by Richard Partington Economics correspondent on (#5K5PV)
Figures from the jobs website Indeed expose the impact on employers as they struggle to recruit staffThe number of EU citizens searching for work in Britain has fallen by more than a third since Brexit, according to a study that exposes the impact on UK employers as they struggle to recruit staff.Figures from the jobs website Indeed show searches by EU-based jobseekers for work in the UK were down by 36% in May from average levels in 2019. Low-paid jobs in hospitality, the care sector and warehouses recorded the biggest declines at 41%. Continue reading...
Low-paid workers will earn an additional $18.80 per week after decision by the Fair Work CommissionThe Fair Work Commission has ordered a 2.5% increase in the minimum wage, lifting it to $20.33 an hour, but the pay rise will be delayed for industries hardest hit by the pandemic.The new full-time minimum wage will be $772.60 per week, an increase of $18.80 for Australia’s lowest-paid workers. Continue reading...
Those who bear a disproportionate share of a carbon tax will mobilise against it … unless they are given reason not toIn his classic book, The Logic of Collective Action, the late great Mancur Olson explained that the hardest policies to implement are those with diffuse benefits and concentrated costs. Olson’s argument was straightforward: individuals bearing the costs will vigorously oppose the policy, while the beneficiaries will free ride, preferring that someone else take up the cudgels.Olson’s insight applies to the single most pressing policy challenge facing humanity today, namely the climate crisis. The starting point for addressing it, economists agree, is a tax on carbon. The resulting reduction in emissions would deliver benefits to virtually everyone on the planet. But specific segments of society – Olson’s concentrated interests – will bear a disproportionate share of the costs and mobilise in opposition.Related: Covid-19 and the climate crisis are part of the same battle | Jeffrey Frankel Continue reading...
by Richard Partington Economics correspondent on (#5K3TQ)
Analysis: No 10 hopes we’ll enjoy price reductions in supermarkets but estimated savings put at £1 per householdIt is billed as good for British consumers and good for business, and the first of many post-Brexit trade deals. But while hailed as a “new dawn” by Boris Johnson, the prime minister’s trade treaty with Australia has few economic benefits.Ministers hope consumers will have more choice on the supermarket shelves, a Brexit boost in the first entirely new trade deal since leaving the EU. Tariffs will be cut on Australian products such as Jacob’s Creek and Hardys wines, as well as on beef, lamb, swimwear and confectionery. However, by the government’s own admission, the savings add up to £34m a year – little more than a pound each per household.Related: Fears UK-Australia trade deal could cause surge in tariff-free meat imports Continue reading...
Key elements of the ‘historic’ post-Brexit deal signed by Boris Johnson and Scott MorrisonBoris Johnson has hailed a “historic” trade deal with Australia as a “new dawn” for the two countries, but what is the deal about?Related: Farmers raise concerns as Boris Johnson hails ‘historic’ UK-Australia trade deal Continue reading...
Analysis: Rishi Sunak has rejected calls to extend furlough – and things could turn much worse when it endsThere are danger signs lurking in the unemployment figures.For government ministers, cheered by the resilient jobs market, it may be a little premature to crack open the champagne. It is plausible that the current benign situation turns decidedly worse in the autumn.Related: UK unemployment rate drops again as firms hire more staff Continue reading...
by Richard Partington Economics correspondent on (#5K2W5)
Jobs boosted by partial lifting of Covid restrictions on non-essential shops and hospitality venuesUK unemployment fell for the fourth month in a row in April as businesses took on more staff in response to the relaxation of Covid-19 restrictions.The Office for National Statistics said the jobs market showed further signs of recovery as non-essential shops and hospitality venues were allowed to open outdoors across the UK.Related: Rishi Sunak rejects calls by businesses for furlough extension Continue reading...
The Bank of England’s consultation on public digital cash could represent the biggest shift in the monetary system for 200 yearsLast week, the Bank of England launched a consultation on a UK central bank digital currency (CBDC) and the regulation of private digital currencies, joining dozens of other central banks around the world who are investigating “digital cash” and some, like the Chinese, who are already trialling it.Modern digital money that we use for everyday transactions on our credit cards and for online transactions has become increasingly important to the functioning of the economy, accounting for 97% of the circulating money supply. But unlike physical cash and coins, digital money is not created by the central bank or government but by commercial banks. When a bank makes a loan, it creates new, sterling-denominated electronic deposits in your bank account: money. The total “money supply” in the economy is determined by the rate of new loans issued to households and firms and the rate of repayment by those borrowers.Josh Ryan-Collins is head of finance and macroeconomics at University College London’s Institute for Innovation and Public Purpose Continue reading...
