Even with effective vaccine, hospitality sector will struggle to return to 2019 levels

Investors’ summer optimism gives way to insecurity as curfews and lockdowns return

The repercussions are everywhere, from reduced retail footfall to losses at train companiesIt took time, but the Industrial Revolution profoundly changed the way people worked. Out went cottage industries and in came giant factories. People migrated from rural areas to the cities.Gradually, as economies became more service-sector driven, the big factory was replaced by the big office, but the principle remained the same: employees left their home in the morning for their place of work and returned in the evening. Continue reading...

Survey finds nearly two-thirds of entrepreneurs believe their business may not survive pandemic

Many low earners are in jobs hit hard by the coronavirus, and help for them feeds straight back into the economy

Review finds testing flaws meant support went to many workers who lost no income but not to others who hadRishi Sunak’s flagship scheme to help the self-employed through the pandemic has handed £1.3bn to workers who saw no loss of income while giving nothing to 500,000 people left without work, new analysis has revealed.In a sign of major flaws in the £12.7bn self-employment income support scheme (SEISS), more than 400,000 workers were able to claim support despite losing no income in the crisis. Continue reading...

Small firms are borrowing big sums to survive. They must be given the option of a debt-for-equity swap with the TreasuryBritain is sleepwalking into a debt crisis that will undermine its prospects of a sustainable recovery.It’s not the debts of the government that are at issue; it is the monumental amount of borrowing by the private sector, much of it from the Treasury, that will hang like a dead weight on the shoulders of thousands of businesses, possibly for a decade.Of course the government would be in the game of 'picking winners' – something the Treasury has always rejected Continue reading...

Labour says hundreds of thousands of people will be left struggling under new scheme

IHS Markit index shows growth is at its weakest since the recovery from lockdown began

Covid has tanked the gains he made in the economy and any new stimulus could be too lateIt all looked so simple for Donald Trump as he took the stage at the World Economic Forum in Davos in January this year. At the start of an election year, the annual gathering of the global business elite was an opportunity to launch his campaign.It was one Trump eagerly seized. The next 30 minutes was one long boast, detailing how a US economy that had allegedly been on its knees under Barack Obama had been transformed under his stewardship. Continue reading...

Chancellor announces new support deal amid concerns over mass unemployment

Hospitality and leisure bosses welcome grants but remain wary of uncertain future

Latest updates: Boris Johnson says he ‘share people’s frustrations’ as figures reveal new low in reaching contacts; further areas added to tier 2 restrictions. This live blog is now closed – please follow the global live blog for latest updates

Rolling coverage of the latest economic and financial news

U-turn on job support scheme leaves many self-employed feeling aggrieved

There are many means by which government and the market can improve opportunitiesInequality has been seizing ever more of the public’s attention in recent years, reflected everywhere from papal encyclicals and economic tomes by French socialists to technical academic debates and the demotic language of politicians and pundits. The health and economic effects of the Covid-19 pandemic have further elevated these concerns.But which aspect of inequality should we be worried about? There are inequalities of opportunity and inequalities of outcome; there is overall inequality and there is inequality at the tails of the distribution. Should we be more worried about absolute or relative positions – mobility or stability? What is really more important, the distribution of the economic pie or the level and growth of living standards?Related: Can central banks keep holding off the Covid economic crisis? | Mohamed El-Erian Continue reading...

12m adults struggling to pay bills, with BAME people worst hit, official figures show

Chancellor to meet employers groups and unions amid pressure from lockdown-hit areas

Crisis creates highest debt-to-GDP ratio since 1960

Rolling coverage of the latest economic and financial news

Sean Rickard and Clive Spragg take issue with an article by Larry Elliott. Plus letters from Christopher Hill and SP Chakravarty on post-Brexit trade dealsLarry Elliott (Boris Johnson’s split from Brussels echoes Henry VIII’s break with Rome, 18 October) seems too willing to accept that the UK’s economic performance has been constrained by EU membership and that models showing the economic cost of Brexit should be treated with scepticism because behaviour can change. Behaviour can change, but not always for the best. Rather than observing that, post-Brexit, the government can nurture industrial regeneration, it would be wise to understand why the UK has spent less on state and regional aids than comparable EU members, and why they have achieved more impressive productivity growth.As to his outmoded view that a fall in sterling’s value will relieve some Brexit pain, all we can say for certain is that it will make the country poorer. Since the financial crash, sterling has lost some 25% of its value, yet the current account continued to decline until the Covid recession reduced import demand. Continue reading...

