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...

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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

Number of workers on payrolls up by 356,000, with easing of Covid controls having impact on hiring

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...

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...

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When Doug Fishbone came across an abandoned apartment complex in Cork, he decided to recreate it in a gallery – to highlight everything that’s wrong with our property-fuelled financial systemA grim concrete wall greets visitors to the Crawford Art Gallery in Cork. It fills the full height of the space, hemmed in by a corrugated steel fence. You might think you’d walked into a room still under construction – until you notice the street lamp. It casts an eerie glow across the facades of stained render and broken windows that line the alleyway running through the middle of the space.

Desire for larger homes and outdoor space during the pandemic help drive growth in the year to MayUK house prices rose by 10% in the year to May, the fastest rate since before the 2008 financial crisis, as buyers scrambled to take advantage of the stamp duty holiday in some parts of the country.Data from the Office for National Statistics put the average price of a property at £254,624. The annual growth appears to have been driven by buyers’ desire for larger homes and outdoor space, and the stamp duty savings that were largest on homes in England and Northern Ireland priced at £500,000 and above. Continue reading...

June figure is highest level since August 2018 and above analysts’ forecasts

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Jump in consumer prices will ratchet up pressure on Federal Reserve to tighten monetary policyUS inflation hit a 13-year high in June, driven by a rise in the cost of used cars.Consumer prices rose 5.4% in the 12 months to the end of June, up from 5% the previous month, the largest increase since August 2008.Related: Does Joe Biden’s spending plan really risk high inflation? Related: Why stagflation is a growing threat to the global economy Continue reading...

Better-than-expected figures for June come as Covid lockdown measures ease worldwideChina’s exports and imports both rose strongly in June, helping ease concerns over global growth that have knocked financial markets in recent days.Exports grew by 32% year on year in June to $281bn (£203bn), according to figures from China’s General Administration of Customs. This is up from the 28% growth recorded in May, and better than analysts had expected. It marks 12 months of continuous export growth. Continue reading...

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Poll shows 80% of Britons against reduction in working hours if accompanied by a cut in wagesThe overwhelming majority of British workers would not want to see the introduction of a four-day working week if it meant taking a cut to their pay.Eight out of 10 British employees would not favour accepting a reduction in working hours if it resulted in lower wages, according to research by cross-party thinktank, the Social Market Foundation (SMF), with only one in 10 employees willing to work less and earn less.Related: 'We see huge benefits': firms adopt four-day week in Covid crisisRelated: Four-day week would be affordable for most UK firms, says thinktank Continue reading...

Survey shows firms most optimistic since 2005, as hiring intentions reach a record high despite a surge in Covid cases

Resolution Foundation finds rising house and asset prices have ‘turbo-charged’ gap between richest and poorestBritain’s wealth gap has ballooned during the pandemic with the richest 10% gaining £50,000 on average, dwarfing increases for the poorest third of the population, according to a thinktank report.The Resolution Foundation said wealth had increased during lockdown as a result of a lack of spending opportunities and rising house prices, but the benefits had been skewed to the richest by a ratio of more than 500 to 1. Continue reading...

Dearth of delivery drivers, abattoir staff and fruit pickers caused by Covid and Brexit are fuelling wage rises with 5% hike in prices forecastFood prices could rise by about 5% by the autumn – and turkeys and pigs in blankets could be in short supply this Christmas – as shortages of delivery drivers, abattoir staff and other workers drive up pay and other costs.Industry insiders say that pay for lorry drivers and other supply chain workers, including abbatoir workers, plus vegetable and fruit pickers and packers have all risen because of difficulties in finding sufficient staff.Related: England’s 19 July reopening may boost UK plc but a longer-term approach is needed Continue reading...

The economy needs a spending splurge but well thought out economic and welfare investment may help more than a bonfire of restrictionsThis is crunch time. Since March, the lockdown restrictions imposed at the turn of the year in all four UK countries have been eased but only gradually. Given that Britain has been at the forefront of the global vaccine effort, progress in opening up the economy has been relatively slow.That all changes on 19 July, with a big bang removal of statutory curbs on activity in England. The coming weeks will also see an easing of restrictions in Northern Ireland, Scotland and Wales.Related: Rishi Sunak has been running the economy on autopilot but needs to change course | Richard Partington Continue reading...