With unemployment among the world’s worst and those under 35 hit hardest, young Nigerians see their prospects rapidly diminishFavour Obi graduated in 2016 with a first class degree in biomedical sciences and what felt like reasonable hopes for a career in medical research.Before a recent shift waiting tables at a fast food restaurant in Lagos, the 27-year-old explained how gradually she let those hopes drift away. “I knew it would be hard to find a job but at the same time I was so determined, I was staying hopeful,” she said. Continue reading...
Full-time female employment in UK has actually risen over the crisis as average working hours slip less than menWomen’s average working hours in the UK have taken a far smaller hit during the pandemic than men’s, according to the Resolution Foundation.Defying predictions of a “shecession” at the start of the pandemic, the thinktank’s quarterly labour market report found that women were not as hard hit by the Covid-19 pandemic as initially thought. Continue reading...
Pent-up demand is temporary and the prospect of a third wave, with all its economic havoc, is very realBritain is on the verge of a historic moment. More than a year since the Covid-19 pandemic began, the endpoint for all social restrictions is within touching distance as spring slips into summer. An announcement is expected from Boris Johnson on Monday.Delay rather than a reopening on 21 June is the most likely decision, as the spread of the Delta variant fuels a third wave in coronavirus infections in the UK. Far from the “freedom day” we had hoped for, we are at yet another moment where the prime minister has built up hopes and then disappointed.Related: GDP rises and suddenly everyone’s afraid of the big, bad inflation beast Continue reading...
A fifth of EU-wide income disparity is down to the difference between countries, with those in the euro area faring worstEconomists generally study inequality – how big income gaps between households are – at the national level. That’s understandable given it’s where major policy choices tend to happen, but this can sideline other issues such as global inequality (income inequality between individuals around the world is traumatically high but encouragingly falling). Fascinating new research looks to fill another such gap: inequality trends across the EU.Unsurprisingly, EU-wide inequality is high – similar to that of Latvia, the third-most unequal EU member – but it’s lower than in the United States. Importantly, 20% of EU inequality is down to income gaps between rich and poor member states, while just 1% in the US relates to differences between the states. The importance of these gaps in determining overall inequality between individuals across the EU helps explain the most interesting finding of the research: EU inequality has declined post-financial crisis, but in the euro area inequality has been slightly increasing. Continue reading...
A summit crucial to the issue of climate change is instead mired in disentangling the mess of Britain’s exit from the EUThere is a certain symmetry about one of the principal themes of the Carbis Bay G7 summit. The first of these meetings – at Rambouillet, outside Paris, in 1975 – was called by the French president, Valéry Giscard d’Estaing, to summon a collective effort to stave off an energy crisis.It began as the Group of Six – the US, Japan, West Germany, the UK, France and Italy. But, in the way of things, what was intended as a one-off special event took on a life of its own, with Canada joining in 1976. In the initial excitement of the collapse of the Soviet Union in 1991 and the west’s attempts to instruct the former USSR in the supposed wonders of western capitalism, Russia was added to the annual gathering of summiteers in 1997.Global Britain? Pull the other one. Once the most popular European destination for inward investment, the UK has been overtaken by France for two years running Continue reading...
Investors are obsessed with the idea of soaring prices, but a glance at the past decade shows there is not much to fearInflation is the word striking fear into global financial markets, and US data last week was far from reassuring. The world’s largest economy reported inflation running at 5% in May, up from 4.2% in April. It is on the move in the UK too, doubling to 1.5% in April, its highest level since the start of the pandemic in March 2020.From New York and Tokyo to the City of London, traders are obsessed with the likely course of rising prices, and how central banks will react. Economists based in the Square Mile say their clients ask about little else when they demand to know which way the financial wind is blowing.This century, employers have been shedding white-collar workers, ignoring unions and hiring on short-term contracts Continue reading...
by Fiona Harvey Environment correspondent on (#5JZMG)
‘Premature austerity will threaten growth’ as world recovers from Covid-19, says climate economistWealthy nations must ignore calls to rein in public spending as the economic recovery from the Covid-19 pandemic gathers pace, or risk a fresh crisis, the climate economist Nicholas Stern has warned.Leaders of the G7 industrialised countries are meeting in Cornwall this weekend, to discuss vaccines, the recovery from the pandemic, and the climate crisis.Related: Global economy set for fastest recovery for more than 80 years Continue reading...
