As a key budget approaches, the chancellor must resist the urge to please his hawkish admirers, and continue to spend freelyTime is short as the chancellor tries to devise a coherent package for his budget on 3 March. Already it looks like being an impossible task.In the same way as the Conservative party is at odds over how to tackle the pandemic, it also cannot decide on what direction to take when the vaccine – maybe by as early as the summer – begins to clear the economic fog.If the Treasury limits its room for manoeuvre and insists on pleasing all sides, then its spending will be incoherent Continue reading...
The idea of being able to put a price on nature is dividing opinion, but the financial value of ‘ecosystem services’ is increasingly guiding policyIn 1996, Prof Shahid Naeem was part of a team of researchers who set out to value the Earth. Specifically, they were trying to establish the dollar value of all of the “ecosystem services” the planet provides to humans every year. Around $33tn, they concluded, nearly double global GDP at the time.“The team was half ecologists and half economists. The ecologists found the exercise really scary but understood the utility of it. The economists felt nature could be valued but they disagreed about how it could be done,” Naeem says.We will be running a series of occasional articles looking at the key issues and people involved at the Cop15 of the UN Convention on Biological Diversity scheduled to be held in Kunming, China, in 2021. The meeting will bring together governments from around the world to sign up to a Paris-style agreement on biodiversity that sets goals for the next decade.
International Monetary Fund says there are concerns about share price bubbleGovernments and central banks must maintain their pandemic rescue programmes or risk triggering a stock market crash, the International Monetary Fund has said.Warning that there were legitimate concerns about a share price bubble, the Washington-based organisation said that without continued low interest rates and government subsidies it was possible a “correction” in stock markets would occur. Continue reading...
Ex-PM calls for Treasury to get ahead of Covid crisis as LSE report warns 1m firms could fail by spring putting 2.5m jobs at riskGordon Brown has called for emergency measures to support businesses in the budget after new research from the London School of Economics warned almost 1m UK companies were at risk of failure in the next three months.The former prime minister said the report’s finding that one in seven businesses – employing 2.5 million people – might be forced to close by the spring should act as a “clarion call” to Rishi Sunak as he prepares his tax and spending measures for 3 March.Related: IMF downgrades forecast for UK economic recovery Continue reading...
Financial body says UK growth in 2021 will be lower than earlier forecasts, while global recovery will be strongerThe International Monetary Fund has downgraded forecasts for the UK’s recovery this year while the expansion of the global economy, aided by accelerating vaccine rollouts, is expected to gather pace.Illustrating the severe impact of the pandemic on the UK economy, the IMF said in its latest forecast that the UK’s national income, or GDP, would expand by 4.5% this year, down 1.4 percentage points from the 5.9% growth forecast made last October. Continue reading...
The party has done the same thing every time a Democrat has won the presidencyHigh among the US president Joe Biden’s many priorities is reinvigorating an economy that – judging by the latest employment numbers – appeared to be slowing as 2021 began. Even if Covid-19 abates during the course of the year, and pent-up consumer demand kicks in, the US faces immediate challenges in areas such as education, infrastructure investment, state and local finances, and especially the fight against the pandemic itself.Biden has thus announced a $1.9tn (£1.4tn) “American Rescue Plan”. Moreover, he is rare among successful US presidential candidates in having stated honestly during the campaign that his spending would continue the recent trend of record budget deficits, notwithstanding his plans also to raise taxes on the wealthy. Most economists approve of this fiscal expansion, in light of the US’s still-high unemployment, low inflation and very low interest rates.Related: What can we learn from the UK's response to Covid-19? | Mohamed El-Erian Continue reading...
Analysis: The unemployment rate hit a four-year high in the autumn and there is a risk it could go higherThese are fast-moving times. The latest official unemployment figures tell us what was happening to the UK labour market in the autumn and they already have a historical feel about them. Since the jobless rate hit a four-year high of 5%, restrictions on the economy have been loosened and then reimposed even more stringently. A mass vaccination programme has got under way.Even so, there are four key messages from the unemployment statistics.Related: UK unemployment reaches four-year high in Covid-19 lockdown Continue reading...
