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

One in three Britons will be unable to afford the cost of living this year – help is needed now for the worst offWith or without a cost of living emergency the UK government looked vulnerable. A chancellor losing his once golden touch, a prime minister questioned by police about partying in lockdown. Boris Johnson’s party veers from scandal to scandal.That households are experiencing the biggest squeeze on living standards since modern records began in the 1950s adds insult to injury, ahead of a local election campaign that will test the Conservative vote-winning machine. For those out canvassing for the party before next month’s polls, what positive news is there to talk about? Continue reading...

Central banks talk tough about tackling inflation, but raising borrowing costs now risks plunging us into recession this yearA recession lurks just around the corner. That’s what many economists and financial analysts in the UK and across Europe fear as inflationary pressures collide with the Russian invasion of Ukraine to undermine the post-Covid recovery.On Monday, the Office for National Statistics will report on how much the UK economy expanded in February. Any chance of matching January’s GDP growth looks optimistic. Continue reading...

An aloof and rich chancellor in dire political trouble still has the chance to ease a brutal cost-of-living crisisRishi Sunak is on the ropes, and not just over accusations that he has been less than transparent about his personal finances and those of his wife.The chancellor looks as if he only needs a top hat and morning coat to complete his transformation to a hard-faced Victorian financier, aloof from the concerns of ordinary people. Details of his expensive homes, cars and holidays abroad only reinforce the image of a minister out of touch with his voters. Continue reading...

Rolling coverage of the latest economic and financial news

Central bank makes surprise cut to interest rates as inflation soars under pressure from war sanctions

Rolling coverage of the latest economic and financial news

As the cost of living crisis starts to bite, Britain’s spectacle of injustice and profiteering may ignite public indignationWho is shocked? “Outrage over huge pay rises for Manchester Airports Group bosses” was a Guardian story on Wednesday, just as the airport seized up. Those eight-hour queues of passengers were partly caused by the company’s mass redundancies; almost 900 jobs were lost at the airport group during the pandemic. No wonder it now has trouble recruiting, after the remaining staff took a 10% pay cut to help the company through Covid. Yet in that same crisis moment, executives had grasped themselves huge pay rises of almost 25%. The chief executive was awarded a £500,000 rise, taking his total pay to £2.5m.This is just one of the many stories from the boardroom troughs that have filled the business pages over the last decades, as fat cats have plundered the companies they manage while average wages have stood still. Here’s the question: is Britain so habituated to decades of kleptocracy that voters just cynically shrug this off, the way they do in Russia? Continue reading...

Institute for Fiscal Studies report finds highest-paid earners benefit from lower tax rates open to business ownersThe top 0.1% of earners in the UK have annual incomes in excess of £500,000, according to a study by a leading thinktank that shows the effect of “unfair” tax rates available to business owners.More than 50,000 people in the top income bracket account for 6% of all earnings – 60 times greater than their population share, said the Institute for Fiscal Studies in a report covering the 10 years to 2019. It showed that more than half of the top 1% richest adults lived in London and the south-east, while almost 60% were aged between 45-64, and as few as a fifth were women. Continue reading...

Bosses say 1.25-point rise heaps pressure on firms already enduring soaring costs linked to Covid and BrexitBritain’s employers are being forced to shoulder a £9bn tax rise after the government pushed ahead with raising national insurance on Wednesday despite stiff opposition.Company bosses said the 1.25-percentage-point rise in national insurance contributions (NICs), which is paid by workers and their employers, would add to already severe pressure from runaway inflation and soaring business costs this year linked to Covid, Brexit and Russia’s war in Ukraine. Continue reading...

Rollng coverage of the latest economic and financial news

Groundbreaking report is first to assign responsibility for damage caused by 160 countries in past 50 yearsThe US and Europe are responsible for the majority of global ecological damage caused by the overuse of natural resources, according to a groundbreaking study.The paper is the first to analyse and assign responsibility for the ecological damage caused by 160 countries over the last half century. Continue reading...

Speaker tells parliament ‘there will be very acute food shortages’ and economic crisis is ‘just the beginning’

Rolling coverage of the latest economic and financial news

Global inflation outlook contrasts with Bank of England, which estimates inflation will fall next yearThe world economy may be on the brink of a new inflationary era with persistently higher growth in consumer prices due to the retreat of globalisation, a leading central bank chief has said.Agustín Carstens, head of the Basel-based Bank for International Settlements – which is known as the central bank of central banks – said there was a strong risk that prices would rise uncontrollably without a sharp rise in interest rates above existing plans. Continue reading...

Shoppers are in for a shock as the cost of kitchen essentials hits record highsWhether it’s chips, stir-fry or curry on the menu, the financial shock from the war in Ukraine is being felt keenly in the kitchen as cooking oil prices hit record highs.The cost had already rocketed even before Vladimir Putin’s invasion, but now vegetable oil goes for £1.30 a litre at the supermarket, up 23p, or 22%, on a year ago. Sunflower oil – of which Ukraine and Russia are major producers – is up sharply too, by 17p to £1.34 a litre, according to NielsenIQ Scantrack data. Continue reading...