Desmond Whyms on the opportunity this weekend’s G7 meeting presents for global leaders to put pressure on the British government. Plus, Henrietta L Moore on what leaders must do to genuinely ‘Build Back Better’World leaders are meeting this weekend a few miles from my home in Penzance, Cornwall, in what could be our best and last chance to reverse the UK’s destructive aid cuts that followed the Foreign Office takeover of the Department for International Development last year.Up to March of this year, I was proud to work for DfID, having spent many years supporting health systems and confronting disease in some of the most challenging settings in the world. Most recently, I was senior health adviser in Malawi, one of the world’s poorest countries, where our support was vital to confronting Covid-19 and ensuring women can access reproductive health services. The shameful and heartbreaking prospect of having to dismantle this vital support led me to resign and seek more worthwhile employment elsewhere. Continue reading...
British producers describe move to remove protections as ‘hammer blow’ and ‘utter madness’A government body has recommended the removal of limits inherited from the EU on about half of the UK’s steel imports, in a move that provoked fury from British producers.The Trade Remedies Authority (TRA) said on Friday that it would revoke the limits on nine categories of steel product, including some bars and wires, meaning imports will no longer face steep tariffs after quotas are filled. It extended limits for three years on another 10 products, including some steel for railways, gas pipes and large sheets. Continue reading...
Foreigners could be placed on an anti-sanctions list and denied entry into China or expelled from the countryChina has passed a law to counter foreign sanctions in response to US and EU pressure over trade, technology, Hong Kong and Xinjiang.Individuals or entities involved in making or implementing discriminatory measures against Chinese citizens or entities could be put on an anti-sanctions list and may be denied entry into China or be expelled from the country. Their assets within China may be seized or frozen and they could be restricted from doing business there.Related: Think 'sanctions' will trouble China? Then you're stuck in the politics of the past | Ai WeiweiRelated: Cold war or uneasy peace: does defining US-China competition matter? Continue reading...
Stocks rally to fresh highs as data shows consumer price index rose at annual rate of 5% in MayInflation in the US has jumped to the highest rate since 2008 as the world’s largest economy rebounds strongly from the coronavirus crisis.The consumer prices index rose at an annual rate of 5% in May, up from 4.2% in April and the highest since August 2008, according to the US Bureau of Labor Statistics. Inflation has steadily climbed since January, when it was 1.4%. Continue reading...
by Kalyeena Makortoff Banking correspondent on (#5JXCN)
Growth of crypto-assets threatens financial stability and could increase risks faced by banks, they warnGlobal regulators have said cryptocurrencies such as bitcoin should come with the toughest bank capital rules to avoid putting the wider financial system at risk should their value collapse suddenly.The Basel Committee on Banking Supervision, which consists of regulators from the world’s leading financial centres, is proposing a “new conservative prudential treatment” for crypto-assets that would force banks to put aside enough capital to cover 100% of potential losses. Continue reading...
Party shifts narrative to put focus on how ‘decade of Tory misspending’ has weakened economyThe UK lost £16.7bn in tax revenues over nine years of slow growth under the Conservatives, figures unearthed by Labour show, as the party seeks to underline the economic effects of the Tories in office.Labour, under the new shadow chancellor, Rachel Reeves, hopes to build a narrative about “a decade of Tory misspending” which would undermine Boris Johnson’s levelling-up rhetoric.Related: Austerity is alive and well, and giving public services a kicking | Phillip Inman Continue reading...
Legislation shows deeply divided parties are united on confronting China in the ‘race for technologies of the future’The US Senate has overwhelmingly approved a bill to boost American semiconductor production and the development of artificial intelligence and other technology in the face of growing international competition, most notably from China.The 68-32 vote for the bill on Tuesday demonstrates how confronting China economically is an issue that unites both parties in Congress. It is a rare unifying issue in an era of division as pressure grows on Democrats to change Senate rules to push past Republican opposition and gridlock.Related: Chips with everything: how one Taiwanese company drives the world economyRelated: China to overtake US as world's biggest economy by 2028, report predictsThe Associated Press, Reuters and Agence France-Presse contributed to this report Continue reading...
