Former archbishop and campaigners say one-off tax on wealthiest 1% would help close gap between rich and poorRowan Williams, the former archbishop of Canterbury, has called on the UK government to impose a wealth tax on the super-rich to help tackle “spiralling inequality”, which he said was “deeply damaging to our collective morale and trust”.Williams, who was the most senior bishop in the Church of England from 2002 to 2012, on Thursday joined a growing group of moral leaders demanding a one-off tax on the richest 1% of the population to help close the “staggering” gap between the richest and poorest in society. Continue reading...
A free-market thinktank says it’s time to start selling off ‘plots of moon land’ – we need to act now before the plundering startsEver heard of the overview effect? It was coined by a space writer called Frank White to describe how looking down at our little blue planet from above can create a shift in how astronauts think about Earth: all of a sudden you realise how fragile the Earth is and how important it is that we all work together to protect it. “Looking at the Earth from afar you realise it is too small for conflict and just big enough for cooperation,” the astronaut Yuri Gagarin said.Alas, it looks like we needed to replace the overview effect with the avarice effect, because attitudes towards space seem to have shifted. Rather than making people imagine a better world, modern space exploration seems to be all about money, money, money. Elon Musk’s SpaceX has been working with a Canadian startup on plans to launch satellites with billboards on them into space so that adverts can light up the night sky. No doubt some of those ads will be for space tourism: on Wednesday Virgin Galactic opened ticket sales to the public for the first time. And by the “public” I mean that the small sliver of the public that can afford $450,000 for a joyride 300,000 feet above Earth. Continue reading...
Each month is the same – UK inflation rises and there are ‘I feel your pain’ messages from chancellorEvery month the story is the same. The annual inflation rate goes up and the chancellor puts out a statement saying he understands life is tough for the British public.The only real difference between this month and last was that, in the interim, Rishi Sunak announced his package of measures to soften – but by no means fully offset – the blow from the huge increase in energy costs households are facing in April. Continue reading...
Brewer predicts 15% increase in costs and says speed of Covid recovery uncertainHeineken has said beer prices will go up as it faces “crazy increases” in the cost of ingredients, energy and transport.The brewer said inflation was “off the charts” and its costs would increase by about 15%, forcing it to charge more – which could lead to lower beer consumption. Continue reading...
by Richard Partington Economics correspondent on (#5W5Z7)
As households face the biggest fall in living standards in three decades staff and businesses feel the pressurePay growth in the UK continued to lag behind inflation in December as households faced the biggest fall in living standards in three decades. Average weekly pay, excluding bonuses, fell in real terms, according to official figures. The Guardian spoke to workers and employers about the pressure to keep up with inflation. Continue reading...
Employees are in a strong position – but the Bank will be keen to avoid a wage-price spiralThe UK labour market was hit by two big shocks towards the end of 2021: the end of the government’s furlough scheme and the arrival of the Omicron variant.The good news from the latest official data is both were negotiated without the feared lengthening of the dole queues. Employment is up, job vacancies are at a new record high and the unemployment rate is down. Continue reading...
Ofcom research highlights pressure on household finances as consumers face inflation-busting billsUp to a fifth of UK households have struggled to pay their TV, internet and phone bills in the last year, with some having to cancel services or cut back spending on essentials such as food and clothing to make payments, according to research by Ofcom.The telecoms regulator’s annual affordability report highlights the rising pressure on household finances, with consumers facing a further inflation-busting increase in mobile, telephone and broadband bills of as much as 10% this year. Continue reading...
by Richard Partington Economics correspondent on (#5W56N)
Office for National Statistics says annual pay grew by 4.3% in three months to DecemberUK wage growth picked up in January as job vacancies hit a new record high, but pay failed to keep pace with the highest inflation rate for three decades.The Office for National Statistics said the annual growth rate for average total pay, including bonuses, increased to 4.3% in the three months to December, up from a rate of 4.2% in the three months to November. Continue reading...
by Phillip Inman and Richard Partington on (#5W55P)
Analysis: some want Bank to play catchup on rates; others say it risks engineering conditions for a recessionThe Bank of England is facing fierce criticism from both sides over its plans to raise interest rates. For hawkish economists, Threadneedle Street has fallen badly behind the curve, miscalculating the rise of inflationary pressures, and now needs to play catch-up to regain credibility.Others say the Bank is navigating the most dangerous moment for the economy in decades, but now risks a huge policy mistake. They argue that driving up borrowing costs will have little effect on inflation caused by global supply chain disruption, and that it risks engineering the conditions for a recession in an economy still grappling with Covid-19 and struggling for momentum. Continue reading...
