Decline started before Covid pandemic and continued to drop as country entered first lockdown in March 2020Wellbeing in England has decreased in the last year while loneliness and mistrust in government has increased, analysis of ONS data shows.The new report from Carnegie UK comes in advance of the publication on Tuesday of the latest ONS GDP figures, which are expected to show that the UK economy grew in the second quarter of 2021.Related: Virtual contact worse than no contact for over-60s in lockdown, says study Continue reading...
After 10 years of writing about capitalism I saw that the erasure of women is not only palpable, it’s bound to my own flesh and blood… is the economics profession a functionary and tool of patriarchy – or is patriarchy a functionary and tool of economics? – Marilyn WaringEconomically, the rupture of 2020 showed us two things: that our lives depend on care work, especially the unpaid care work still mostly done by women; and that another way is possible.Related: You can’t hide from the numbers: Australian women earn less than men in any job | Greg JerichoWomen’s unpaid domestic labour and all unpaid caring work are not counted and so don’t contribute to GDPRelated: Why women are more likely to suffer from long Covid | Susan Evans and Mark HutchinsonReproductive rights, freedom to leave abusive relationships and other freedoms are nothing without economic empowerment Continue reading...
Report after report is reaching the same conclusion: exporters, including many in the red wall, will be suffering for a long timeBrexit is beginning to take its toll. Trade with the EU is suffering and foreign investment is heading south. Neither trend is temporary and both harm the government’s stated aim of “levelling up” regions that until now have depended on overseas trade to create well-paid jobs.It’s not clear whether the red wall has noticed. Or anyone among the 17.4 million people who voted for Brexit. So far, all the in-depth polling shows there is little movement on the vexed question of EU membership.Businesses in the north-east are already nursing their wounds – a point made by the chamber of commerce last week in an open letter to Boris Johnson Continue reading...
Spending is up. The world has been fighting a war against Covid, and in wartime the power of the state always increasesOver the past 18 months, the world has been amazed at how slippery an enemy Covid-19 has proved to be. The virus first detected in China at the end of 2019 has mutated on a regular basis. Vaccines need to evolve because the virus is changing to survive.The shock to the global economy from the pandemic has been colossal, but things are now looking up – especially for advanced countries. Some are surprised by the pace of recovery, but they perhaps shouldn’t be, because alongside new variants of the virus there has been a new variant of global capitalism.Related: Cautious optimism over Covid as inflation hits three-year highRelated: Another roaring 20s? We need to do better than that | Dan Davies Continue reading...
by Richard Partington Economics correspondent on (#5MR69)
US GDP grew 6.5% in the second quarter of 2021, but fears of a slowing recovery persistThe US economy has returned to its pre-pandemic level despite growing at a weaker rate than expected in the second quarter.Gross domestic product (GDP) increased at a 6.5% annualised rate in the three months to the end of June, according to figures from the US Commerce Department on Thursday, as government financial support helped power a sharp rise in consumer spending.Related: US inflation hits 13-year high in June Continue reading...
Post-Brexit trade adviser Tony Abbott ‘heartened’ by review into takeover of Newport Wafer FabBoris Johnson may block a Chinese-owned company from purchasing the UK’s largest producer of semiconductors, a senior government adviser has suggested, as they warned Beijing was on the brink of initiating a new “cold war”.Tony Abbott, the former prime minister of Australia recruited by Johnson to advise on post-Brexit trade, said he was heartened by a review being launched into the takeover of Welsh microchip manufacturer Newport Wafer Fab by Nexperia and suggested it meant the process could be paused.The global shortage in semiconductors, the microchips that are an essential component in every electronic device in the world, started as a temporary delay in supplies as chip factories shut down when the coronavirus pandemic first hit.Related: Global shortage in computer chips 'reaches crisis point' Continue reading...
Jan Vlieghe says Threadneedle Street should be cautious about raising interest rates to counter inflationBritain’s economy is not out of the woods and the damage caused by the Covid-19 pandemic has been only partly repaired, a Bank of England policymaker has said.Speaking as fresh figures showed only a modest impact on consumer activity from “freedom day”, Jan Vlieghe said Threadneedle Street should be cautious about raising interest rates to counter higher levels of inflation emerging after lockdown.Related: Inflation isn’t out of control yet, governor, but can you reassure us it won’t be? Continue reading...
