With an unfair, inefficient global rollout, the west is squandering trust and risking its own prosperityThe proper functioning of any interconnected economic system depends on trust. And a global system that has been designed by advanced economies requires a significant level of buy-in from the developing world. Both become even more important as more developing economies, led by China, gain systemic importance.Related: WHO and global faith leaders call for fair access to Covid vaccinesRelated: South-east Asian countries battle Covid resurgence amid lack of vaccines Continue reading...
Nature’s financial value must be considered to avoid ‘irreversible’ degradation to biodiversity and landThe world needs to quadruple its annual investment in nature if the climate, biodiversity and land degradation crises are to be tackled by the middle of the century, according to a new UN report.Investing just 0.1% of global GDP every year in restorative agriculture, forests, pollution management and protected areas to close a $4.1tn (£2.9tn) financial gap by 2050 could avoid the breakdown of natural ecosystem “services” such as clean water, food and flood protection, the report said.Related: Top scientists warn of 'ghastly future of mass extinction' and climate disruption Continue reading...
by Vincent Ni China affairs correspondent on (#5JAVA)
Both sides emphasised importance of bilateral trade relations and agreed to further negotiationsTop US and Chinese trade negotiators have held “candid” talks, their first under the Biden presidency, as Washington continues to raise concerns over Beijing’s trade practices.In the long-awaited first official engagement between the US trade representative Katherine Tai and the Chinese vice-premier, Liu He, held virtually on Thursday morning (Beijing time), the two sides emphasised the importance of the bilateral trade relations and agreed to further negotiations.Related: China replaces Germany as UK’s biggest import market Continue reading...
After the 2008 crash, hawks worried about debt. Amid this one, they’re fretting about price rises. They were wrong then, and they’re likely to be wrong nowInflation is back. That old foe of central bankers, mugger of pensioners and fashion staple of the 1970s is once again in the news. Its return is being talked about at Threadneedle Street and at the US Federal Reserve. It is creeping into newspaper headlines and on to market-watchers’ worry lists. But some perspective is essential: the price rises of today are nothing like those we saw half a century ago, because the world we live in is nothing like that one. Many of the fears expressed over any sign of rising prices are misplaced.Economists are perhaps not the first people you might want to hear from about fashion, but one guaranteed revival for this spring/summer is: price rises. They will be in the news a great deal over the coming months. Last week’s news of a doubling of the inflation rate is just the beginning. The primary reason for that is mechanical. Last year saw many parts of the economy put in deep freeze to prevent the spread of Covid; with the reopening of pubs, restaurants and clothes shops, and the return of high street spending, prices will tick up. In this sense, inflation is to be welcomed as a sign of economic growth after a record slump. Another factor will not have passed motorists by: fuel prices, both at the petrol pump and to heat homes, are on an upward march. Continue reading...
National debt pile still climbs to £2.17tn or about 98.5% of GDP, the highest ratio since March 1962Britain’s stronger than expected recovery during the third lockdown limited government borrowing in April to just less than £32bn, an improvement of £16bn on the record high set a year earlier.As parts of the economy reopened and businesses adapted to Covid restrictions, tax receipts improved from a year earlier and government spending on the furlough scheme fell, said the Office for National Statistics (ONS). Continue reading...
Authorities in China say they will take a ‘zero tolerance’ approach to monopoly behaviour and hoardingChina has signalled a crack down on “excessive speculation” that is pushing up the price of raw materials including iron ore and copper, amid mounting concerns over rapid growth in inflation.Against a backdrop of soaring raw material costs as several big economies relax Covid-19 restrictions, China’s National Development and Reform Commission (NDRC) said it would show a “zero tolerance” approach to monopoly behaviour and hoarding by commodities firms.Related: Iron ore price slides as China warns of ‘excessive speculation’ – business live Continue reading...
by Rupert Jones and Richard Partington on (#5J62S)
Labour expected to trigger Commons vote to force UK government to support proposalRishi Sunak is facing growing pressure to support US proposals for a global minimum rate of corporation tax in the run-up to the UK hosting a pivotal meeting between G7 leaders in Cornwall next month.Labour is expected to trigger a Commons vote on Monday designed to force the UK government to back the plan put forward by the US president, Joe Biden, which is being negotiated between more than 130 nations with the hope of securing an agreement this autumn. Continue reading...
