President signals more cautious approach to climate crisis and says China must ‘overcome notion of rapid success’China’s ambitious low-carbon goals will not be realised easily and should not come at the expense of energy and food security or the “normal life” of ordinary people, its president, Xi Jinping, has said, signalling a more cautious approach to the climate emergency as the economy slows.China, the world’s biggest source of greenhouse gas emissions, has been under pressure to “enhance ambition” and take more drastic action to tackle global heating. In the past two years, Beijing has also made a number of pledges to show its commitment. Continue reading...
A different Tory leader will not save a failing social security system. We need a new welfare state from the bottom upThe thing about governments in crisis is that they have little time for governing. Boris Johnson – once king of the world, now lame duck – is a prime minister consumed with his own survival. Insiders say Johnson is motivated to hang on to power not to deliver a pressing policy agenda but to beat former Bullingdon Club chum, David Cameron: “He won’t accept the last Etonian PM having survived longer than him.” Meanwhile, in the real world, British families are about to endure the worst cost of living crisis for 30 years, and are left waiting for anyone in power to notice.For many, the money going out is about to soar, causing that coming in to shrink in real terms. Inflation rose to 5.4% last month, driven by pricier food and clothes. Energy tariffs are escalating and tax bills are set to go up too. At the same time, the £20 universal credit uplift has been cut and unemployment benefits are about to hit their lowest real value in more than three decades, a rate that experts call “only slightly more than destitution”. Ministers can claim work is the solution but it is good jobs, not any job, that is a reprieve; the majority of people living in poverty in the UK last year were in working households. The official line may be that the pandemic is over, but this too is still hitting personal finances – just ask the clinically vulnerable pensioner shielding in a cold home. The result of all this is clear enough: simply getting by is increasingly going to become a luxury.Frances Ryan is a Guardian columnist and author of Crippled: Austerity and the Demonisation of Disabled People Continue reading...
by Caitlin Cassidy (now) and Matilda Boseley (earlier on (#5VDH2)
Large crowds gather for Invasion Day protests; NSW marks grim Covid milestone as nation records at least 87 deaths from Covid-19; lockdown call for NT remote communities; Scott Morrison speaks at Australia Day ceremony in Canberra. This blog is now closed
Resolution Foundation report also highlights risk of British firms being undercut by lower cost rivalsGains from a UK trade deal with India could be on a par with those from an agreement with the US but risks exposing the economy to tougher competition, a report says.The Resolution Foundation thinktank said successful talks between London and New Delhi had the potential to gain “first-mover” advantage in India and replicate the success of German manufacturing exporters to China. Continue reading...
Latest public finance data shows government borrowing £13bn less this year than forecast in October budgetPressure is mounting on Rishi Sunak to scrap April’s planned increase in national insurance contributions (NICs) after the latest figures for the public finances showed the government borrowing £13bn less this year than expected in the October budget.With cost of living pressures mounting, thinktanks and City analysts said a faster drop in the UK’s deficit would prompt the chancellor into a rethink of the £12bn tax hike to pay for the NHS and social care. Continue reading...
Global growth downgraded to 4.4% as body predicts especially marked slowdown for US and ChinaThe International Monetary Fund has sharply cut its growth forecast for 2022 with a warning that higher-than-expected inflation and the Omicron variant have worsened the outlook for the global economy.In a quarterly update to predictions made in October 2021, the IMF said it anticipated growth of 4.4% this year – down 0.5 percentage points – and emphasised the risks were of a weaker performance. Continue reading...
Survey finds labour shortages driving ‘intense and escalating cost and price pressures’Cost pressures for Britain’s factories are growing at their fastest pace since 1980 as companies struggle to find workers to meet growing demand, a leading business lobby group has said.The CBI warned that higher manufactured goods prices were inevitable after its monthly healthcheck of industry showed labour shortages at their most acute in almost half a century.Average costs growth accelerated at the fastest pace since April 1980.Average domestic price growth in the quarter to January was similar to October, which was the highest figure since April 1980 and is anticipated to accelerate over the next three months.Average export prices in the quarter to January grew at their quickest pace since April 1980 and price growth is again expected to pick up over the coming quarter.The share of firms citing skilled labour as a factor likely to limit output next quarter rose to its highest since October 1973. Continue reading...