UK chancellor will set out one-year plan covering budgeting needs of departments

Covid crisis means government’s long-term economic agenda must wait

Centre for Policy Studies plan includes new limits on child benefit and foreign aid cutsA right-of-centre thinktank with close links to Downing Street has called for the pensions triple lock to be scrapped, the aid budget to be cut and child benefit further limited as part of £30bn worth of spending cuts designed to spare the UK from post Covid-19 tax increases.The Centre for Policy Studies (CPS) said its nine-point plan would ensure that the government was getting value for money and ensure that frontline services were protected as the Treasury took steps to repair the public finances.Related: UK economy nears 'perilous turning point' on Covid-19Introduced in 2011 by the coalition government, the triple lock guarantees that the basic state pension will rise by a minimum of either 2.5%, the rate of inflation or average earnings growth, whichever is largest.A cut of 160,000 in public sector administrative staff at an estimated saving of £3.5bn.The sale of high-value council homes and replacing them with cheaper properties (£1.5bn).Reducing the number of quangos and combining their back-office functions (£3bn).Streamlining local government and its administrative costs (£1bn).Improving e-procurement and data sharing (£4.5bn).Making child benefit part of the child tax credit system and tightening eligibility (£1bn). Continue reading...

New Economics Foundation estimates 2.7m roles at risk of redundancy despite new job support scheme

Brazilian president’s stance on deforestation remains stumbling block for South America agreementBrussels is in talks with Brazil’s far-right nationalist president, Jair Bolsonaro, over commitments on the future of the Amazon as it seeks to persuade Emmanuel Macron and other EU leaders and parliaments to ratify the trade deal the bloc has negotiated with South America.The ratification of the draft trade agreement between the EU and the “Mercosur” or Southern Common Market free-trade zone – which spans Brazil, Uruguay, Paraguay and Argentina – has been in doubt almost since it was announced last June.Related: This is my message to the western world – your civilisation is killing life on Earth | Nemonte Nenquimo Continue reading...

Rolling coverage of the latest economic and financial news, as MPC member Gertjan Vlieghe says UK may need more stimulus to fight Covid-19 crisis

Gertjan Vlieghe says the surge in Covid cases means the Bank will need a range of measuresNegative interest rates in the UK edged closer on Monday after a Bank of England policymaker warned the central bank would need extra firepower to boost the economy following the surge in Covid-19 cases.In a gloomy assessment of the next few months, Gertjan Vlieghe, who sits on the monetary policy committee, the bank’s interest rate setting body, said the second wave of Covid-19 was holding back consumer spending and suppressing business investment, which would push unemployment higher.What would happen to my mortgage? Continue reading...

From test and trace to care homes, it’s time to bring public services back in house and award contracts to social enterprisesEngland’s “world-beating” test-and-trace service has failed to materialise. Riddled with problems since its inception, it has been described as barely functional, with demand up to four times that of capacity and 90% of tests failing to hit the 24-hour turnaround target.But the problems with test and trace go far deeper than the incompetencies of this government. Over the last 30 years, Britain has shifted from having a market economy to being a market society where large swathes of public services are outsourced to the private sector. NHS test and trace is a prime example of this model, with management consultants such as Deloitte and Serco running large parts of a system where shareholder value appears to have trumped the needs of our frontline services.Related: UK coronavirus live: Johnson to hold press conference, following talks with Burnham about Greater ManchesterRelated: Private equity and care: a sector propped up by debt Continue reading...

