Analysis: after catching up lost ground, growth will be relatively swift next year but then slow in 2023If the Bank of England is right, Britain is on course for its strongest annual growth since 1941 – the year of Pearl Harbor and Hitler’s invasion of Russia.The latest forecasts from Threadneedle Street are stronger in every respect than those it came up with three months ago: the hit to growth during the first-quarter lockdown has been less severe, the bounce back will be more rapid, and the peak in unemployment will be significantly lower. Continue reading...

Vaccine rollout spurs fastest monthly rise for seven years with sharp increases in spending and jobs growth

Interest rates to be kept at record low of 0.1% with GDP growth now forecast to rise at 7.25% in 2021Britain is on track for the strongest growth since the second world war this year as it stages a faster-than-expected recovery from the Covid-19 pandemic, according to the Bank of England.The Bank raised its estimate for UK GDP growth to 7.25% in 2021, up from a previous forecast in February for growth of 5% this year, as rapid progress with the Covid-19 vaccine and easing of restrictions paves the way for a boom in pent-up demand.Related: Bank of England raises growth forecasts and leaves interest rates on hold – business live Continue reading...

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A cautious approach works for Labour only when the economy is booming – not in times of crisisKeir Starmer approaches his first electoral test since becoming Labour leader – the local and devolved elections on Thursday – with no shortage of advice on how to restore the party’s fortunes. One view is that Starmer must dissociate himself from Jeremy Corbyn’s policy platform and take the party rightwards, back to the moderate centre ground.This argument fits with the standard academic account of Labour’s history since the second world war. Labour’s membership always wants to push the party to the left, but elections are won on the centre ground. So the party faces a constant dilemma, doomed to choose between ideology and electability.Related: An electoral stamp of approval for the Tories risks dishonesty becoming the new normal | Polly ToynbeeMichael Jacobs is professor of political economy and Andrew Hindmoor professor of politics at the University of Sheffield Continue reading...

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Throwing money at an already heated market looks nonsensical and could lose the Treasury £2bnSurprise, surprise. Presented, or so they thought, with an end-March deadline to save a few thousand pounds on stamp duty, buyers rushed to complete their house purchases. Mortgage lending in the month reached a new record.It requires no imagination to see what will happen in June, the extended deadline for the £500,000 zero band on stamp duty in England and Northern Ireland – an extension announced very late in the day by the chancellor, Rishi Sunak, in his March budget. There will be a repeat. Then the drama will be replayed in a miniature form in September as buyers try to get on the right side of the taper from £250,000 to £125,000. Continue reading...

Analysis: UK unlikely to win a big deal when Delhi’s big ask is fewer curbs on Indians working in Britain

The advanced economies and China are rebounding from the Covid crisis, but there is a dangerous global divergenceWhat is remarkable about the increase in nationalist sentiment across the developed world in recent years is that it is occurring at a time when many of today’s most pressing challenges, including the climate emergency and the Covid-19 pandemic, are fundamentally global problems demanding global solutions. And the anger brewing among citizens of vaccine-poor countries – basically, the two-thirds of humanity living outside the advanced economies and China – could come back to haunt the rich world all too soon.Joe Biden’s ambitious plans to address inequality in America are to be welcomed, provided the administration succeeds in covering the long-run costs through higher taxes or stronger growth, admittedly two big ifs. So, too, is the smaller but still significant Next Generation EU scheme to help EU members such as Italy and Spain that have been disproportionately affected by the pandemic.Related: India Covid cases pass 20m as calls grow for national lockdown Continue reading...

Consumers repaying credit card debts and manufacturing booms as Covid restrictions ease, new figures showMortgage borrowing in the UK has reached its highest level since modern records began as buyers rushed to beat the now-extended stamp duty holiday deadline.Bank of England figures showed that Rishi Sunak’s decision in the budget to extend the tax break until June did not dampen a burst of activity in the housing market in March.Related: Wallasey in Merseyside tops list of British property hotspots Continue reading...

Downing Street says agreement will create 6,500 jobs and contain £533m of Indian investment in UK

Country Milk’s trade with the EU has nosedived with the dairy industry particularly badly affected by new customs rulesA small error in the paperwork – a box ticked by mistake – and the tanker of butter oil was held at French customs for five days, with veterinary authorities at the border threatening to destroy it. The debacle nearly cost the tanker’s exporter, dairy company County Milk, a six-figure sum. After fraught negotiations, the cargo was eventually repatriated.“You don’t need too many of those to be destroyed and you are in dire straits,” says Phil Langslow, trading director at County Milk, the UK’s largest privately owned dairy ingredients business. Continue reading...

