Review of G20 fiscal stimulus spending counters many countries’ pledges to ‘build back better’Only about 6% of pandemic recovery spending has been “green”, an analysis of the $14tn that G20 countries have poured into economic stimulus.Additionally, about 3% of the record amounts governments around the world have spent to rescue the global economy from the Covid-19 pandemic has been spent on activities that will increase carbon emissions, such as subsidies to coal, and will do little to reduce greenhouse gases or shift the world to a low-carbon footing. Continue reading...

Fuel prices are soaring across America as the Ukraine crisis bites – bad news for those trying to stay warm in their carsFor the past five months Anna Hokuf has lived in her car with her cat after she left an abusive home environment. Trying to save enough money to secure an apartment doing odd jobs while homeless has been hard enough for the 19-year-old. Now rising gas prices have made it all but impossible.“I don’t have the ability to save much money and gas prices being as high as they are at almost $4 a gallon really makes being homeless tough,” said Hokuf, of the Lehigh Valley, Pennsylvania, area. “I have to keep my car on all the time to stay warm and to keep my cat warm, which wastes more gas and has caused a strain on my car.” Continue reading...

Bank’s European subsidiaries faced ‘abnormal cash outflows’, so it could no longer supply them with liquidity

President acknowledges ‘too many families are struggling’ as climbing prices hit him in pollsGetting runaway prices in America under control is “my top priority” Joe Biden told Congress on Tuesday in his first State of the Union address.Soaring inflation – now at a 40-year high – has hurt Biden in the polls and the US president bluntly acknowledged “too many families are struggling to keep up with the bills. Inflation is robbing them of the gains they might otherwise feel”. Continue reading...

Analysis: Economic penalties have been meted out since Napoleon’s day but there’s little proof they achieve the desired outcomeWaging war by economic means is nothing new. Napoleon imposed an ineffective embargo on British exports in the early 19th century and during the first world war there were attempts by both sides to starve each other into submission.But since 1945 sanctions have been used with increasing frequency as a means of trying to change either the policy stance or the regimes in targeted countries. Continue reading...

The invasion of Ukraine has led many British companies to consider disinvestment – with encouragement from the governmentRussia is “uninvestable for the foreseeable future”, said Stephen Bird, chief executive of Abrdn, a statement of the obvious for a fund management group. If BP and Shell can ditch long-held investments and partnerships, Abrdn can certainly wave goodbye to the 0.5% of its assets that it currently holds in Russia. The money is the customers’ anyway.The moral clarity around the moves by BP and Shell owed much, of course, to the fact that the duo were in bed in state-backed energy companies that are arms of the Kremlin – Rosneft and Gazprom, respectively. Continue reading...

Debt charities expect borrowing levels to rise more sharply in spring as cost of living crisis bitesBorrowing on credit cards and short-term loans slowed in January to its lowest growth rate since September 2021 as the Omicron variant discouraged consumers from venturing out to shops, restaurants and bars.Data from the Bank of England showed a net increase of £600m in consumer credit lending in January, a drop from an increase in December of £800m and £1.2bn in November. Continue reading...

Business secretary Kwasi Kwarteng says firms are joining in push to isolate Moscow

Food prices in the US are up 7.5% overall and gas and housing prices in many areas have soared. How are you coping?Inflation in the US reached its highest level in 40 years in January, with prices rising 7.5% from a year ago, according to the Bureau of Labor Statistics.Price rises for food, electricity and shelter were the largest contributors to the increase, which has been driven by soaring demand and a lack of supply caused by Covid-19’s global impact on trade. Continue reading...

MoneySavingExpert’s Martin Lewis says deal is a ‘corker’ as prices are likely to rise later this yearAn energy tariff offering fixed prices for a year has sold out within hours of being publicised, after consumers rushed to try to protect themselves from the effects of the war in Ukraine on household bills.E.on’s Next Online V11 tariff promised prices fixed for a year, set at the same level as Ofgem’s new capped rate. Continue reading...

Mirror and Express owner expects ‘modest’ drop in operating profits this year due to inflation and soaring costsThe value of the publisher of the Daily Mirror and Daily Express newspapers plunged by a quarter on Tuesday after it warned that inflationary pressure and soaring newsprint costs would hit profits this year.The London-listed publisher Reach, which also owns 200 regional print and digital titles, including the Manchester Evening News and Liverpool Echo, warned that it expects to see a “modest” drop in operating profits this year. Continue reading...