Even the IMF believes that fiscal restraint is not the right way to deal with pandemic debt – but the UK can’t seem to move on“There’s no money left.” That is the ominous refrain repeated in hushed tones across Whitehall and public services. It is the same idea that scarred the UK economy for much of the past decade and inflicted misery on millions. Could austerity be set to return?At an international level, the consensus has certainly turned against austerity. Both the International Monetary Fund and the World Bank now advocate for fiscal activism rather than restraint. Continue reading...

Minister battles to rescue retailers amid fears for 50,000 shops and hundreds of thousands of jobs

FT economics columnist and author who influenced Wilson and Thatcher“No one is more senior to another on this paper, except for Sam Brittan.” Thus spoke Sir Gordon Newton, the longtime editor of the Financial Times, when one of his staff was claiming precedence over another.Newton was referring to Samuel Brittan, his prize economics commentator, whom he had hired as part of a graduate recruitment policy in the 1950s, among a formidable crop that included Nigel Lawson and William Rees-Mogg. Continue reading...

Beijing was fast to respond and increased public investment; it has not faced a second waveBy its own standards, China’s economy is having a bad year. After four decades of stellar growth, the east Asian country will barely expand at all in 2020.But just about every country – big or small – has faced a hit from the Covid-19 pandemic, and China has suffered less than most. Whereas most western industrialised nations are still struggling to get back to where they were before the virus struck, Beijing has reported that there was year-on-year growth in the third quarter.Related: China becomes first major economy to recover from Covid-19 pandemic Continue reading...

As long as the economy is structured around the City – the south will find it easier to bound back from Covid

Year-on-year expansion, while slightly lower than analyst expectations, represents a dramatic reversal

Former Labour prime minister’s proposal part of plan to prevent spike in youth unemploymentThe former prime minister Gordon Brown has called for employers to be given a wage subsidy of £100 a week to hire workers under 25 as part of a plan to prevent youth unemployment exceeding levels seen in the 1980s.Brown said 1.5 million young people would need help to find work over the next year, adding the government’s £2bn ”kickstart” scheme announced in the summer would not be sufficient.Provision of quality work experience.Training geared to new jobs, in sectors such as care, IT and logistics, jobs linked to the recovery from lab technicians and contact tracers, to care workers and teaching assistants, not training for continued unemployment.Help with job searches – which Brown said were a vital element of getting into work, as demonstrated by Labour’s 2009 future jobs fund.A wage subsidy for employers in the order of £100 a week for six months to take a young person on full-time. Continue reading...

Many would have thought the Tudor king needed to avoid a no-deal break but history has proved otherwiseBoris Johnson’s assertion that the UK should prepare for a no-deal Brexit has left the financial markets unconvinced. Brinkmanship is the name of the game, they say. Before negotiations can be concluded there always has to be a crisis when it appears all is lost, then both sides give a little and success is plucked from the jaws of failure.The big banks in the early 1530s did not employ armies of economists to opine about political events but had they done so the analysts of the 16th century would probably have been saying the same about Henry VIII’s divorce from Catherine of Aragon as they are now about Brexit. Henry is bluffing. He is not really prepared to break with Rome. A schism will do neither side any good, but there will be more damage to England than to Catholic Europe.Related: Boris Johnson is dancing with danger by threatening a crash-out Brexit | Andrew RawnsleyRelated: Boris Johnson takes note of Trump's game theory to keep EU guessing on Brexit | Larry Elliott Continue reading...

Organisations told financial help tied to crediting culture fund on web and in news lettersArts organisations and businesses desperate for financial survival have been told that rescue grants are tied to them publicly praising a government campaign.Emergency funding worth £76m was awarded to 588 venues, comedy clubs, circuses, festivals, regional theatres and local museums across the UK, in the second round of funding pledged from the government’s £1.57bn culture recovery fund. Last Monday, £257m was awarded to 1,385 applicants, bringing the spend by Arts Council England so far to £333m. Continue reading...