Despite reports of US worker shortages, people who are less than five years from retirement are facing a lack of employment optionsElaine Simons, a 61-year-old substitute art teacher in the Seattle, Washington area, was on a 10-month contract and hoping to settle into a more permanent role at the school where she was teaching when the Covid-19 pandemic hit the US in March 2020.Her school shut down for the remainder of the school year, with Simons having to pack up her classroom and learn to navigate the technology necessary to teach remotely. In June 2020, Simons was informed her teaching contract would not be renewed. Continue reading...
The Boston-based fund manager has hard-to-deny evidence to back up his prediction of a ‘wild rumpus’Jeremy Grantham’s warning that share prices are heading for a mighty fall is just part of the new year financial calendar, say his critics. On this occasion, however, the British co-founder of Boston-based fund manager GMO and highly regarded observer of stock market bubbles, may have got his timing spot-on.Certainly “Let the Wild Rumpus Begin” was a terrific title for Grantham’s piece last week: a rumpus is roughly what we’re seeing, at least if one looks at the US, where the technology-heavy Nasdaq has lost 16% since the start of January. It was clobbered so severely on Monday that even the UK’s FTSE 100 index, a decidedly non-tech collection of stocks, was obliged to react to the apparent shift in investor sentiment. The Footsie lost 187 points, or 2.6%, even if a possible Russian invasion of Ukraine was also in the mix. Continue reading...
European markets slide to lowest levels since October, while New York sees wild trading sessionGlobal stock markets have fallen sharply as fears of military conflict in Ukraine spooked investors, wiping £53bn off the value of the UK’s blue-chip share index.European markets tumbled by 3.8% to their lowest levels since October, their biggest one-day fall in more than 18 months, after Nato said it was reinforcing its eastern borders with land, sea and air forces as a Russian invasion of Ukraine appeared increasingly likely. Continue reading...
by Jasper Jolly and Richard Partington on (#5VB9T)
Former Brexit secretary last week called for Boris Johnson to resign over alleged breaches of Covid rulesBoris Johnson is facing growing demands from his own party to make a dramatic U-turn on planned national insurance tax increases in response to Britain’s worsening cost of living crisis.On a day of renewed pressure for the prime minister, the former Conservative cabinet minister David Davis threw his weight behind calls for the tax increase due to come in from April to be scrapped. Business leaders and opposition parties also warned urgent action is required to help households with the highest rates of inflation for 30 years. Continue reading...
Our global finance system is failing to rise to the challenges we face. It’s time it was reimagined – and grounded in our shared humanity“The peoples of the Earth,” Henry Morgenthau said, “are inseparably linked by a deep underlying community of purpose.”In July 1944, Morgenthau, the US Treasury secretary, was closing the Bretton Woods conference with a reflection on extreme nationalism and the failures of cooperation that had led to war. Cautioning against the pursuit of national interest through “the plan-less, senseless rivalry that divided us”, he outlined an accord for new institutions grounded in an appeal to shared humanity. Continue reading...
Poor country repayments to creditors are running at highest level in two decadesFears are growing that action by the US central bank to combat high inflation will trigger a fresh debt crisis, as it emerged poor-country repayments to creditors are already running at their highest level in two decades.The Jubilee Debt Campaign said debt payments by developing countries had more than doubled since 2010 and were likely to increase further if, as expected, the Federal Reserve pushed up interest rates. Continue reading...
The Bank of England upped the base rate to 0.25% in December, but since then only a handful of savers have felt the benefitThe recent unexpected rise in interest rates could have been the good news that savers had waited so long for. But more than five weeks after the Bank of England increased rates, only four financial firms have passed on the full rise to all, or nearly all, of their variable-rate savings account customers.The Bank decided on 16 December to lift the base rate from its historic low of 0.1% to 0.25%, prompting expectation it would be passed on. Continue reading...