It is mad to be concerned about levels of government debt when so many people’s livelihoods and wellbeing are at stakeLast November, the Office for Budget Responsibility’s worst-case scenario figured that the double whammy of a lingering pandemic and a no-deal Brexit would see 4.2 million people out of work by 2022. The good news is that Britain clinched a deal with the EU before it left its regulatory orbit. The bad news is that the OBR’s worst-case scenario almost certainly underestimates the scale of the jobs crisis. Ministers have wilfully shut their eyes to the facts, clutching at the straws of dodgy statistics and inadequate policy responses.We ignore the obvious at our peril. A report by the Alliance for Full Employment, a cross-party coalition of politicians, charities, trade unions and faith leaders, reckons that within months at least one in 10 workers (about four million people) will be without work. Government ministers may latch on to the fact that Gordon Brown is the report’s messenger and train their fire on the former Labour prime minister. But they would do better to deal with its message. Continue reading...
Rolling coverage of the latest economic and financial news as online retailers swoop in on two of Britain’s major high street brands2.56pm GMTWe started Monday morning with news that online retailers Boohoo and Asos are swooping in on two of Britain’s major high street brands:2.33pm GMTUS markets are open for trading and the Nasdaq had already hit a record high.U.S. markets open higher https://t.co/LiUQbJIBO3 pic.twitter.com/Tq2QIn34dL2.24pm GMTChinese President Xi Jinping has used his speech at the digital Davos meeting to call for greater global cooperation, and - without naming names - warn that countries that decide to go-it-alone “will always fail”We should build an open world economy ... discard discriminatory and exclusionary standards, rules and systems, and take down barriers to trade, investment and technological exchanges.To build small circles or start a new Cold War, to reject, threaten or intimidate others, to wilfully impose decoupling, supply disruption or sanctions, and to create isolation or estrangement will only push the world into division and even confrontation.We cannot tackle common challenges in a divided world, and confrontation will lead us to a dead end.1.59pm GMTBREAKING: Mike Ashley’s Frasers Group have announced they will close the House of Fraser store at the Jenners building in Edinburgh in May, leading to 200 job losses, according to Reuters.1.43pm GMTCineworld has been dealt a blow after nearly a third of investors voted against a controversial pay plan for its senior bosses.We acknowledge that there were a significant number of votes cast against the plan and the board will continue to engage with shareholders on remuneration matters in the coming months in light of the feedback received during our consultation.1.20pm GMTThe economic blow from Covid-19 has cost workers around the world $3.7tn (£2.7tn) in lost earnings, after the pandemic wiped out four times the number of working hours lost in the 2008 financial crisis, according to the UN’s labour body.The International Labour Organization (ILO) said women and younger workers had borne the brunt of job losses and reductions in hours, and warned that people in sectors hardest-hit by the crisis – such as hospitality and retail – risked being left behind when the economy recovers.Related: Covid-19 has cost global workers $3.7tn in lost earnings, says ILO1.07pm GMTStocks have fallen further in the past two hours, with most major indices down more than 1%, as the prospect of extended or tougher Covid lockdowns threatens economic growth in the short term.It would appear that European markets are not enjoying the benefits of the Biden spending hopes like their US counterparts as restriction fears are the dominant story on this side of the Atlantic.There has been little in the way of fresh news to spark excitement. Last week, US stocks set fresh records on account of President Biden’s stimulus plans, which influenced the positive moves we saw in Asia overnight but the mood is a little duller in this part of the world.France already has tough restrictions in place but there is speculation the country is heading for a renewed lockdown.12.22pm GMTRetail trade union Usdaw is seeking urgent meetings with Debenhams’ administrators and calling on the government to do more to save high streets after the failed department store said it would close all stores following the brand’s sale to Boohoo.Dave Gill, Usdaw National Officer, said:It is devastating news for our high streets that Debenhams’ administrators have sold the company brand to an online only retailer.Throughout Debenhams’ difficulties the company and then administrators have refused to engage with Usdaw, the staff are being treated appallingly.12.07pm GMTSpringboard data released this morning shows that footfall across UK retail destinations (at least the ones that are open during lockdown) rose 9% in the week to 23 