Combining pay freezes with levelling up, the chancellor seems intent on cementing the deal that gave Johnson his landslidePick a Labour chancellor, any Labour chancellor, from Stafford Cripps to Alistair Darling. Now imagine the jeers, the jibes, the public derision they would endure after confessing in parliament to racking up a budget deficit of almost £400bn, total debt of more than £2tn and the sharpest dive in GDP in three centuries; they would be exiled to some speck in a faraway sea. Yet this afternoon Conservative Rishi Sunak, who only moved into No 11 in February, did all that, warned of “an economic emergency”, and still made it look like a not utterly awful day at the office.This must be what they mean by the “natural party of government”.Related: We needed long-term spending and higher taxes. Rishi Sunak gave us foreign aid cuts | Tom KibasiAditya Chakrabortty is a Guardian columnist and senior economics commentator Continue reading...

Latest updates: Liz Sugg, minister for the overseas territories and sustainable development quits; nurses, doctors and NHS workers to get pay rise

Rolling coverage of the latest economic and financial news

Analysis: Public sector and foreign aid face cuts, but the chancellor dodged tough decisions

Rishi Sunak has said the UK faces an 'economic emergency' that requires a public sector pay freeze, with the exception of some NHS workers and those on the lowest wages.Announcing the spending review in the Commons, the chancellor said he could not justify a significant pay increase for all public sector workers amid job and wages cuts in the private sector

UK’s ‘economic emergency’ leads to cut in foreign aid and partial public sector pay freeze

The chancellor has delivered the spending review – here are the main points, with political analysis

Aid agencies say debts should be restructured or cancelled due to the pandemic and warn other countries could followZambia has become the first African country to default on its debts since the pandemic, leading to fears that a “debt tsunami” could engulf the continent’s most heavily indebted nations as the financial impact of coronavirus hits.A hastily-arranged G20 finance minister meeting in Saudi Arabia failed to sort out Zambia’s debt, after the southern African country missed a $42.5m (£32m) coupon payment on its bonds in October. Missing another payment on 14 November meant a technical default.Related: ‘People are suffering’: G20 to call on private lenders to suspend debt repaymentsRelated: Africa leads calls for debt relief in face of coronavirus crisis Continue reading...

With the UK economy in its steepest decline for centuries, we look at what the chancellor could announce on Wednesday

Rolling coverage of the latest economic and financial news

Colin Hines and Kevin Donovan respond to an editorial on Rishi Sunak’s economic strategy

To one sort of capitalist, the insecurity and chaos that Brexit will bring is horrifying. To the other, it is highly profitableWhere there is chaos, the government will multiply it. Where people are pushed to the brink, it will shove them over. Boris Johnson ignored the pleas of businesses and politicians across the UK – especially in Northern Ireland – to extend the Brexit transition process. Never mind the pandemic, never mind unemployment, poverty and insecurity – nothing must prevent our experiment in unassisted flight. We will leap from the white cliffs on 1 January, come what may.Perhaps, after so much macho bluster, the government will take the last of its last chances and strike a deal this week. If so, with scarcely any time for refinement, the agreement is likely to be rushed and bodged. In any event, pain will follow. Disruption at the border is likely to be felt across the nation. Continue reading...

Business group says autumn lockdown not nearly as damaging to sales as Covid shutdown in springA surge in shopping from home has eased the pressure on retailers caused by England’s four-week lockdown and tighter restrictions in the rest of the UK, according to a survey from the CBI.The employers’ organisation reported that while the level of spending was well below normal there were also clear signs of consumers substituting online purchases for visits to stores in person.What’s the problem? Continue reading...