Keir Starmer says initiative to provide good jobs is necessary as economy emerges from Covid crisisLabour is to launch a “new deal for working people” this week, as Keir Starmer seeks to put creating more secure, better-paid jobs at the heart of his offer to voters.The world of work is one of two areas, together with tackling crime, where Starmer’s team believe they have a distinctive offer and a strong line against Boris Johnson’s government. Continue reading...
A Brexit and Covid-induced pay boom won’t last long while employers hold all the the cardsThe past few days have had a hint of the late 1970s about them. A shortage of lorry drivers has led to fears of food shortages. Nurses are thinking about taking industrial action over pay. The Bank of England has been fretting about rising inflation.Holed up in Chequers, the self-isolating Boris Johnson has been as unconvincing as a bronzed Jim Callaghan was on his return from Guadeloupe in January 1979, when he was misquoted as saying, “Crisis? What crisis?”.Related: UK recovery slows amid weakening consumer demand and staff shortages Continue reading...
In Northern Ireland, the Leavers’ folly is now manifest. How can the opposition stay silent about the root cause of the crisis?‘He did not want to die until Brexit was reversed.” These words were spoken at the funeral last week of my dear friend and former Observer colleague Dick Leonard.Dick died a month ago at the ripe old age of 90. The speaker was his widow, Irène Heidelberger-Leonard, before a group of mourners who included the Labour leader Keir Starmer, to whom Dick had been something of a political mentor.One wonders whether Cummings now thinks that, on top of all the other well-publicised prime ministerial gaffes, the chaos of Brexit may contribute to Johnson’s downfall Continue reading...
TUC says high proportion of people who will be affected by planned £20-a-week benefit cut are in workThe south-west of England will have the highest proportion of low-income workers affected by a £20-a-week cut later this year in universal credit payments, according to analysis by the TUC that illustrates the widespread culture of low pay from Cornwall to Gloucestershire.More than four in 10 universal credit claimants in the south-west have a low-paid job that qualifies them for benefits, a larger percentage than any other region, said the trade union body. Continue reading...
CBI says post-lockdown surge likely to break output records but leaves industry with acute cost pressuresThe number of people employed in Britain’s factories rose at its fastest rate in almost half a century in the past three months as manufacturers sought to cope with a surge in post-lockdown order books, the CBI has said.The business lobby group said jobs, investment, output, costs and prices were all rising rapidly in the strongest period of growth since the early to mid-1970s.Related: Isolate if ‘pinged’ by NHS Covid app, says No 10, despite minister’s claims Continue reading...
Central bank policies have enriched the wealthy – bold politicians must start redistributing wealthIn the Forbes list of the World’s Most Powerful People for 2012, Ben Bernanke, the then chair of the US Federal Reserve, held the sixth position, while Mario Draghi, the then president of the European Central Bank, came in at number eight. They were both ranked above the Chinese president, Xi Jinping. As the global economy struggled with the aftermath of the global financial crisis that began in 2008, and its European cousin, the eurozone crisis, central banks were in the driving seat, easing quantitatively like there was no tomorrow. They were, it was often said, “the only game in town”. Even at the time, some thought there was an element of folie de grandeur in their elevation.This time is different. Although central banks continue to buy bonds incontinently, fiscal policy has been the key response to the Covid-19 pandemic. In the US, President Joe Biden and Congress have led the charge. In the EU, the European Commission’s recovery and resilience facility is at the heart of the €750bn (£650bn) next generation EU plan, while in the UK, the chancellor, Rishi Sunak, is signing the cheques.Related: Has Brexit fatally dented the City of London’s future?Related: Rising inequality? Don't blame the rich Continue reading...
by Richard Partington Economics correspondent on (#5MDR7)
Government on track to spend billions less than planned before pandemic, warns thinktankRishi Sunak is poised to usher in cuts to public services of up to £17bn compared with the government’s pre-pandemic plans unless he takes action this summer to increase funding, a leading thinktank has warned.The Institute for Fiscal Studies said the government was on track to spend between £14bn and £17bn less each year on a range of public services from April 2022 than had been earmarked prior to Covid-19. Continue reading...