January.Despite rain and snow last week across much of the UK, footfall rose in retail destinations last week from the week before for the first time in five weeks; perhaps providing the first indications of lockdown fatigue emerging once again.The last rise in footfall was in the peak Christmas trading week beginning 13th December, and even then the rise was only a third as large as last week’s; since then there has been a double digit drop in footfall in each week.11.58am GMTGordon Fletcher of the University of Salford Business School says the Boohoo deal is proof that shoppers are becoming less tied to the brick and mortar presence of their favourite brands:A very clear message is being broadcast. Brands are still important. Brands have credibility and reputation.Consumers have strong emotional connections with brands. However, the importance of the bricks and mortar traditionally associated with retail brands has now fully waned.11.20am GMTThe FT’s retail correspondent Jonathan Eley reflects on how fortunes have changed for Boohoo, Asos, Debenhams and Arcadia over the past 15 years:Quite a year, was 2006:
by Fiona Harvey Environment correspondent on (#5D8NV)
Kristalina Georgieva says investing to create resilient economies is a ‘win-win-win-win’ scenarioHelping the most vulnerable people to cope with the climate crisis can boost the global economy during the Covid crisis and governments should make this a priority, the head of the International Monetary Fund has said.Kristalina Georgieva said international responses to the pandemic must urgently take account of the need to adapt to the impacts of extreme weather and other climate shocks, as well as reducing greenhouse gas emissions.Related: Road to net zero: what the Committee on Climate Change recommends Continue reading...
The paralysis at Britain’s new borders was wholly foreseeable to those not led astray by zealotry and ignorance in high officeTeething troubles? Bumps in the road? Pull the other one, Mr Gove. As the daily news from fishing crews, farmers, road hauliers, wine merchants, musicians and thousands of businesses up and down the land – not least in Northern Ireland – confirms, Brexit tier 3 is indeed a disaster. Far from having teething troubles that disappear, many of these businesses are having their commercial teeth extracted.It becomes increasingly manifest by the day that this is a Conservative act of conscious economic self-harm which, in an ideal world, would be rescinded before things get a lot worse. Not to put too fine a point upon it, Brexit is not only a disaster: it is also plain stupid.Leaving perfectly sensible trading arrangements was always guaranteed to end in tears. We – or some of us – have done it to ourselves Continue reading...
Former prime minister calls for total rethink on support for unemployed and assessment of data after new reportThe full scale of Britain’s jobs crisis is being underestimated because hundreds of thousands of people are being missed by official unemployment figures, Gordon Brown has warned.At least 300,000 out-of-work people across the UK are being missed by official figures, according to a study backed by the former prime minister. He warned that it meant Rishi Sunak, the chancellor, was at risk of drawing up a financial rescue package that failed to address the impact of the pandemic’s economic fallout.Related: UK economy facing its 'darkest hour' due to lockdown, warns Bank governor Continue reading...
The leader has declared victory over the virus, but a fresh outbreak is complicating the narrativeWhen Britain was in its second lockdown last November and the economy was contracting, China’s quarterly growth rate was hitting 6.5%. Figures last week showed that for the full year, the world’s second-largest economy could boast a growth rate of 2.3% while all its rivals in Europe and the Americas were going backwards.The trend could be traced back to Beijing’s efforts to tackle the virus – albeit after a period of denial – and keep infection rates among the lowest in the world. Continue reading...
Philipp Wilhelm knows local people rely on forum’s revenue – but still thinks world must changeIn his youth, Philipp Wilhelm was at the forefront of protests against the World Economic Forum’s annual “extreme capitalism” gathering of the business and political elite in Davos, the Swiss mountain resort where he grew up.Now, however, Wilhelm is the mayor of the town and his central mission is to ensure the return of the WEF jamboree, which had been scheduled to start next week but was cancelled this year due to the pandemic. Continue reading...
Actions aim to help American families and workers struggling with economic toll of Covid-19Declaring the US government had a “moral obligation” to act, Joe Biden signed a pair of executive orders meant to provide emergency relief to millions of American families grappling with the economic toll of the Covid-19 pandemic.Related: Biden warns Covid will 'get worse before it gets better' as he unveils strategy Continue reading...
