Rolling coverage of the latest economic and financial news

Manufacturers upbeat as May figures show output grew at fastest rate since December 2018Factory output grew this month at the fastest rate since December 2018 to record the first large increase in UK manufacturing production in almost two years.Chemicals producers, electronic engineering firms and metal factories reported the strongest growth, with output up in 12 of 17 subsectors, according to the CBI’s monthly industrial trends survey. Continue reading...

Covid, Brexit, automation and net-zero carbon all require state intervention, and shouldn’t be entrusted to the rightSometimes political parties hit a sweet spot and their opponents struggle to lay a glove on them. Rapid non-inflationary growth meant Margaret Thatcher was invulnerable at the 1987 election. Tony Blair was unbeatable in the mid-1990s when Britain was bored with a tired, discredited and sleazy Tory government.Boris Johnson has arrived at his own political state of grace this spring. Everything has come together: the NHS has played a blinder with the vaccine programme; record peacetime spending has anaesthetised the pain of lockdown; a weary population is grateful to be allowed to hug and go to the pub again.Larry Elliott is the Guardian’s economics editor Continue reading...

Shadow trade secretary backs US call for patent waiver as party proposes plan to increase production in poorer countries

Rolling coverage of the latest economic and financial news

Rise in cost of clothing and footwear also contributes to 1.5% figure, says ONS

Analysis: it will not be long before UK inflation is above the official 2% target

Rolling coverage of the latest economic and financial news

Rate fell for third consecutive month in three months to March, according to ONS

Although the Square Mile will remain Europe’s largest money marketplace it will no longer be the continent’s de facto financial centreNearly five years after the Brexit referendum, and in the five months since Brexit itself, there has been little debate about the future of the City, the financial centre of London. Those who voted in June 2016 to leave the EU believe, whatever the evidence to the contrary, that the impact will be minimal, and that the warnings of job losses and business relocation are exaggerated. Remain voters are programmed to think the opposite and, whatever the evidence to the contrary, forecast gloom and doom. What can we learn from what has actually happened?We have to acknowledge, first, that Covid-19 has confused the picture mightily over the last 18 months. People have not found it easy to change location, even if they wanted to. More important, there are some temporary regulatory arrangements that blunt the impact of the UK’s departure from the single financial market. There is a Temporary Permissions Regime in London for some EU-based firms, and the European Commission has allowed euro-denominated instruments to be cleared in London until 2022, to avoid the disruption any sudden change on 31 December 2020, might have brought. So what we are seeing today may not reflect Brexit’s full longer-term impact. Continue reading...

Analysis: furlough has helped shelter Britons from unemployment, and businesses are hiring againTrying to get to the bottom of what is happening to Britain’s labour market is a tricky business. There are three different measures for calculating unemployment, not all of which cover the same period.Even so, some broad themes emerge from the latest blitz of data from the Office for National Statistics. One is that the furlough has done its job in shielding the economy from rising joblessness, with more than 4 million workers taking advantage of wage subsidies at the end of the first quarter.Related: UK unemployment drops as businesses hire amid Covid easing Continue reading...

Thinktank says new strategy needed in face of Covid, Brexit, net zero, automation and demographic changeBritain risks mirroring Italy’s economic woes unless it develops a strategy for tackling the five seismic changes that will shape a decisive decade for the country, a report has warned.A joint project by the Resolution Foundation thinktank and the London School of Economics said the UK was neither used to nor prepared for the challenges posed by the aftermath of Covid-19, Brexit, the net zero transition, automation and a changing population.Covid-19: More home working as a result of the pandemic will mean more lifestyle choices for professionals, but will force lower earners to find new jobs in new places.Brexit: The UK will be able to utilise new policy freedoms but will also have to cope with higher costs of doing business with the EU, its main trading partner.Net zero: Decarbonisation will provide economic opportunities, but action is urgent. The UK needs to go from installing almost zero heat pumps each year, to installing 3,000 every single day by 2030.Technology: The arrival of new technologies will boost but also disrupt living standards, with the Organisation for Economic Cooperation and Development estimating that one in seven jobs could disappear as a result of automation in the next 15-20 years.Demography: The ratio of people under the age of 20 or over 65 to those aged 20-64 is likely to increase from 72 per 100 to 79 per 100 between 2020 and 2030 – a faster projected change than in any other decade in the first half of the 21st century. Continue reading...