Monetary policy committee member warns against choking off UK economy to combat inflationThe Bank of England would risk choking off recovery with an overhasty tightening of policy to combat a temporary rise in inflation, according to both a current and soon-to-be member of the central bank’s key interest-rate-setting committee.Prof Jonathan Haskel, one of the eight members of Threadneedle Street’s monetary policy committee (MPC), said the twin headwinds of the Delta variant of the coronavirus and the withdrawal of support from the government meant “tight policy is not the right policy”. Continue reading...
New figures highlight challenge faced by government in levelling up the British economyThe government’s challenge in levelling up Britain’s economy has been highlighted by official data showing London accounted for almost half of foreign direct investment (FDI) into the UK in the pre-pandemic year of 2019.Reflecting the dominance of the capital to the economy and its position as a global financial centre, the Office for National Statistics (ONS) said London’s FDI was more than three times that of the second highest region – the south-east. Continue reading...
Advertising and marketing company upgrades profits despite growth of Delta Covid variantSir Martin Sorrell’s advertising and marketing company, S4 Capital, has reported booming business amid what it described as a “post-pandemic rebound” in the global economy, as it prepares for expansion.S4 said like-for-like gross profits and revenues were both at levels “beyond expectations”, in a statement to the stock market on Monday. Continue reading...
Corrupt elites and badly managed aid have ensured life for Haitians remains mired in violence and poverty. President Moïse’s assassination marks an escalating catastropheThe Haitian political activist Marie Antoinette Duclair appears to have been unaware that two men on a motorbike were following her car through the badly lit streets of Port-au-Prince.Her passenger on the night of 29 June was a journalist, Diego Charles. They had been attending a meeting, and she was now, at 11 o’clock at night, dropping him at his home in the Christ-Roi area of Haiti’s capital.Related: Ex-senator among three new suspects after murder of Haiti president Continue reading...
Tax is becoming increasingly regressive to the detriment of more deprived areas, committee saysMPs are urging the government to carry out a “long overdue” reform of council tax property values in England.The housing, communities and local government committee said the tax was becoming increasingly regressive to the detriment of more deprived areas.Related: Nine in 10 councils in England see rise in people using food banks Continue reading...
If all had gone well, Rishi Sunak could have delivered a budget to make economic support more tailored and less expensiveSupermarkets warning of empty shelves. Underground lines closed due to staff shortages. A “pingdemic” that has told more than 500,000 people to self-isolate in the past week. Funny sort of freedom day.Yet it was all supposed to be so easy. Britain would gradually emerge from its winter hibernation in a series of measured steps. By June, according to the original roadmap, all restrictions would have gone.Related: Inflation isn’t out of control yet, governor, but can you reassure us it won’t be?Related: Bank of England warns it could step in to curb rising inflation Continue reading...
The Bank of England’s Andrew Bailey needs to say what he will do if the rate of price increases – already 2.5% – remains highThe UK’s annual rate of consumer price inflation was 2.5% in June, we learned last week, up from just 0.7% in March. It has arrived at that point sooner than almost every economist had expected in the spring. Now the forecasters agree 3% is a nailed-on certainty this year, with a few saying 4% will be seen.Related: UK inflation jumps to 2.5% as secondhand car and food prices rise Continue reading...
The opposition leader should address the issue head on: questions about who pays for public services won’t go awayAusterity is on its way back to the top of the Conservative party agenda. Forget about “levelling up”, a skills agenda and a fully functioning welfare state backed by billions of pounds of funding: the scene is set for a three-year spending review that Rishi Sunak has already warned will be extremely tough.Whitehall departments are braced for yet another round of spending cuts justified by the need to keep taxes low and to bring down borrowing in the wake of the billions spent helping the country get through the Covid-19 pandemic. Continue reading...
BoE must be more transparent and justify use of quantitative easing, says Lords reportThe Bank of England risks becoming addicted to creating money and needs to come clean about how it plans to unwind its £895bn bond-buying programme, the House of Lords has warned.A report from a Lords committee – the members of which include the former Threadneedle Street governor Mervyn King – said there was a threat of quantitative easing (QE) leading to higher inflation and causing damage to the government’s finances. Continue reading...
The PM’s plans have been described as rhetoric and the detail is sometimes vague, but here is what we know so farWhat does “levelling up” mean? The prime minister has faced repeated accusations that his ambitions are rhetoric rather than reality. Downing Street said his speech on Thursday in Coventry was setting out a vision, with a white paper to come later this year. It did include some clear ambitions, however there has already been controversy. Continue reading...