Some breeders are eager to export more to Britain, but others have their hands full keeping up with domestic demandFourth-generation beef producers Josie and Blair Angus have spent a lifetime developing their own branded product and exporting it around the world.The couple own four properties in Central West Queensland covering 162,000 hectares – an area slightly larger than greater London – and run a 35,000-strong herd of Angus and Belmont Red cattle. They are also in the process of building an export-accredited abattoir handling 50,000 head of cattle a year.Related: Put out to pasture? Britain’s farmers fear surge of imports from Australia Continue reading...
The Treasury understands that shutdowns and reopenings can seriously distort growth and joblessness figuresThere’s a scene in Tom Stoppard’s Arcadia when the clever, media-hungry English don, Bernard, thinks he has got one over on his rival by discovering something new about Lord Byron. He plans to publish his findings in a suitably august academic journal, where he promises the write-up will be “absolutely gloat-free”.Rishi Sunak’s response to the barrage of good news that has been emerging about the UK economy in the past few weeks has also been gloat-free. The chancellor of the exchequer has expressed modest pleasure at official figures showing a pick-up in activity and a fall in the jobless rate, but he certainly hasn’t been banging the drum for boom-boom Britain.Many businesses have little or no working capital; insolvencies have been kept artificially low; the furlough comes to an end in September Continue reading...
Keeping the housing market spinning has become top priority for a government focused on wealth creation based on propertyWhen we consider the likely effects of Boris Johnson’s administration over the next three years, and possibly beyond, it is easy to believe his achievements will be near or less than zero.Looking back to his time as mayor of London, he wasted most of his first term dealing with arguments among his close lieutenants before procrastinating about which of his limited set of manifesto pledges he would implement. Only in his second term did he press ahead with the capital’s cycle superhighways – for many people his only visible achievement. Continue reading...
A trade deal could expose UK agriculture to the economic power of the southern hemisphere’s giant livestock ranchesOn a rain-lashed and windswept day in the Welsh valleys, Jonathan Huntley is almost at the end of the busiest six weeks of the year on his hillside farm. Lambing season is over, following the arrival of 1,400 newborns, and one of his 60 suckling cows is calving.Huntley, 53, farms sheep and cattle in the same 500 acres as his father before him, and he and his wife Tracey hope their 22-year-old son Thomas will take over from them. Continue reading...
If the trade secretary agrees to Canberra’s demands for no tariffs on agriculture, it sets a dangerous precedent for other, bigger dealsFarming is the tail that wags the dog in all trade talks. Agriculture might be worth less than 1% of GDP in the UK and Germany and less than 2% in France and Italy, yet the emotional connection with food makes it a critical subject when negotiators sit down to hammer out a deal.According to the latest World Bank data, the sector contributed only 3.3% to global GDP – and in Australia, which is in controversial and secretive talks with the UK about a free trade agreement (FTA), it made up just 2.1% of GDP in 2018. But Dan Tehan, Australia’s trade minister, has placed agriculture front and centre by insisting that any deal with the UK must be covered by tariff-free and quota-free arrangements.A deal with Australia is not significant in itself: Truss admits it would boost Britain’s economy by just £500m over 15 years, or 0.02% of GDPTruss argues that the UK has a tariff-free deal with the EU and this should be the template. But the UK stands on a level playing field with other EU countries after four decades of convergence Continue reading...