The chancellor’s spending review will hit the north hardest: prepare yourselves for a new austerity

Rolling coverage of the latest economic and financial news, as the UK Treasury Committee questions the Bank of England

Freezing public sector wages is an attack on those already hardest hit by the pandemic, writes Marion Doherty. Plus letters from Alan Millington, Pete Dorey and Gary BennettWhy does the Guardian (New UK spending row as Rishi Sunak puts squeeze on public sector salaries, 20 November) continue to use “squeeze”, “restraint” and “belt-tightening” to describe what are vicious cuts to the wealth and health of working people? These cuts will disproportionately fall on women, BAME people, lone parents and the most economically deprived parts of the country. Using such language normalises the significant attacks by this government.Such an attack is not just aimed at the public sector, but at depressing wages for all workers. With rising poverty, inequality and the hypocrisy of the government’s levelling-up rhetoric, the Guardian needs to tell it like it is. With shareholder dividends being thrown around, who should pay for the crisis is not a difficult question. The answer is not workers.

Economy shrinks as service sector suffers steepest fall in activity since May

Shutting down tax havens and cancelling debts could pay for the pandemic and more – if countries work together

Funds will boost ‘rough sleeping initiative’, councils and prison leavers – Treasury

Chancellor says plans will mean more money for health, education and police, as unions refuse to rule out strikesRishi Sunak has rejected accusations that his planned public sector pay freeze amounts to a return of austerity and insisted that spending plans to be announced on Wednesday will result in more money for health, education and the police.With trade unions demanding that the chancellor do a last-minute U-turn over his clearly signalled intention to clamp down on the state’s wage bill and refusing to rule out strikes, Sunak said there would be significant increases in spending on public services next year.New forecasts showing the economy on course to shrink by more than 10% this year.A public sector pay freeze for all workers outside the NHS.An extra £3bn for the NHS to tackle a backlog in operations caused by the Covid-19 crisis.Confirmation of funding for 50,000 more nurses and 50m additional GP appointments.A cut in the UK aid budget from 0.7% to 0.5% of national income.Plans for a new national infrastructure bank and a northern campus for the Treasury.A warning from the chancellor that the unlimited spending to cope with the twin health and economic emergencies is coming to an end. Continue reading...

Despite Rishi Sunak’s warnings, Boris Johnson’s strategy is to keep spending big in hope of recovery

Covid-19 has dealt a heavy blow to Birmingham’s glitzy city centre led by retail – and it’s revealing other deep fault linesWhen Andy Street wants to show off the best of Birmingham to visitors up from London, the Conservative mayor of the West Midlands starts his tour in Centenary Square, a public space the length of two football pitches. To the west stands the International Convention Centre (ICC) and the Symphony Hall; to the north, the Birmingham Rep theatre and the new Library of Birmingham; HSBC’s new UK headquarters lies to the south, while to the east – where Street marches off – is a £700m development optimistically named Paradise. The square and its surroundings, Street claims, is “a statement that this place has refound its self-confidence”.Perhaps it is. But the buildings that surround the square tell another story of a modern city. The ICC was sold off by the council five years ago to help cover the cost of a £1.1bn equal pay bill after thousands of women had been paid less than men for doing similar jobs. The Birmingham Rep is currently closed and 40% of the staff are likely to lose their jobs. The Library of Birmingham cost £188m, which the city couldn’t afford – and led to cuts in opening times, staff and books at libraries across the city and even the shiny new centrepiece itself. HSBC is supposed to bring 2,200 people into the city centre every day but, since Covid-19, the proportion of staff coming in, Street estimates, is around 35%. He is confident that, once Paradise is complete, the new office blocks will be full and the restaurants busy, but pinning one’s economic hopes on city-centre jobs feels optimistic in the midst of a pandemic.You don’t think of Birmingham in your top five struggling places. If Birmingham is struggling, that has consequences for the country at large Continue reading...

