The chancellor will be monitoring the price of gilts after last week's selloff and data to come on inflation and growthRachel Reeves will be back at her desk in the Treasury on Monday after her trade mission to China as markets reopen after last week's bruising bond selloff and ahead of some key economic data on inflation and growth.Officials will be monitoring closely moves in the price of government bonds, or gilts, after they were sold off sharply last week, pushing the 30-year yield - effectively the interest rate - to its highest level since 1998. Continue reading...

Trade unions body finds 17% have skipped meal in past three months, and as many as 10% do so most daysAs many as one in six workers in Britain are skipping meals to make ends meet as households remain under pressure from the higher cost of groceries, energy and other essentials.Highlighting the impact of the cost of living crisis on working households, figures from the Trades Union Congress (TUC) showed 17% of full- or part-time workers had skipped a meal to reduce their spending in the past three months. Continue reading...

In his first 12 months Javier Milei has imposed drastic economic measures - sparking protests while banking on an IMF bailoutThe first foreign leader to meet Donald Trump after his victory last November was Argentina's president, JavierMilei. The affinity is obvious: both are political outsiders united by extreme-right rhetoric and a penchant for anarchic capitalism. Mr Milei promised a war on bureaucrats, brutal public spending cuts and sweeping deregulation of Latin America's second-largest economy. Predictably, the outcome has been devastating: a recession plunged more than half the country into poverty within the first six months of 2024.Mr Milei did not so much win the last election as the previous government lost it. When voters went to the polls in October 2023, monthly inflation stood at around 8%, fuelling frustration with the established parties and anxiety about the future - sentiments MrMilei skilfully exploited. After his victory, monthly inflation soared to 25% before dropping back to under 3% in November. As a devotee of Milton Friedman, MrMilei might claim his public sector cuts were painful but necessary. This is far from the truth. The reality, as the economist Matias Vernengo notes, is that Mr Milei devalued the peso, triggering a spike in domestic prices while using currency controls to keep a lid on further inflationary pressures. Continue reading...

Plunging temperatures and high demand for gas fired power stations have reduced UK winter gas storage levels, reports Centrica

Pound falls against the dollar and bond yields rise amid concerns over high UK inflation and interest rates

Markets appear to be fretting over sustainability of tax and spending plans and whether UK is heading for stagflation'Rachel Reeves intended to spend January burnishing her reputation on the global stage with trips to Beijing and Davos, and flipping the focus from her 40bn tax-raising budget to Labour's plans to rekindle economic growth.Instead, the chancellor was reduced to watching anxiously, as a sell-off swept through government bond markets, and sterling came under intense pressure as a result. Continue reading...

Economy adds 256,000 jobs in December, with Biden boasting of 16.6m jobs created during presidencyThe US labor market expanded strongly in the last jobs report of the Biden administration, according to new data released on Friday.The number of new jobs added to the economy accelerated to 256,000 in December, up from 227,000 in November, soaring past expectations. The labor market last month was bolstered by new jobs in healthcare, retail and government. Continue reading...

Premier of most populous province says rhetoric clouds trade relationship worth hundreds of billions of dollarsThe United States will feel pain" if Donald Trump doesn't back down from his threat to impose steep tariffs on its northern neighbour, the leader of Canada's most populous province has warned.After a tumultuous week that left Canadian leaders flailing for a coherent national response to Trump's provocations - including the suggestion that the US would annex its closest ally - the Ontario premier, Doug Ford, told the Guardian: We will never be for sale." Continue reading...

Almost 700,000 homeowners face increase when fixed-rate deals end this year

Chancellor could slash departmental spending in spring after ruling out tax increase, officials revealRachel Reeves is considering imposing steeper cuts to public services to repair the government's finances after a bruising week in which investors drove up the cost of UK borrowing and pushed the pound to a 14-month low.Government officials have told the Guardian the chancellor is prepared to reduce departmental spending even more than planned, having ruled out increases to either borrowing or taxes. Any measures to avoid breaking her fiscal rules could be announced at an emergency statement in the spring. Continue reading...

Labour's fiscal rules may limit the chancellor's ability to act, but waiting it out may be the best optionThe UK government has come under pressure from a bond market sell-off and the tumbling pound, heaping pressure on the chancellor, Rachel Reeves, to reassure investors about Britain's economic and financial position.After a challenging first six months in power for the government, the chancellor's options have been limited by Labour's political promises. There are a range of measures, of varying severity, the Treasury and the Bank of England could still take, depending on how market conditions unfold. Continue reading...

