Rolling coverage of the latest economic and financial news, as manufacturers report growing shortages and supply chain delays

Northern MPs tell chancellor his budget should protect high street and tax online retailers such as AmazonRishi Sunak is under increasing pressure from Conservative “red wall” MPs to go beyond existing support for the UK economy in Wednesday’s budget and cut taxes for thousands of retailers.MPs across the political spectrum are increasingly uneasy that he may introduce income tax rises for middle earners, and the chancellor is facing calls from 45 northern Tories to make “a bold move to reduce business rates”.Related: Sunak 's budget must place economic needs above party politics | Larry Elliott Continue reading...

The tax break on house purchases saw prices rise by 8.5% – but is it really the best way to address the housing shortage?Reports last week that the stamp duty holiday in England and Northern Ireland is to be extended were met with unsurprisingly little consternation, surprisingly. I mean that I wasn’t surprised by the lack of consternation which, on reflection, was surprising. Can you be surprised on reflection, or just by a reflection because you haven’t had a haircut since October? I think you can. It was a gradual, creeping surprise that stole through me gingerly, like a presentiment of diarrhoea.People don’t like stamp duty, because it makes the surreal sums involved in procuring shelter significantly more eye-watering. Still, isn’t it a bit nuts, when you think about it, extending the stamp duty holiday? The country isn’t made of money. Except it sort of is made of money because the property here is worth so much. Particularly in the south-east, but in Britain generally, houses cost too much. And, thanks to the stamp duty holiday, UK prices rose last year by 8.5%. That’s while most of the economy was somewhere on a scale from lightly to totally screwed.I, like all loyal Britons, swell with pride that our property market has become the repository of choice for Russian oligarchs’ ill-gotten wealth Continue reading...

Rishi Sunak rejects comparisons between himself and George Osborne. But the view from local government is very differentThere are plenty of ways to measure austerity. Before, during and after the budget this week, voters will hear Rishi Sunak herald the end of tight spending as the government builds a bridge from the pandemic to a glorious recovery.What economists do when they want to kick the tyres on such claims is look at the Treasury’s books. They want to see whether public spending is contracting or expanding. And if there is a squeeze, we can be said to be living in a period of austerity.Even in affluent Surrey, Tory councillors have had to cut children’s centres from 58 to 21 to balance the books Continue reading...

Treasury says low-deposit mortgages have virtually disappeared since 2008 financial crisisThe chancellor is expected to unveil a mortgage guarantee scheme that aims to help first-time buyers get their foot on the property ladder in next week’s budget.Rishi Sunak is attempting to incentivise lenders to provide mortgages to first-time buyers, along with current homeowners, with deposits as low as 5% on properties worth up to £600,000. The government will offer lenders the guarantee they need to provide mortgages covering the remaining 95%, with details set to be unveiled on Wednesday.Related: Sunak to use budget to start repairing UK's public finances Continue reading...

Relief bill represents Biden’s first big legislative win but wage hike proposal to be removed from Senate versionThe US House of Representatives has passed Joe Biden’s $1.9tn coronavirus aid bill in his first major legislative victory.Related: Criticism builds over Biden's failure to lift Trump sanctions on ICC prosecutors Continue reading...

Expect measures to help economic recovery but watch out for capital gains tax and other tax risesRishi Sunak’s budget on 3 March is set to unveil a range of measures to help support the recovery of the UK economy, but tax rises are in the offing too. Here is what we can expect.Related: Few budgets really matter, but this one does: Sunak must keep splashing the cash | Larry Elliott Continue reading...

Corporation tax and capital gains tax expected to rise as chancellor begins huge task of repaying Covid debtRishi Sunak will use the volatility in global financial markets to ram home a budget message next week that immediate action is needed to repair the damage to the public finances caused by the Covid-19 pandemic.Despite the deep downturn caused by the third nationwide lockdown in England, the chancellor – who has been closely monitoring market moves – will announce the first steps towards reducing the biggest peacetime deficit in Britain’s history.Related: Few budgets really matter, but this one does: Sunak must keep splashing the cash | Larry ElliottRelated: Never mind about the economy, Britain has a new luxury brand – Rishi Sunak | Marina Hyde Continue reading...

Rolling coverage of the latest economic and financial news

UK FTSE was down 2.5%, its biggest one-day fall in percentage terms since the end of OctoberGlobal stock markets ended February deep in the red, as fears of higher inflation prompted a sell-off in government bonds and spread anxiety across financial markets.The UK’s FTSE 100 index fell 168 points to 6,483, a 2.5% drop – the biggest one-day fall in percentage terms since the end of October. Continue reading...

