Rolling coverage of the latest economic and financial news

As pinged people stay home, the unpinged may be getting more cautious, suggesting a longer-than-expected recoveryNewspapers call August the silly season because not a lot happens. That’s not always the case, as events in Afghanistan have shown, but it is certainly true of the UK economy this year. And that’s bad news.Each week the Office for National Statistics puts together a digest of the very latest data, everything from restaurant bookings to the number of cars on the road. To be clear, these are not official figures, but they do provide a reasonably good guide to what’s going on. Continue reading...

Covid has made us poorer and increased wealth and educational disparities. Optimism alone cannot fix this

Our latest snapshot of key economic indicators also finds cooling inflation and supply chain chaos

Recruitment firm says strength of recovery has been dramatic as economy bounces back from Covid crisis

Rolling coverage of the latest economic and financial news

Jerome Powell seen as less likely to announce cut to stimulus due to Delta variant affecting growthThe resort of Jackson Hole in the Grand Tetons will be the focus of intense financial market interest on Friday as the head of the US central bank, Jerome Powell, gives his update on the health of the world’s biggest economy.Expectations that Powell will provide a timetable for the scaling back of the Federal Reserve’s colossal support programme have faded in recent days due to signs that rising case numbers of the Delta variant of coronavirus are leading to slower growth.Related: ‘Taper tantrum’ by stock markets points to gaps in the easy recovery story | Nils PratleyRelated: Banking chiefs head for the hills in bid to leave cheap money behind Continue reading...

A prolonged malaise caused by deep-seated structural problems has prevented a full economic recovery post-2007Every year since 1978 the world’s central bankers have gathered to chew the fat at Jackson Hole in the Grand Tetons. This year’s star attraction is the most influential central banker of them all – Jerome Powell – and financial markets will hang on every word from the chairman of the US Federal Reserve.Powell won’t reveal much and for good reason: he doesn’t have all that much to say. He is worried about inflation but there are also signs the US economy is slowing as coronavirus infection rates rise. The pace of recovery is moderating in the UK, Germany, China and pretty much everywhere else as well. There are shortages of materials and labour. In a world of lockdowns, quarantines and travel restrictions, it is proving harder to sustain a model built around frictionless movement of people, parts and finance. Global supply chains are under pressure.Related: As the UK economy bounces back, do we sceptics need to say we got it wrong? | Willl HuttonLarry Elliott is the Guardian’s economics editor Continue reading...

We are raiding the Audio Long Read archives to bring you some classic pieces from years past, with new introductions from the authors.This week, from 2017: The word has become a rhetorical weapon, but it properly names the reigning ideology of our era – one that venerates the logic of the market and strips away the things that make us human. By Stephen Metcalf Continue reading...

Shortage of workers and disruption caused by Covid and Brexit push retail stock to 38-year lowBritain’s economy has been plunged into a supply chain crisis, with major retailers’ stock levels at their the lowest since 1983 as a result of worker shortages and transport disruption caused by Covid and Brexit.In a development that suggests recovery from the pandemic could be at risk, the Confederation of British Industry (CBI) said stock levels in relation to expected sales fell to their lowest level in August since it began tracking retail industry trends almost four decades ago. Continue reading...

Rolling coverage of the latest economic and financial news

There was no need to put a rocket under the housing market. The consequences are now all too clearRishi Sunak’s approval ratings tell their own story. The chancellor’s stock is high, because the Treasury’s furlough scheme has limited the job losses from the pandemic. But while Sunak has had a much better crisis than some of his colleagues, his record is far from flawless.Two errors of judgment stick out: the “eat out to help out” discounts for diners, blamed for a wave of infections last autumn, and the decision to raise the threshold on stamp duty for home purchases in England and Northern Ireland from £125,000 to £500,000. Continue reading...

Rolling coverage of the latest economic and financial news

Britain’s bout of mini-stagflation continues as businesses face supply and demand constraintsGrowth is slowing and price pressures are mounting. Consumers are anxious and an important commodity is in short supply. That was the state of the UK in the mid-1970s, when a single word was used to describe a combination of recession and a rising cost of living: stagflation.And, in a much milder form, it is the malaise that is afflicting the economy today. The shortage is of computer chips rather than crude oil but the latest snapshot from IHS Markit/Cips suggests businesses again face supply and demand constraints.Related: UK’s Covid recovery slows amid staff and materials shortages Continue reading...

