is to bring them in from overseas.”London, where Boris Johnson served two terms as mayor between 2008 and 2016. Richard Burge, chief executive of the London Chamber of Commerce and Industry, said: “London’s businesses certainly wish to hear a little less of London being presented almost as a villain in the levelling-up narrative. London is the UK’s world city. It is a key player in a global economy. We need to further ensure that investment into London brings further benefit across this country. Do London down, and that investment may end up leaving these shores altogether, and that benefits no one here.” Continue reading...
by Richard Partington Economics correspondent on (#5QFBS)
Huw Pill says inflationary pressures still likely to be temporary and will fall back after disruptions of Covid and BrexitThe Bank of England’s new chief economist has warned high rates of inflation could last longer than expected, due to severe supply shortages and rising household energy bills.Huw Pill, who replaced Andy Haldane at Threadneedle Street last month, said inflationary pressures were still likely to prove temporary and would fall back over time, as the economy adjusted after disruption caused by Covid and Brexit. Continue reading...
Next boss, thinktanks and unions criticise Boris Johnson, saying ‘shortages cannot be blustered away’Business leaders rounded on Boris Johnson for lacking a coherent economic plan after he delivered a boosterish conference speech that made barely a mention of the supply chain crisis.The address was condemned as “bombastic but vacuous and economically illiterate” by the free market Adam Smith Institute, while the Conservative thinktank Bright Blue issued a stark warning. Continue reading...
Business leaders have hit back at Boris Johnson over claims they allowed Britain to become a low-wage and low-skilled economyBritain’s businesses stand accused of allowing the UK to become a low-wage, low-skilled and low-productivity economy bedevilled by slow growth.The prime minister criticised company bosses for wanting to import cheap workers to fill vacancies rather than improve the skills of young people already in the UK. Only a more skilled workforce could command higher wages and better living standards, Boris Johnson said. Continue reading...
Cost per litre nears the record 142.48 set in April 2012, stoked by global demand outpacing supply rather than UK fuel shortagePetrol prices could reach all-time highs before Christmas, the RAC warned, signalling “misery” for motorists still reeling from the fuel shortage crisis.Amid signs that the number of petrol forecourts running dry was easing, the drivers’ organisation warned that anxiety about whether motorists could fill up their tanks was likely to be replaced by concern about how much it would cost. Continue reading...
BCC warning comes as Greggs flags price pressures amid surge in fuel and energy costsNearly two-thirds of UK manufacturers expect to raise their prices in the run-up to Christmas after being hit by mounting cost pressures, a leading employers’ group has said.The British Chambers of Commerce said inflation expectations had risen to their highest since its records began at the end of the 1980s, with 62% of industrial firms planning price hikes over the next three months. Continue reading...
by Richard Partington and Lisa O'Carroll on (#5QC3M)
Almost 140 countries understood to be in final OECD talks on measures to stop firms moving profits to tax havensAlmost 140 countries are edging closer to a global deal on the taxation of multinationals, with agreement on a minimum 15% rate of corporation tax set to be announced as part of a landmark statement at the OECD in Paris on Friday.Governments representing more than 90% of the world economy are understood to be in the final stages of talks on a global minimum rate and other measures designed to stop multinationals shifting profits into tax havens. Continue reading...
Fund chief Kristalina Georgieva says most serious obstacle to full recovery remains Covid vaccine divide between rich and poor statesThe head of the International Monetary Fund has warned the world economy remains “hobbled” by the Covid-19 pandemic as she revealed her organisation has revised down its forecast for global growth this year.Kristalina Georgieva, the IMF’s managing director, said the most serious obstacle to a full recovery was the vaccine divide between rich and poor nations and warned the global economy could suffer a cumulative $5.3tn loss over the next five years unless it was closed. Continue reading...
The chancellor’s praise for the economic policies of previous Conservative governments augurs badly for struggling familiesOne of the lessons that leading Brexiters learned from the 2016 referendum was that brazen opportunism can pay off handsomely. A Eurosceptic movement born in the more arcane reaches of the Conservative right, committed to deregulated, laissez-faire economics, achieved its goal by channelling a desire in Labour’s heartlands for more, not less, protection from the global economy.This week, as the Conservative party conference meets in Manchester, the same audacity is on display again. As the army moves in to deliver urgent fuel supplies, food and labour shortages grow and an unprecedented, wasteful cull of more than 100,000 pigs looms. Boris Johnson and his ministers have hailed the chaos as necessary disruption on the way to a “high skills, high wage” economy. The worse things get, the better they will become, it is claimed, as business is forced to adapt to a long-term absence of migrant labour and up its game on pay and conditions. The abject handling of a foreseeable crisis, exacerbated by Brexit, is thus rationalised post-hoc as the royal road to “levelling up”. Continue reading...