Continued rise stoked by tax breaks and demand from well-off households likely to deepen inequality, says Andy HaldaneBritain’s housing market is “on fire” thanks to the extension of government tax breaks for homebuyers and increased demand from richer households with more savings following coronavirus lockdowns, the Bank of England’s chief economist said on Tuesday.Andy Haldane warned that the property market was likely to continue running hot while all these factors, in combination with the central bank’s ultra-low interest rates, remained in place. He said the recent rise in house prices – which topped 10% over the 12 months to March 2021, according to official data – was very likely to worsen inequality. Continue reading...
We should expect price increases in the Covid recovery phase – and we have the tools to cool the economySlight increases in the rate of inflation in the United States and Europe have triggered financial market anxieties. Has Joe Biden’s administration risked overheating the economy with its $1.9tn (£1.3tn) rescue package and plans for additional spending to invest in infrastructure, job creation and bolstering American families?Such concerns are premature, considering the deep uncertainty we still face. We have never before experienced a pandemic-induced downturn featuring a disproportionately steep service sector recession, unprecedented increases in inequality and soaring savings rates. No one even knows if or when Covid-19 will be contained in the advanced economies, let alone globally. While weighing the risks, we also must plan for all contingencies. In my view, the Biden administration has correctly determined that the risks of doing too little far outweigh the risks of doing too much.Related: A shortage of workers is driving up wages: are we entering a new economic era? | John HarrisRelated: Post-lockdown summer: Americans out for fun and with money to spend Continue reading...
Until full employment is reached, governments need not cut back on public spendingA decade ago the financial press, echoing predictions from mainstream macroeconomists, obsessed about whether governments would run out of money as deficits rose to combat the global financial crisis. Stark predictions of rising bond yields and inevitable debt defaults came to nought.Now, with much larger deficits, the headlines are all about inflation. No one seems worried any longer about government insolvency as capitalism survives on fiscal life-support systems. The focus has shifted from meaningless financial ratios to substantive issues relating to real resource scarcity (that is, how close nations are to full employment). However, the inflation mania is as misconstrued as the earlier solvency fears.Related: What is modern monetary theory and could it fix Australia’s problems?Related: Why governments should keep spending, and stop worrying about inflation | Leah DowneyWilliam Mitchell is a professor of economics at the University of Newcastle, Australia, and docent professor of global political economy at the University of Helsinki, Finland. He is one of the co-founders of modern monetary theory Continue reading...
The real story includes the reconciling of domestic interests with international demandsA historic agreement has been reached. For decades, multinational corporations have abused gaps in an international tax system that has barely changed since agreements made at the League of Nations in the 1920s.After meetings in London at the weekend, the message from the G7 group of wealthy nations is clear: time is up on tax havens. In a landmark move, a global minimum rate of corporation tax has been agreed, alongside measures forcing large firms and online tech giants such as Facebook, Apple and Google to pay more tax in the markets where they make their money regardless of physical presence.For Rishi Sunak, it was about sending a message that post-Brexit Britain still holds sway in the world Continue reading...
Labour problems may be an early sign of inevitable economic readjustments around the world following the pandemicJamie Rogers is a former semi-finalist in the BBC’s Masterchef: The Professionals, and the founder of an award-winning restaurant called Twenty Seven, located in the south Devon town of Kingsbridge. As it reopened for business after the recent lockdown, a handful of staff handed in their notice. As he told me last week, he then began to explore what was happening in his part of the economy, and was confronted with huge changes: “Jobs that were worth £10 an hour last year are suddenly paying double that.”Brexit is part of the story. “A lot of international people have gone home – a lot of people are telling me that,” he said. So too is a shift among British-born workers. “I bumped into someone the other day who was working in Tesco. He used to be a head chef. He said, ‘I’m happy where I am now.’ He’s seen that he doesn’t have to work a 60- or 70-hour week, and he’s still probably making the same money.”Related: UK ‘faces labour shortage’ as Covid and Brexit fuel exodus of overseas workers Continue reading...