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Iain Ramsay and Ian Arnott respond to George Monbiot’s article on cuts to trading standards and the lack of law enforcementGeorge Monbiot is right to draw attention to the absence of enforcement of consumer protection law, and people running into “a wall of unaccountable, opaque bureaucracy” when they attempt to report scams (My friend was the victim of a scam – and cuts mean she can do nothing about it, 12 May). I encountered the same problem when trying to contact trading standards in relation to a national retailer in Canterbury that was continuing to run a “closing down” sale for many months – in my opinion, a breach of relevant consumer protection regulations. I was unable to contact trading standards directly, and could only identify relevant officials by making a freedom of information request to the council for the trading standards annual report.The government has claimed that leaving the European Union will not affect standards of consumer protection in the UK, but even if this claim is correct, laws are of little use if they are not properly enforced.

Experts say recovery at risk amid sharp fall in EU workers and dwindling interest in UK jobs from abroadBritain’s employers are struggling to hire staff as lockdown lifts amid an exodus of overseas workers caused by the Covid pandemic and Brexit, industry figures reveal.According to the Chartered Institute of Personnel and Development (CIPD) and the recruitment firm Adecco, employers plan to hire at the fastest rate in eight years, led by the reopening of the hospitality and retail sectors as pandemic restrictions are relaxed in England and Wales on Monday.Related: EU citizens arriving in UK being locked up and expelled Continue reading...

The effects of the pandemic are still with us, writes Gene Marks, creating a problem of supply and demand. It makes sense to pay workers moreIt’s not news that employers are struggling to fill open positions. There are a lot of different reasons why so many people are staying at home – the lack of childcare options and a continuing fear for health and safety to stimulus payments and expanded federal unemployment benefits. None of this really relevant to small business owners right now. The fact is that, despite a growing economy and increased demand, there’s a serious labor shortage and just about every small business owner I talk to is struggling to find people.Related: Does Biden’s Pro Act contain a nasty surprise for small businesses? | Gene Marks Continue reading...

Countries came together early and decisively to fix a broken global system. The same ambition is needed todayWar was still raging in Europe and Asia when delegates from 44 countries met at Bretton Woods in New Hampshire in July 1944. Three weeks of negotiations produced two new global institutions, the International Monetary Fund and the World Bank, and a different economic mindset.Related: The Guardian view on the IMF and World Bank: back a global Green New Deal | EditorialRelated: The Guardian view on a comeback for Keynes: revolutionary road | Editorial Continue reading...

England’s football clubs may be of Champions League quality, but the current political debacle reveals our politicians are notIt turns out that throughout the Brexit discussions with the British government, the EU’s chief negotiator, Michel Barnier, was keeping a diary. That he managed to do this at the end of days of usually frustrating talks says something for Barnier’s staying power. And to judge from speculation about the next French presidential election, he intends to stay around for some time.His diary has been published in France. Surprise, surprise: with one or two exceptions, the British side does not come too well out of what our football commentators would call “the Frenchman’s” reflections.The 'bureaucracy of Brussels' was largely a myth. Now we do have bureaucratic delays to normal business, as a direct consequence of Brexit Continue reading...

Economies are now so heavy with savings and state cash that rising prices cannot be ruled out. But will it happen?The spectre of inflation had investors on the run last week. With no handbook to guide them on how economies behave in a pandemic, markets are struggling to predict whether a post-Covid recovery will be so strong as to bring with it a tidal wave of spending that sends prices spiralling.Investors are spooked because rising inflation, which threatens investment and consumer spending, would need to be tamed by a rise in currently rock-bottom interest rates – and that would be anathema to markets and a corporate sector that have grown used to cheap money.Related: Record metals boom may threaten transition to green energy Continue reading...

Rolling coverage of the latest economic and financial news

Shadow chancellor will discuss how party can appeal to blue-collar voters and urban graduatesThe new shadow chancellor, Rachel Reeves, intends to consult Joe Biden’s economic team on how Labour can make a major economic offer before the next election, rooted in job security, childcare and social infrastructure.The party has suffered a bruising week of infighting, criticism of Keir Starmer’s leadership and questions over the party’s values, which both Starmer and Reeves will be called on to address in the coming months. Continue reading...