Institute of Economic Affairs argues against raising taxes, saying growth and deregulation will cut borrowingThe government should not worry about its rising debt levels, according to an economic thinktank with close links to the Conservative party that was previously a champion of austerity.In the latest sign that attitudes to public debt may be shifting, the Institute of Economic Affairs (IEA) on Monday published a paper by two economics professors saying that debt incurred during the coronavirus pandemic “can be coped with” and arguing against trying to reduce it too quickly. Continue reading...

As it marks 100 years since its foundation, a look at how the region is doing in education and jobsOne hundred years to the day after its foundation on 3 May 1921, Northern Ireland is outdoing the rest of the United Kingdom on many metrics.The UK’s smallest country has had the lowest unemployment rate on the British Isles for six consecutive quarters, reaching a record low in late 2019; tourism was booming pre-Covid; and it has the highest levels of wellbeing in the OECD. Continue reading...

Legendary investor also warns about share-trading apps and investment Spacs while partner calls cryptocurrencies ‘disgusting’The billionaire investor Warren Buffett has warned of inflation hitting the US economy amid a “red hot” recovery from the worst of the coronavirus pandemic.Buffett said his portfolio companies were “seeing very substantial inflation” in a range of sectors amid shortages of raw materials and high savings among those who kept jobs but were barred from spending on things such as holidays during lockdowns.Related: ‘It’s just the beginning’: Covid push to digital boosts big tech profits Continue reading...

Strong institutions, the right mix of human and physical capital, and sound economic management are keyScotland’s population is similar to that of Norway and Denmark, both countries in the International Monetary Fund’s list of the top 10 richest in the world. So when Nicola Sturgeon says there is no reason why an independent Scotland could not make it on its own after independence, she is absolutely right.All the evidence suggests size really doesn’t matter when it comes to economic success. What does matter is having strong institutions, the right mix of human and physical capital, and sound management of the economy. In their different ways, Singapore, Switzerland and Sweden all have these, which is why they score highly on living standards, educational attainment and longevity.Related: Scottish independence: have we seen these tactics before in Québec? Continue reading...

Boris Johnson and his former aide are locked in a relationship that is still having damaging consequences for all of usBefore he moved on to lower things, Boris Johnson lived in our neighbourhood, just off the Holloway Road in London’s Islington. Another famous Islingtonian who lived off the Holloway Road was the fictional Mr Pooter, protagonist of the Victorian classic Diary of a Nobody.Mr Pooter’s wife was called Carrie, and his close neighbour went by the name of Cummings, of whom on one occasion Pooter writes: “Cummings and I have a little misunderstanding.”It may seem like poetic justice that Johnson and Cummings have fallen out, but the awful truth is that they won the battle to diminish this country Continue reading...

A familiar UK recovery led by a property boom and debt-fuelled consumption does not qualify as ‘building back better’The average house price, according to the Nationwide building society, rose by £6,000 in April, or £200 a day. In the course of the month, the cost of property increased by 2.1% – the highest one-month jump since 2004.Everywhere there are signs of boom conditions: buyers putting in offers without even seeing the property they are after; agents asking for best and final offers well in excess of the asking price; lenders trying to compensate for spiralling prices by offering cheaper home-loan rates and easier terms.Britain has been here many times before and it never ends well Continue reading...

The new president is benefiting not just from bold proposals and actions but from his predecessor’s catastrophic recordBy almost any measure, Joe Biden’s first 100 days have been hugely successful. Getting millions of Americans inoculated against Covid-19 and beginning to revive the economy are central to that success.Related: In his first 100 days, how has Biden handled the four crises he outlined?Even on the fraught issue of race, the contrast with Trump has strengthened Biden’s handRelated: Biden’s ‘transformative’ 100 days in office: Politics Weekly Extra - podcastRobert 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 columnist for Guardian US Continue reading...