When the finance industry gets into trouble, it pleads that it is funding ordinary people’s retirements. It isn’t truePensioners are a useful defence in the City’s fight to preserve its privileges. Unwittingly they are wheeled out as human shields by the finance industry, and increasingly major corporations, to serve and protect probably the most powerful interests in the UK.The over-65s – or in many cases the over-55s, given the extent of early retirement – function as a high wall against accusations of tax avoidance, financial plundering and executive enrichment, because the world’s pension funds are benefiting.Individual shareholders own just 13.5% of the London stock market. UK pension funds own 2.4%. The largest slice is held by overseas investors, with 55% Continue reading...

This week’s spending review gives the chancellor the chance to recover the political momentum he lost in a series of U-turnsRishi Sunak will face his sternest test this week when he stands up in parliament to outline the latest post-coronavirus economic recovery plan. Billed as a major part of the government’s post-Dominic Cummings reboot, the spending review will set out the budget limits for departments across Whitehall over the next financial year.More than that, the chancellor will be under pressure to show how the government’s “levelling-up” agenda to boost northern towns and cities will translate into actual projects, and what an infrastructure revolution means in practice.Related: Five things to watch out for in Rishi Sunak's spending review Continue reading...

The chancellor’s scope for long-term planning on Wednesday is limited – but there may still be significant signals of changeThe Covid-19 pandemic has forced Rishi Sunak to postpone both his planned autumn budget and the announcement of plans for public spending until the middle of the decade. So uncertain is the short-term outlook that the chancellor will now outline what the government intends to spend for one year only, 2021-22. These are some of the things to look out for. Continue reading...

Chancellor to unveil delayed £100bn plan on Wednesday along with spending reviewRishi Sunak is set to unveil the government’s national infrastructure strategy next week, including long-term investments in the climate and transport sectors and plans to narrow the north-south divide.The strategy, which the chancellor had been due to be published in March, provides £100bn to improve connectivity in transport systems and work toward the government’s goal of net-zero emissions by 2050. It includes a down payment on flagship programmes including fibre broadband, flood defences and transport schemes, according to the Treasury. Continue reading...

Countries emphasise potential for cooperation and future partnerships, which Beijing opposesTaiwan and the United States have held their first high-level meetings under a new economic dialogue, inking a five-year agreement and pledging future cooperation on health, tech, and security.The talks, held amid a contentious US presidential transition period and high regional tensions with China, did not advance Taiwan’s hopes for a trade deal with US, despite the two countries growing closer under Donald Trump and his pushback on Beijing.Related: China and 14 Asia-Pacific countries agree historic free trade deal Continue reading...

The government no longer needs to comply with the general restriction imposed by the EU on the size of government deficits, writes Anton van der Merwe. Plus Angela Barton on deciding public sector pay

Rolling coverage of the latest economic and financial news

Monthly borrowing hits £22.3bn as Covid crisis forces debt pile up to highest proportion of GDP since 1960sA steep fall in tax receipts and the extra cost of government subsidies for businesses and the self-employed pushed UK government borrowing last month to its highest level for October since records began in 1993.In the latest reading of the government’s finances ahead of the chancellor’s spending review next week, the Office for National Statistics said monthly borrowing had hit £22.3bn in October, up more than £10bn on the same month last year.The Office for Budget Responsibility is the government’s independent forecaster, which gives its verdict on the outlook for growth and the public finances twice a year. Continue reading...

Consumers rushing to buy gifts ahead of new lockdown increase sales for sixth month in a rowShoppers rushed to buy early Christmas presents in October, before a second Covid-19 lockdown in England, increasing retail sales for a sixth consecutive month, according to official figures.A 6.4% increase in online sales drove a 1.2% rise in the total volume of retail spending in Britain compared with September and boosted sales by 5.8% on the same month last year.Related: UK national debt highest since 1960s after record October borrowing – business live Continue reading...

Tax Justice Network calls on G20 to tighten rules, saying system is ‘programmed to fail’Tax abuse by multinational companies and avoidance by rich individuals is costing countries $427bn a year in lost revenues, according to a study by a global advocacy group.The Tax Justice Network said its report revealed for the first time the extent of the resources being lost, and it called on this weekend’s meeting of the G20 group of developed and emerging market countries to tighten the rules. Continue reading...