Brexit, global supply chain issues and the ‘long tail of Covid-19’ creates ‘perfect storm for UK firms’Staff shortages are rippling out from the haulage, farming and hospitality sectors to almost all parts of the economy, putting “severe pressure” on medium-sized business across the UK, a new survey has warned.More than a quarter of the 500 firms polled said the lack of staff was putting pressure on their ability to operate at normal levels, with reduced stock – due to the resulting supply chain disruption – hurting their business. Continue reading...
Renowned economist Joseph Stiglitz says chief is victim of conservative ‘hatchet job’ using unfair report to discredit herThe International Monetary Fund boss, Kristalina Georgieva, is the victim of a plot to oust her, according to a Nobel prize-winning economist, after a report alleged that she applied “undue pressure” on staff to boost China’s standing in global rankings while in her previous job at the World Bank.Joseph Stiglitz, a former chief economist at the World Bank, said a report prepared by the law firm WilmerHale on concerns about China’s influence at the Washington-based organisation was being used unfairly to “discredit and oust” Georgieva. Continue reading...
by Peter Walker, Jessica Elgot and Aubrey Allegretti on (#5Q9EE)
PM’s remarks come as Liz Truss insists it’s the role of business, not ministers, to resolve such problemsQueues for petrol and mass slaughter of pigs at farms because of a lack of abattoir workers are part of a necessary transition for Britain to emerge from a broken economic model based on low wages, Boris Johnson has argued.His comments, on the first day of the Conservative conference, came as Liz Truss, the foreign secretary, insisted it was the role of business, not ministers, to sort out such problems. Continue reading...
The long-running series in which readers answer other readers’ questions on subjects ranging from trivial flights of fancy to profound scientific and philosophical conceptsHow much poorer would the rich need to be to provide a basic minimum income for everyone? Robin DevanySend new questions to nq@theguardian.com. Continue reading...
Rising prices and lack of goods are what happens when just-in-time economy collides with seat-of-the-pants governmentIt all seems to have happened so fast. Only a few months ago, the government was congratulating itself for the speed at which Britain was emerging from the pandemic. But as the nights have lengthened, there have been empty shelves at supermarkets, spiralling energy prices and queues snaking back from petrol stations.If there is a general sense of bemusement at all this, then there really shouldn’t be. This is what happens when just-in-time production methods collide with just-in-time government and turn a problem into a crisis.Britain now has just 1% of Europe’s storage capacity, enough to cope with four or five cold winter days. Continue reading...
Pictures of destitute Brazilians searching scraps for food lay bare scale of economic and social crisisHeart-wrenching photographs of destitute Brazilians scavenging through a heap of animal carcasses for food have laid bare the hunger crisis blighting Latin America’s most populous nation, where millions have been plunged into deprivation by the coronavirus pandemic and soaring inflation.The images, taken in Rio last week by the prize-winning photojournalist Domingos Peixoto, show the group rummaging for scraps in the back of a lorry that had been transporting the discarded offal and bones to a factory that makes pet food and soap. Continue reading...
Amid the petrol crisis and labour shortages, hardline MPs continue to celebrate the damage Britain has inflicted on itselfIn 1979 the Conservative party under Margaret Thatcher fought a successful election campaign with the slogan “Labour isn’t working”. The campaign relied on a profusion of posters purporting to show a long line of unemployed people. It later turned out that this was not a real dole queue but a group of actors hired for the purpose.This was characteristic of the loose attitude to the facts – what President Obama memorably dubbed “truth decay” – that has become more prevalent in recent years. Continue reading...
The chancellor will address the Conservative party conference in Manchester against the background of a faltering economyRising prices, queues at the petrol pumps and a flatlining economy provide a sobering backdrop to Rishi Sunak’s speech at the Conservative party conference in Manchester on Monday .The outlook was more promising only three months ago when the UK was recovering quickly from the lockdown restrictions imposed at the start of the year. Continue reading...
by Richard Partington Economics correspondent on (#5Q8QF)
Analysis: mismatches between high-vacancy sectors and those receiving emergency support belie Sunak’s trust in market forcesOver the past 18 months, Rishi Sunak has been in bridge-building mode. Providing billions of pounds in emergency financial support through the furlough scheme to carry businesses and workers over the chasm of the coronavirus pandemic.In an unprecedented act of state intervention worth £70bn, almost 12 million jobs were protected from the worst economic collapse in 300 years. More than 9bn hours of pay was topped up to 80% of a workers’ usual wage, up to £2,500 per month, across every industry from advertising to waste collection. Continue reading...
Greater financial instability, fraud and funding of terrorism likely unless governments toughen supervision, fund saysTougher regulation is needed to prevent the rapid growth in cryptocurrencies leading to financial instability, defrauding of consumers and the funding of terrorism, the International Monetary Fund has said.The Washington-based IMF said the 10-fold increase in the market value of crypto assets – digital or virtual currencies – to more than $2tn since early 2020 required more active and collaborative supervision by governments. Continue reading...