Businesses struggling to fill vacancies will offer highest rise for a decade –but lower than inflationBritish employers are expecting to award pay rises of 3% in 2022, the highest in at least a decade, though well below the rate of inflation, as they try to recruit and retain workers, according to a new survey of businesses.The expected pay rise comes amid persistent signs of a tight labour market, with almost two-thirds of employers expecting to have difficulties filling job vacancies in the coming six months, according to a survey of more than 1,000 recruitment and human resources workers by YouGov for the Chartered Institute of Personnel and Development (CIPD). Continue reading...
They have the chance to be the hero of the hour, but if they get it wrong, we’ll be back in recessionCentral banks are getting twitchy about inflation. Cost of living pressures are rising just about everywhere and the relaxed mood of last autumn has been replaced by an urgency that could soon become panic.In the US, where inflation is at its highest in four decades, the latest chatter on Wall Street is that the Federal Reserve will take every opportunity to raise interest rates between now and the end of the year, seven times in all. Continue reading...
The high street lender may soon no longer be majority state-owned: and its fortunes are key to the wider UK economyIt has taken 14 years but a minor miracle is about to happen, probably within months: the state’s stake in NatWest will fall below 50%. We will no longer have to refer to the former Royal Bank of Scotland as “majority owned” by the government. Hallelujah.NatWest’s full-year figures for 2021, to be announced on Friday, won’t in themselves trigger further disposals of government-owned shares, but they should confirm that the climate is ripe to continue a sell-down programme that has been buzzing along in the background for the past year. Continue reading...
Events co-organised by People’s Assembly and trade unions held in at least 25 towns and citiesProtesters demonstrated in dozens of towns and cities across the UK on Saturday to highlight how the spiralling cost of living crisis is affecting the public.The demonstrations, co-organised by anti-austerity organisation People’s Assembly and supported by trade unions, were held in at least 25 towns and cities, from London to Glasgow to Bangor. Continue reading...
Labour is pushing for a windfall tax on the industry’s bonanza – and Sunak must grasp that this is not even an ‘un-Tory’ ideaNorth Sea oil producers are ripe for a windfall tax. Without moving a muscle, they have benefited from a doubling in the oil price and a quintupling of the gas price over little more than a year.There are big names in the frame, like BP and Shell, and some minnows that are now making hundreds of millions of pounds from wells offloaded a few years ago by these two lumbering giants of the industry. Continue reading...
by Larry Elliott and Richard Partington on (#5W2YH)
Soaring vacancy rates mean employers need to work to attract and retain staff, but this will require a shift in attitude• How welcoming is Britain to older workers?A deadly virus arrives from the east and sweeps through western Europe for two years. The pandemic devastates the country’s economy and drastically reduces the number of available workers. Those who survive find they are in a strong position to secure a higher price for their labour.That was the England of the 1350s in the aftermath of the Black Death, when emergency measures were brought in to cope with labour shortages. And, while the death toll from Covid-19 is nowhere near as severe as the drop – of at least a third – in England’s population between 1348 and 1350, the outcome for today’s economy is in some ways similar. Continue reading...
Diesel already at all-time high of 151.2p with petrol close behind as Opec production falls shortMotorists face the return of record high prices at the pumps as global oil markets continue to climb towards $100 a barrel after a slowdown in output from the Opec oil cartel.British drivers will now pay 151.21p a litre of diesel after pump prices on Thursday climbed above the previous all-time high of 151.10p a litre in November last year, compounding the national cost of living crisis. Continue reading...
by Richard Partington Economics correspondent on (#5W1ZT)
Figures show Brexit compounding Covid disruption, with clothing exports plunging 60%, vegetables down 40% and cars 25%UK exports of goods to the EU have fallen by £20bn compared with the last period of stable trade with Europe, according to official figures marking the first full year since Brexit.Numbers released on Friday by the Office for National Statistics (ONS) showed that the combined impact of the pandemic and Britain’s exit from the single market caused a 12% fall in exports between January and December last year compared with 2018. Continue reading...
Mixers at Schweppes and upmarket Fever-Tree on the rise as supply chain bottlenecks and soaring energy bills inflate costsIt is the kind of news that calls for a stiff drink: the cost of a home-poured G&T is bubbling up due to a jump in tonic prices at the supermarket.Shop price data from the research firm Assosia suggests that the price of mixers made by major tonic brands such as Schweppes and Fever-Tree has risen sharply this month. Continue reading...
Britain is not ‘going back to the 1970s’. Organised labour is far too cowed for that, and collective bargaining all but goneFor those versed in trade union folklore, the battle of Saltley Gate holds a special place. In 1972, workers from Birmingham factories downed tools to support striking miners, blockading a gasworks in the city where there was a huge stockpile of coking coal. Orchestrated by a young Arthur Scargill, the blockade successfully prevented lorries from collecting the coal.The action was pivotal in winning the strike for the miners, so it comes as no surprise that today, on the 50th anniversary of Saltley Gate, the Midlands branch of the TUC is holding a celebratory event. Scargill will be one of the speakers.Larry Elliott is the Guardian’s economics editor Continue reading...
