Exclusive: Ángel Gurría says action on environmental crises must be defining focus of wealthy countries after Covid

Ángel Gurría reflects on time at helm as new generation leads institutions with power to influence governments

How and when to unwind some of emergency stimulus will be on agenda

Consumer prices index rose to 0.7% in January, says ONS

Rolling coverage of the latest economic and financial news

Trade union body says Mathias Cormann would set back fight against poverty and the climate crisisThe TUC has urged the UK foreign secretary to reject the Australian candidate to lead the Organisation for Economic Cooperation and Development (OECD), saying it would set back the fight against poverty and the climate crisis.Frances O’Grady, the head of the trade union body, said she was concerned that the UK was preparing to vote in favour of Mathias Cormann, the former Australian finance minister who has a reputation for defending Australia’s mining interests and opposing urgent action on climate change. Continue reading...

As Wall Street enjoys its hottest run in 17 years, economists debate the new president’s optionsIt’s fair to say that Wall Street usually takes little interest in debates between economists, even ones as distinguished as Larry Summers and Paul Krugman.But the debate between the two Keynesians over the merits of Joe Biden’s stimulus package matters at a time when global stock markets are on their hottest run for 17 years. The mood has changed completely since fearful investors were piling into cash a year ago. The way the markets look at it, successful Covid vaccines plus low interest rates plus higher US government spending equals rapid growth and higher corporate profits.Related: Central banks aren't what they used to be - and the better for it 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?

Thinktank says additional support is needed to help UK face Brexit, Covid and global heatingBritain’s foremost economics thinktank has urged Rishi Sunak to use next month’s budget to announce a targeted extension of government support to tackle a “triple challenge” to the economy from Brexit, Covid and global heating.The Institute for Fiscal Studies said the chancellor needed to steer clear of raising taxes in response to record peacetime borrowing of about £400bn inflicted by the coronavirus pandemic and called on him instead to focus on supporting the UK’s economic recovery from lockdown. Continue reading...

Okonjo-Iweala is unanimous choice, becoming trade body’s first female and first African leader

FTSE 100 posts biggest daily gain for over a month as investors buoyed up by vaccine and US economy hopesThe pound has hit its highest level against the dollar for almost three years as global markets were buoyed up by hopes for a faster economic recovery from the coronavirus pandemic.Sterling rose by 0.5% to hit a 33-month high against the dollar on Monday, trading above $1.39 on the global currency markets for the first time since 2018, while also rising to a nine-month high against the euro of almost €1.15. Continue reading...

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Ngozi Okonjo-Iweala, set to be named director general, joins as global trading system facing make-or-break momentEven for an economist, there are lots of very large numbers in the life of Ngozi Okonjo-Iweala. As the chair of Gavi, the vaccine alliance, she has overseen the annual immunisation of millions of children. When managing director of the World Bank, she oversaw $81bn (£58bn) worth of operations. In her stints in charge of Nigeria’s finances, she tackled Africa’s most populous country’s $30bn debt. And she has 1.5 million followers on Twitter.There are lots of smaller numbers too: the 20 non-profit organisations that have appointed Okonjo-Iweala to their advisory boards, the major banks and corporations she has advised, the 10 honorary degrees in addition to her own doctorate, 20 or so awards, dozens of major reports authored, and the books.Related: 'It can’t be business as usual': the Nigerian frontrunner to be next WTO head Continue reading...

Withdrawal of deputy head leaves two women and two men in running for the secretary general postThe race to lead the Organisation for Economic Cooperation & Development (OECD), one of the world’s most influential multilateral organisations, has narrowed after the deputy head of the organisation withdrew from the race.The exit of Ulrik Knudsen, who is a former Danish foreign minister, leaves four candidates for the secretary general post, including two women: the former Greek education secretary Anna Diamantopoulou and Cecilia Malmström, the Swedish EU trade commissioner who spent four years in Brexit talks with the UK. Continue reading...

Treasury select committee says doing so would help businesses and public understand pros and cons

Boris Johnson vowed that austerity, and the misery it inflicted, would not return after Covid. Labour must hold him to it

Epidemiology, psychology and sociology are at play in forecasting post-pandemic spendingThree times a week an update on new Covid-19 cases is published by the economics consultancy Pantheon. Vaccination rates are monitored by the Swiss bank UBS. The scientists advising the government are in regular contact with the Bank of England’s monetary policy committee – the body that sets interest rates.Richard Nixon may or may not have said “we are all Keynesians now” after the US broke its link with gold in 1971 but one thing is for sure: all economists are epidemiologists now. And there’s a downside and an upside to that. Continue reading...