Rolling coverage of the latest economic and financial news

Governor Andrew Bailey at odds with bank’s chief economist warning of price inflation above 2% targetThe governor of the Bank of England has sought to calm financial market fears over rising inflation but has exposed a policy rift with Threadneedle Street’s outgoing chief economist, Andy Haldane.The day after Haldane used a newspaper article to warn of the need to prevent the “inflation genie” getting out of the bottle, Andrew Bailey said he thought upward price pressures would prove temporary.Related: Top Bank of England economist warns of 1970s-style price inflation Continue reading...

But news from the US means markets are likely to remain twitchy at the prospect of interest rate hikesFlared jeans. Fawlty Towers. Abba churning out No 1 singles. It has been a long time, but the explanation for the severe bout of jitters on global stock markets this week comes down to a word that was on everybody’s lips in the mid-1970s: inflation.Inflation, the preoccupation of prime ministers from Harold Wilson to Margaret Thatcher and of US presidents from Gerald Ford to Ronald Reagan, was considered yesterday’s problem. News this week has forced investors to rethink that comforting assumption. Continue reading...

Andy Haldane says economic recovery will resemble bouncing tennis ball and outpace US this yearBritain’s economy will “power through in the months ahead”, according to a senior Bank of England policymaker, “moving swiftly from bounce-back to boom”.The recovery will resemble a bouncing tennis ball and outpace the US and the rest of the G7 this year, said Andy Haldane, the central bank’s outgoing chief economist.Related: Markets fall again as inflation worries rattle investors – business live Continue reading...

Many investors are right to wonder if the ultra-low interest rates they have been semi-promised until 2023 will materialiseStatistical quirk or a warning of a fundamental change in the inflationary weather? We know on which side of the debate the US Federal Reserve will land. It will take the relaxed view that the sharpest monthly rise in US consumer prices since 2008 – 4.2% – is nothing to worry about.The Fed is committed to keeping interest rates at rock-bottom levels into the middle distance on the grounds that an economy in recovery mode is bound to throw up a few odd-looking pieces of data. Inflation fell a year ago at the onset of the pandemic, so one should not be misled by so-called “base effects”, goes the argument. Don’t risk the recovery by reacting. Continue reading...

New shadow chancellor faces Rishi Sunak in Commons for first time and signals intent to recoup lost votersLabour’s Rachel Reeves made a clear attempt to start reconnecting with the party’s lost supporters by using her debut as shadow chancellor to back British workers and to attack the lack of government action on employment rights in the Queen’s speech.Reeves said a Labour government would introduce measures to tackle low pay, the gig economy and companies’ ability to fire workers and then rehire them on worse conditions. Continue reading...

Shadow of coronavirus beginning to lift from Europe’s economy, says EU’s economics commissioner

Analysis: stronger than expected first quarter means more chunky increases in GDP on cards as Covid controls ease

GDP lifted by 2.1% that month and dropped by only 1.5% in first quarter of 2021

Rolling coverage of the latest economic and financial news

Fund managers tried to vote down Pascal Soriot’s package for fear of more boardroom pay inflationA majority is a majority, but a rebellion of 40% against an executive pay policy is too large to be pinned solely on those brain-dead fund managers who outsource their thinking to proxy voting agencies.At AstraZeneca some serious institutions, with Aviva Investors and Standard Life Aberdeen to the fore, clearly thought the company was pushing things too far by adding a potential £2m cherry on top of their chief executive, Pascal Soriot’s, already substantial pay package. The rebels had a point. Continue reading...

US tech sell-off and report of rising prices for goods leaving China’s factories spook stock marketsFears that central banks will have to abandon their zero-interest rate strategies in the face of mounting inflation prompted steep falls on the world’s leading stock markets on Tuesday.In the UK, the FTSE 100 had its biggest one-day fall since February, closing down 175.69 points at 6947.99 – a drop of 2.47%. The British Airways owner, IAG, was the top faller on the City’s main share-price barometer, down 7.4%, with the engineering companies Renishaw, Melrose and Rolls-Royce also among the the worst performers. Continue reading...

Wealth inequality will rise over the next decade unless death duties also increase, says thinktank

The government has been gradually reducing its holdings in the bank since the 2008 financial crisisThe government has launched the sale of a £1.1bn stake in NatWest to cut the British taxpayer’s holding in the bank, which was bailed out during the financial crisis more than a decade ago.In the second selldown this year, UK Government Investments (UKGI), which manages the shares on behalf of the Treasury, said it would sell 580m shares, representing about 5% of the bank’s stock. Continue reading...

