Shutting down tax havens and cancelling debts could pay for the pandemic and more – if countries work together

Funds will boost ‘rough sleeping initiative’, councils and prison leavers – Treasury

Chancellor says plans will mean more money for health, education and police, as unions refuse to rule out strikesRishi Sunak has rejected accusations that his planned public sector pay freeze amounts to a return of austerity and insisted that spending plans to be announced on Wednesday will result in more money for health, education and the police.With trade unions demanding that the chancellor do a last-minute U-turn over his clearly signalled intention to clamp down on the state’s wage bill and refusing to rule out strikes, Sunak said there would be significant increases in spending on public services next year.New forecasts showing the economy on course to shrink by more than 10% this year.A public sector pay freeze for all workers outside the NHS.An extra £3bn for the NHS to tackle a backlog in operations caused by the Covid-19 crisis.Confirmation of funding for 50,000 more nurses and 50m additional GP appointments.A cut in the UK aid budget from 0.7% to 0.5% of national income.Plans for a new national infrastructure bank and a northern campus for the Treasury.A warning from the chancellor that the unlimited spending to cope with the twin health and economic emergencies is coming to an end. Continue reading...

Despite Rishi Sunak’s warnings, Boris Johnson’s strategy is to keep spending big in hope of recovery

Covid-19 has dealt a heavy blow to Birmingham’s glitzy city centre led by retail – and it’s revealing other deep fault linesWhen Andy Street wants to show off the best of Birmingham to visitors up from London, the Conservative mayor of the West Midlands starts his tour in Centenary Square, a public space the length of two football pitches. To the west stands the International Convention Centre (ICC) and the Symphony Hall; to the north, the Birmingham Rep theatre and the new Library of Birmingham; HSBC’s new UK headquarters lies to the south, while to the east – where Street marches off – is a £700m development optimistically named Paradise. The square and its surroundings, Street claims, is “a statement that this place has refound its self-confidence”.Perhaps it is. But the buildings that surround the square tell another story of a modern city. The ICC was sold off by the council five years ago to help cover the cost of a £1.1bn equal pay bill after thousands of women had been paid less than men for doing similar jobs. The Birmingham Rep is currently closed and 40% of the staff are likely to lose their jobs. The Library of Birmingham cost £188m, which the city couldn’t afford – and led to cuts in opening times, staff and books at libraries across the city and even the shiny new centrepiece itself. HSBC is supposed to bring 2,200 people into the city centre every day but, since Covid-19, the proportion of staff coming in, Street estimates, is around 35%. He is confident that, once Paradise is complete, the new office blocks will be full and the restaurants busy, but pinning one’s economic hopes on city-centre jobs feels optimistic in the midst of a pandemic.You don’t think of Birmingham in your top five struggling places. If Birmingham is struggling, that has consequences for the country at large Continue reading...

When the finance industry gets into trouble, it pleads that it is funding ordinary people’s retirements. It isn’t truePensioners are a useful defence in the City’s fight to preserve its privileges. Unwittingly they are wheeled out as human shields by the finance industry, and increasingly major corporations, to serve and protect probably the most powerful interests in the UK.The over-65s – or in many cases the over-55s, given the extent of early retirement – function as a high wall against accusations of tax avoidance, financial plundering and executive enrichment, because the world’s pension funds are benefiting.Individual shareholders own just 13.5% of the London stock market. UK pension funds own 2.4%. The largest slice is held by overseas investors, with 55% Continue reading...

This week’s spending review gives the chancellor the chance to recover the political momentum he lost in a series of U-turnsRishi Sunak will face his sternest test this week when he stands up in parliament to outline the latest post-coronavirus economic recovery plan. Billed as a major part of the government’s post-Dominic Cummings reboot, the spending review will set out the budget limits for departments across Whitehall over the next financial year.More than that, the chancellor will be under pressure to show how the government’s “levelling-up” agenda to boost northern towns and cities will translate into actual projects, and what an infrastructure revolution means in practice.Related: Five things to watch out for in Rishi Sunak's spending review Continue reading...

The chancellor’s scope for long-term planning on Wednesday is limited – but there may still be significant signals of changeThe Covid-19 pandemic has forced Rishi Sunak to postpone both his planned autumn budget and the announcement of plans for public spending until the middle of the decade. So uncertain is the short-term outlook that the chancellor will now outline what the government intends to spend for one year only, 2021-22. These are some of the things to look out for. Continue reading...

Chancellor to unveil delayed £100bn plan on Wednesday along with spending reviewRishi Sunak is set to unveil the government’s national infrastructure strategy next week, including long-term investments in the climate and transport sectors and plans to narrow the north-south divide.The strategy, which the chancellor had been due to be published in March, provides £100bn to improve connectivity in transport systems and work toward the government’s goal of net-zero emissions by 2050. It includes a down payment on flagship programmes including fibre broadband, flood defences and transport schemes, according to the Treasury. Continue reading...

