The key figures in the Owen Paterson debacle were all Leavers. To many Remainers, that will come as no surpriseThere is a close link between the parliamentary sleaze scandal and – you’ve guessed it – Brexit.The plotters who tried scandalously to exonerate Owen Paterson and undermine the course of parliamentary justice were all Brexiters – some of them extremely so. From Paterson himself to the prime minister, who attended the dinner where the plot was hatched, taking in the leader of the house, Jacob Rees-Mogg, who enthusiastically supported it, they all share responsibility for what is now being increasingly recognised as the catastrophe of Brexit. For, make no mistake about it, Brexit was, and remains, a sleazy operation. Continue reading...

A tight labour market and high inflation may see real wages growth for some, but ongoing uncertainty for manyFor several months now, policymakers at the Bank of England have been agonising about wages. They ask themselves how workers will react when they see rising prices in the shops and, worse, the rocketing cost of petrol, which last week jumped to its highest level on record.Will they march into their boss’s office and demand a pay rise of 10%? Or, more likely, will they march down the road to a rival employer prepared to increase wages by double digits to attract new staff? Continue reading...

The Tories set great store by the special economic zone, but will it create thousands of jobs, or just be the economic damp squib experts predict?There is demolition work at every turn on Teesside, from the increasingly regular explosions heard across Redcar, as the old steelworks is blasted to pieces, to the cranes taking down nearby Wilton International’s coal-fired power plant.“The site has seen better days,” said Andy Koss of Sembcorp Industries, which manages the Wilton International complex. “For the region as a whole it has been a tough time, with the gradual erosion of industry at Wilton. And then the closure of the steelworks was a massive blow.” Continue reading...

Rolling coverage of the latest economic and financial news

Wealthier households likely to wait for better economic outlook before increasing spending, suggests IFSA much-anticipated Christmas spending spree is unlikely to materialise despite consumers having around £150bn of savings on deposit to splash on toys, food and festive parties, economists have warned.According to a study by the Institute for Fiscal Studies, much of the savings built up during the pandemic will remain in household bank accounts until the economic outlook is more upbeat. Continue reading...

Rolling coverage of the latest economic and financial news, as UK economy grows slower than expected in Q3 despite a September rebound

Analysis: The fact that figures for Q3 compare unfavourably with other large economies must worry the chancellor

Surging infection rates, the ‘pingdemic’, rising prices and supply constraints put the brakes on growthBritain’s recovery from its third Covid-19 lockdown slowed sharply over the summer as the economy’s growth was hit by rising infection rates, the pingdemic and global supply shortages.Figures from the Office for National Statistics show that national output expanded by 1.3% in the three months to September, leaving it still more 2.1% below its pre-crisis level in the fourth quarter of 2019. Continue reading...

World Bank says 40% of low-income countries failed to publish any figures in past two yearsEfforts to combat a looming debt crisis in the world’s poorest countries are being hindered by a lack of up-to-date, reliable figures showing how much individual nations owe, the World Bank has said.The Washington-based institution highlighted “massive gaps” in the data, with 40% of low-income countries failing to publish any figures on their sovereign debt in the past two years. Continue reading...

Joe Biden needs someone at the top who shares his values – so step forward then please … Lael BrainardThe US president, Joe Biden, faces a critical decision: whom to appoint as chair of the Federal Reserve – arguably the most powerful position in the global economy.The wrong choice can have grave consequences. Under Alan Greenspan and Ben Bernanke, the Fed failed to regulate the banking system adequately, setting the stage for the worst global economic downturn in 75 years. That crisis and policymakers’ response to it have had far-reaching political consequences, exacerbating inequality and nurturing a lingering sense of grievance in those who lost their houses and jobs. Continue reading...

Number of vacancies now 25% higher than pre-Covid figure as companies struggle to recruit workers for festive seasonBritain’s employers are offering bonuses of up to £2,000 to recruit Christmas workers amid fears over staff shortages disrupting the festive season.Research from the jobs website Adzuna showed there are currently 26,307 seasonal job vacancies ahead of the pivotal Christmas shopping period, almost double the 13,668 at the same point a year ago. Continue reading...

Rolling coverage of the latest economic and financial news

NIESR blames deepening malaise on economic mismanagement since 2008 amid criticism for BoE and BrexitBritain’s economy risks emerging from the pandemic into a long period of stagnation that damages household incomes and undermines plans to level up the regions, according to a hard-hitting report by the National Institute of Economic and Social Research.As it downgraded growth forecasts for next year and predicted a rise in prices that could push inflation above 5%, the thinktank accused the government and the Bank of England of mismanaging the economy since the 2008 financial crash. Continue reading...