Two-year study reveals households are being ‘battered again and again’ by an ‘unfit’ welfare state that is in urgent need of reformBritain’s welfare system is “unfit for purpose” and in urgent need of reform, experts warned on Sunday amid fears that millions more families will struggle to make ends meet amid the dual pressures of the pandemic and the spiralling cost-of-living crisis.The soaring price of food and rent, along with energy bills – which are expected to more than double in April when the price cap is lifted, bringing the number of households under “fuel stress” to at least 6 million – is forcing families to choose between basic essentials such as food and heat, the experts said, while growing numbers are being forced into debt and relying on food banks. Continue reading...
Johnson is at the mercy of his cabinet. The trouble is, as Leavers, none of them will face up to our post-EU crisis eitherWay back in the mid-1960s, during a quiet summer, a former journalist turned public relations man persuaded the chairman of a public company to conduct a search for the Loch Ness monster.Quiet summers used to be known in Fleet Street as the “silly season”. One day, the PR man responsible for what was essentially a publicity stunt was called into the chairman’s office. The chairman, a retired general, was in a state of panic. “What on earth are we going to do if we find the monster?” he said. Continue reading...
The LSE’s director and former Bank of England economist is outspoken over the need for a reset of the wider capitalist systemMinouche Shafik seemed destined for the top job at the Bank of England when she arrived in 2014, but becoming the first female governor was not to be.She only spent two years inside the Bank’s imposing offices on Threadneedle Street before quitting as deputy governor to head the London School of Economics. Continue reading...
Chiefs of CBI, BCC, IoD, Make UK and FSB say ‘rocketing’ charges will delay economic recovery from CovidFive of Britain’s leading business groups have demanded urgent and decisive government help to tackle the UK’s energy crisis, warning failure to act will result in lower investment, an increase in poverty and the risk of an inflationary spiral.In a letter to Rishi Sunak, the heads of the CBI, the British Chambers of Commerce, the Institute of Directors, Make UK and the Federation of Small Businesses said “rocketing” domestic and business bills would put the brake on economic recovery. Continue reading...
We’re keen to hear how small and medium sized businesses in the UK are affected by a sharp rise in inflation and rising energy billsUK inflation figures have risen to their highest in almost 30 years, and energy costs are expected to increase further this year.We’d like to hear from owners of small or medium sized UK businesses about how their enterprises are affected by skyrocketing costs. Continue reading...
Inflation is at a 30-year high, while workers are suffering their third drop in real wages in a decade – and worse is yet to comeThe economic news this week is stark. Inflation has hit a 30-year high and the average British worker is entering their third drop in real wages in a decade. But what’s really sobering is that the worst is still to come. Next month, the regulator Ofgem announces the maximum price for heating bills, and energy company bosses are already warning that they will almost certainly be double last winter’s levels. The new price cap kicks in from April, at just the point that national insurance goes up alongside council tax increases in many boroughs, and there’s a stealth rise in income tax. If government ministers think they’re unpopular now, they should check back once voters are paying what economists estimate as an extra £1,200 a year for the average household.Without immediate state action, the human fallout of all of this will be severe. Two big points need to be borne in mind: first, when basics are shooting up in price, households cannot put off their purchases or buy something cheaper. You either switch the heating on or not; you either have enough food or you go hungry. Second, although prices are going up for everyone, not all families have the same financial buffer against this storm. As it is, debt charities are already warning of many more people trying to borrow to keep on top of their bills. Fuel poverty looks almost certain to shoot up. Continue reading...
The concern is not about getting more backpackers working here, but that those workers are more likely to be exploitedOn Thursday the December labour force figures will come out, quite likely showing good news.The latest payroll job index released on Wednesday covers the same period – up to the week ending 18 December – and it revealed better numbers than in November: Continue reading...