US and other rich countries must allocate more to make vaccines available to low- and middle-income countries

Growth in private sector output slid to six-month low in August, survey finds

Former England cricketer and crossbench peer will ‘bat for business down under’, says Liz TrussIan Botham, the former England cricketer and crossbench peer, has been appointed a UK trade ambassador to Australia, the government has announced.He is one of 10 parliamentarians given a new role as a trade envoy, taking the total number of MPs and peers performing unpaid trade ambassador roles to 36. Continue reading...

‘Freedom day’ was supposed to bring business as usual but Nando’s is out of chicken and carmakers are low on chipsFirst there were empty supermarket shelves and “pingdemic” staff shortages; now Nando’s is out of chicken and the car industry short of chips. It’s an unusual state of affairs for a country where normality was supposed to resume a month ago.After the lifting of most pandemic restrictions on the government’s 19 July “freedom day”, the long hard slog of Covid-19 was meant to be all over bar the shouting. Britain’s economic potential would be unleashed, allowing for the fastest growth since the second world war. Continue reading...

Regions worst hit by the religious persecution are substantially economically worse off than areas that escapedHistory isn’t just of historical interest – it matters for understanding economies today. That’s the lesson of a growing body of research demonstrating the very long shadow cast by events.A new paper on the Spanish Inquisition proves the point. The Inquisition lasted from the late 15th century to the early 19th century. Its aim was to root out heresy and its methods were the denunciation of suspects followed by torture and executions. The researchers examined how active the Inquisition was in local areas by considering the number of trials and reveal its lasting effect: areas with little or no Inquisition activity have around 8% (€1,450) higher average incomes than those that had lots of persecution. Continue reading...

Many of us have been confounded by recent figures, but the British model remains flawedBritish capitalism seems to be on a roll. A million job vacancies were advertised in July, a new monthly record. Early signs are that unwinding the furlough scheme, now under way, is not going to cause a sharp rise in unemployment.House prices are rising at the fastest rate since 2004. Public borrowing in July halved compared with last July. Many new companies are being created. Business confidence is rising. The recovery is moving so fast as threats of lockdown recede that the UK on average will get back to pre-pandemic levels of output before the year is out. The chancellor, Rishi Sunak, can indulge his boss’s tantrums; his political position could hardly be stronger.The US private equity group Clayton, Dubilier & Rice’s unsolicited – and swiftly rejected – takeover approach for the supermarket chain Morrisons is the latest in a flurry of bids for UK firms from private equity firms since the start of the pandemic.Kwarteng and the chancellor collude in the fiction that Brexit presents opportunities that trump its obvious costs Continue reading...

The UK’s feebleness abroad and supply-chain problems at home show how absurd the Brexiters’ dream of a transformed nation wasSo much for Global Britain. The fiasco and tragedy of the retreat from Afghanistan have laid bare the folly of the Brexiters’ Faustian pact: choose the irresponsible but vote-winning Boris Johnson as your leader; say “goodbye European Union, hello world”; and, oh dear, it turns out not to be the triumph they promised.The combination of the insanity of Brexit and the Johnson government’s manifest incompetence is now seen to be adding geopolitical impotence to economic self-harm. What an achievement! Global Britain? Whatever you say, President Biden. Three bags full, sir.It may never – in Browning’s words – be 'glad confident morning again' for Johnson as prime minister Continue reading...

Trade between Northern Ireland and the Republic has soared this year, while life for British exporters looks set to get grimmerIt was supposed to be a deal no UK prime minister could ever agree to, an Irish sea border between Great Britain and Northern Ireland. Half a year on from Boris Johnson doing exactly that, while denying the fact, the economic consequences are becoming clearer.Figures published by the Irish government last week indicate that a heavy toll for British trade can be added to the political turmoil unleashed by Johnson’s signing up to the Northern Ireland protocol. The data shows evidence beginning to emerge of deeper economic unity on the island of Ireland, at a time when shipments between Britain and Northern Ireland have been disrupted by the Brexit border checks the prime minister promised would never happen. Continue reading...

At the Jackson Hole bankers’ summit this week, the talk will be of ending quantitative easing – and this time it will be seriousIt is credited with preventing the worst global recession since at least the second world war from turning into something far worse. But after the injection of trillions of dollars into financial markets to cushion the blow from Covid-19, the era of quantitative easing could be coming to an end.This week, attention will turn to the gathering of central bank chiefs in Jackson Hole for clues about how the US Federal Reserve plans to bring its vast QE bond-buying programme to an eventual halt after more than a year of emergency stimulus.Leading central banks now own more than £18tn in government bonds and other assets, an increase of more than 50% on pre-pandemic levels Continue reading...