In the hospitality sector, where labour costs are a bigger proportion of the overall base, employers have fewer optionsIf one looked solely at this week's trading reports from the world of big retail - the likes of Marks & Spencer, Next and Tesco - you might wonder why Rachel Reeves' increase in employers' national insurance contributions (NICs) has caused such a fuss. It is obvious from the trio's outlook statements that they will cope with the extra costs.At Tesco, which faces a 250m extra from NICs and other budget changes, the chief executive, Ken Murphy, did not rule out price rises but said the group would do its very best" to mitigate them; and, given Tesco's expertise in grinding out efficiency gains, you would bet on it to succeed. In similar style, Stuart Machin at M&S noted the cost headwinds but said there is much within our control". Continue reading...

While age is a factor in how people are affected, the turbulence is not all bad news, experts suggestThe bond market sell-off has revived fears about rising borrowing costs after the crisis that followed Liz Truss's disastrous mini budget in 2022. However, experts are suggesting there is no need to panic. Here is what it may mean for mortgages, pensions and savings. Continue reading...

This blog is now closed, you can read more on this story hereDarren Jones, the chief secretary to the Treasury, is responding to the UQ about borrowing costs.He says there is a long-standing convention that the government does not comment on movements in the financial markets, and that will not change today, he says.The Debt Management Office's gilt sales operations continue to see strong demand, with the latest auction held yesterday receiving three times as many bids as the amount on offer.There should be no doubt of the government's commitment to economic stability and sound public finances. This is why meeting the fiscal rules is non negotiable. Continue reading...

Unlike 2022, bond markets have not been shocked, but the chancellor will know threat of a doom loop is not far awayBorrowing costs at the highest level since 1998, the pound at a 14-month low and some major UK company shares dropping like a stone. For a government that had pledged a return to economic stability, it has been a tough start to 2025 for Rachel Reeves.As the chancellor prepared to fly to China to promote closer economic ties with Beijing, the blow-up in the bond market appeared to ease on Thursday after a rough couple of days. But Reeves is still battling a political fire and comparisons to Liz Truss's ill-fated mini-budget. Continue reading...

The former PM has sent a cease and desist letter to the current one. Will everyone who thinks she was useless get one next?The problem with worrying about megalomaniacs on the web and wildfires in Los Angeles is that we have been distracted from the very real plight of Liz Truss.She is the victim of a very special kind of injustice: people think she was a terrible prime minister, whose doings were disastrous for the economy, resulting in her defenestration by her own party - and what's worse, people keep saying so.Hugh Muir is the Guardian's executive editor, Opinion Continue reading...

Sterling extends losses against US dollar before easing to half a cent down after Treasury calms market jitters

Cease and desist' letter accuses PM of harming her reputation and contributing to her losing her seat

Treasury chief secretary responds to urgent question in Commons as market turmoil hits poundRachel Reeves will not break her promise to borrow money only for investment, even as gilt yields rose to their highest levels since the financial crisis, her deputy has said.Darren Jones, the Treasury chief secretary, told MPs the chancellor would not borrow to pay for day-to-day spending despite rising UK borrowing costs that threaten to make it much harder for her to meet her fiscal rules. Continue reading...

Seeking business partners is sound policy, but even in these darker geopolitical times the UK will still side with the USRachel Reeves will fly with a delegation of City executives to China this week as Labour seeks closer economic links with Beijing as part of its quest for growth.With the outlook increasingly rocky at home after a run of soft economic data, the chancellor is sorely in need of a positive story to tell. Reeves came under pressure to cancel the long-planned trip amid the sell-off in the bond markets but Darren Jones, the Treasury chief secretary, said she would still go on the important visit in terms of trends and investment". Continue reading...

Job market data deepens sense of gloom enveloping UK plc as analysts plan close look at effects of NICs rise on hiringVacancies for permanent jobs in the UK declined at their fastest pace for four years last month, according to a new survey that adds to the gloomy economic mood.Amid febrile markets and weak economic data, the monthly jobs report from the consultancy KPMG and the recruitment firm REC shows many firms reluctant to hire. Continue reading...