Service sector hit hard by closure of shops and restaurants as manufacturing also suffersCoronavirus – latest updatesSee all our coronavirus coverageFears that the UK economy is facing a double-dip recession have intensified after a poor Christmas for retailers was followed by a slump in activity in January as tougher lockdown measures took effect.In a triple-whammy of bad news for the chancellor, Rishi Sunak, official figures showing weak consumer spending and the third highest monthly borrowing on record were accompanied by evidence that the UK’s private sector had fallen this month to its lowest level since May. Continue reading...
For an emirate dependent on trade, transport and tourism, vaccination, not lockdown, is key to keeping its economy goingAs if the Boohoo online fashion company had not generated enough controversy in recent months, its bosses once again found themselves in the headlines last week for hosting a four-day meeting with suppliers in the luxurious surroundings of a Dubai hotel.The company’s top executives had taken a private jet to the emirate for the get-together with the businessmen and women who supply their fabrics and manufacture their fashions, despite Foreign Office guidance that advises against all but essential travel. Continue reading...
by Richard Partington Economics correspondent on (#5D5G0)
Job opportunities increasing for higher-paid staff in sign of growing inequalityThe UK’s lowest-paid workers are more than twice as likely to have lost their jobs in the coronavirus pandemic than higher-paid employees, according to a study revealing rising inequality amid the crisis.The Institute for Employment Studies said one in 20 low-paid workers had fallen out of a job in each quarter since the pandemic struck – equivalent to 250,000 workers across Britain – compared with one in 50 of those on higher wages. Continue reading...
by Presented by Heather Stewart, with Peter Walker, S on (#5D2QS)
Heather Stewart and Peter Walker discuss the latest on the vaccine rollout and universal credit. Severin Carrell examines the upcoming Scottish Labour leadership contest. Plus, Miatta Fahnbulleh and Will Tanner discuss ‘levelling up’On Monday night, six Tory MPs defied calls from the prime minister to abstain from a Labour opposition day debate on the planned removal of a £20-a-week increase in universal credit for millions of people.Boris Johnson called the vote a “stunt”, and then through his new press secretary asked for people in political debate to be nicer to each other, with some calling him a hypocrite.
Incoming Treasury secretary’s speech boosts markets with call on Republicans to back Joe Biden’s $1.9tn stimulus planJanet Yellen, the economist picked by Joe Biden to run the US Treasury, has said America needs to “act big” to revive its flagging economy and protect itself against long-term scarring with a major stimulus package.The former chairman of the US central bank, the Federal Reserve, underlined the new administration’s determination to press ahead with plans to boost government spending when she told a Senate committee that the benefits of action by Washington outweighed the costs.Related: Goldman Sachs profits surge; EU car sales in record fall – business live Continue reading...
by Richard Partington Economics correspondent on (#5D05R)
Rapid economic recovery from Covid recession could help ministers avoid increasing taxes, says Jesse NormanA Treasury minister has downplayed the need for immediate tax rises to tackle record levels of government borrowing caused by the coronavirus pandemic.Jesse Norman said a rapid economic recovery from the worst recession for more than three centuries could help ministers avoid increasing the tax take in response to record borrowing levels. Continue reading...
Country was expanding at a faster rate than before the coronavirus pandemic at the end of 2020China’s economy has posted its strongest growth in two years after completing a rapid recovery from the slump caused by the Covid-19 pandemic at the start of 2020.Although the 2.3% annual increase in activity for the world’s second biggest economy was its slowest since 1976, by the final three months of last year China was expanding at a faster rate than before the crisis. Continue reading...
Economically, 2020 was a terrible year for the UK, but the real damage will not be easy to assessNext month it will be official. Figures will provide the first estimate of how much the UK economy shrank by in 2020. Depending on what happened when lockdown restrictions were temporarily eased in December, the likelihood is that there was a fall of about 10%.That will be the signal for all sorts of comparisons. Germany, which has already released data, contracted by 5% last year. Numbers for the US are not yet out but will probably show the world’s biggest economy suffered a 4%-5% drop in gross domestic product. China grew by about 2%.Related: 'How many more lockdowns can we go through?' Bosses on Covid double-dip recession Continue reading...