Caution is needed when extrapolating from statistics in times that are far from normalSome economic effects of the coronavirus are obvious. Pre-pandemic, the share of retail sales conducted online had taken around eight years to go from 10% to 20%, but then in nine months shot up to 36% in January 2021.But perhaps more surprising was a recent dramatic headline from Bloomberg: “UK Wage Growth Hits a Record as Vacancies Pass 1 Million”. This was based on estimates from the Office for National Statistics’ monthly wages and salaries survey that average regular pay had increased by 7.4% over the past year. So why should we be cautious in interpreting this huge rise? Continue reading...

For the hardline conservatives ruling Poland and Hungary, the transition from communism to liberal democracy was a mirage. They fervently believe a more decisive break with the past is needed to achieve national liberation. By Nicholas Mulder Continue reading...

Industry faces mounting problems as Covid and Brexit pressures continue, says retail expert

Analysis: sense of foreboding will gnaw away at chancellor’s Treasury team as October spending review looms

Cheap money, the Delta variant and China’s sluggish performance add up to tough times aheadFinancial markets these days react to any whiff of tighter monetary policy in the US, so a little drama on Thursday was par for the course after the US Federal Reserve’s minutes suggested the winding-down of the huge pandemic stimulus programme could start soon. The Fed will still be buying assets in the autumn, but maybe not at the rate of $120bn (£89bn) a month. Commodities fell and shares globally took a hit. The FTSE 100 index dropped 1.5%.Context is needed, of course. The Footsie had risen by 25% in a straight line, more or less, since the arrival of vaccines last November. If one goes back further to the start of the pandemic, the S&P 500, the main US index, has roughly doubled from its low point. So the odd percentage decline hardly shows up on a medium-term view.Related: European stock markets tumble on Covid support concerns Continue reading...

Shares slump amid signs that central banks could start withdrawing pandemic assistance

Analysis: pressure to calm UK economy with higher borrowing costs has eased for now

Cheaper electronic goods also push down July rate to 2% from 2.5% in June

Claim that wages element of formula is distorted by pandemic backed by latest figures, which would mean rise of over 8%Rishi Sunak has come under further pressure to suspend the state pension triple lock after wage figures showed that the chancellor is on course to pay pensioners a rise of more than 8% next year.Sunak is understood to be considering telling Britain’s 12 million state pension claimants that the pandemic has artificially inflated the official wages figures and a new formula is needed to calculate the rise in the basic state pension for next year.Related: Ending pension lock is a start, but there’s no easy fix to the yawning generation gap Continue reading...

Analysis: chancellor warns of ‘bumps in the road’ as Covid, furlough and Bank verdict loom

June and July figures show rocketing demand for workers as country emerged from Covid lockdown

With service industries and foreign tourism decimated, the potential fall in ore prices and demand shows just how much the country relies on mining exportsIt seems not all that long ago all the talk was about how gloriously the economy was going and how the Covid recession was in the past. But now the two states encompassing 55% of the nation’s economy are in lockdown and the second half of this year looks to be tough for the economy – especially as our iron ore exports might be about to take a hit.One of weird things about the pandemic is that our major exports of iron ore and coal have seen an absolute prices boom:Related: Think Morrison was wrong about electric cars and weekends? Wait till you hear him on emissions | Greg JerichoRelated: Australia urged to embrace stronger 2030 climate targets in ‘crucial’ fight ahead of Glasgow summitRelated: The IPCC report is a massive alert that the time for climate action is nearly gone, but crucially not gone yet | Greg JerichoRelated: Pensioner slugged with jobkeeper debt accuses Coalition of double standardsGreg Jericho writes on economics for Guardian Australia Continue reading...

Economic output defies expectations to expand in Q2 – but analysts warn of contraction risk

Fewer than 25% intend to lure new recruits with better wages despite challenges, CIPD report showsFewer than a quarter of UK companies struggling to hire staff after the easing of pandemic restrictions plan to increase the wages they offer to lure new recruits, according to a report.Employers’ hiring confidence has hit a nine-year high as firms attempt to tackle what some recruiters have described as the worst staff shortages since the late 1990s, according to research from the Chartered Institute of Personnel and Development (CIPD).Related: Bottleneck Britain: turmoil has raised job vacancies and firms now jostle for staff Continue reading...