Rolling coverage of the latest economic and financial news

Official snapshot taken prior to latest restrictions in England reveals confidence low

The party talks loudly about the need for a green economic recovery with workers at its heart, but its policies fall shortThis week, the government announced a so-called “green industrial revolution”, with the slogan and some watered-down policies lifted straight out of Labour’s 2019 manifesto. With a £12bn investment pledge that Labour believes includes just £4bn of new money, it was rightly characterised by Ed Miliband as a “disappointment”. But the same could be said of the latest iteration of Labour’s own environmental plans.At last year’s Labour conference in September, at the climax of a long summer of climate action, members voted in favour of a motion to set ambitious target of net-zero carbon emissions by 2030; public ownership of key industries and utilities to deliver a war-like mobilisation to respond to the crisis; and the repeal of anti-trade-union laws to ensure a just transition with workers at its heart.Related: Tory MPs are right: the north needs a renaissance – but it's got to be green | Owen Jones Continue reading...

Expecting the free market to fix global warming is like trying to pound nails with a sawThe massive wildfires that have been rampaging across the American west this year are not purely natural disasters. They are partly products of the unnatural disaster of climate change – “unnatural”, in that the ultimate responsibility for global warming belongs not to physics but to our economic system. Nicholas Stern, the former chief economist of the World Bank, calls climate change the “greatest and widest-ranging market failure ever seen”. Sadly, climate change is only one – albeit a whopper – of the countless market failures that degrade our lives.Related: Hurricane Iota: at least six killed and 60,000 evacuated in NicaraguaPurposeful collective action is the overarching solution to market failuresRelated: Laugh if you want, but the 'McPlant' burger is a step to a greener world | Adrienne MateiRobert S Devine is the author of Bush Versus the Environment and The Sustainable Economy: The Hidden Costs of Climate Change and the Path to a Prosperous Future Continue reading...

As we progress through the pandemic, tens of thousands of people are being made redundant. The Guardian will track these job losses as they are announced

Figure of 0.7% in October is more than expected and cost of food also rose

Bank of England chief economist explains that digital currency could help central bankers cut interest rates below zero, as part of a ‘new monetary order’

VAT cut for hospitality sector, which is meant to end in January, is one of main drags on CPI

Millions who lost their jobs at the beginning of the pandemic are continuing to face unemployment, a number not touted by the Trump administrationBetty Patterson of Lakeland, Florida lost her job as a cashier at Dollar General in April, and has struggled to find ever work since.While relying on unemployment benefits, she managed to find temporary work for the US Census Bureau, and then as a poll worker during the election, but like an increasing number of Americans who lost their job at the start of the pandemic, she still remains unemployed.Related: 'I'm homeless': Florida's unemployed struggle with system designed to fail Continue reading...

Accountancy firm warns of stalled economic recovery without EU trade agreementFailure to strike a post-Brexit trade deal would cut the UK’s economic growth rate by more than half next year, delaying a full recovery from the coronavirus pandemic, according to a report.The accountancy firm KPMG said the economy would suffer heavily should the UK fail to secure a trade deal with the EU before the end of the Brexit transition period at the end of December, just as the country attempts to escape the deepest recession since records began.Related: Covid crisis changing the structure of UK economy, Bank of England chief says Continue reading...