The high-profile financier lost her high court claim but Barclays walks away wounded

Andy Haldane says there is a danger of central bank complacency letting ‘tiger’ out of the bagCentral bank complacency risks letting the “inflation tiger” out of the bag, a senior Bank of England policymaker has said.Adding to market jitters about the resurgence of price pressures as the global economy recovers from the Covid-19 pandemic, Andy Haldane said borrowing costs could need to go up sooner than the City expected to tame the inflationary threat. Continue reading...

The US has the lowest minimum wage of all G7 nations, in terms of purchasing power, and the third-highest poverty rate in the OECD

Analysis: party figures fear Labour may be forced to U-turn if chancellor raises business taxes in budget

Additional 700,000 people were away from work, with women, young adults and hospitality staff worst hit

The burden to pay for people in retirement is too great on those facing debt, job insecurity and an uncertain futureCovid-19 continues to bring many inter-generational tensions to the fore. Older people bear the brunt of the disease’s impact on health; younger people have to make economic and social sacrifices to protect them. But the pandemic is just one reason why the social contract between the generations is under pressure.Within families, the social contract between the generations is easy to understand. Parents want to give their children the capabilities and means to have a good life; children want their parents to have a comfortable old age. But at a societal level, the social contract between the generations is more complex. The legacy we leave to future generations has many dimensions – the stock of human knowledge and culture, inventions, infrastructure and institutions, and the state of the natural world. We owe a great deal to previous generations and most would agree that we also owe something to future generations we will never meet, and that each generation should leave the next at least as well off, and preferably better off than they were.Related: Millennials are struggling. Is it the fault of the baby boomers?Related: Covid jobs crisis could have lasting impact on young people's pensions Continue reading...

Our analysis of Covid effects on businesses examines work, growth and stock markets

Britain suffering worst economic damage since Covid crisis began, analysis shows

Without fit and competitive firms, there will be no lasting recovery from the Covid crisis

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Jessica Elgot and Polly Toynbee discuss the government’s latest plans to exit lockdown. Richard Partington and Charlotte Alldritt look ahead to next week’s budget, and Larry Elliott and Katy Balls discuss the man behind the budget, Rishi Sunak.The prime minister announced four phases to get England out of lockdown on Monday. Has the government finally struck a safe balance?Plus, as we gear up to hear the budget next Wednesday. We look at how Rishi Sunak can make sure it’s inclusive enough to keep it in line with his party’s plan to level up the country. Continue reading...

Two out of three supply chain managers report experiencing import delays of ‘two to three days’

UK sectors hit hardest by lockdown show sharp rise as big tech shares fall on Wall StreetUK travel and hospitality companies set to benefit from the easing of Covid restrictions rallied on the London stock market after Boris Johnson set out the government’s roadmap for ending lockdown in England.Against a backdrop of rising hopes for a rapid economic recovery from the worst recession for more than 300 years, shares in companies among those hardest hit by lockdown, including airlines, travel firms and operators of retail, food and drink outlets at train stations, recorded the biggest gains amid growing hopes for a fast return to relative normality.Related: Boris Johnson 'very optimistic' all Covid restrictions will end on 21 June Continue reading...

The government must not allow an even more divided society to emerge post-pandemicIt was John Maynard Keynes who developed the idea of “animal spirits” as a kind of spontaneous market optimism, or pessimism, which lent a crucial emotional dimension to economic outcomes. The unveiling of Boris Johnson’s roadmap out of social restrictions was accompanied by a glimpse of how they might play out in a Covid context.As people rushed to bet on the possibility of taking a foreign holiday in July or August, easyJet was among the top risers on the FTSE 250 on Tuesday, reporting a 337% leap in bookings. Shares in the long-suffering hospitality and entertainment industries jumped too. Vaccine rollout and the prime minister’s roadmap have understandably persuaded the population that a definitive exit from lockdown purdah is at hand. For its part, the government, quite reasonably, believes that the release of pent-up consumer energy will fuel a significant post-pandemic recovery. Last week’s UK consumer confidence index was sufficiently buoyant to lead analysts to talk of a “return to normality” in the coming year. Continue reading...