Companies grappling with higher employment costs say price of food may rise by 4.2% in latter half of yearUK retailers have urged ministers to ease their tax burden as they said that the cost of food and other items will rise sharply throughout the year as companies grapple with higher employment costs.Food prices are forecast to climb by 4.2% on average in the latter half of the year, while non-food items are likely to increase in line with inflation, which stands at 2.6%, according to modelling by the British Retail Consortium (BRC) and finance leaders of retail businesses. Continue reading...

While our currency is lower than it's been for a while, there is no sense of a crash. The RBA's focus should be on the domestic economy and rate cuts

Officials concerned by possible impact of potential changes in trade and immigration policy' from incoming presidentFederal Reserve officials see a rising risk that inflation may remain sticky in the US as policymakers begin wrestling with the impact of policies from the incoming Trump administration, according to the minutes of the US central bank's latest meeting.While officials believe inflation will continue to move toward 2%, the Fed's target rate for inflation, they noted that recent higher-than-expected readings on inflation, and the effects of potential changes in trade and immigration policy, suggested that the process could take longer than previously anticipated". Continue reading...

Treasury issues rare second statement in two days after sell-off leaves 10-year bonds at highest level since 2008

There is no need to panic: the government's overall fiscal strategy is the right one. Spending cuts would be a mistakeThe cost of UK government borrowing is higher than it has been since just before the global financial crisis of 2008. The yield on five-year gilts - the interest rate the government is paying on the 4.25bn it borrowed today to finance the deficit - is about 4.5%, nearly five times what it was a decade ago, and higher than at any time during the Liz Truss meltdown.So have the so-called bond vigilantes come after Rachel Reeves, selling off their holdings of government bonds en masse as they did after Truss and Kwasi Kwarteng's budget? Not really. The Truss debacle was the consequence of a toxic cocktail of irresponsible tax cuts, institutional vandalism and a near-death spiral in an obscure part of the pensions market, all of which were UK-specific. By contrast, since the start of 2023, UK long-term interest rates have broadly followed US ones upwards. While part of this reflects the fact that UK inflation has been somewhat more persistent than the Bank of England hoped, it is mostly driven by global developments, and especially those in the US, where growth and inflation are somewhat higher than expected. It's this, far more than anything the new UK government has done, that has driven the rise in borrowing costs.Jonathan Portes is professor of economics and public policy at King's College London and a former senior civil servant Continue reading...

Analysts say costs hitting highest level since 1998 risk wiping out almost all of chancellor's 10bn bufferRachel Reeves could be forced to make fresh cuts to public spending at her March spring forecast" as a rise in government borrowing costs risks the chancellor breaking her own fiscal rules.With the government under pressure on the economy, City analysts warned that Britain's long-term borrowing costs hitting the highest level since 1998 risked wiping out almost all of a 10bn buffer the chancellor had kept in reserve at the autumn budget. Continue reading...

Global instability and possibility of Trump administration imposing tariffs may disrupt flow of goodsThe price of household staples including food and drink could climb by as much as 20% in 2025 if challenges with sourcing and transporting goods continue, an industry body has warned.The cost of electronics, machinery, chemicals and petroleum products could also rise, said the Chartered Institute of Procurement and Supply (CIPS), as a result of geopolitical instability, including tensions in the Middle East, supply chain disruption and cybersecurity issues. Continue reading...

Former Bank of England governor in the frame as successor to departing Justin Trudeau

Supermarkets celebrate bumper Christmas as households' spending reaches record 460 on average

British Retail Consortium figures show sales growth close to flatlining, as card spending fails to riseBritain's largest retailers are warning they could be forced to cut thousands of jobs this year as the industry braces for higher taxes and employment costs after a bleak Christmas shopping season.In the latest sign of tough trading conditions on the high street, figures from the British Retail Consortium (BRC) show sales growth over the golden quarter" between October and December came close to flatlining. Continue reading...