Analysts predict rising costs of groceries will push hard-pressed consumers to shop around even moreFood price inflation reached a 14-month high in October with the prices of favourite snacks such as crisps and soft drinks rising the most, according to new figures.Annual grocery price inflation reached 2.1% last month which is the highest since August 2020, according to grocery market analysts Kantar. Continue reading...

Rolling coverage of the latest economic and financial news, as transatlantic leisure flights resume….and UK households grow more anxious

Bank of England stimulus since late 2008 has done more to boost house prices than productive investmentNext year marks the 30th anniversary of Black Wednesday, a momentous day in history. 16 September 1992 will be forever remembered as the day Britain was blown out of Europe’s exchange rate mechanism by foreign currency speculators led by George Soros.John Major’s government sought to fend off the attacks by using Britain’s reserves to buy pounds and by raising interest rates. The day started with official borrowing costs at 10% but during the morning of Black Wednesday they were raised to 12% and later it was announced that they would be further increased, to 15%, the next day. Continue reading...

The UK’s long-running productivity problems are not being solved – but they must be if the economy is to get greenerRishi Sunak says his tax and spending plans, outlined in the budget, will boost the outlook for private sector jobs, wages and growth. The Bank of England’s most recent review of the economy begs to differ.It might appear that the recovery is strong and that companies can barely keep pace with customer demand. Sadly, appearances can be deceptive. If anything, the archetypal mainstream UK business – the one that stays out of the limelight, doesn’t attend award ceremonies or even bother to join the local chamber of commerce – will continue to look and behave like a zombie, staggering along with the same old equipment and outmoded technology. Continue reading...

Digital art is a billion-dollar business, with everyone from Paris Hilton to Damien Hirst trading in ‘non-fungible tokens’. But are NFTs just a get-rich-quick scheme masquerading as culture?“It’s actually a lot simpler than you think.” It’s a Tuesday afternoon, and somewhat to my surprise, I’m on the phone to Paris Hilton, who is graciously explaining the world of NFTs.Hilton is many things – a reality star, an heiress, an unlikely lockdown fitness guru who uses designer handbags instead of weights. But until now, she has never been considered a significant player in the art world. When artists have acknowledged her, often they’ve done so to fetishise her image. In 2008, Damien Hirst bought a portrait of her by the artist Jonathan Yeo, in which her body is constructed from collaged images cut from porn magazines. Continue reading...

As labor shortages and supply chain problems bite, consumers have a growing sense they’re getting less for their money“Flight cancelled”; “service temporarily suspended”; “not currently available”; “longer than normal wait times”: these are the messages that confront US consumers daily as the economy struggles to find a post pandemic footing. Now the phenomenon has a name: “skimpflation”.It’s a simple in concept – struggling with shortages of workers and goods, companies are skimping on what they offer consumers while, in many cases, charging the same price or more for that service. Continue reading...

Andrew Bailey says interest rates will rise when clearer picture about the labour market emergesThe governor of the Bank of England has signalled that interest rates will need to rise towards 1% in the coming months and rejected suggestions that his team of policymakers “bottled it” by failing to impose a widely expected increase.Speaking to BBC Radio 4’s Today programme on Friday, Andrew Bailey said interest rates would rise when a clearer picture emerged about the end of the furlough scheme and unemployment. Continue reading...

Rolling coverage of the latest economic and financial news

With shipping industry still recovering from Ever Given crisis, transit tolls are increasing by 6%The Suez Canal Authority is increasing the fees it charges ships passing through the critical waterway, in a move expected to pile further inflationary pressure on global supply chains.It will seek to capitalise on the recovery in cargo trade by raising its transit tolls by 6% from February, 11 months after the canal was blocked for nearly a week by the Ever Given container ship. About 12% of international trade passes through the canal, which is the shortest maritime route between Asia and Europe. Continue reading...

President says ‘our economy is on the move’ as jobs growth outpaces 450,000 new positions analysts had predictedUS employers added a solid 531,000 jobs in October as the American economy appeared to withstand the impact of coronavirus and continued its recovery.The strong number provides a boost to Joe Biden, whose presidency has been battered by political setbacks in recent months as it struggles to enact his domestic agenda and suffered a major defeat in the race for governor of Virginia. Continue reading...

Analysis: decision to keep rates on hold is not unpopular but governor’s signalling is roundly criticised

At Cop26 the wealthy countries cast themselves as saviours, yet their efforts are hopelessly inadequate and will prolong the injusticeThe story of the past 500 years can be crudely summarised as follows. A handful of European nations, which had mastered both the art of violence and advanced seafaring technology, used these faculties to invade other territories and seize their land, labour and resources.Competition for control of other people’s lands led to repeated wars between the colonising nations. New doctrines – racial categorisation, ethnic superiority and a moral duty to “rescue” other people from their “barbarism” and “depravity” – were developed to justify the violence. These doctrines led, in turn, to genocide.George Monbiot is a Guardian columnist Continue reading...