Rolling coverage of the latest economic and financial news

PM says firms will continue to get economic support until they can operate as normal

The G7 needs to keep giving financial aid and other support if it wants to avoid ongoing disruption

Analysis: firms are adding to their payrolls, but the real test will come when the Covid furlough scheme endsOn one reading of the latest unemployment figures, the UK labour market is in pretty good shape. The number of people being added to payrolls is going up and so is the number of job vacancies. Annual earnings growth is up sharply to 4.7%.An alternative reading is that the jobless total is going up along with the redundancy rate, while the number of people employed is going down.Related: UK unemployment rises to 5.1% as Covid lockdown freezes economy Continue reading...

Government furlough scheme prevents higher increase in joblessness in December

David Malpass says delivery systems must be improved in poorer nations as world prepares for next crisisSerious capacity constraints on vaccination programmes pose the biggest threat to the ambitious goal that all 7 billion people across the globe be offered Covid-19 protection within a year, the World Bank’s president has said.In an interview with the Guardian, David Malpass said delivery systems in poor countries and the fact that so many vaccines were going to rich countries were more important factors than money in ensuring success. Continue reading...

The PM is plotting a more cautious course on Covid, but that means higher cost and more job lossesCoronavirus – latest updates

Party’s most conservative senator, from one of the poorest states, has advocated for a rise only to $11 an hour – but workers say it’s not enoughHopes that the US will finally increase the federal minimum wage for the first time in nearly 12 years face a seemingly unlikely opponent: a Democrat senator from one of the poorest states in the union.Joe Manchin of West Virginia, the state’s former governor and the Democrats’ most conservative senator, has long opposed his party’s progressive wing and is on record saying he does not support increasing the minimum wage from $7.25 to $15 an hour, the first increase since 2009. “I’m supportive of basically having something that’s responsible and reasonable,” he told the Hill. He has advocated for a rise to $11.Related: 'Hopefully it makes history': Fight for $15 closes in on mighty win for US workersIf you’ve never lived in poverty, you have no idea what it does to youZack Harold is a freelance writer and radio producer in Charleston, West Virginia. He is a regular contributor for West Virginia Public Broadcasting’s Inside Appalachia and formerly served as the Charleston Daily Mail’s entertainment editor and managing editor for WV Living, Wonderful West Virginia and WV Focus magazines Continue reading...

The long-running series in which readers answer other readers’ questions on subjects ranging from trivial flights of fancy to profound scientific and philosophical conceptsHow can a country’s economy apparently grow year on year without limit, and why is this thought to be desirable?

Consumer spending may boom once the crisis fades but that could power up prices, interest rates and a severe bear marketAndy Haldane caused quite a stir this month when he suggested the economy was like a coiled spring waiting to go off. As the Bank of England’s chief economist has discovered, it’s harder to be a Tigger than an Eeyore. Predictions of impending disaster tend to be forgotten even when they don’t come true. Much less slack is given to those predicting that things will turn out well.Haldane could well be proved right. Consumer and business confidence is on the rise and if – a big if, admittedly – the government continues to support the hardest-hit sectors appropriately as the economy is unshackled, it is quite possible there will be an explosion of pent-up demand.Inflation is when prices rise. Deflation is the opposite – price decreases over time – but inflation is far more common. Continue reading...

This bungling, populist government is basking in the reflected glory of the experts who created the Covid vaccinePhilip Stephens, the chief political commentator of the Financial Times, tells a wonderful story about how he was playing football in the playground at school – in those days playground football was with tennis balls – and a ball hit the Latin master as he was passing.The Latin master immediately clipped Stephens round the ears – which, these days, would no doubt have led to the master’s dismissal. Stephens protested: “It wasn’t me, sir.” To which the reply was: “Let this be a lesson to you, my boy. There is no justice in this world.”I have even heard wild talk of a snap election, although I cannot see why a prime minister with such a huge majority should want one Continue reading...

In Holyhead, traffic has fallen 50% as hauliers stymied by Brexit find their way from Ireland to France without entering the UKPerched on the shores of Anglesey, the island linked by road bridges to the north-west coast of Wales, Holyhead’s geography has given it a leading role in British-Irish trade since the early 19th century.About 50 miles directly across the Irish Sea from Dublin, a journey of just three-and-a-quarter hours by ferry, Holyhead was until December the second busiest roll-on roll-off port in the UK after Dover. About 450,000 trucks rumbled through each year on their way to Dublin, with cargoes of meat and agricultural produce, secondhand cars and items destined for the shelves of Irish supermarkets.I worry about the next generation. Where are these young people going to get jobs from? Continue reading...