Readers respond to the Conservative party’s plan to slash £4bn from the overseas aid budgetThe decision by the government to cut the overseas aid budget from 0.7% to 0.5% of gross national income to save £4bn annually is truly shocking, particularly as the underdevelopment and poverty in many parts of Africa and Asia are partly the legacy of colonialism (Outrage aimed at No 10 as MPs back £4bn cut to foreign aid budget, 13 July). Let’s get the figures in perspective. Borrowing £4bn (instead of cutting aid) would increase the current UK national debt of approximately £2tn by just 0.2%. The damage to the public finances would be negligible. At an interest rate of 1%, the cost of borrowing would be approximately £40m annually to save an estimated 100,000 to 200,000 lives. The cost per person saved would therefore be between £200 and £400 – a trivial sum to put on the value of a life. The interest cost to the UK adult population would be less than £1 per head per annum. If the British people knew the facts, the meanness and pettiness of the government would appal them.
Finance minister denies reports country will scrap 12.5% rate to align with plans for global figure of 15%Ireland has denied reports that it will scrap its low corporate tax regime to align with an international plan for a global tax of 15%.The finance minister, Paschal Donohoe, told RTÉ on Thursday that the country’s 12.5% rate “has been a key feature of our economic policy now for decades” and he was “committed” to maintaining that.Related: G7 tax reform: what has been agreed and which companies will it affect? Continue reading...
Second member of monetary policy committee suggests UK stimulus could be curtailed in near futureThe prospect of early Bank of England action to counter rising inflation has moved closer after a second Threadneedle Street policymaker within 24 hours made the case for a tougher stance.Michael Saunders, one of eight members of the Bank’s monetary policy committee, said on current trends it might become appropriate “fairly soon” to rein in some of the stimulus provided to support the economy.Related: UK inflation jumps to 2.5% as secondhand car and food prices rise Continue reading...
Conservative rhetoric warning of wage-price spirals is disingenuousThirty years ago, Albert O Hirschman published a short book that infuriated conservatives called The Rhetoric of Reaction. The book showed how conservative arguments across time and space fell into three rhetorical buckets: perversity – raising taxes means less revenue; futility – voting changes nothing; and jeopardy – if you give the vote to poor people, you get revolution (the opposite of futility, but who cares about consistency). As well as being a great summer read, Hirschman’s rhetoric continues to shed a useful light on the present conservative obsession (apart from critical race theory) with inflation.Whenever inflation threatens, two versions of the perversity thesis are deployed. The first, usually opined by members of the investor class, argues that inflation mainly hits those on fixed incomes, older and poorer people, thereby proving their concern is born from a sense of care for society’s weakest. Oddly, that same class of folks seem utterly indifferent to older and poorer people until inflation threatens to either reduce their expected investment returns, or impact their leveraged financial strategies, as interest rates rise.Mark Blyth is professor of international economics at Brown University
Boris Johnson may talk a good game on the climate crisis, but ordinary people need financial support to make changesThere are many reasons why the government’s decision to cut the aid budget is dumb. High among them is the failure to see the link between poverty and climate change. If you want to convince people of the need to save the planet, it is a good idea to make sure first that they are not going hungry, have access to running water and can put their children through school.The link between social justice and the green agenda applies domestically as well. Millions of people in Britain count the pennies each week because they are struggling to get by. Exhorting them to change their lifestyles or pay more to heat their homes is not enough. If the government is to meet its ambitious targets people who are less well-off are going to need plenty of help, but as things stand they are not getting it.Related: We're on a collision course with the planet. But with public support, that can change | Larry ElliottLarry Elliott is the Guardian’s economics editor Continue reading...
by Fiona Harvey Environment correspondent on (#5M78S)
Only 10% of $17tn global bailout directed to cutting greenhouse gas emissions and restoring nature, report findsTrillions of dollars poured into rescuing economies around the world from the Covid-19 crisis have been spent in ways that worsen the climate crisis and harm nature because governments have failed to fulfil promises of a “green recovery” from the pandemic.Only about a tenth of the $17tn in bailouts provided by governments since the start of the pandemic was spent on activities that reduced greenhouse gas emissions or restored the natural world, according to analysis from Vivid Economics, published on Thursday. Continue reading...