Country hit by companies pulling out, as US halts Russian government dollar debt paymentsRussia’s services sector has suffered the worst slump in activity since the Covid-19 pandemic hit in 2020 as consumers and businesses cancelled orders amid increasingly severe western sanctions after the invasion of Ukraine.A closely watched business survey showed that new orders during March dived as restrictions on imports and exports began to bite and inflation raised the price of services at the fastest rate on record. Continue reading...

From May, a 1.5% charge will hit mobile phone transactions above 100 cedis (£10). In the country’s bustling markets, people are angry and anxiousAt her shop in Accra’s sprawling Kantamanto market – one of the largest for second-hand clothes in west Africa – Cynthia Bentum sits on top of a mound of goods imported from Guangzhou and Manchester.Many who trawl through her clothes are traders themselves and pay via their mobile phones, so the decision by Ghana’s government this week to tax all electronic payments has left Bentum, 49, frustrated. Continue reading...

Conflict adds strain to developing economies in east Asia and Pacific already struggling with Covid and inflationRussia’s invasion of Ukraine has further dampened the economic prospects for developing countries in east Asia and the Pacific, meaning lower economic growth and higher poverty in the region this year, the World Bank has warned.The Ukraine factor came on top of the existing risks that the region – home to 2.1 billion people and stretching from China to Papua New Guinea – has been facing in recent years. They included the ongoing Covid-19 pandemic, the financial tightening in the US, and the pandemic resurgence amid China’s zero-Covid policies. Continue reading...

Rolling coverage of the latest economic and financial news

With work changed forever by the pandemic, firms say shorter week could help attract and retain staffMore than 3,000 workers at 60 companies across Britain will trial a four-day working week, in what is thought to be the biggest pilot scheme to take place anywhere in the world.Employees from a wide range of businesses and charities are expected to take part in the scheme, which will run initially from June to December, including the Royal Society of Biology, the London-based brewing company Pressure Drop, a Manchester-based medical devices firm, and a fish and chip shop in Norfolk. Continue reading...

The chancellor would prefer forecasts to be more upbeat, but the economic outlook is unremittingly bleakRishi Sunak should be used to grim economic forecasts. In his two years as chancellor, he’s been warned to brace for the worst jobs crisis since the 1980s, a recession without parallel for three centuries, and the biggest shock to the public finances since the second world war.Not everything came to pass. Extending furlough – rather than ending it early as the chancellor planned – prevented unemployment from hitting levels unseen since the days of his political idol Nigel Lawson. Continue reading...

Firms say they need the kind of help that EU competitors get as gas and electricity prices soarBritain’s strategic heavy industries have warned they risk being left high and dry by a lack of support in the government’s upcoming energy strategy, warning that failure to follow European countries’ measures to reduce gas and electricity costs will put UK businesses at risk.The government is expected to outline long-awaited proposals this week for a once-in-a-generation drive to invest in nuclear power and possibly more onshore wind and solar power, as well as approving continued North Sea oil and gas exploration. Continue reading...

This government is faced with a collapse in real incomes, spending, and its own popularity. But still it will not actWe have passed the Ides of March, and Boris Johnson is still in office. Until the start of Putin’s invasion of Ukraine, the conventional wisdom held that the skids were under the prime minister: his nine political lives were almost exhausted and he was seriously threatened by the none-too-subtle manoeuvres of his neighbour, Chancellor Sunak.Then Putin emerged as an unlikely deus ex machina and the conventional wisdom became that Johnson was once more safe. Folklore tells us it is an ill wind that blows nobody any good: this truly terrible carnage in Ukraine has prompted certain observers to say this is “Johnson’s Falklands”. Continue reading...

Emmanuel Macron’s reforms have seen the country pull ahead of the UK on most economic measuresWhile the UK, US and much of the EU are gripped by a cost-of-living crisis heightened by Russia’s invasion of Ukraine, in France, President Emmanuel Macron’s “tariff shield” is helping keep a lid on rising prices.Inflation there hit 4.5% in March, and while this was up from February’s 3.6%, it remains one of the lowest rates in the industrialised west and well below the UK’s 6.2%, Germany’s 7.3%, Spain’s 9.8% and 11.9% in the Netherlands. A decision last year to limit the amount by which France’s largely state-owned energy companies could raise prices has benefited consumers and taken some of the inflationary pressure off industries that depend on gas and electricity. Continue reading...

The US executive took over the port in 2019, in the heat of the debate about the EU. He’s not surprised it’s been a challengeWhen Doug Bannister told his family he would be joining the Port of Dover as its chief executive, weeks before the original March 2019 Brexit date, his father-in-law voiced what many might have thought: “Are you mad?”The softly spoken American clearly isn’t one to shy away from a daunting task, including taking over at Britain’s busiest port during what he calls the “once in a generation” change in the country’s trading relationship with its closest neighbours. Continue reading...

As the squeeze on household budgets tightens, many will turn to local authorities for help: but their councillors are also struggling with inflationInflation is weighing on Nazia Rehman’s mind. Not only has the Wigan councillor been approached by scores of residents who can’t afford their energy bills, but some of the town’s community centres – tasked with helping the very same people – now face similar problems.“They’re saying they’re not sustainable any more because of the risk they can’t afford their expenses,” she says. “They’re our eyes and ears: people use them and they’re so valued by our community. It would be a disaster if they go.” Continue reading...