Downwardly mobile graduates are arguably becoming the UK's electoral kingmakers - and could spur a political revolutionSome groups loom larger in the national imagination than others. It has become a shibboleth that economically left, socially conservative ex-Labour voters in the red wall" are the UK's political kingmakers and therefore must be wooed. Yet there is little mention of the graduate without a future, a group that first emerged after the 2010 student protests and continues to grow in numbers.Across the UK there are nearly 5 million graduates working in non-graduate roles. The much-vaunted graduate premium - the idea that graduates earn more than non-graduates over their lifetime - is in drastic decline. New research from the Resolution Foundation shows that new graduate salaries have fallen sharply in real terms over the past two decades, while the minimum wage has risen slightly. With the exception of Stem, law, finance and management, university is no longer a guaranteed ticket to social mobility and a better life.Dan Evans is a sociologist and author. His latest book is A Nation of Shopkeepers: The Unstoppable Rise of the Petite Bourgeoisie Continue reading...

BCC survey shows growing concern over planned employer tax rises with 55% of companies planning to hike pricesMore than half of British companies are planning price rises in the next three months, according to research that found UK business confidence has slumped to its lowest since the chaos of Liz Truss's brief stint as prime minister.Of 4,800 businesses polled by the British Chambers of Commerce (BCC), 55% said they expected to increase prices by April, up from 39% in a similar survey in the second half of last year. Continue reading...

In a new book, Dana Frank tells stories of the people who made history happen' through organizing and mutual aidHistorian Dana Frank treasures a photo from a 1937 edition of Life magazine. It shows a group of seven African American women, clustered close, sitting on chairs in a small space. Each wears a fashionable hat and is bundled in a coat appropriate for the late Chicago winter. At first glance, the photo appears to be a gathering of friends. All are smiling, and some appear to be laughing, as they talk with each other.The women were actually on strike, occupying the city hall office of the president of the Chicago board of health. As wet nurses for a local hospital, they were paid $0.04 for each ounce of breast milk they produced. The women all knew that the white wet nurses at another hospital were getting paid $0.10 per ounce. They shouldn't make any difference between us," Louise Clark, a wet nurse on strike, told reporters at the time. Continue reading...

The main issues confronting policymakers around the world seem particularly portentous this new yearJanuary is always a time for new beginnings and fresh thinking. But with Donald Trump heading for the White House and a new(ish) Labour government in charge of a faltering UK economy, the onset of 2025 seems especially portentous.Forecasting is a mug's game, as former Bank of England governor Mervyn King used to say about predicting exchange rates; but here are some of the big economic questions to ponder, as the new year gets under way: Continue reading...

The government is only deceiving itself by trying to make Brexit work' and forlornly pursuing a trade deal with TrumpWalter Scott knew a thing or two: Oh what a tangled web we weave/When first we practise to deceive."In many ways, however, Keir Starmer, Rachel Reeves and their colleagues were deceiving themselves when apparently deceiving the electorate on the subject of taxation. Continue reading...

From post and planes to TV, phones and retail chains - and even a central bank - here are the chiefs facing the most testing of timesA year is a long time in business: enough time for things to turn sour financially, or to engineer a comeback. Here are our picks of the figures across all sectors who face a testing year with something big to prove in 2025 Continue reading...

Live, rolling coverage of business, economics and financial markets as 2025 starts with trepidation over new US administration's trade policies, and the global manufacturing sector strugglesNine out of ten new cars sold in Norway last year were powered by battery only, as the country approaches the feat of becoming the first to completely ditch petrol and diesel sales.Norway is aiming to completely phase out sales of cars with petrol and diesel engines by 2025. The latest data from the Norwegian Road Federation suggest that it is well on track.Norway will be the first country in the world to pretty much erase petrol and diesel engine cars from the new car market. Continue reading...

Pound drops to nine-month low against dollar after PMI for December signals further contraction in manufacturing

With threats of recession, global fracturing and increasingly angry voters, Labour's sticky start is unlikely to get any easierThe 2020s have been a dismal decade. Five years ago, when the first reports emerged of a new virus that had its origins in the Chinese city of Wuhan, it was hard to imagine that Covid-19 would have such a devastating impact. Yet within months, the UK was in lockdown, the global economy was in a chokehold, trade flows had dried up and governments were spending freely to prevent deep recessions turning into something even more catastrophic.A second Great Depression was avoided, but half a decade on, the long-term effects of the pandemic are still being felt. Predictions that the development of new vaccines to combat the virus would prove the catalyst for a new roaring 20s" have proved wide of the mark. The second half of the decade should be an improvement on the first half - but that's not saying much. The good news is that a few green shoots have started to emerge.Larry Elliott is a Guardian columnistDo you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

Good for equities, good for the US, and good for crypto but the year spawned mixed blessings for the UK, China and EuropeGlobal stock markets climbed in 2024, helped by falling inflation and the US economy's success in avoiding a hangover from a strong post-pandemic recovery.While Europe and the UK struggled to make headway, the US maintained pole position at the top of the rich nations' growth league, pushing shares in New York to new record highs. Continue reading...