Rolling coverage of the latest economic and financial news

Analysts say SNP’s failure to achieve overall majority in Scottish elections also a factor in highest level against dollar since FebruaryThe fading prospect of an immediate Scottish independence referendum and hopes for a strong UK economic recovery sent the pound higher against the US dollar and the euro on the financial markets.Sterling gained more than 1.5 cents to trade above $1.41 against the US currency for the first time since late February amid relief in the City that the SNP had fallen just short of securing an overall majority in last week’s election to the Scottish parliament. Continue reading...

NIESR says UK facing worse permanent damage than other rich nations due to ‘poor Covid response’Britain’s economy is on track to suffer more than £700bn of lost output caused by Covid-19, made worse by the government’s mishandling of the health emergency and Brexit, one of the UK’s leading economics thinktanks has warned.The National Institute of Economic and Social Research (NIESR) said the UK was facing worse permanent damage than other rich nations due to a “poor Covid-19 response” from Boris Johnson’s government. Continue reading...

For decades, cities had been prioritised as the engine of growth, with London at the apexLet the recriminations commence. In the aftermath of electoral defeat in its former industrial heartlands, Labour is in search of yet another new direction. While much of the focus is on the fundamental shifts in our politics, it is worth remembering the economics underpinning them.Part of the story is about timing. Labour’s punishment at the ballot box comes as most things appear to be going right for the government. There was a time last year when it was a very different scenario, with the botched handling of Covid leading to the highest death rate and worst economic collapse in the G7, ministers doling out contracts to friends, and the chancellor, Rishi Sunak, desperate to make an unemployment crisis worse by closing the furlough scheme.From catastrophe, an unlikely recipe for electoral success has emergedRelated: 2021 election results: latest from local, Scottish and Welsh votes Continue reading...

Key advisers are among those who say scheme is flawed as holiday firms report huge rise in bookings

The bid by top clubs to break away was globalisation at its worst – and emblematic of the UK’s problems beyond sportFour weeks on from what is turning out to be one of the biggest self-inflicted errors by any members of the business elite, the owners of the supposedly top six English football clubs must be wondering how on earth they got themselves into this mess. They are also probably, wishfully, thinking: “Head down, this will all blow over.”Among the numerous fascinating aspects of the European Super League debacle, designed to ram through non-competitive staged events for Europe’s top teams, is that it arrived in the UK – England, specifically – at a time when the government is trying to resurrect its domestic mantra of “levelling up” after 14 months of challenges over Covid-19.The enforcement of proper boards with true independent directors would be an extremely easy step, and a beginning Continue reading...

Markets have been on a dazzling run since Pfizer’s trial results. Now there is reason to worry that things are going too farSix months ago exactly – on 9 November last year – Pfizer unveiled interim data from trials of a vaccine candidate known as BNT162b2, developed in partnership with German firm BioNTech. The numbers were far better than expected: 90% efficacy in preventing Covid.“Today is a great day for science and humanity,” declared Albert Bourla, the company’s chief executive, a judgment that clearly still stands half a year later. Even as the pandemic still rages – appallingly in India, Brazil and many other places – the arrival of effective vaccines has been a turning point in the crisis.Copper and iron prices are at record highs and crude is back at $65 – all before the global recovery has got into its stride Continue reading...

MPs and charities fear a wave of homelessness when landlords can once again legally force out tenants in debt

Booming housing market as ‘incredible demand’ fuels shortage of essentials from concrete and timber to taps and roof tilesUK homeowners face higher bills for renovation work as builders grapple with soaring material costs and shortages of essentials ranging from concrete and timber to taps and roof tiles in a booming housing market.“It is a bit like going to Sainsbury’s and them not having any bread, milk or eggs in,” said Paul Bence, the managing director of builders merchants Bence, of the runaway demand for supplies that is emptying shelves. “Cement is our bread and butter and we would normally keep a good 10 days stock. We would not operate a ‘just-in-time’ model … but that’s effectively where we are right now.” Continue reading...

Rolling coverage of the latest economic and financial news, as the recovery in the US labour market slows unexpectedly

US employees are concerned about safety, others have caregiving responsibilities and some are using their job loss as an opportunity to find other work