A pandemic is a moral and economic minefield. How should governments weigh up the difficult choices – and are they getting it right?

The financial regulator’s latest report hints at a bleak prospect of an uneven post-virus recoveryIn recent years, the Financial Conduct Authority has started running major surveys to examine the public’s financial vulnerabilities. I’m a big fan of this from the regulator of our financial markets and firms – after all, the point of regulation is to improve people’s lives. So it’s good to see their latest Financial Lives report.The results are pretty bleak. You’ll have heard a lot about the extra saving going on during lockdown. People not being able to spend on holidays or restaurants has led to a staggering £125bn in extra savings. But this report crucially notes that not everyone is racking up the cash. Pre-Covid, 10.7 million of us were over-indebted or had low savings. That has now risen to 14.2 million.Torsten Bell is chief executive of the Resolution Foundation. Read more at resolutionfoundation.org Continue reading...

Analysis: The governor and chief economist say they expect a consumer boom this year, but others disagree. And the Bank has a record of being too optimisticConfidence is everything during a recovery. The question is, can Britons shake off their fears of infection and swagger back to work merely by looking in the mirror and telling themselves everything will be OK.At the Bank of England, some senior staff believe we are all about to do just that. Having looked into their crystal balls they predict that people who have saved their pennies during the pandemic – and many millions of workers and rich retired have done just that – will spend them when the nation is vaccinated.After the global financial crisis of 2008-09, it took five years for the UK to return to its pre-recession peak Continue reading...

Fast-food workers will walk out on Tuesday, hoping to push through a minimum-wage raise to benefit tens of millionsFear was the overwhelming emotion Alvin Major felt when, on a chilly November morning in 2012, he went on strike at the Brooklyn KFC where he worked.“Everybody was scared,” said Major. He may have been fearful, but what Major didn’t know was that he was about to make American history – an early leader in a labor movement that some historians now see as the most successful in the US in 50 years.I’m thrilled to announce that after working with leadership, we’ve secured a $15 minimum wage in the House’s COVID relief bill!

Italians optimistic as former ECB chief appoints mix of political and technocratic ministers to cabinetItaly’s new government, led by former European Central Bank chief Mario Draghi, will be sworn in on Saturday, ending weeks of political turmoil.Draghi, 73, announced his cabinet, which contains a mix of political and technocratic ministers, to president Sergio Mattarella on Friday.Related: Mario Draghi accepts mandate to form new Italian government Continue reading...

UK GDP shrank by 9.9% last year amid Covid-19 lockdowns, the worst since modern records began, and only beaten by the Great Frost of 1709

Bosses recount how they adapted to the lockdowns that pitched the UK economy into its worst performance in 300 yearsThe UK economy recorded the deepest economic contraction for 300 years in 2020 but it has avoided a double-dip recession during the second wave of Covid-19.The Guardian spoke to three company bosses about how they have adapted during lockdown and the pressures they face amid tougher restrictions at the start of this year. Continue reading...

Slowdown toward end of 2020 will be followed by slump in output in first quarter of 2021

ONS figures show GDP shrank 9.9% last year, the biggest decline since the Great Frost of 1709

Exclusive: just 12% of spending on economic rescue packages is going towards low-carbon projects, research findsEfforts by governments around the world to forge a green recovery from the coronavirus pandemic are so far failing even to reach the levels of green spending seen in the stimulus that followed the 2008 financial crisis, new analysis has shown.Only about 12% of the spending on economic rescue packages around the world is going towards low-carbon projects, such as renewable energy and clean technology, according to a report by Vivid Economics, published on Friday. Continue reading...

Wall Street bank seizes chance to attract huge savings made by the cash-rich during the pandemicGoldman Sachs has reopened its Marcus-branded online savings accounts to UK customers, nearly eight months after an increase in demand forced it to temporarily pull applications.The Wall Street bank said it was reopening its doors, given that “conditions in the savings market have changed” since last summer. Continue reading...

Chief economist says cash not spent during pandemic will be splurged when restrictions end

Traders offered grant of up to £2,000 each to pay for practical support for importing and exportingSmall British businesses are being offered access to a £20m Brexit support fund from the government to help them with new trade rules following border disruption in the first few weeks since the UK left the EU.In response to mounting criticism from business leaders over the impact of the new arrangements, the Cabinet Office minister, Michael Gove, said the funding would help businesses adapt to the changes.Related: Half of UK exporters to EU are having Brexit difficulties, survey finds Continue reading...