Bank of England’s decision to hold interest rates offers reprieve, but house price growth forecast to slow

Rolling coverage of the latest economic and financial news

Monetary Policy Committee votes 7-2 to leave borrowing costs at current record low of 0.1%

City wrongfooted after committee decides to hold rate despite forecast of 5% inflation by springThe pound fell heavily after the the Bank of England wrongfooted the City by leaving interest rates at their record low level of 0.1%, despite forecasting a jump in inflation to 5% by next spring.Sterling dropped by more than two cents against the US dollar when it emerged that only two members of Threadneedle Street’s nine-member monetary policy committee voted for a rise, confounding expectations of an increase in the cost of borrowing to 0.25%. Continue reading...

It’s no use telling developing nations to decarbonise. The west must accept it bears the bulk of the blame for the climate crisisA couple of hundred years ago Britain was not a lot different from many poor countries today. Life expectancy was low, infant mortality was high, living standards barely rose from year to year, water-borne diseases were rife. People worked long hours and life for the struggling was, as Thomas Hobbes put it, “nasty, brutish and short”.Then the Industrial Revolution came along and Britain, followed by other countries in the world’s temperate zones, discovered the elixir of economic growth. After pretty much flatlining for more than a thousand years, incomes per head started to rise much more quickly.Larry Elliott is the Guardian’s economics editor Continue reading...

Rising inflation and winding down of Covid likely to weigh on central bank’s decision makers

Rolling coverage of the latest economic and financial news

Final snapshot on economy before Bank’s decision shows strong rise in activity in services sectorThe Bank of England is considering raising interest rates for the first time since the onset of the coronavirus pandemic, against a backdrop of rising inflationary pressures and a rebound in economic growth.In a final snapshot from the economy before the rate decision is announced on Thursday, monthly data showed a stronger-than-expected rise in activity in Britain’s dominant services sector during October. Continue reading...

Officials announces tapering of programme amid fears central bank may raise rates to curb inflationThe US Federal Reserve has announced it is winding down the massive stimulus programme it put in place at the onset of the Covid-19 pandemic amid fears that the central bank may have to raise rates soon to control rising inflation.Fed officials have been debating for months over whether and when to taper the stimulus programmes that it set up to head off the economic headwinds caused by the pandemic. They announced on Wednesday that they would begin cutting that stimulus by $15bn a month but left interest rates unchanged. Continue reading...

George Gater was a congenial colleague at the National Economic Development Office (NEDO) in the 1970s. Some of his colleagues involved in the organisation of the “little neddies”, the industrial working parties, tended to favour the interests of particular sectors. But George never lost sight of the ultimate purpose of the activity – improving the performance of the British economy – on which economists like me were more focused. Our lunchtime conversations ranged more widely, to such matters as the influence of social and historical factors in national economic performance. Continue reading...

Analysis: contradictory data has split experts over whether the Bank of England will raise rates or notIt is a sign of the confusion surrounding the Bank of England’s interest rate decision on Thursday that investors are unusually divided over which direction the central bank will go.Financial markets show that more than six in 10 investors are anticipating a hike in the cost of borrowing while a majority of City economists take the opposite view, telling a Reuters survey they expect rates will remain at historic lows, at least for the time being. Continue reading...

World Economic Forum says taxing carbon emitters would cost less than economic fallout from climate crisisCreating an international price for carbon emissions could reduce global greenhouse gases by 12% at a cost of less than 1% of global GDP, according to a new report from the World Economic Forum (WEF) and PwC.The report found that if global governments agreed together to set a price for pollution to help cut carbon emissions the cost would be less than the economic losses triggered by the fallout of a runaway climate crisis. Continue reading...

Rolling coverage of the latest economic and financial news

The governor blundered by suggesting an early hike – but the least costly option is to wait and seeDid the governor of the Bank of England, Andrew Bailey, err in exaggerating the prospects of an interest rate rise? It seems so. Mr Bailey’s intervention, along with his chief economist’s, suggested the base rate might rise this week. City traders are now betting that it will do so – with the Bank’s rate-setting monetary policy committee (MPC) due to pronounce on Thursday. The governor is now damned if rates rise – giving the impression that the central bank can be talked into a hike. And he is damned if they do not – because he signalled rises that did not arrive.There is no pressing reason for money to be made dearer. For many, employment is far more precarious than the official figures suggest. Business surveys report more pessimism than optimism about the UK’s prospects. The chancellor did not help by precipitately withdrawing the fiscal stimulus. The budget ended the furlough scheme, reduced benefits and raised taxes, leaving – as the Institute for Fiscal Studies revealed – wages stagnant for years to come. This, combined with higher interest rates and a bumpy path out of Covid, risks a recession, not a recovery. Continue reading...