The signs are of relapse, not recovery, when it comes to the pandemic. Central banks must rise to the challenge againAs Britain and the rest of Europe battle the second wave of the Covid-19 pandemic, desperate eyes turn to central bank bosses, wondering what rescue plans they have up their sleeves.This year the Bank of England has pumped £300bn into the UK economy via its quantitative easing programme. The European Central Bank (ECB) pushed more than double that amount into the 19 eurozone countries, and the US Federal Reserve has done the same to keep credit flowing through the banking system. Continue reading...

Leave campaigners were heedless of the economic damage they might do. Now they must reckon with a pandemic as wellIt may come as an unpleasant surprise to my remaining Brexiter readers, but if it had not been for a suggestion by the late Sir Samuel Brittan, I might never have embarked on a life as an economics commentator – a role which most certainly involves keeping up the attack on the folly of Brexit and of all Brexiters.Sir Samuel, who died peacefully last Monday at the age of 86, was the senior economics commentator of the Financial Times for many years, and it was he who asked me to assist him in coverage of economic news. He was a mentor towards whom I have always been extremely grateful.The chancellor is being firmly told by many experts that the government is now not doing nearly enough Continue reading...

The government just reported nearly 900,000 new jobless claims, and 8m Americans have fallen into poverty since MayThe chasm between the two Americas – “Unemployment America” and “Stock Market America” – made starkly visible this spring, has not disappeared. Instead, the divide has widened.Related: IMF estimates global Covid cost at $28tn in lost outputWhen Trump’s refusal to wear a mask in public is taken as a sign of courage, the body politic is ailing Continue reading...

PM has told firms to prepare to trade with EU ‘based on simple principles of global free trade’

Rolling coverage of the latest economic and financial news, as EU leaders said Brexit talks would continue next week3.04pm BSTThe main market story has centred on investor reaction to Brexit talks after Boris Johnson urged the UK to prepare for no deal. While EU counterparts suggested negotiations would continue next week, a spokesperson for the UK prime minister essentially said the EU shouldn’t bother unless the bloc fundamentally changes its stance.2.38pm BSTUS stocks are climbing in part due to vaccine hopes, after pharma giant Pfizer said it may apply for emergency use of its Covid vaccine as early as November.The world is waiting for a safe and effective #COVID19 vaccine. Today our Chairman & CEO penned an open letter to help people understand the criteria we must meet and the expected timelines for our investigational vaccine program. https://t.co/RlhDYq4vK0Assuming positive data, Pfizer will apply for Emergency Authorization Use in the U.S. soon after the safety milestone is achieved in the third week of November.All the data contained in our U.S. application would be reviewed not only by the FDA’s own scientists but also by an external panel of independent experts at a publicly held meeting convened by the agency.2.31pm BSTUS stock markets have opened in positive territory:2.25pm BSTData flash: US industrial production has come in far lower than expected, having contracted 0.6% in September.That’s compared with forecasts for 0.5% growth, according to a Reuters poll, and August’s growth of 0.4%2.14pm BSTAnd yet again, the pound has tumbles to around-0.3% versus the dollar to 1.2881 after a spokesman for Boris Johnson reportedly said trade talks with the EU are over unless the bloc fundamentally changes its stance.Reuters reports the spokesman as saying:The trade talks are over: the EU have effectively ended them by saying that they do not want to change their negotiating positions.There is no point in trade talks if the EU does not change its position. The EU effectively ended the trade talks yesterday. Only if the EU fundamentally changes its positions, will it be worth talking.2.01pm BSTIt’s easy to see why sterling is struggling to settle this afternoon, given that the UK’s ‘no-deal is looming’ statement is being interpreted as a sign of concession by others.The latest comments from EU leaders comes from Dutch prime minister Mark Rutte. Reuters reports Rutte saying that he interprets Boris Johnson’s comments as a sign that Britain is prepared to compromise.1.41pm BSTFortunes have turned for US futures on the back of the stronger than expected retail sales:Futures gaining in the pre-market after retail sales clobber expectations https://t.co/Vshxd2Niyi pic.twitter.com/i7PjIJFHLd1.39pm BSTData flash: US retail sales for September have comfortably beat estimates, having jumped 1.9% compared to a month earlier.That compares to Reuters polls forecasting a 0.7% month-on-month rise.1.32pm BSTBoris Johnson’s dismal Brexit update crucially did not rule out further talks with the EU, and markets are now taking cues from European leaders who said negotiations would continue in London next week.It’s been a roller coaster ride for the pound this afternoon. After dropping more than 0.3% following Johnson’s comments, it’s now back in positive territory and is nearly up 0.1% at 1.2926.12.55pm BSTPret a Manger is to cut 400 jobs and close six more outlets in London after a slowdown in sales growth since September as coronavirus infection rates increased in the UK.The coffee and sandwich shop chain has struggled to deal with the slump in commuter numbers since the pandemic struck, with branches in the City of London particularly hard hit.It’s absolutely right that we take steps to stop the spread of the virus and tackle the new wave of infections. Sadly, the result of the rise in infections and the necessary shift in public health guidance mean that our recovery has slowed.We’ve said all along that it’s up to Pret to decide our own future and that we must adapt to the new situation we find ourselves in. That’s why we have to make these further changes as we continue to transform our business model and prepare for the six months ahead.Related: Pret a Manger to cut a further 400 jobs and close six more stores12.47pm BSTThe EU Commission president confirms Brexit negotiations are set to continue in London next week.- talks: the EU continues to work for a deal, but not at any price.