Analysis: times are changing as IMF says wealth taxes must rise to pay for pandemic costs and Joe Biden says trickle-down economics don’t workThe 2021 Sunday Times Rich List will renew debate over how to prevent Britain’s position as one of the most unequal societies in the developed world from getting worse.Those who argue for a wealth tax would usually face a withering response from the major international bodies that analyse the effects of taxation on economic growth. In previous decades a neoliberal consensus demanded wealth creators be given free rein, while everyone should accept that the extraordinary lifestyles of the super-rich was the price of innovation and decently paid jobs for the rest. In the 1990s the Clinton and Blair administrations felt unable to confront the proselytisers for trickle-down economics.Related: Number of billionaires in UK reached new record during Covid crisis Continue reading...
People may roll their eyes at the concept, but at least it tries to address a problem that won’t go away on its own“Maybe mental health isn’t the problem,” said Mr Z, listening to a news item about mental health on the radio. “Maybe it’s a crisis in late capitalism.”“Funny, that’s what Sinéad O’Connor thinks,” I replied.Zoe Williams is a Guardian columnist Continue reading...
Backing IMF’s $50bn three-point plan is in wealthy nations best interests by supercharging world economy, says Kristalina GeorgievaWealthy nation backing for a $50bn (£35bn) mass global vaccination drive could provide a $9tn boost to the world economy, the head of the International Monetary Fund has said.Putting pressure on the G7 countries ahead of their summit in Cornwall, England, next month, Kristalina Georgieva said richer nations would see the best return on investment in modern times if they dug deeper to help tackle the pandemic in poorer parts of the world.Vaccinating at least 40% of the global population by the end of this year and at least 60% by the first half of 2022. To do so would require extra grants to Covax, the global vaccine initiative, donating surplus doses, and free cross-border flows of raw materials and finished vaccinesPreparing for the possibility that new variants of the virus will require booster shots will demand investment in extra vaccine production capacity by 1bn dosesManaging the interim period where vaccine supply is limited with widespread testing and tracing, therapeutic and public health measures, and, at the same time, ramping up preparations for vaccine deployment together with any approved dose-stretching strategies. Continue reading...
Manufacturers upbeat as May figures show output grew at fastest rate since December 2018Factory output grew this month at the fastest rate since December 2018 to record the first large increase in UK manufacturing production in almost two years.Chemicals producers, electronic engineering firms and metal factories reported the strongest growth, with output up in 12 of 17 subsectors, according to the CBI’s monthly industrial trends survey. Continue reading...
Covid, Brexit, automation and net-zero carbon all require state intervention, and shouldn’t be entrusted to the rightSometimes political parties hit a sweet spot and their opponents struggle to lay a glove on them. Rapid non-inflationary growth meant Margaret Thatcher was invulnerable at the 1987 election. Tony Blair was unbeatable in the mid-1990s when Britain was bored with a tired, discredited and sleazy Tory government.Boris Johnson has arrived at his own political state of grace this spring. Everything has come together: the NHS has played a blinder with the vaccine programme; record peacetime spending has anaesthetised the pain of lockdown; a weary population is grateful to be allowed to hug and go to the pub again.Larry Elliott is the Guardian’s economics editor Continue reading...
Although the Square Mile will remain Europe’s largest money marketplace it will no longer be the continent’s de facto financial centreNearly five years after the Brexit referendum, and in the five months since Brexit itself, there has been little debate about the future of the City, the financial centre of London. Those who voted in June 2016 to leave the EU believe, whatever the evidence to the contrary, that the impact will be minimal, and that the warnings of job losses and business relocation are exaggerated. Remain voters are programmed to think the opposite and, whatever the evidence to the contrary, forecast gloom and doom. What can we learn from what has actually happened?We have to acknowledge, first, that Covid-19 has confused the picture mightily over the last 18 months. People have not found it easy to change location, even if they wanted to. More important, there are some temporary regulatory arrangements that blunt the impact of the UK’s departure from the single financial market. There is a Temporary Permissions Regime in London for some EU-based firms, and the European Commission has allowed euro-denominated instruments to be cleared in London until 2022, to avoid the disruption any sudden change on 31 December 2020, might have brought. So what we are seeing today may not reflect Brexit’s full longer-term impact. Continue reading...