After three decades of stability the virus has done for the cost of living what wars did in the pastMobile phones were still a rarity. Shopping online was a thing of the future. The launch of football’s Premier League was looming. This was Britain in March 1992, the last time the annual inflation rate was as high as it is today.Nobody under the age of 30 can really recall when the cost of living was a pressing political issue. There have been the occasional surges, usually caused by a rise in global oil prices, but nothing to match what has happened in the past six months. Continue reading...
Cost of living crisis worsens, piling pressure on Bank of England to raise interest rates againBritain’s cost of living crisis worsened in December after inflation jumped to 5.4% – its highest level in almost 30 years – driven by the higher cost of clothes, food and footwear.Heaping further pressure on Bank of England policymakers to raise interest rates when they meet next month, the price of furniture and eating out also increased as shortages of staff pushed up wage costs and hold-ups at UK ports hiked the cost of imports. Continue reading...
Analysis: Households face triple whammy of higher taxes and energy bills, with wages failing to keep paceInflation was supposed to be yesterday’s problem. This time last year, the government’s preferred measure of the annual increase in the cost of living was running at less than 1%. Now it stands at 5.4% – the highest in almost 30 years – and it has not peaked yet.With the lagged impact of the supply-chain bottlenecks of last autumn feeding through into prices in the shops and a likely 50% jump in domestic energy bills to come, inflation will certainly exceed 6% in April and may be closer to 7%. Continue reading...
People who are feeling the pinch explain how their expenses are stacking upMost of primary school teacher Kate Locke’s salary goes on her rent – and in the last month, that’s gone up by 10%. Combined with the rising costs of food and energy, Locke, 39, is increasingly worried about money. “By end of month I’m in my overdraft, I haven’t been able to save anything – there’s no stability,” Locke, who lives in Reading, says. Continue reading...
Group of 102 wealthy people say tax would help tackle gulf between rich and poorMore than 100 members of the global super-rich called on Wednesday for governments around the world to “tax us now” to help pay for the pandemic response and tackle the gulf between rich and poor.The group of 102 millionaires and billionaires, including Disney heiress Abigail Disney, said the current tax system is rigged in their favour and needs to be rewritten to make taxation fairer for hard-working people and restore trust in politics.Pay for the Health and Social Care Levy twice over every year – eliminating the need to raise national insurance on working people.Cover the salaries of an additional 50,000 new nurses.Pay for the permanent increase of universal credit.Build 35,000 affordable houses and retrofit the UK’s draughtiest homes to reduce the cost of energy bills and help fight the climate crisis. Continue reading...
Analysis: Jobs market is booming, but Bank of England seems set to heap more pain on householdsA cursory glance at the latest jobs market figures suggests the economy was in good health as the end of 2021 came into sight.In the three months to November employment rose by 60,000 and the unemployment rate decreased by 0.4 percentage points on the quarter to 4.1%. Continue reading...
by Fiona Harvey Environment correspondent on (#5V42F)
Global heating of 2C would cause billions in damage each year by 2050, according to risk assessmentThe climate crisis will wipe at least 1% a year off the UK’s economy by 2045 if global temperatures are allowed to rise by 2C, the government has said.More action would be needed on key areas such as flood defences, restoring natural protections such as peatlands and wetlands, and making the built environment more resilient to extreme weather, ministers said. Continue reading...
‘Dr King knew that economic injustice was bound up in the larger injustice he fought against,’ says treasury secretaryThe treasury secretary, Janet Yellen, marked Martin Luther King Day with a speech acknowledging that the US economy “has never worked fairly for Black Americans or, really, for any American of color”.Interpreting the late civil rights leader’s I Have a Dream speech, Yellen said: “Dr King knew that economic injustice was bound up in the larger injustice he fought against.” Continue reading...
Xi Jinping says major economies need to be wary of ‘negative spillovers’ hitting global recoveryChina has warned the US and Europe against a rapid rise in interest rates that would “slam on the brakes” of the global recovery from the pandemic.Central banks should maintain the monetary stimulus or risk “serious economic consequences” from the spillover effects with developing markets bearing the brunt. Continue reading...