Trade body says 39,000 jobs are at risk as a direct result of restrictions

The US president is right to spend, but shrinking the federal deficit is not the priorityJoe Biden’s first 100 days in office signalled that the future does not have to be a rerun of the past. The US president’s speech to Congress this week made it clear that Trumpism was a warning from history, a reminder that no republic is guaranteed to last. The US remains in danger – its decline accelerated by an iniquitous economic model, and by leaders unable or unwilling to remedy it. It is a relief to find in the White House a president who wants to bridge divisions rather than widen them. Mr Biden should be praised for saying he will stop the rot and recognising the challenge to democracy posed by autocracy. But his response risks being undone by an obsession with containing non-existent fiscal risks.The Biden White House proposes spending $4trn, with about half the money used to rewrite the social contract. The rest will create jobs, with infrastructure investments to repurpose the post-Covid economy for a zero-carbon world. The problem is not that money is being spent to fix a broken society. Neither is it wrong to ask the rich to pay their fair share of tax. The problem is that Mr Biden says spending must be balanced by tax rises or savings from other government programmes. Continue reading...

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GDP in the 19 economies sharing the euro shrank by 0.6% between January and March

Jes Staley says bank continues to take ‘cautious view’ of impact of Covid-19 pandemic

Guardian analysis shows rapid progress rolling out vaccine is fuelling boom in consumer spending

Our latest snapshot of key economic indicators finds business activity booming, but borrowing reaching record levels

Rolling coverage of the latest economic and financial news

Analysis: why the president wants to build the US economy from the middle and bottom, not top downCut taxes on the rich. Unleash a wave of entrepreneurship. Growth will pick up and more jobs will be created. Everybody benefits. That, in essence, is trickle down – a theory of economics that Joe Biden wants to consign to the dustbin of history.The US president was a young politician when the idea that cutting taxes on the well-off would be good for the poor first came into vogue in the 1970s. Now he has used his first address to a joint session of Congress to call on the US’s top 1% to pay for his $1.8tn (£1.3tn) American families plan – higher spending in areas such as education, childcare and infrastructure. Continue reading...

Former PM urges G7 leaders to help finance rapid immunisation programme to stem spread of virus

ONS says 83% of businesses are now trading, a rise of six percentage points since late March

We may be seeing the rise of a new authoritarian capitalism shielded from democratic scrutinyThirteen years after the financial crisis put the global economy on life support, neoliberal capitalism is facing an existential crisis. The Covid-19 pandemic has exposed the disastrous consequences of decades of privatisation, deregulation and outsourcing. In order to contain the economic fallout from the pandemic, western countries have ripped up the neoliberal playbook.Market forces have been shunned in favour of regulatory controls and state intervention. Central banks have broken the ultimate economic taboo and are printing money to finance ballooning budget deficits. For the first time in decades, the direction of travel for corporate tax rates is up rather than down. Even the International Monetary Fund (IMF) has thrown its weight behind wealth taxes. As Guardian columnist Larry Elliott recently put it: “the era of small states, low taxes and balanced budgets suddenly looks to be over”. The question remaining is: what is replacing it? In the UK, a number of recent developments provide some clues.Laurie Macfarlane is economics editor at openDemocracy and a fellow at the UCL Institute of Innovation and Public Purpose. He is co-author of Rethinking the Economics of Land and Housing Continue reading...

The Covid-ravaged global economy is at a crossroads: we can commit to greater tax cooperation or risk a tax-driven trade war

Ángel Gurría says international deal is within striking distance and could be signed this summer

Strong sales in furniture and DIY as lockdown eases but clothing, footwear and department stores still struggleBritain’s biggest retailers recorded the sharpest growth in sales since 2018 as consumer confidence was boosted by the easing of lockdown in England and Wales, and progress with the Covid-19 vaccination programme.For the first time in 2021, sales volumes were viewed as good for the time of year, according to the latest monthly snapshot from the CBI lobby group, and sales were expected to remain above normal levels in May after the reopening of non-essential shops in Scotland and Northern Ireland.Related: Footfall in England up by almost 200% as Covid controls ease Continue reading...

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EY Item Club upgrades forecasts for 2021 after businesses adapted better to Covid controls

The UK is beating Covid economic recovery expectations but there should be a degree of warinessAlmost every indicator is pointing in the same direction. Footfall on the high streets is up. Payments by debit and credit card are rising. The strongest business surveys since 2013 suggest that the Brexit hangover was short-lived. Firms are starting to hire. The housing market is red-hot.Growth estimates are being revised up sharply amid signs that consumers didn’t even wait for lockdown restrictions to be lifted before going on a spending spree.Rapid recoveries are what is needed to limit the long-term scarring from the pandemic Continue reading...