Frightening retail sales figures mean the Treasury must instil more confidence in struggling firms and consumersRetail sales figures for January will give the Treasury a fright. A fall of 8% was much larger than the more modest 3% expected by City economists and reveals how shoppers, when confronted by a third lockdown, were reluctant to keep calm and carry on.There was a faint hope that after a disastrous Christmas period, and a year that ranked as the worst for consumer spending on record, we might see retailers start 2021 with a fresh set of wings. It was not to be.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...

Boris Johnson’s dizzying list of policy changes is a way of keeping his party in office, not making British life betterThe news that the Conservatives intend to undo their own elaborate NHS reforms could be seen as yet another sign of how badly they’ve governed. It could also be taken as a reminder of how bafflingly long they have been in office, given their record. The original legislation setting out their reforms to the NHS was passed nine years and three general elections ago.During that time the Tories have reversed their policies, or significantly changed their message, in many other crucial areas: among them the role of the state, EU membership, the north-south divide, the relationship between Northern Ireland and the rest of the UK, and the balance between economic growth and public safety during a pandemic. Sometimes since Boris Johnson became prime minister in 2019 he and his ministers have failed to keep to a consistent line for the duration of a sentence.Related: The Guardian view on Boris Johnson's role: laundering the Tory brand | EditorialAndy Beckett is a Guardian columnist Continue reading...

James Cleverly says 100% certainty is not possible ‘because viruses don’t work like that’

Sterling rises against dollar and euro and is best-performing G10 currency

Borrowing was highest for a January since modern records began

The Labour leader says Tory ideology made Britain vulnerable to the pandemic. Now he has to bring the public along with him

Everything about the UK tax system is upside down – we tax work, while relieving unearned gains. And the public knows itIn a stricken country in a state of suspended animation, everyone says build back better, but no one knows if we have the collective will. Standing on a burning platform with a sky-high debt mountain, public services crippled by austerity, Covid and Brexit, it’s not an obvious moment for optimism. But there’s a rumbling suggestion that this conservative country could be changing.Keir Starmer’s speech reached for that mood, citing William Beveridge’s 1942 report beckoning to a better postwar future. He might have looked to John Maynard Keynes in 1940, lifting political horizons in How to Pay for the War. He called for “courage” and “enough lucidity of mind in leaders … to explain to the public what is required” and “in a spirit of social justice to draw up a plan which uses a time of general sacrifice to move towards reducing inequalities”. And in 1945 people did find that “lucidity of mind”. In this deepest financial crisis for 300 years, with twice as many dead as those lost from the blitz and flying bombs, Starmer echoes those Kenynesian tones, warning “inequality is not only morally bankrupt, it’s economic stupidity too”.Related: Keir Starmer's post-Covid plan for Britain – the key pointsPolly Toynbee is a Guardian columnist Continue reading...

Exclusive: ex-Whitehall tsar questions Tories’ desire to safeguard workers’ rights amid legislation delays

Labour leader calls for ‘moral crusade’ in wake of Covid pandemic to deliver social justice and equalityKeir Starmer has argued that Labour must build “a strong partnership with businesses” if it is to create a more just and equal post-Covid society, announcing plans for a public saving scheme to boost investment in the recovery.Castigating the government for wanting to maintain existing inequalities after the pandemic, the Labour leader set out what he called a “moral crusade”, borrowing Harold Wilson’s phrase to set in place a national transformation equivalent to that seen after the second world war.Related: Keir Starmer's leadership needs an urgent course correction | Tom Kibasi Continue reading...

Profits fall 27% as pandemic also cuts appetite for new home, car and life insurance dealsPrice comparison website Moneysupermarket has reported a sharp slump in annual profits after coronavirus restrictions wiped out demand for travel insurance.The financial services platform, which helps customers compare deals, reported a 24% fall in pre-tax profits, to £87.8m, following “negligible” revenues from its TravelSupermarket site. Continue reading...

Hopes for lockdown easing and vaccine breakthrough bolster mood, survey of 1,000 firms shows

When Andrew Haldane claims post-Covid UK is ‘poised like a coiled spring’, he does no favours to either his reputation or the debate over the futureTo state the blindingly obvious, the chief economist of the Bank of England, Andrew Haldane, is an intelligent man. No boilerplate praise, this: his speeches on subjects as varied as how to reform economics and the importance of the voluntary sector have been model interventions – both serious and ever-so-slightly subversive. Yet when Mr Haldane writes a newspaper op-ed that claims the post-Covid economy is “poised like a coiled spring”, as he did last week, he risks looking not only silly but, worse, choking the debate over the future of the UK.

Rolling coverage of the latest economic and financial news