Rishi Sunak has signalled that a policy agenda favouring older people is in retreatHunger for fairness is universal. But to want fairness does not mean to want equality. Rather, it means acceptance of the economic and social reality that intelligence, muscle, effort, application and ability may vary, but rewards must remain proportionate. No one should receive more than their due desert.Crucially, fairness means recognising that life throws everyone undeserved good and bad luck, often through no fault of their own. The commonweal should step in to correct the resulting injustices. These concepts of proportionality and necessary collective action to mitigate the accidents of luck are deeply rooted. Nearly every society levies some tax when inheritance is passed from wealthy parents to wealthy children – and every society attempts to relieve, even if sometimes not very effectively, the circumstances of the children of the poor.Pensioners will be reaping the bulk of the 'savings' made through savage cuts to the aid budgetRelated: Rishi Sunak hints at suspension to pension triple lock Continue reading...

The Renaissance thinker, despite his reputation, believed politicians should act decisively to benefit the state. The PM has not done soThe Queen has recognised the achievements of doctors, nurses and ancillary staff by awarding the National Health Service the George Cross. Honours do not come much higher than that. And the government of Prime Minister Johnson and Chancellor Sunak? It has rewarded NHS workers with a 2% wage cut.The figure of 2% is the real wage cut that results from the already miserly 1% pay award once the impact on it of an estimated 3% rise in prices is taken into account.Johnson’s latest disaster is the announcement that caution will be thrown to the winds, and masks and social distancing abandoned. This is reckless Continue reading...

Banking and property did well even in lockdown, but businesses such as office services and retailing may see profound changeWithout any fuss, the UK financial services industry has clambered back to its pre-pandemic level and even added two percentage points of growth since February 2020, according to official figures last week.Banks and insurance companies may have slimmed down their staff, but customers have kept borrowing and saving, making the sector one of the few to have exceeded previous levels of activity. Continue reading...

Experts worried about long-term impact on low-income and non-white Americans, populations community colleges tend to serveDavid Ramirez, a student at Pasadena City College in Pasadena, California, struggled with balancing work and classes during the pandemic. Ramirez, who works at Starbucks, worked at least 30 hours a week in addition to his classes.He wasn’t alone. The number of students enrolled in community colleges – local educational establishments that offer two-year courses and are often seen as an affordable stepping stone to higher education – was down 9.5% this past spring, about 476,000 fewer students than in spring 2020, according to National Student Clearinghouse data released last month.Related: ‘The benefits outweigh the negatives’: US college students return to class Continue reading...

Cybersecurity comes down to which side has access to more information about the other and can utilize it bestThis week, shares in China’s giant ride-hailing app Didi crashed by more than 20%. A few days before, Didi had raised $4.4bn in a massive IPO in New York – the biggest initial public offering by a Chinese company since Alibaba’s debut in 2014.The proximate cause of Didi’s crash was an announcement by China’s Cyberspace Administration that it suspected Didi of illegally collecting and using personal information. Pending an investigation, it had ordered Didi to stop registering new users and removed Didi’s app from China’s app stores.Related: Didi the latest casualty as China tackles tech’s ‘barbaric growth’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 columnist for Guardian US. Continue reading...

Analysis: National sporting success has failed to boost the economy in the past, but this time might be differentOn Saturday 30 July 1966 the then prime minister, Harold Wilson, took his seat in the royal box at Wembley to watch England play West Germany.If ever there were a moment for sporting triumph to prompt an economic feelgood factor it was when Geoff Hurst raced through in the final seconds to seal England’s 4-2 victory.Related: Cup tie: Gareth Southgate’s lucky polka dot neckwear prompts sales surge Continue reading...

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A pledge to use the state’s £290bn procurement budget to buy from British companies is all about a future outside the EUWhatever the patriotic gloss and 1960s-sounding slogan, the shadow chancellor Rachel Reeves’s Buy British policy announcement is a genuinely smart response to a newly emerging economic consensus. Pledging that a Labour government would use the state’s £290bn procurement budget to buy from British companies, provide funds for bringing supply chains back to the UK and seek improved agreements with the European Union on key trade pressure points such as professional qualifications, Reeves’s package is the surest indicator yet that both parties have accepted the previous assumptions of decades of free-market, “neoliberal” globalisation are shifting. Government intervention is back, in a big way, and the political arguments of the future will be about who can do it best, not whether it should be done at all.Strikingly, this is the first major economic announcement under Keir Starmer’s leadership that directly confronts Britain’s future outside the EU. By insisting that government spending could be deliberately targeted to create secure, high-paying jobs and support domestic supply chains, the policy would run up against the EU’s level playing field rules if Britain were still a member. When Jeremy Corbyn’s Labour launched a similar initiative in summer 2018, promising to Build it in Britain, the howling from certain quarters about “red Ukip” or worse pushed the party into a retreat. Now the country is decisively outside the EU, Starmer’s Labour faces no such constraint.James Meadway is director of the Progressive Economy ForumThis article was amended on 9 July 2021 to make clear that a government decision on Nvidia’s bid to buy ARM awaits the outcome of an inquiry. Continue reading...