Like many companies, Pickering’s Gin have faced supply chain disruption and rising prices during the pandemicThe low point for Matt Gammell, co-founder of Pickering’s Gin, came last spring when he got down to his last pallet of glass bottles.A longstanding order with a European glass maker was cancelled at short notice, and the Edinburgh-based spirit maker feared it might have to stop production. Continue reading...
Ursula von der Leyen says chips are ‘bedrock of our modern economies’ but the pandemic has exposed supply vulnerabilitiesThe European Union has announced a €43bn ($48bn) plan to overcome its dependency on Asian computer chip makers as governments and businesses around the world battle with a global supply chain crisis that experts believe could persist for much of the year.With consumers having to wait months for cars, dishwashers and other durables thanks to chip shortages, the bloc’s plan marks one of the most significant developments yet seen as a result of the tectonic shifts in the global economy set off by the coronavirus pandemic.In the US, Harley Davidson said its customers would have to bear the brunt of component price rises, and Starbucks said it was raising its prices for the third time since October, while FedEx’s air cargo arm was booming as businesses sought a way around bottlenecks.In Europe, the UK’s biggest private employer, Tesco supermarket, said food inflation will hit 5% this spring on the back of tighter supply, the price of beer was rising due a “vicious cycle of costs”, and truck maker Iveco reported protracted supply chain issues on Tuesday.In Australia, analysts at Commonwealth bank this week said Covid-induced supply chain disruptions and labour shortages continued to drive a big lift in price pressures for businesses, weakening business confidence. On the upside, small-town butchers were thriving thanks to supply shortages leaving supermarket shelves bare. Continue reading...
Public spending will rise by £76bn a year, requiring income and wealth to be taxed more efficiently and fairlyWealth taxes will be needed to fund a £76bn a year increase in government spending by the end of the decade, caused by an ageing population and more expensive healthcare, a thinktank has said.The Resolution Foundation said the UK was on course to see the size of the state match that of Germany by 2030, and warned new methods of raising money to pay for higher spending would be needed. Continue reading...
Sunak still has time to make a ‘cash machine’ withdrawal to ease consumers’ energy bill painA cash machine. That was how Bernard Looney, the chief executive of BP, described his company back in November following last year’s sharp rise in global oil and gas prices. And the size of the company’s bank balance has now duly been revealed: profits just shy of £10bn last year – the highest in eight years.Clearly, these are windfall gains. BP had not expected a fivefold increase in the wholesale price of gas during 2021. Nor did it forecast that the cost of crude oil would currently be nudging its way towards $100 a barrel. Continue reading...
by Harriet Sherwood Arts and culture correspondent on (#5VX4B)
Artists finding it harder than ever to make a living despite being part of one of the fastest growing industriesTen million jobs in creative industries worldwide were lost in 2020 as a result of the Covid pandemic, and the increasing digitisation of cultural output means it is harder than ever for artists to make a living, a Unesco report has said.Covid has led to “an unprecedented crisis in the cultural sector”, said Audrey Azoulay, the director-general of Unesco, the UN’s cultural body, in a foreword to the report. “All over the world, museums, cinemas, theatres and concert halls – places of creation and sharing – have closed their doors … Continue reading...
by Richard Partington Economics correspondent on (#5VX00)
British Retail Consortium says rising energy prices will cause shoppers to tighten their purse stringsBritain’s biggest retailers have warned that soaring living costs will hit consumer spending after a mixed start to the year amid concerns about the Omicron variant.The British Retail Consortium, which represents more than 5,000 businesses across the country, said soaring household energy prices would mean consumers tightening their purse strings over the coming months, with a knock-on effect on high streets. Continue reading...
In the midst of a cost-of-living crisis, the Bank’s governor has betrayed a familiar disdain for those struggling to copeWith just a few words, Andrew Bailey, the governor of the Bank of England, perfectly crystallised the state and the fate of the nation. Tone-deaf and socially oblivious, the voice booming out from the economic seat of power captured the history of the last lost decade.“We do need to see restraint in pay bargaining, otherwise it will get out of control,” Bailey told the BBC last week. As wages continue to fall, inflation is set to hit 7.25% in a couple of months, while pay will rise by far less. TUC leaders protest that “workers have been hammered and now they’re coming back for more.” “This is a very tough message to swallow when take-home pay is falling,” the Institute for Fiscal Studies director, Paul Johnson, tells me, pointing to a decade of lost pay – the longest period of pay stagnation in many years. Continue reading...
by Vincent Ni China affairs correspondent on (#5VVG8)
Worsening Sino-US ties, strict Covid rules and the crackdown on dissent have dented the territory’s fabled allure as a business hub, say expatsIn July 2018, Tara Joseph, president of the American Chamber of Commerce in Hong Kong, wrote an article in the best-known local English-language newspaper, the South China Morning Post, stressing to Americans the territory’s unique position as an Asian business hub.“The US is forgetting the differences between Hong Kong and China. Let’s remind them,” she wrote. “Hong Kong continues to have a robust and hearty infrastructure of values, practices and institutions that could not contrast more starkly with those of the mainland system.” Continue reading...