The decision by both countries’ governments to block a Covid recovery programme for the EU is unjustified and irresponsibleWhen European Union leaders finally agreed on a groundbreaking economic recovery fund in July, there was understandable euphoria and relief. The huge €750bn package allowed the European commission, for the first time, to raise funds from the open markets on behalf of member states. The money would be distributed to the countries that needed it most, as the coronavirus pandemic led to soaring debt and unemployment. Hailing the deal, the German chancellor, Angela Merkel, said at the time: “Europe has shown that it is able to break new ground in a very special situation such as this one.”Depressingly, it seems that Ms Merkel spoke too soon. On Monday, Hungary and Poland effectively vetoed the recovery package, along with the EU’s latest seven-year budget. Unless a solution can quickly be found, the deployment of vital funding could be delayed far into 2021. As countries cope with the second Covid wave and Europe heads towards a double-dip recession, this would be disastrous and destabilising. In Italy, for example, where social unrest has broken out in cities such as Naples and Turin, the €209bn allocated from the fund represent an economic lifeline. Continue reading...

Andrew Bailey hails vaccine developments, saying success could trigger investment surgeRecent vaccine developments have signalled light at the end of the Covid-19 tunnel and could be the trigger for a post-crisis surge in investment, the governor of the Bank of England has said.Andrew Bailey hailed the results of clinical trials by Pfizer/BioNTech and Moderna as encouraging and said the prospect of treatments for the virus would remove a key source of uncertainty that had held back capital spending.Productivity is an economic measure of the efficiency of a workforce. It typically measures the level of output per hour of work, or per worker. Continue reading...

Covid exposes the key government role in maintaining the total level of spending in the economy at a level that keeps the country as close to full employment as possibleA great deal of poverty in Britain can be blamed on joblessness, insufficient hours of work, and low pay. The pandemic has emphasised that the penury that too many suffer in this country is nothing to do with the shortcomings of workers. It is do with a shortage of work. That is why the chancellor, Rishi Sunak, in next week’s mini-budget, should scrap plans to abolish, in April 2020, the £20 a week extra benefit payments going to 6m low-income households. A report by the Resolution Foundation reveals that the longer the pandemic has gone on, the harder the poorest have been hit. People who did nothing but stoically bear the brunt of the crisis ought not be made to pay for it.Coronavirus has thrown into sharp relief the inequalities in Britain. The bottom fifth of the working population have seen incomes cut sharply and their savings reduced to nothing. For the poor, there’s little or no cash to furnish even the barest of Christmases, while those at the top have seen cash pile up in bank accounts. What is needed, as the former prime minister Gordon Brown made clear at the launch of the Resolution Foundation report, is a U-turn. Without a rethink from Mr Sunak, around 700,000 people, including 300,000 children, will sink into poverty at a time of surging unemployment and plummeting living standards. Continue reading...

Rolling coverage of the latest economic and financial news

Countries reject package over attempts to link funding to respect for rule of lawThe EU is facing a crisis after Hungary and Poland vetoed the bloc’s historic €1.8tn (£1.6tn) budget and coronavirus recovery plan over attempts to link funding to respect for democratic norms.The move unravels months of negotiations over the scale and terms of the EU’s spending and sets the stage for a stormy videoconference meeting of the bloc’s leaders on Thursday. Continue reading...

John Marriott says Biden must succeed where Blair failed, Richard Yoell points out that Obama was cursed with a hostile and belligerent Senate, Philip Stenning is appalled by the idea of ‘tub-thumping left populism’, and Adam Hart argues that Covid-19 has forced neoliberal regimes to re-evaluateGeorge Monbiot (The US was lucky to get Trump – Biden may pave the way for a more competent autocrat, 11 November) is probably right about Barack Obama paving the way for Donald Trump, because the former failed to tackle big business. I would go even further and say that Tony Blair, another “breath of fresh air” at the time with his Tory-lite policies, more or less paved the way for our Trump – in the form of Brexit.Both politicians had a clear electoral mandate to bring about fundamental changes to their societies: in Blair’s case, to change our parliamentary institutions, as, when it came to corralling business, the UK was very much, and still is, a bit-part player. In the end, his successor handed over a poisoned chalice to the Tory/Lib Dem coalition to attempt to clean up the mess and, after its failure, to face the consequences. Joe Biden, besides confronting neoliberalism, needs to do to his country’s political system what Blair failed to do to his.