Analysis: furlough has helped shelter Britons from unemployment, and businesses are hiring againTrying to get to the bottom of what is happening to Britain’s labour market is a tricky business. There are three different measures for calculating unemployment, not all of which cover the same period.Even so, some broad themes emerge from the latest blitz of data from the Office for National Statistics. One is that the furlough has done its job in shielding the economy from rising joblessness, with more than 4 million workers taking advantage of wage subsidies at the end of the first quarter.Related: UK unemployment drops as businesses hire amid Covid easing Continue reading...
Thinktank says new strategy needed in face of Covid, Brexit, net zero, automation and demographic changeBritain risks mirroring Italy’s economic woes unless it develops a strategy for tackling the five seismic changes that will shape a decisive decade for the country, a report has warned.A joint project by the Resolution Foundation thinktank and the London School of Economics said the UK was neither used to nor prepared for the challenges posed by the aftermath of Covid-19, Brexit, the net zero transition, automation and a changing population.Covid-19: More home working as a result of the pandemic will mean more lifestyle choices for professionals, but will force lower earners to find new jobs in new places.Brexit: The UK will be able to utilise new policy freedoms but will also have to cope with higher costs of doing business with the EU, its main trading partner.Net zero: Decarbonisation will provide economic opportunities, but action is urgent. The UK needs to go from installing almost zero heat pumps each year, to installing 3,000 every single day by 2030.Technology: The arrival of new technologies will boost but also disrupt living standards, with the Organisation for Economic Cooperation and Development estimating that one in seven jobs could disappear as a result of automation in the next 15-20 years.Demography: The ratio of people under the age of 20 or over 65 to those aged 20-64 is likely to increase from 72 per 100 to 79 per 100 between 2020 and 2030 – a faster projected change than in any other decade in the first half of the 21st century. Continue reading...
Iain Ramsay and Ian Arnott respond to George Monbiot’s article on cuts to trading standards and the lack of law enforcementGeorge Monbiot is right to draw attention to the absence of enforcement of consumer protection law, and people running into “a wall of unaccountable, opaque bureaucracy” when they attempt to report scams (My friend was the victim of a scam – and cuts mean she can do nothing about it, 12 May). I encountered the same problem when trying to contact trading standards in relation to a national retailer in Canterbury that was continuing to run a “closing down” sale for many months – in my opinion, a breach of relevant consumer protection regulations. I was unable to contact trading standards directly, and could only identify relevant officials by making a freedom of information request to the council for the trading standards annual report.The government has claimed that leaving the European Union will not affect standards of consumer protection in the UK, but even if this claim is correct, laws are of little use if they are not properly enforced.
by Richard Partington Economics correspondent on (#5HWWT)
Experts say recovery at risk amid sharp fall in EU workers and dwindling interest in UK jobs from abroadBritain’s employers are struggling to hire staff as lockdown lifts amid an exodus of overseas workers caused by the Covid pandemic and Brexit, industry figures reveal.According to the Chartered Institute of Personnel and Development (CIPD) and the recruitment firm Adecco, employers plan to hire at the fastest rate in eight years, led by the reopening of the hospitality and retail sectors as pandemic restrictions are relaxed in England and Wales on Monday.Related: EU citizens arriving in UK being locked up and expelled Continue reading...
The effects of the pandemic are still with us, writes Gene Marks, creating a problem of supply and demand. It makes sense to pay workers moreIt’s not news that employers are struggling to fill open positions. There are a lot of different reasons why so many people are staying at home – the lack of childcare options and a continuing fear for health and safety to stimulus payments and expanded federal unemployment benefits. None of this really relevant to small business owners right now. The fact is that, despite a growing economy and increased demand, there’s a serious labor shortage and just about every small business owner I talk to is struggling to find people.Related: Does Biden’s Pro Act contain a nasty surprise for small businesses? | Gene Marks Continue reading...