John Allan fears rate will rise quickly after big hike in energy costs filters through supply chainThe chairman of Britain’s biggest supermarket chain has warned that “the worst is yet to come” on food price inflation, as he predicted it will soon hit 5%.John Allan, who has chaired Tesco since 2015, told the BBC’s Sunday Morning programme that he was well aware people on very tight budgets were having to choose between food and heating. He said the idea that this was happening was very troubling. Continue reading...
Diana Wilkins spells out measures to curb energy consumption, and Andrew Knowles bemoans the privatisation of essential services. Plus letters from Hilary Lang and Dr Christopher SaitAmid all the discussion about how to mitigate the cost of energy price rises for households (Report, 3 February), there has been no mention of how to cut energy use in the first place. Rather than offset the cost by discounts, the money would be better used to reduce long-term energy consumption by making buildings as energy-efficient as possible and thereby helping to meet climate change commitments, too. It’s not rocket science.We can go a long way to improve the situation by ensuring lofts are insulated, windows are double-glazed and fit correctly, letterbox holes are plugged and external mailboxes fitted instead, draught excluders are fitted around wooden front doors, curtains have thermal linings etc. Continue reading...
Borrowing funds services and keeps taxes low, but true prosperity cannot be built on excessive cheap creditEconomics in Australia is frequently reduced to debates around government debt. Claims and counterclaims about profligacy and borrowings overlook several issues.First, the current scale of the debt is unprecedented outside of wars. At the end of 2021, global debt was US$295tn – 350% of everything the world produces in a year, compared with 282% in 2008. The major increase is in government debt, which has reached a record 99% of global output. US, eurozone and Japanese government debt is now at 103%, 98% and 257% of output respectively. Continue reading...
Washington and the west are inflicting brutal collective punishment on an already destitute people by freezing assets and aidThe war in Afghanistan did not end when US and UK troops left Kabul airport last year; it merely took a different, but still lethal, form.The response of President Joe Biden to the military humiliation inflicted on America by the Taliban has been a scorched-earth policy designed to cause the maximum amount of economic damage to what was already one of the world’s poorest countries. Continue reading...
Leaving the EU has effectively left this government unable to pay for its own ambition to ‘level up’ the country“I had a unique touch. Absolutely unique. They came up to me. They came up to me and said they were grateful. Champagne we had that night. The lot.”No, this was not Prime Minister Johnson speaking of the now notorious birthday party that was in breach of his own lockdown rules that we in the rest of the country were observing. This is Stanley, the character whose birthday it is in Harold Pinter’s macabre comedy The Birthday Party. Continue reading...
Policymakers fear a labor shortage is pushing up wages and prices. Wrong. Real wages are down and workers are strugglingThe January jobs report from the US labor department is heightening fears that a so-called “tight” labor market is fueling inflation, and therefore the Fed must put on the brakes by raising interest rates.This line of reasoning is totally wrong.Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com Continue reading...
While the Tories feud over Boris Johnson, the country edges deeper into an economic mire that will cause hardship for thousandsThe Bank of England last week published a set of grim economic forecasts that project inflation will peak at over 7% this year and real household incomes will fall by an average of £1,000 by the end of 2022. Meanwhile, the energy price cap will have risen by hundreds of pounds over the same period. Without another Covid wave, it is the cost of living crisis and particularly its impact on families already struggling to meet their rent, put food on the table and pay their heating bills that will dominate people’s lives in the next two years.Yet Boris Johnson remains mired in the depths of political crisis, debilitated in his role as prime minister, while his potential successors are more concerned with their campaigns to succeed him than addressing the challenges faced by the country. Westminster politics reached a new nadir when, in order to try to shift focus from his own woes, he falsely accused Keir Starmer of failing to prosecute the child abuser Jimmy Savile, a made-up allegation with no grounds in reality. Savile’s victims have spoken out about their distress at seeing their abuse politicised by the prime minister in this way and the unfounded slur prompted the resignation of his long-serving policy chief, Munira Mirza, who accused him of “scurrilous” behaviour. Continue reading...