Readers respond to reports on the state of social care in England and lack of support for vulnerable familiesPatrick Butler is right that the pandemic has made the crisis in children’s social care “even more acute” (Crisis in children’s services in England is shocking if not surprising, 11 August). However, it is difficult to see how the government’s review of children’s social care will achieve the radical changes needed, for two reasons.First, it will require a commitment to more progressive taxation and increases in the minimum wage and universal credit to combat major inequalities, including those associated with the rising demand for children’s and youth services: childhood poverty, social deprivation, homelessness, poor health, ethnicity and disability. Continue reading...

Debbie Colson says the chancellor’s short-sighted approach to spending upfront will lead to a far larger global disasterYour article “Treasury blocking green policies key to UK net zero target” (13 August) suggests extreme myopia on the part of Rishi Sunak. This is surprising as he has shown with his coronavirus policies that it is possible to spend large amounts upfront to prevent large-scale future disaster. Climate change, if not addressed, will be a far larger global disaster. It needs a multi-pronged and global approach from central and local governments, the private and public sectors, and individuals. The state of the planet we leave to our children is, after all, a shared responsibility. Central governments must provide the lead, due to the scale and complexity of the challenge.Spending now will generate new technologies that will open up global business and economic growth opportunities. It will also save huge sums that will otherwise be needed – if we delay – to deal with worse flooding, drought and fires, as well as the physical and mental health consequences. Continue reading...

The decision has led to volatile financial markets, geopolitical tension and inflated asset pricesFew dates in economic history classify as turning points but one of them was 15 August 1971 when Richard Nixon went on TV to announce that the US would no longer exchange dollars held by foreign governments for gold.Nixon’s announcement 50 years ago this week had lasting ramifications. It was a statement to the world that the US was too weak to continue anchoring the global monetary system as it had done for the past quarter of a century. It would remain the world’s biggest and most important economy, but the days when it was uniquely dominant were at an end.In 2019, Mark Carney floated the idea of a global digital currency as a replacement for the dollar Continue reading...

All signs are that the chancellor will end his wage support initiative next month. If he does, it will be a chance missedIt seems inevitable that the Treasury will turn down requests from trade unions to maintain the furlough scheme as a permanent safety net beyond autumn.The TUC said it would be a step forward for the UK to have the kind of underpinning to incomes that German workers and many others across the world’s richest nations enjoy. The Kurzarbeit income protection scheme that Berlin has maintained through thick and thin since 1924 always comes to prominence in a major crisis, but it is in place to cope with a mini-crisis as much as a major one.An increase in universal credit is due to be cut back by Sunak in September. This tells everyone a permanent replacement for furlough is unlikely Continue reading...

Author of government study says Treasury resistance to green spending programmes could halt progress to net zeroImposing “premature austerity” again will undermine the fight against climate change and stop poorer households going green, one of the world’s leading climate economists has warned the government, amid claims that the Treasury is resisting policies to tackle the crisis.Nicholas Stern, the author of the seminal 2006 government study into the costs of climate change, said comprehensive programmes were needed to help poorer households make the switch to electric cars and away from gas heating, if the government hoped to bring all greenhouse gas emissions to net zero by 2050.Related: Calls for G7 spending restraint misguided, warns Lord Stern Continue reading...

HSBC analysis gives a good half-dozen reasons why buying a house will not get easier for years – which is very bad news for most British youngstersAnyone hoping for a property crash is going to be sorely disappointed. The main element of Rishi Sunak’s stamp duty giveaway may now be in the past and the Delta strain of the virus still ever-present, undermining consumer confidence, yet all the elements are in place for prices to continue moving up.Without the market having much time to catch its breath, the 7% to 8% increases of the past year will only moderate as the mania for property as an investment marches onwards. Continue reading...

The real worry is the gap between what the country produces and what average folks can afford to consume. Inequality is eating our economyHours after the Democrats passed their $3.5tn budget for Joe Biden’s American Families Plan – including childcare, community college, extended Medicare and measures to slow climate change – the West Virginia senator Joe Manchin, whose vote is necessary to get it through the Senate, made an ominous announcement. He had “serious concerns” about its size, warning it would add trillions of dollars to the national debt and spur inflation.One expects Republican lawmakers to demagogue about inflation and spending. To hear this from a Democrat is jaw-dropping.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 Continue reading...

UK inhaler maker plans to back tobacco giant Philip Morris International’s takeover bid, despite health charities urging them to oppose it

Analysis: GDP figures show attempts to revive business investment have not got off to a flying start

Official data shows 1% growth in June after further easing of lockdown restrictions