Food price inflation climbed to 4.3% in February as Ukraine conflict deepened cost-of-living crisisGrocery prices rose at their fastest rate in more than eight years in February, according to the market analysts Kantar, which predicted the squeeze on shoppers would continue as a result of supply-chain disruption and the conflict in Ukraine.Food price inflation hit 4.3% last month, the highest since September 2013, as the price of savoury snacks, fresh beef and cat food increased the fastest. However the cost of some products, including bacon, beer, and spirits fell. Continue reading...

Debate rages over whether Russian banks could use crypto such as bitcoin as an alternative currency exchange

The inventor of the Brics acronym says sanctions against Russia have exposed nations’ dependence on the western economic system

Rising global stock markets and increased property prices swelled ranks of ultra-high net worth individuals, according to new reportMore than 51,000 people joined the ranks of the “ultra-wealthy” last year as the fortunes of the already very rich benefited from rising global stock markets and increased property prices during the pandemic.The number of ultra-high net worth individuals (UHNWIs) – those with assets of more than $30m (£22.4m) – rose by a record 9.3% last year to 610,569, according to a report by the property consultants Knight Frank. Continue reading...

As Ukraine crisis drives energy prices up, firms say tax rise could put Covid recovery at riskRishi Sunak is facing renewed pressure from business leaders to delay a planned £12bn rise in national insurance, amid warnings over soaring costs for companies and households as the Russian invasion of Ukraine drives up inflation.The manufacturing trade body Make UK, which represents 20,000 firms of all sizes across the country, said the tax hike planned for April should be pushed back until the UK economy is in a stronger position. It warned the government that pressing ahead would risk firms slamming the brakes on recruitment and putting the economic recovery from Covid at risk. Continue reading...

Government claims it will boost bilateral trade by 60% but critics call its benefits ‘economically marginal’Britain and New Zealand have signed a free trade deal, which the UK government said would boost bilateral trade by 60% by eliminating tariffs, cutting red tape and enabling freer movement of professional workers.Most business leaders welcomed the deal, which was agreed in principle in October and follows on the heels of a similar agreement with Australia, but the National Farmers’ Union (NFU) said it would lead to unfair competition in their sector. Continue reading...

With growing queues at cash machines across country, Russian economy faces growing fallout from international sanctions

Analysis: Images of war, US and UK allies and Volodymyr Zelenskiy have all helped create a new political necessity

We look at different economic measures deployed around world to counter aggression from Putin

Russian currency expected to plunge in first day’s trading since Swift ban and ECB says state-owned Sberbank subsidiaries are set to collapse

Inflation and higher energy bills could lead to sharpest fall in UK living standards since 1956These are challenging times. The reconstruction job from Covid-19 had barely begun when Russia invaded Ukraine. Now the international consensus to build back better from the pandemic has been replaced by an urgent need to prevent the conflict from escalating.With such high stakes, economic sanctions, not bombs, are the western weapon of choice, limiting Vladimir Putin’s ability to muster guns and butter. But while there will be harsher consequences for Russia, made a pariah under the Putin regime, it is a battle not without economic collateral damage. European leaders will this week announce a strategy to cut Europe’s reliance on Russian energy – a plan in the works before the first tank rolled into Ukraine, now given added urgency. With Russia accounting for 40% of EU gas imports – rising to 65% in Germany and 100% for some eastern European states – it is a prudent move. Yet it is a process likely to take years. In the meantime, the shock of war will drive up energy prices across the continent – adding to what was already the worst squeeze on living standards in decades. Continue reading...

Press secretary promises ‘optimism’ in face of war and inflation despite worrying Post-ABC poll two days before State of the Union

Biden’s green energy plan could be derailed since Russia mines and produces a significant amount of key metals“I will not pretend this will be painless,” Joe Biden warned Americans before Russia’s invasion of Ukraine. And as the war disrupts already hard-hit international trade, US consumers are likely to soon see just how painful the consequences of the conflict will be in the US.Inflation is already at a 40-year high in the US and, depending on the length and depth of Russia’s war, any further disruption could cause prices to rise at the pump and perhaps on store shelves. Continue reading...