Departure to cost EU 0.5% of GDP but UK 2.25% by end 2022, according to first official estimate since deal was agreedThe economic blow dealt by Brexit will be four times greater in the UK than the EU, according to the latest forecasts by Brussels.A month into the new relationship, the European commission said the UK’s exit on the terms agreed by Boris Johnson’s government would generate a loss in gross domestic product (GDP) by the end of 2022 of about 2.25% in the UK compared with continued membership. In contrast, the hit for the EU is estimated to be about 0.5% over the same period. Continue reading...

Business lobby group BCC urges swift action by both UK government and Brussels to deal with major problemsHalf of British exporters to the EU are facing difficulties with mounting Brexit red tape and border disruption after a month of the new rules, according to one of the most comprehensive business surveys since leaving the bloc.The British Chambers of Commerce (BCC) said that 49% of UK-based exporters in a survey of 470 firms had suffered problems with post-Brexit arrangements since the start of the year, as companies struggled to adapt and faced higher costs due to extra border checks and paperwork. Continue reading...

John Worrall on the fundamental shift needed in home ownership philosophy, Barry Jones on community-led housing groups and Duncan Roberts on challenging conventional home ownershipI’m surprised to see Larry Elliott (How to turn the UK’s ‘generation rent’ into ‘generation buy’, 7 February) pointing to “tough green belt regulations” and “local planning rules” as villains in the housing affordability equation, because, as he has previously said, the housing market isn’t a market at all in the traditional supply-and-demand sense. Developers won’t increase supply to the point where they have to drop prices. Granting them more planning consents simply gives them more bankable assets, which is why they donate millions to the Tory party.He does mention a land value tax to deter hoarding, but then compounds his felony by suggesting that the outrageous help-to-buy scheme, which has been bloating prices and developers’ profits since 2013, might be part of the future, along with other creative lending wheezes to saddle punters with more debt than banks think they can afford. Continue reading...

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Smart, activist states could prove as effective at handling the biodiversity crisis as they have at tackling the pandemicLet’s be honest: few government-commissioned reports make a real difference. Often ministers call on an expert to look into a contentious issue in the hope of kicking it into the long grass, and when a weighty tome duly arrives with uncomfortable recommendations, it is quietly ignored.It is easy to see how the review into the economics of biodiversity by the Cambridge University academic Prof Sir Partha Dasgupta could be one of those that gathers dust in the Treasury, because it has a tough message. Put simply, Dasgupta says humanity – all 7.8 billion of us – is on a collision course with the planet. Our current economic system is unsustainable and endangers the prosperity of current and future generations.Larry Elliott is the Guardian’s economics editor Continue reading...

Banks now tackle diverse issues, be it Covid-19, climate change or inequality. Purists may disagree but there’s no other optionWe are used to thinking about the remit of central banks as focusing narrowly on price stability, or at most as targeting inflation while ensuring the smooth operation of the payment system. But with the global financial crisis of 2008 and now Covid-19, we have seen central banks intervening to support a growing range of markets and activities, using instruments that extend well beyond interest rates and open market operations.An example is the US Federal Reserve’s Paycheck Protection Program Liquidity Facility, under which the Fed provides liquidity to lenders who extend loans to small businesses in pandemic-related distress. This, clearly, is not your mother’s central bank.Related: The $2,000 stimulus cheques alone won't work – the US needs better infrastructureRelated: Can central banks keep holding off the Covid economic crisis? | Mohamed El-Erian Continue reading...

Rolling coverage of the latest economic and financial news as investors cooled on European stocks and oil futures

Many of us are living for the buzz of the doorbell – spending billions we can’t afford on stuff we don’t need. Here is how to recognise the problem and regain controlIn the past fortnight, I have bought the following items online: a hideous cat tree that takes up most of my living room, a lavender pillow spray, two scarves, a pair of gloves, two candles, a sheet mask, a pair of fleece-lined jogging bottoms (so comfy!), a card-holder and an under-eye brightening cream. None of these purchases were essential. Many I haven’t even taken out of the packaging, leaving them in a pile by the front door.Ten months into the pandemic, I know the rhythms of the courier networks better than I know my menstrual cycle. Royal Mail in the morning; DPD and Hermes in the afternoon. Amazon comes any time, including late at night. DPD couriers insist on taking a photo of you with the package, mortifyingly. I wonder where these photos go: me in a food-stained tracksuit, dirty-haired, holding an armful of packages I can’t remember ordering with an abashed smile. I pray they never see the light of day.It’s like sitting in a pub all day when you’re trying not to drink ... social media is full of things to buy Continue reading...