Cautious optimism' forecast despite end to key stamp duty relief and fears of higher taxes and interest ratesExperts have predicted a buyer's market" for house hunters in the year ahead, giving them greater negotiating power as the mood of the housing market shifts to cautious optimism".However, even the more hopeful expectations for 2025 were met with caution, as an important stamp duty relief for first-time buyers was scheduled to end in the spring, as well as potentially high interest rates and taxes bearing down on the market. Continue reading...

Rolling coverage of the latest economic and financial news, on the final trading day of the yearWall Street is set for a calm final session of 2024, judging by the latest futures prices which show the Dow flat:European gas prices are also higher today, with the month-ahead contract up 0.8% at 48.25/MWh.Gazprom said it would send only 37.2 million cubic metres on Tuesday compared to 42.4 mcm on Monday. Flows are expected to fall to zero from the early hours of Jan. 1 after the expiry of the five-year transit agreement.Its demise marks the almost complete loss of Moscow's once mighty hold over the European gas market. Ukraine refused to negotiate a new deal because of the war. Continue reading...

President seeks to allay fears that world's second-largest economy will falter in 2025 because of high US tariffsChina's economy is on course to expand by 5% in 2025, according to its president, Xi Jinping, meeting official growth targets and rebutting concerns that Donald Trump's incoming US administration will harm Beijing's prospects in the new year.Using his annual address to the nation, Xi sought to allay fears that the world's second-largest economy would falter over the next 12 months after the government battled to prevent a slide towards recession during 2024. Continue reading...

Relaxing financial rules risks undermining stability, ignoring post-crash lessons and prioritising short-term gains over the long-term health of the economyRachel Reeves's enthusiasm for the City of London - the crown jewel in our economy" - raises concerns. Economists were worried enough to publicly warn her this month that liberalising financial sector regulations could undermine the government's efforts to grow the economy, posing particular risks to the government's wider industrial strategy". They also stressed the importance of not forgetting the painful lessons of the 2008 global financial crisis.The experts were responding to the chancellor's November Mansion House speech, in which Ms Reeves suggested that post-crisis regulations have gone too far". This is a troubling statement. Those rules were implemented to curb the sector's excesses, prevent systemic risks and ensure that the Treasury does not have to bail out its failures. Rolling back such measuresin the name of economic growth ignores thestability and protection they've provided.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

Rolling coverage of the latest economic and financial newsJapan's blue-chip stock index has ended the year at its highest year-end finish on record, despite a small selloff today.The Nikkei stock average ended down 386.62 points, or almost 1%, today at 39,894 points.There was much optimism in the first half of the year with hope for a favorable cycle in which wages increase in tandem with prices, alongside the weak yen for corporate profits." Continue reading...

Study predicts an intention economy' where companies bid for accurate predictions of human behaviourArtificial intelligence (AI) tools could be used to manipulate online audiences into making decisions - ranging from what to buy to who to vote for - according to researchers at the University of Cambridge.The paper highlights an emerging new marketplace for digital signals of intent" - known as the intention economy" - where AI assistants understand, forecast and manipulate human intentions and sell that information on to companies who can profit from it. Continue reading...

Economic confidence polls reveal that 70% expect turnover to rise and 73% expect profitability to riseA majority of UK businesses expect a positive start to 2025, according to two economic confidence surveys which show managers planning for growth after a challenging period for the economy.About 70% of UK businesses expect their turnover to increase over the next year, up from 62% in December 2023. Meanwhile, 73% are confident of greater profitability, according to research from Lloyds bank. Continue reading...

Biden's loan forgiveness efforts have faced major resistance, but people are bracing for worse under president-electJoe Biden has pushed during his presidency to cancel student debt for tens of millions of Americans. Now Donald Trump, who has branded such efforts vile", is preparing to succeed him - leaving borrowers at risk of losing relief they received, or had been waiting for.Mary Ann Rockwell, 72, is a librarian in upstate New York. She has grappled with her student loans for years, as interest ballooned while she often struggled to afford to make payments. Continue reading...