The attitudes of the first fund chief to come from a former communist country were shaped by her early life, but her focus is now on a greener post-Covid futureAnyone in charge of the International Monetary Fund would be concerned about what is happening in Ukraine, but Kristalina Georgieva has a personal reason for being anxious about events in eastern Europe. In London, two days before Vladimir Putin launched his invasion, the IMF’s managing director tells the Observer she has a family connection to the north-eastern city of Kharkiv – an early target for Russian air strikes.“My brother married a Ukrainian and he and his wife went there to look after her mother,” says the Bulgarian-born economist. “They stayed because they didn’t want to leave her in a time of uncertainty. I speak to him every day.” Continue reading...

Russia’s aggression will fuel the energy price crisis. The Bank of England, and Sunak, must change course to avoid recessionRussia’s attack on Ukraine poses a dilemma for the UK government and the Bank of England with an obvious answer.The dilemma centres on the cost of living crisis, which is only going to worsen now that gas prices are on course to rocket again and oil prices along with them. Continue reading...

Russian invasion of Ukraine could further hike global energy prices and cut real incomes by 3.1%, economists fearUK households could suffer the biggest annual decline in their living standards since the 1950s as the Russian invasion of Ukraine pushes up global energy prices, experts have warned.With inflation already at the highest rate for 30 years, analysts said a sustained rise for wholesale oil and gas markets would further add to the squeeze on families from soaring utility bills. Continue reading...

Katharine Murphy speaks to economics writers Shane Wright and Greg Jericho to discuss the state of Australia’s economy, the upcoming federal budget and the impact of Russia’s invasion of UkraineRead more: Continue reading...

With global economy hooked on fossil fuels economists are drawing parallels with the the oil shocks of the 1970sEconomists are warning Russia’s invasion of Ukraine will fuel a sharper rise in inflation, despite the rising cost of living having already hit the highest levels for three decades.With Russia the world’s biggest natural gas exporter and second-largest for oil, the stakes are high in a global economy still hooked on fossil fuels – drawing parallels with the Yom Kippur war and oil price shocks of the 1970s which led to galloping inflation and economic crises worldwide. Continue reading...

Analysis: Only the financial equivalent of unleashing a nuclear arsenal will dent Russia’s foreign assets war chest

Bank scrambles to prevent invasion of Ukraine sending Russia’s financial system into meltdown as currency hits all-time low

Russian invasion of Ukraine fuels near-40% rise in gas price and oil to $105 per barrel as European stock markets tumble

Analysis: country has positioned itself to blunt western sanctions and has a few retaliatory ones of its own

Economic institute says current levels of gas enough for six weeks if mild temperatures continue

Analysts warn of 10% inflation and weaker growth across western economies as Ukraine crisis raises oil price to $99 a barrelUK petrol prices are poised to hit a record 150p a litre later this week after the worsening tension in Ukraine added fresh pressure to the cost of living crisis facing households.Crude oil prices reached more than $99 a barrel at one point on Tuesday in response to Vladimir Putin’s decision to recognise the independence of two breakaway regions in eastern Ukraine. Prices later slipped back after markets viewed the west’s initial sanctions response as weak. Continue reading...

Analysis: The west will adopt step-by-step approach, leaving toughest sanctions as last resortAfter all the tough talk of the past month, the sanctions imposed on Russia by the west are unlikely to lose Vladimir Putin much sleep. The response to Boris Johnson’s announcement that five of the less important Russian banks and three individuals would be targeted was: is that it?The most dramatic news was Germany’s decision to halt approval of the Nord Stream 2 gas pipeline from Russia to western Europe. That will have an impact, but may end up affecting Germany more than it does Russia. Continue reading...

Survey highlights cost inflation as Bank of England’s Dave Ramsden predicts more interest rate risesThe largest number of British manufacturers plan to raise prices in the next three months than at any point since 1976, according to a business survey that underscores the inflationary pressures hitting the UK economy.With energy prices rocketing and wages on an upward path, the CBI said four-fifths of firms expect to increase the cost of manufactured goods in the next three months. Continue reading...