GDP expanded by 0.8% in May, behind the 1.5% forecast, as construction sector also shrank

Investors worry resurgence of Covid-19 cases will slow economic growth and stall global recovery

ECB denies ‘moving the goalposts as prices begin to rise’ and says new strategy will be easier to communicateThe European Central Bank (ECB) has overhauled its rulebook to allow for the expansion of its unprecedented stimulus programme in a direct rebuff to German politicians concerned that printing billions of extra euros this year will spark an inflationary spiral.After an 18-month review, the central bank for the 19-member eurozone said it would shift its inflation target from “below but close to 2%” to a 2% target it said was easier to communicate to financial markets and the public.Related: Tax financial transactions to help Covid recovery, G20 told Continue reading...

Economists say Tobin taxes would raise vital funds to help support global poor and tackle climate crisis

Data comes before official figures for UK’s national income are expected to show fourth month of expansion

Analysis: labour market appears to have perked up with UK jobless rate at 4.7% but labour shortage ‘traffic jam’ could ease soon

Rush to reopen and departure of overseas workers have caused problems in areas including transport, hospitality and constructionBritain’s employers are struggling with the worst staff shortages since the late 1990s, amid the rush to reopen from lockdown and a sharp drop in overseas workers due to Covid and Brexit.Sounding the alarm over the risks to economic recovery from acute labour shortages, the Recruitment and Employment Confederation (REC) and the accountancy firm KPMG said the number of available workers plunged in June at the fastest rate since 1997. Continue reading...

Analysis suggests recent rise in employment will go into reverse over next six months

Office for Budget Responsibility says UK debt will rise to pay for decarbonisation, and early action would limit the bill

Chancellor faces unfunded spending commitments on health, education and transport, says watchdog

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New alliance of multilateral institutions warns vaccine inequity could curb economic recovery

Analysis: Businesses and unions have doubts about big-bang approach to reopening economy

Research by Resolution Foundation and IFS suggests 18- to 24-year-olds could bear scars of crisis for yearsMore than one in four young people are worried that poor mental health will affect their ability to find work after the Covid-19 pandemic, according to a report.After the opening up of the British economy this spring, the Resolution Foundation said young workers were still suffering a heavier toll than their older colleagues and were paying a heavier price with their mental health.Related: Revealed: rise in stress among those working from home Continue reading...

Ground of pandemic is shifting, so forecast of post-Covid consumer spending boom could be mutedEngland is on the move. Despite rising infections and the race between coronavirus vaccines and variants back in full swing, there has been a distinct shift in tone from ministers over the past week about the English exit from pandemic restrictions.For several weeks the government has been watching and waiting, poring over Covid-19 data in the hope the link between infections, hospitalisations and deaths has been broken by the vaccination programme. So far, the news is encouraging despite rising concern as the Delta variant drives a fresh wave in the pandemic.Further growth in infections will put the recovery on the back foot, regardless of whether restrictions are relaxed Continue reading...

Buoyant Labour sets out post-Brexit vision promising that more public contracts will go to UK companiesLabour has announced a new post-Brexit economic vision for the UK involving ambitious plans to “make, sell and buy more in Britain” as it seeks to build a strongly patriotic policy platform with which to take on the Tories.Emboldened by its morale-boosting victory in Thursday’s Batley and Spen byelection, when the party halted Tory advances into its strongholds in traditional manufacturing areas, the move marks the opening shot in a new campaign to be led by Keir Starmer focused on jobs and the battle against crime in all local communities.Related: MPs criticise ministers’ failure to plan industrial policyRelated: Forget incremental change: the left shouldn’t be afraid of thinking big | Ed Miliband Continue reading...

But with government more keen on avoiding a crash than addressing inequality, property prices look safeHouse prices are soaring and gazumping has returned in property hotspots. The average cost of a home jumped by 13.4% in June from the same month last year, according to Nationwide building society.This is more than four times the 3% annual rate of growth in wages during April and more than six times the 2.1% increase in consumer price inflation (CPI) registered in May. According to upmarket estate agent Knight Frank, figures out next month are likely to show sales across Britain hitting an all-time record.£10bn of help-to-buy subsidy has done nothing to make homes more affordable for first-time buyers Continue reading...

June’s numbers suggest economy is continuing to recover at steady pace – but another pattern shows people are quitting their jobsThe Bureau of Labor Statistics reported on Friday that the US economy added 850,000 jobs last month. Hidden by this encouraging figure is the hint of an unusual trend: people are beginning to quit their jobs in extraordinary numbers.June’s numbers, in combination with last month’s figures, suggest that the economy is continuing to recover at a steady pace. The rate of unemployment was 5.9% and 9.5 million people remain unemployed. Continue reading...