Politicians tend to subscribe to the same set of assumptions because they are terrified of being labelled radical, writes Jamie Driscoll. Plus letters from Dr Hugh Firth , Oliver McAdoo, Mike Garnier and Cathy WoodGeorge Monbiot’s claim that “our system of organised lying has created an entire class of politicians, officials, media commentators, cultural leaders, academics and intellectuals who nod along with” capitalist orthodoxy is largely true (Putin exploits the lie machine but didn’t invent it. British history is also full of untruths, 30 March).I’m a metro mayor. We’ve run a citizens’ assembly on climate change and are implementing its recommendations. We’ve invested in clean energy and our Green New Deal is operational. We promote our Good Work Pledge, directly tackle child poverty, and are investing in the social and cooperative economy. Our policy objective is to create a zero-carbon, zero-poverty North of Tyne. I call for wealth taxes, and without urgent and crisis-level action, we will destroy our planet’s capacity to support us. Continue reading...

Cost of living crisis intensifies with average annual gas and electricity bill poised to double to £2,600

Live rolling coverage of business, economics and financial markets as energy costs rise and criminal investigation opened into P&O Ferries

British Chambers of Commerce survey suggests inflation surge will escalate further in coming monthsMore UK businesses are preparing to raise prices than at any time since the 1980s, heaping further pressure on hard-pressed consumers amid recent increases in gas, electricity and petrol prices.The British Chambers of Commerce said its latest quarterly survey found almost two-thirds of firms expected to raise prices over the next three months, the highest since the survey began in 1989. Continue reading...

Customers try to beat 54% price rise, as multiple hikes from council tax to VAT on pub food also come into effectMillions of households faced chaos on Thursday as the websites of the major energy providers crashed after being overwhelmed by a flood of customers rushing to secure cheaper bills ahead of Friday’s massive hike in prices.Panicked customers rushed to submit meter readings, responding to advice to ensure they got a cheaper rate for energy right up until the end of the day. Continue reading...

Dr Nathalie MacDermott says policymakers are not accounting for condition that will be ‘our downfall’The UK will pay an economic price for failing to consider long Covid when lifting restrictions and making recommendations on vaccinations for children, a doctor has warned.The decision to drop all Covid rules in England was largely based on whether the NHS could handle the number of sick patients, but far more people are expected to develop long-term medical problems after fighting off the virus. Continue reading...

Upward revision in annual GDP growth, despite Omicron denting output over ChristmasThe UK economy was only 0.1% below pre-pandemic levels after growing faster than previously thought at the end of 2021 because of a rush of coronavirus test-and-trace activities, the latest official data has shown.UK economic output grew by 1.3% from October to December, compared with an initial estimate of 1%, despite the Omicron variant denting output over Christmas, the Office for National Statistics said on Thursday. Continue reading...

Plan could be extended to include exports of oil, grain, fertilisers, coal, metals and other key commodities

34% of those feeling the pinch report using less gas and electricity and 31% are spending less on foodConsumers have begun cutting back on food spending and reduced their use of gas and electricity at home, as more people report rising living costs and concern grows about the impact of soaring prices on the poorest households in Britain.According to an extensive survey of more than 13,000 adults in Great Britain, the Office for National Statistics (ONS) said as many as 83% saw an increase in their cost of living this month, up from 62% in November. Continue reading...

Rising energy bills, food and transport costs are set to plunge many families into the redThe UK’s poorest families will see the amount of spare cash at their disposal drop by a fifth this year with £850 less to spend on non-essentials as shop prices hit a decade high.Pressure on family budgets is tightening as grocery price inflation reached 5.2% in March, the highest level since April 2012, according to the latest figures from market analysts Kantar. Continue reading...

Concerns that low-income households are turning to expensive forms of lending as inflation soarsA surge in credit card borrowing to a record high last month has prompted concerns that low-income households are turning to expensive forms of lending to cope with rising costs of food, clothing and fuel.Figures from the Bank of England showed credit card borrowing jumped by £1.5bn in February to £59.5bn – the highest since records began in 1993 – pushing the total amount of unsecured lending up by 90% on the prior month to £1.9bn. Continue reading...

Sunak veered from the fantasy that he was cutting taxes to cold hard reality when admitting Brexit has made the UK poorerRemember the happy clappy Rishi Sunak? The caring Dishy Rishi? The chancellor who could look lovingly into the camera at Downing Street press conferences and promise that he would have our backs? Always. The Good Samaritan who smiled as he dug deep behind the sofa to pay our wages when our employers could not?That Sunak is long gone. The new Rishi is a far snippier iteration. Someone who walks out of interviews when he doesn’t like the questions. Someone who is visibly irritated to have been forced to fill in a police questionnaire about the birthday party of a boss he cannot stand – and who cannot stand him; the dislike is mutual. Someone who is beginning to realise he might just have missed the boat. Continue reading...