From Rosneft to Gazprom and En+ Group, most significant London-listed firms potentially face sanctions

Government faces record monthly interest costs of £6.1bn on national debt pile of £2.3tnThe UK government has recorded the first monthly budget surplus since the start of the coronavirus pandemic, despite a weaker than expected January performance as rising inflation pushed up debt interest costs.The Office for National Statistics said public sector net borrowing was in surplus of £2.9bn last month – the first month in which income outstripped expenditure since January 2020. Continue reading...

Evidence of strongest performance in private sector since June convinces analysts of increase next monthThe prospect of a third successive interest rate rise from the Bank of England is looming larger after news that the easing of Covid restrictions is generating growth and inflationary pressure.Evidence of the strongest performance by the private sector since last summer left economists convinced Threadneedle Street would again increase borrowing costs when its monetary policy committee meets next month. Continue reading...

Labour fears public grants to operators will be slashed on Wednesday prompting cuts to up to one-in-three bus servicesLabour has urged the government to “come clean” on bus funding as operators prepare to slash services, with a critical moment for decisions over routes approaching on Wednesday.Almost one in three services are at risk, the industry and local authorities have warned, with the Treasury refusing to confirm if it will continue grant funding to support operators whose bus revenues have yet to recover to pre-pandemic levels. Continue reading...

It is time for the Tory chancellor to stand up – and there’s no better opportunity than the Mais lectureThere’s something odd about Rishi Sunak. The chancellor has rarely been out of the news since he took over at the Treasury from Sajid Javid two years ago and his approval rating with the public is high. His reputation as a safe pair of hands means he could be the next prime minister – yet we know little about what he believes.To the extent that while a picture of Sunak has emerged through the blizzard of budgets and mini budgets of a technocrat fascinated by Silicon Valley-style capitalism, in truth there have been only hints of an over-arching philosophy. Continue reading...

Persevering with this policy, as Labour suggests, is as bad for the country as persevering with this charlatan prime ministerMy Irish mother taught me always to try to see the good in people. But it has to be admitted that the attempt to see the good in Alexander “Boris” Johnson would, in another of her favourite sayings, “try the patience of Job”.It is already a commonplace in this country and around the civilised world that our prime minister is a charlatan on an industrial scale. John Major knew what he was about when declaring, as a prime minister himself, that Johnson should not even be allowed to fight a parliamentary seat. Continue reading...

Starbucks, McDonald’s, Chipotle, Amazon – all protect profits by making customers pay more. We need the political courage to say they can and should cover rising costs themselvesThe Biden White House has decided to stop tying inflation to corporate power. That’s a big mistake. I’ll get to the reason for the shift in a moment. First, I want to be clear about the relationship between inflation and corporate power.While most of the price increases now affecting the US and global economies have been the result of global supply chain problems, this doesn’t explain why big and hugely profitable corporations are passing these cost increases on to their customers in the form of higher prices. Continue reading...

Analysis: official figures are fuelled by bumper City bonuses but many key workers still getting below inflation risesPay growth is picking up, official figures showed this week, but for key workers on the pandemic frontline the champagne is firmly on ice.The detail behind annual pay growth of 4.9% in December revealed the gulf between the size of awards being handed to public sector workers, and those in the private sector, boosted in part by swelling banker bonuses. Continue reading...

Rolling coverage of the latest economic and financial news

UK, US, Canada, Australia and New Zealand team up to identify collusion between suppliers and shippersThe UK competition watchdog is teaming up with its counterparts in the US, Canada, Australia and New Zealand in a drive to detect and investigate collusion between suppliers or shipping groups to hike prices.The Competition and Markets Authority said it was linking up with its fellow agencies in other “five eyes” nations after receiving “multiple complaints” from businesses about supply chains, where, for example, fees for shipping have soared by up to 10 times compared with pre-pandemic levels in the past two years. The CMA said that despite the complaints it was yet to find evidence of potential breaches of the law. Continue reading...

Rolling coverage of the latest economic and financial news

Nestlé joins other firms in passing on rising costs, adding to financial squeeze facing UK householdsThe KitKat-maker Nestlé and the Dettol manufacturer Reckitt have both indicated they will pass on rising costs in the form of higher prices this year, adding to the cost of living crisis facing consumers.Nestlé, which also makes Nespresso coffee pods, Häagen-Dazs ice-cream and Purina pet food, increased its prices throughout 2021, and by the final three months of the year they were 3.1% higher. Continue reading...