Countries came together early and decisively to fix a broken global system. The same ambition is needed todayWar was still raging in Europe and Asia when delegates from 44 countries met at Bretton Woods in New Hampshire in July 1944. Three weeks of negotiations produced two new global institutions, the International Monetary Fund and the World Bank, and a different economic mindset.Related: The Guardian view on the IMF and World Bank: back a global Green New Deal | EditorialRelated: The Guardian view on a comeback for Keynes: revolutionary road | Editorial Continue reading...
England’s football clubs may be of Champions League quality, but the current political debacle reveals our politicians are notIt turns out that throughout the Brexit discussions with the British government, the EU’s chief negotiator, Michel Barnier, was keeping a diary. That he managed to do this at the end of days of usually frustrating talks says something for Barnier’s staying power. And to judge from speculation about the next French presidential election, he intends to stay around for some time.His diary has been published in France. Surprise, surprise: with one or two exceptions, the British side does not come too well out of what our football commentators would call “the Frenchman’s” reflections.The 'bureaucracy of Brussels' was largely a myth. Now we do have bureaucratic delays to normal business, as a direct consequence of Brexit Continue reading...
Economies are now so heavy with savings and state cash that rising prices cannot be ruled out. But will it happen?The spectre of inflation had investors on the run last week. With no handbook to guide them on how economies behave in a pandemic, markets are struggling to predict whether a post-Covid recovery will be so strong as to bring with it a tidal wave of spending that sends prices spiralling.Investors are spooked because rising inflation, which threatens investment and consumer spending, would need to be tamed by a rise in currently rock-bottom interest rates – and that would be anathema to markets and a corporate sector that have grown used to cheap money.Related: Record metals boom may threaten transition to green energy Continue reading...
by Jessica Elgot Deputy political editor on (#5HT23)
Shadow chancellor will discuss how party can appeal to blue-collar voters and urban graduatesThe new shadow chancellor, Rachel Reeves, intends to consult Joe Biden’s economic team on how Labour can make a major economic offer before the next election, rooted in job security, childcare and social infrastructure.The party has suffered a bruising week of infighting, criticism of Keir Starmer’s leadership and questions over the party’s values, which both Starmer and Reeves will be called on to address in the coming months. Continue reading...
Governor Andrew Bailey at odds with bank’s chief economist warning of price inflation above 2% targetThe governor of the Bank of England has sought to calm financial market fears over rising inflation but has exposed a policy rift with Threadneedle Street’s outgoing chief economist, Andy Haldane.The day after Haldane used a newspaper article to warn of the need to prevent the “inflation genie” getting out of the bottle, Andrew Bailey said he thought upward price pressures would prove temporary.Related: Top Bank of England economist warns of 1970s-style price inflation Continue reading...
But news from the US means markets are likely to remain twitchy at the prospect of interest rate hikesFlared jeans. Fawlty Towers. Abba churning out No 1 singles. It has been a long time, but the explanation for the severe bout of jitters on global stock markets this week comes down to a word that was on everybody’s lips in the mid-1970s: inflation.Inflation, the preoccupation of prime ministers from Harold Wilson to Margaret Thatcher and of US presidents from Gerald Ford to Ronald Reagan, was considered yesterday’s problem. News this week has forced investors to rethink that comforting assumption. Continue reading...
Andy Haldane says economic recovery will resemble bouncing tennis ball and outpace US this yearBritain’s economy will “power through in the months ahead”, according to a senior Bank of England policymaker, “moving swiftly from bounce-back to boom”.The recovery will resemble a bouncing tennis ball and outpace the US and the rest of the G7 this year, said Andy Haldane, the central bank’s outgoing chief economist.Related: Markets fall again as inflation worries rattle investors – business live Continue reading...