Treasury watchdog predicts inflation will keep real household incomes below 2019 levels for another two yearsBritish households will remain worse off than before the pandemic until 2023 as rising inflation hits living standards, the Treasury’s economics watchdog has warned as Rishi Sunak sought to defend his budget.Charlie Bean, a former Bank of England deputy governor and board member of the Office for Budget Responsibility, said that growth in household incomes, after taking account of inflation, would effectively stall over the next two years. Continue reading...

New 15% rate on firms that have avoided paying tax on US soil will help to improve education and infrastructure – treasury secretaryThe treasury secretary Janet Yellen has said US multinationals who have spent years avoiding paying tax on American soil will be forced to help fund improvements to education, social and infrastructure programmes, thanks to the landmark global tax deal.Speaking in Ireland, where 800 US companies are based, Yellen said the new global tax rate agreed by 136 OECD countries halted the “race to the bottom” where multinationals scoured the world for the lowest corporation tax rate, failing to pay their dues to the populations that helped them make billions every year in profits. Continue reading...

Rolling coverage of the latest economic and financial news, as UK manufacturing output growth slows to an eight-month low

The Bank of England is expected to raise interest rates in the next month and we would like to find out how people may be affectedIt’s expected that the Bank of England will begin to increase interest rates this month or next to tackle rising inflation. Interest rates are currently at a historic low of 0.1%.We would like to understand more about the impact any increase may have on household finances.. Do you have concerns about your mortgage or debt repayments? Or perhaps a rise will help with savings? Or is there another reason why you will be keenly watching for the Bank’s decision? Continue reading...

Can the Granite city diversify into non-fossil fuel industries in time to avoid the fate of UK coal-mining areas?The oil companies know it. The car dealers selling top of the range Porsches get it, as do the hoteliers and the restaurateurs. Change is coming to Aberdeen: the UK centre of North Sea fossil fuel production since the 1970s is trying to avoid becoming the city of stranded assets.The Granite city became Scotland’s boom town almost by accident. It was Dundee down the coast that was originally identified as a probable hub for offshore production when exploratory work established large reserves of oil and gas under the continental shelf. Continue reading...

Thatcherites hate the ‘big state’, but economic realities are forcing the party into messy compromisesThe days of the big state are back. Plans announced by Rishi Sunak last week mean public spending as a share of the economy is on course to reach levels not seen since the Thatcherite revolution was about to begin in the late 1970s. The Iron Lady’s disciples are having kittens at the prospect.It’s worth saying that the economy has changed substantially over the past four decades, with manufacturing accounting for a much smaller share of national output and the service sector growing in importance. Since the 1980s, the UK has run a large and persistent trade deficit in goods, only partly offset by a surplus in services. Continue reading...

Prince of Wales urges G20 to set aside differences and build sustainable economyCop26 is “the last chance saloon” to save the world from runaway climate change, Prince Charles has told world leaders in Rome ahead of the crucial climate summit in Glasgow.Speaking to an audience including Boris Johnson on the sidelines of the gathering of the G20 group of industrialised nations, Charles said it was the moment to begin a green-led economic turnaround. Continue reading...

The chancellor is politically astute, but there is less substance in his investment plans than it appearsFor a chancellor who billed his budget as a moment to kickstart the UK’s economic rebirth after the pandemic, Rishi Sunak’s hour-long speech lacked substance.A reform of alcohol duties – which seemed to excite the teetotal Sunak enough to visit a brewery immediately after the speech – may help the drinks industry, but it was a distraction too far for many business leaders. They were left in the dark about the overall strategy and how policies were likely to be implemented. Continue reading...

Fishing rows notwithstanding, much of Europe looks on at the UK’s plight with astonishment – and even, still, sympathyAt the recent celebration of the life and achievements of my friend and fellow Remainer John le Carré, I was asked by a leading academic whether I was absolutely certain that we could rejoin the European Union.The answer is that I am not. But as the evidence of the damage of that foolish referendum decision accrues, it is becoming more and more certain that we should try. At the very least, we should be repairing fences and attempting to re-establish as close a relationship as possible – a cause championed by Labour’s impressive shadow chancellor, Rachel Reeves. Continue reading...

Agreement allows duty-free access for limited amounts of EU-made metals and fends off retaliatory EU tariffs due in DecemberThe US and EU have agreed to end a festering dispute over US steel and aluminium tariffs imposed by former president Donald Trump in 2018, removing an irritant in transatlantic relations and averting a spike in EU retaliatory tariffs, US officials have said.Commerce secretary Gina Raimondo told reporters on Saturday that the deal would maintain US section 232 tariffs of 25% on steel and 10% aluminium, while allowing “limited volumes” of EU-produced metals into the US duty free. Continue reading...