Howard Davies warns of technical and contractual issues if cost of borrowing cut furtherBritain’s banks are not ready for negative interest rates, according to the chairman of NatWest.“We’re not completely ready for it,” Howard Davies said. “There would be technical issues and many contractual issues.”What would happen to my mortgage? Continue reading...

Rolling coverage of the latest economic and financial news, as US weekly jobless claims hit a seven-week high

Every country wants to fight the virus with minimal economic damage. Our attempts have created the worst of all worldsIt’s the textbook example of being caught between a rock and a hard place. The number of people being treated for Covid-19 in hospital is rising fast and is currently higher than it was when the UK went into full national lockdown on 23 March. Worse is to come.Simultaneously, the threat of mass unemployment looms ever larger. More workers were made redundant in the three months to August than at any time since the period when the banks almost went bust a decade ago. Worse is to come here, too.Larry Elliott is the Guardian’s economics editor Continue reading...

IMF says more must be done to tackle rising poverty, unemployment and inequality despite record public debts

Ultra-low interest rates mean wealthy countries can continue to spend, a luxury the poorest cannot affordGo out there and spend. Don’t worry about the build up of debt. You will be making a mistake if you remove support for your economies too soon. That’s the message from Kristalina Georgieva, the managing director of the International Monetary Fund, to finance ministers as they contemplate how to deal with the economic damage caused by Covid-19.Well, some of them at least. Finance ministers such as Rishi Sunak are certainly getting the green light to spend more. That’s the right advice and it should be heeded, not least because ultra-low interest rates mean debt servicing costs are going down even as borrowing goes up. Continue reading...

A group of European ministers and the EC’s commissioner for international partnerships call for measures to foster long-term resilience in the global economy and environmentThe world is facing an unprecedented crisis. In just a few months, the Covid-19 pandemic has swept across the world, bringing human tragedy and causing an economic shock of historic proportions. While it poses a tremendous challenge to our economies and societies, the Covid crisis also gives us an opportunity to work towards a future that is more fair, equal and green.This week, the World Bank Group and the International Monetary Fund are holding their annual meetings. We will discuss our efforts to fight poverty and hunger, support socioeconomic recovery and respond to the emerging debt crisis. “Business as usual” is not an option. It is imperative that the World Bank’s development financing of $160bn for the coming year is directed towards a sustainable and inclusive future. This is the time to strengthen our economies in line with the sustainable development goals and the Paris climate agreement. Continue reading...

International Monetary Fund says it’s too early to end government support scheme, as pandemic drives up to 90m people into extreme poverty