Britain faces years of high energy prices and needs to have a conversation about what policies are neededThe good news is that energy prices will be coming down. The bad news is nobody knows when for sure. The UK’s biggest energy supplier, Centrica, says high gas and electricity prices could last for another two years. The International Energy Agency (IEA) reckons that’s too optimistic. Expensive bills are a problem for firms, consumers and the government. Households could face a doubling of annual energy bills to £2,400 a year from October - a cost-of-living catastrophe for millions. While Labour proposes a support package, Conservative ministers have said little – fuelling suspicions that they intend to reduce demand for energy by making people poorer.Carbon-based energy will fade, but it won’t disappear completely. To keep temperatures to 1.5C above pre-industrial levels, the IEA says the world in 2050 would have to use about half as much natural gas as today and about one-quarter as much oil. British policymakers must wake up to the security implications of greening the economy. Britain replaced coal-fired plants with wind power to reduce carbon emissions, becoming dependent on natural gas imports – especially in calm weather. Traditional suppliers like Russia might see opportunities in volatile fossil fuel prices that result from the transition to net zero. This is not reassuring. Fuel price protests sparked unrest in Kazakhstan this month, but they also brought Britain to a halt 22 years ago. Continue reading...
Urgent questions from the climate crisis to tax avoidance remain on the tableIt is January 2020. Donald Trump and Greta Thunberg are the star turns at the annual festival of globalisation organised by the World Economic Forum in Davos. The fossil fuel-loving president and the teenage environmentalist have a pop at each other. There are reports of a new virus emerging from China but Covid barely gets a mention.Much has happened since. For a second year running, Davos is not going ahead in person. US billionaires will not be parking their private jets at Zurich airport. The skies above the ski resort made famous by Thomas Mann in the Magic Mountain will not be thick with helicopters. Hotels will not be able to charge five times their normal rates for a captive audience of policymakers, business leaders, academics, campaigners, journalists and assorted hangers-on. Continue reading...
We bring you Not the World Economic Forum, where monetary hawks fly and bankers explain why China is all right, reallyThe purpose of this column is usually fairly clear: to look ahead at the biggest event in the coming week. But this time we are breaking with tradition to bring you the week’s biggest non-event: Davos.Every year the great and the good gather in the Swiss Alps at the grandly titled World Economic Forum to give their answers to the big questions. But Covid-19, running now into its fourth calendar year, has seen it called off again. Continue reading...
Vacancies are falling, pressure on pay seems to be reducing, tax rises are looming. This economy is unlikely to overheatNext month brings the likelihood of a 0.25% interest rate rise from the Bank of England, and possibly two more over the rest of the year, as Threadneedle Street seeks to dampen Britain’s overheating economy.At least that would be the reason if the economy were overheating and in need of higher interest rates. In fact, the central bank is simply revealing itself to be weaker than it was in 2011, when inflation jumped to 5% and investors, fearful of runaway prices encouraging workers to demand sky-high wages, demanded action. Interest rates then remained at historic lows. Continue reading...
Leaders in Warrington turned to commercial investing to make up for funding cuts, but now the plight of a small energy firm threatens to make that a gamble too farIn an ideal world, Cathy Mitchell wouldn’t have to spend her time worrying about a £1bn-plus investment portfolio. The former barrister and deputy leader of Warrington borough council would usually have her mind on schools, adult social care and bus services, with the investments looking after themselves. But things are far from normal for the Cheshire borough or its book of assets: one of its flagship stakes – a 50% share in stricken firm Together Energy – is reportedly on the verge of going up in smoke.Warrington has followed councils across the country in ploughing cash into commercial schemes in the hope of generating returns that can offset a decade of Conservative austerity. However, critics say the Labour-run council has taken the high-stakes strategy too far: putting public money into risky ventures in property, energy and finance – including some firms backed by super-rich Tory donors. Continue reading...