Perhaps Labour should wake up and start addressing the besetting sins of unfettered capitalismIt’s no good expecting people to be nice. That’s an important rule of thumb when working out how to run things or, indeed, when designing a system that decides who runs things. And if you think that’s too cynical, remember not to lock your door when you next leave the house.Obviously, many people are very nice. Some people are nice all the time and almost everyone is nice some of the time, but, when you’re trying to build a system, thinking about that is a waste of headspace. We hope for the best but prepare for the worst, with alarms, passwords, insurance, Tasers and scanning everyone’s shoes before they get on an aeroplane.You can’t just steal stuff, but you can trade stuff and you can make stuff Continue reading...
Wise Bank of England heads are pondering the case for a state-run digital currency this week. But do we really need one?When Google announced that bitcoin traders would be allowed to buy advertising space on its pages from August, central banks were alerted to the next likely surge in publicity for cryptocurrencies.The increasing activity around digital currencies has not gone unnoticed at the Bank of England, and on 7 June Threadneedle Street’s brightest will publish a consultation document, setting out how a publicly operated electronic coinage system – one that would rival bitcoin – might work. Continue reading...
Parts of the continent potentially face a decade of crisis. These two measures are more important than any other in avoiding itThere are so many good causes in the world it is often difficult to know where aid money should go. As leaders line up to attend the G7 summit in Cornwall, the most effective destinations for aid money have become clearer – a global vaccination programme and improving girls’ education.This is especially true in sub-Saharan Africa, where so much can go wrong over the next 10 years – a population explosion, massive biodiversity loss, desertification, famine and mass migration to mention just a few – that unless we focus our efforts on vaccines and girls’ education, whatever is done to alleviate poverty or tackle the climate emergency will be threatened or even sabotaged in almost every other region of the world.African leaders are well aware of the benefits that flow from educating girls, from the immediate economic income to the wider gains for the planet. What they lack is the resources Continue reading...
Analysis: As the UK’s post-lockdown hospitality sector struggles to find staff, one obvious solution presents itselfFrom Michel Roux Jr to Tim Martin, from swanky Le Gavroche in London to Wetherspoons pubs, the message is the same: we need more staff. Labour shortages were not a problem envisaged when the UK was plunged into lockdown in the spring of 2020. Then, the fear was of massive job losses and the highest unemployment since the 1930s.Now, the hospitality sector says a lack of chefs, bar staff and waiters is affecting trade. Roux has announced he is closing Le Gavroche at lunchtimes. At Wetherspoons, Brexit-supporting boss Martin has urged ministers to use their ability to set immigration laws to grant visas to EU citizens.One of the basic tenets of economics is that raising the price of something increases its supply Continue reading...
Government data shows unemployment rates for many groups remain high, even as post-pandemic hiring picks upThe coronavirus pandemic sparked one of the deepest, and strangest, downturns in employment in US history. On Friday, the Bureau of Labor Statistics said the US had added another 559,000 jobs in May, and the unemployment rate had fallen to 5.8% – a dramatic drop from its 14.8% high in April last year.Employers say they are struggling to hire workers, and yet the US is still 7.6m jobs short of where it was before Covid-19 struck. Below, in the first of a monthly series, we take a look at what lies behind the headline figures for the highly influential jobs report.A job should get you out of poverty, not keep you in it.
By the time a family gets a social worker, it’s usually 20 years too late, writes Jean Robertson-Molloy, who has 40 years of experience in the sectorHaving worked in social services at the “coalface” for nearly 40 years, and also being a member of the Movement for an Adoption Apology, I welcome Nina Lopez’s letter drawing attention to today’s forced adoptions (Letters, 1 June). I believe we are the only country in western Europe which regularly sanctions adoptions opposed by the birth family.During my career, I saw the profession change from one that was primarily concerned with supporting families in difficulties, to one which will only allocate a social worker to a family where it is believed that the children could already be in danger. And the fear, sadly often justified, that the main function of social services nowadays is to remove children from home, means that few families will now even think of asking for help from this source. As a result, by the time a family gets a social worker, it’s usually 20 years too late. And much of the blame for this must lie with successive governments, who have cut to the bone the subsidies which councils need if they are to employ enough social workers to reverse this trend.