New restrictions dent consumer confidence as online activity fails to compensate fully for store closures

Rolling live coverage of business, economics and financial markets as US electric carmaker promises to accept payments in cryptocurrency

Mounting concern as firms borrow for ‘survival rather than growth’, figures from EY show

Within days of assuming power, Joe Biden had a plan to rebuild a Covid-scarred country. Boris Johnson has little to show after monthsWhen Covid struck, it was governments that decided people could not go to work and governments that took people’s money away. It is now down to governments to decide whether or not to return that money and when to open up the economy. In the US, Democrats want to give generously. While $1.9tn dollars is a lot of money – about the size of Canada’s GDP – it probably is not enough.As Yeva Nersisyan and Randall Wray of the Levy Institute have pointed out, the US government is engaged in relief, not stimulus, spending. It is offering much-needed assistance to the devastated balance sheets of households, school districts and local governments. Rescuing public services, making sure people don’t starve and building Covid-testing systems is not an economic stimulus but a necessary antidepressant. Reducing the size of the relief package would prolong the recession, which, given the virus’s capacity to surprise, may last longer than the experts predict. President Joe Biden was right to rebuff criticism that Democrats risked overheating the economy, saying the problem was spending too little, not too much. There is slack in the US economy: 400,000 Americans left the labour market in January. Continue reading...

Exporters badly hit already but KPMG says ‘biggest headaches’ have yet to come’ for importersBritish firms are warning of an escalation in Brexit red tape as the government prepares to introduce a long list of new controls on imports from the European Union in April and July.In the coming months further checks are due to be phased in at the UK border, controlling everything from the import of sausages and live mussels to horses and trees, along with new rules on the locations these checks can take place.Related: Fury at Gove as exports to EU slashed by 68% since Brexit Continue reading...

A new paper says a ‘blended mortgage’ can work for first-time buyers unable to access help to buy or the bank of mum and dadProperty is Britain’s obsession. As soon as the first lockdown ended there was a burst of activity in the housing market that only now seems to be tailing off. Andrew Bailey, the governor of the Bank of England, says if the only economic statistic available was the one for mortgage approvals you would never know there had been a pandemic raging in 2020.There was certainly a disparity between the strongest demand for home loans since 2007 and what was going on in the rest of the economy. Even after modest falls in January, prices are still rising at an annual rate of 5.4% according to the Halifax, and 6.4% according to Nationwide. Continue reading...

Bank of England governor Andrew Bailey says economy should make a strong recovery from the pandemicThe Bank of England is braced for the possibility that a mood of national depression that engulfed Britain as it plunged into a third national lockdown will end with a spending spree when restrictions are lifted.In an interview with the Observer, the Bank’s governor, Andrew Bailey, said there was a chance after being cooped up for so long people would “go for it” once the vaccine programme allowed the economy to reopen. Continue reading...

An interview with the ex-chancellor underlines the dangers that now face economically vulnerable areas of the UKI sincerely hope that it is only the lunatic fringe of Brexiters who do not accept that, having made the disastrous mistake of leaving the EU, this country should now try to align itself as closely as possible with the trading arrangements we have crassly abandoned.The chaos surrounding the “protocol” which is supposed to answer the latest manifestation of the Irish Question is the most extreme example of the damage caused by the rest of the UK leaving the single market. But for the past five weeks the obstacles arising from trying to unscramble the egg of our relationship with the rest of the European economy have been widely publicised, the reductio ad absurdum being the way in which businesses – in order to stay in business! – are finding it necessary to relocate some or all of their operations to continental Europe – in other words, within the single market.He predicts 'the cost … will be pretty much 100% absorbed by exactly the demographic profile that voted for Johnson, having never voted Tory before' Continue reading...

An important Brexit study reveals that financial security makes voters more likely to take risksElections often come down to whether the public wants to stick or twist. But how does voters’ wealth affect their appetite for a ballot-box gamble? It increases people’s willingness to risk a big change is the answer from an important new Brexit study. Challenging simplistic claims that Brexit was driven entirely by the economically left-behind, it shows that having wealth (especially housing) made people more likely to vote for Brexit.Previous research has shown people in high house-price areas tended to vote Remain, but this study digs deeper, focusing on voters’ own wealth. Having lots of it makes you particularly likely to have voted Leave if you live in an area such as the home counties. Why?Related: Live farm animal exports to mainland EU at a standstill post-Brexit Continue reading...

The Covid crisis has turbo-charged profits and share prices. But are the big six now too powerful for regulators to ignore?The coronavirus pandemic has wrought economic disruption on a global scale, but one sector has marched on throughout the chaos: big tech.Further evidence of the industry’s relentless progress has come in recent weeks with the news that Apple and Amazon both raked in sales of $100bn (£72bn) over the past three months – 25% more than Tesco brings in over a full year. Continue reading...

Ben Broadbent says switch to areas with lower infection risk could linger after lockdown