Joe Biden is about to shake up US taxation policy. The UK must hope that the chancellor feels a need to emulate himThe differences couldn’t be more stark. Promises to “build back better” from Covid-19 have been made on both sides of the Atlantic. But as lockdown measures are steadily relaxed, President Joe Biden is showing far greater ambition than Boris Johnson’s government when it comes to shaping the post-pandemic recovery.This week, Washington will set out plans for the most comprehensive reforms of American tax policy in half a century, alongside trillions of dollars in funding for investment to tackle deep-rooted inequalities.At the budget, Sunak raised corporation tax, arguing he could because Biden was also increasing taxes on company profits Continue reading...

The government spends more than twice as much on each pensioner as on each working-age BritonOne of the major shifts in government spending over recent years has been away from young people and towards those in retirement. A study due this week from the Intergenerational Foundation thinktank shows that while spending on pensioners and children respectively increased at similar rates before 2010-11, the austerity years to 2019 proved much more generous to the old.The report finds that in 2018-19, the government spent “on average £14,660 on each child, £10,180 on each working-age adult, and £20,790 on each pensioner” and that the gap in per capita spending on children and pensioners more than doubled over the previous 20 years.A pensioner has much more disposable income than a worker on the same money, especially if the latter wants to start a family or buy a home Continue reading...

In March, 495,000 women entered the labor force, but the figures betray the harsher economic situation for Black women and many have dropped out altogetherWomen were hit hardest when the Covid-19 pandemic started taking its terrible toll on the job market. Last month there were promising gains for women in the workforce but it’s still too early to declare the end of the “shecession”.The pandemic’s arrival hit the women-dominated leisure, hospitality and retail industries first and hardest as the nation went into lockdown. As job losses hit record highs the US recorded another sorry first – the first recession in which women lost the most jobs.Related: ‘We don’t get help from anywhere’: Covid exposes inequality in crisis-hit New York neighborhoodThe recovery may not be as complete as for Black workers as it will be for white workers Continue reading...

Figure at highest level since end of second world war but deficit was less than forecast for 2020-21

Keir Starmer sets out scheme to bolster UK economy with secure jobs in clean industries

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CBI poll of 288 leading companies finds firms plan to hire at fastest rate in nearly 50 years

Corona, Queens, home to many essential and immigrant workers, has had New York’s highest rates of death and infection – and vaccine uptake remains lowA year after New York City became the center of the global Covid-19 outbreak, the neighborhood considered at the time to be the “epicenter of the epicenter” of the pandemic remains in crisis – laying bare many of the economic fault lines exposed by the coronavirus.Corona, Queens, a welcoming enclave for many of the city’s undocumented immigrants and home to many of the “essential” workers who kept New York running during the pandemic’s worst days, has had the highest number of infections and deaths in the city – and now has one of the lowest percentages of people vaccinated. Continue reading...

From elite football to tech giants, our lives are increasingly governed by ‘free’ markets that turn out to be riggedBack in the days of the Soviet Union, it was common to hear people on the left criticise the Kremlin for pursuing the wrong kind of socialism. There was nothing wrong with the theory, they said, rather the warped form of it conducted behind the iron curtain.Related: Boris Johnson says fans will be at centre of wider review of English footballLarry Elliott is a Guardian columnist Continue reading...

Northern and Midlands towns with major distribution centres record best employment prospectsNorthern and Midlands towns with sprawling warehouse distribution centres have emerged as the places in Britain with the strongest growth in job opportunities as the economy exits lockdown.Reflecting the online shopping boom during the pandemic, data compiled by the jobs website Indeed and the Centre for Cities thinktank showed that Barnsley, Mansfield and Stoke-on-Trent – all strategic locations for distributors such as Amazon, Hermes and Asos - were staging the fastest recovery. Continue reading...

Paschal Donohoe says Dublin will not accept reforms that affect its ability to undercut its rivalsIreland’s finance minister has signalled the country will resist attempts to rebalance the global tax system if they affect Dublin’s ability to undercut its rivals.Under new tax proposals led by the US, Ireland could lose 20% of its tax revenues, according to Paschal Donohoe. Continue reading...