GDP grew faster than forecast in second quarter as fewer Covid restrictions prompted households and companies to spendHigher NHS spending, stronger investment and a bounce back in exports helped the UK economy to recover more quickly from the lockdown at the start of the year, official figures have shown.After shrinking by 1.4% in the first three months of the year, the economy grew by a record 5.5% in the second quarter as restrictions on activity were eased. Continue reading...
by Larry Elliott and Richard Partington on (#5Q5AR)
Rishi Sunak criticised for cutting off wage-subsidy lifeline that still supports over a million jobsRishi Sunak’s decision to wind up the furlough scheme today will intensify Britain’s economic woes, an array of unions, business groups, employment experts, City firms and politicians have warned.With signs of activity slowing even before pressures on supply chains began to mount over the past few weeks, the chancellor was criticised for cutting off a wage-subsidy lifeline that is still supporting well over a million jobs. Continue reading...
by Richard Partington Economics correspondent on (#5Q42Q)
Burger King and Starbucks leaders also sign up to new body to discuss mounting challengesBosses from chains including Nando’s, Starbucks and Prezzo have been drafted in to advise the government on its plans to boost the hospitality sector after the easing of lockdown this summer.Amid mounting concern over staff shortages and supplies across the economy, ministers said the group of executives would help to identify and oversee actions that the government could take to smooth the post-pandemic recovery for pubs, hotels, cafes and restaurants. Continue reading...
The long-running series in which readers answer other readers’ questions on subjects ranging from trivial flights of fancy to profound scientific and philosophical conceptsHow much poorer would the rich need to be to provide a basic minimum income for everyone? Robin DevanyPost your answers (and new questions) below or send them to nq@theguardian.com. A selection will be published on Sunday. Continue reading...
Andrew Bailey says inflationary pressures strengthen the case but ‘we are monitoring situation closely’The inflationary pressures building in the UK has made a rise in interest rates next year more likely, the central bank chief has warned.Against a backdrop of rising fuel prices and the prospect of higher transport costs pushing up the price of food in the run-up to Christmas, the Bank of England’s governor said there were signs that inflation could be sustained and the central bank’s monetary policy committee (MPC) may need to increase borrowing costs in 2022. Continue reading...
With Britain facing multiple challenges, Keir Starmer’s party is right to promise prudenceLabour is not much cop at winning elections. In its entire history, the party has won only five elections with a comfortable majority. The brutal truth is that Labour should be good at opposition because it has plenty of practice at it.Just about every political pundit has advice for Sir Keir Starmer on how to avoid a fifth successive defeat, an outcome that would be dismal even by Labour’s own standards. To win, it is said, Labour needs to be seen as a solid government-in-waiting but also have radical policies to put before the public. It must challenge the Tories for the support of older voters while appealing to the young; and win back Brexit supporters in former “red wall” seats while at the same time hanging on to those who backed remain in 2016. There are, no question, easier jobs than being the leader of the opposition. Continue reading...
After the success of the chancellors’s £70bn programme, there is uncertainty about the future direction of the economyThe biggest state intervention in the UK’s labour market in peacetime comes to an end this week when the government finally winds up its furlough support.Barring an unlikely last-minute change of heart, a wage subsidy that has been in place for 18 months and has cost £70bn will no longer be open to struggling firms. Continue reading...
With inflation set to rise, alongside the cost of shopping and transport, the economic fallout will squeeze Britons’ budgetsThe Bank of England warned this week that surging energy bills will lead to inflation topping 4% this winter, piling pressure on already tight household budgets. The economic fallout from the pandemic and Brexit is pushing up the cost of essentials such as food and clothing as well as travel and even doing up your home. We look at how this perfect storm is affecting you. Continue reading...
There are signs that previously struggling social democratic parties are drawing the right lessons from the pandemicIn the wake of the financial crash in 2008, hopes were high on the left that a bona fide crisis of capitalism would significantly shift the political dial in its favour. Isolated victories and movements aside, it didn’t really happen. Instead, in the early 2010s, the bailout of the bankers was followed by the imposition of austerity across Europe and in America as governments sought to balance the books.Premature predictions on the nature of post-Covid politics in the west are therefore to be avoided. But certain themes do seem to be emerging. Sketching out broadly communitarian territory, they chime with many people’s experience of how the pandemic played out and what it exposed; and there is some evidence that, in northern Europe, they might inform a revival and renewal of centre-left parties and movements. Continue reading...
Cryptocurrencies are a baffling entity but adopting it as legal tender is the strangest, most worrying aspect of allEl Salvador this month became the first country to adopt a cryptocurrency – in this case, bitcoin – as legal tender. I say the first, because others might follow. But they should think twice, because the idea is highly dubious – and likely to be economically dangerous for developing countries in particular.I will admit that I don’t understand the need for cryptocurrencies at all. Like many economists, I fail to see what problem they solve. They aren’t well designed to fulfil any of the classic functions of money – a unit of account, store of value, or means of payment – because their prices are so extraordinarily volatile. This volatility is not surprising, because cryptocurrencies are backed neither by reserves nor by the reputation of a well-established institution, such as a government or even a private bank or other trusted corporation. Continue reading...