Countries emphasise potential for cooperation and future partnerships, which Beijing opposesTaiwan and the United States have held their first high-level meetings under a new economic dialogue, inking a five-year agreement and pledging future cooperation on health, tech, and security.The talks, held amid a contentious US presidential transition period and high regional tensions with China, did not advance Taiwan’s hopes for a trade deal with US, despite the two countries growing closer under Donald Trump and his pushback on Beijing.Related: China and 14 Asia-Pacific countries agree historic free trade deal Continue reading...

The government no longer needs to comply with the general restriction imposed by the EU on the size of government deficits, writes Anton van der Merwe. Plus Angela Barton on deciding public sector pay

Rolling coverage of the latest economic and financial news

Monthly borrowing hits £22.3bn as Covid crisis forces debt pile up to highest proportion of GDP since 1960sA steep fall in tax receipts and the extra cost of government subsidies for businesses and the self-employed pushed UK government borrowing last month to its highest level for October since records began in 1993.In the latest reading of the government’s finances ahead of the chancellor’s spending review next week, the Office for National Statistics said monthly borrowing had hit £22.3bn in October, up more than £10bn on the same month last year.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...

Consumers rushing to buy gifts ahead of new lockdown increase sales for sixth month in a rowShoppers rushed to buy early Christmas presents in October, before a second Covid-19 lockdown in England, increasing retail sales for a sixth consecutive month, according to official figures.A 6.4% increase in online sales drove a 1.2% rise in the total volume of retail spending in Britain compared with September and boosted sales by 5.8% on the same month last year.Related: UK national debt highest since 1960s after record October borrowing – business live Continue reading...

Tax Justice Network calls on G20 to tighten rules, saying system is ‘programmed to fail’Tax abuse by multinational companies and avoidance by rich individuals is costing countries $427bn a year in lost revenues, according to a study by a global advocacy group.The Tax Justice Network said its report revealed for the first time the extent of the resources being lost, and it called on this weekend’s meeting of the G20 group of developed and emerging market countries to tighten the rules. Continue reading...

Rolling coverage of the latest economic and financial news

Official snapshot taken prior to latest restrictions in England reveals confidence low

The party talks loudly about the need for a green economic recovery with workers at its heart, but its policies fall shortThis week, the government announced a so-called “green industrial revolution”, with the slogan and some watered-down policies lifted straight out of Labour’s 2019 manifesto. With a £12bn investment pledge that Labour believes includes just £4bn of new money, it was rightly characterised by Ed Miliband as a “disappointment”. But the same could be said of the latest iteration of Labour’s own environmental plans.At last year’s Labour conference in September, at the climax of a long summer of climate action, members voted in favour of a motion to set ambitious target of net-zero carbon emissions by 2030; public ownership of key industries and utilities to deliver a war-like mobilisation to respond to the crisis; and the repeal of anti-trade-union laws to ensure a just transition with workers at its heart.Related: Tory MPs are right: the north needs a renaissance – but it's got to be green | Owen Jones Continue reading...

Expecting the free market to fix global warming is like trying to pound nails with a sawThe massive wildfires that have been rampaging across the American west this year are not purely natural disasters. They are partly products of the unnatural disaster of climate change – “unnatural”, in that the ultimate responsibility for global warming belongs not to physics but to our economic system. Nicholas Stern, the former chief economist of the World Bank, calls climate change the “greatest and widest-ranging market failure ever seen”. Sadly, climate change is only one – albeit a whopper – of the countless market failures that degrade our lives.Related: Hurricane Iota: at least six killed and 60,000 evacuated in NicaraguaPurposeful collective action is the overarching solution to market failuresRelated: Laugh if you want, but the 'McPlant' burger is a step to a greener world | Adrienne MateiRobert S Devine is the author of Bush Versus the Environment and The Sustainable Economy: The Hidden Costs of Climate Change and the Path to a Prosperous Future Continue reading...

As we progress through the pandemic, tens of thousands of people are being made redundant. The Guardian will track these job losses as they are announced

Figure of 0.7% in October is more than expected and cost of food also rose

Bank of England chief economist explains that digital currency could help central bankers cut interest rates below zero, as part of a ‘new monetary order’

VAT cut for hospitality sector, which is meant to end in January, is one of main drags on CPI

Millions who lost their jobs at the beginning of the pandemic are continuing to face unemployment, a number not touted by the Trump administrationBetty Patterson of Lakeland, Florida lost her job as a cashier at Dollar General in April, and has struggled to find ever work since.While relying on unemployment benefits, she managed to find temporary work for the US Census Bureau, and then as a poll worker during the election, but like an increasing number of Americans who lost their job at the start of the pandemic, she still remains unemployed.Related: 'I'm homeless': Florida's unemployed struggle with system designed to fail Continue reading...

Accountancy firm warns of stalled economic recovery without EU trade agreementFailure to strike a post-Brexit trade deal would cut the UK’s economic growth rate by more than half next year, delaying a full recovery from the coronavirus pandemic, according to a report.The accountancy firm KPMG said the economy would suffer heavily should the UK fail to secure a trade deal with the EU before the end of the Brexit transition period at the end of December, just as the country attempts to escape the deepest recession since records began.Related: Covid crisis changing the structure of UK economy, Bank of England chief says Continue reading...

The decision by both countries’ governments to block a Covid recovery programme for the EU is unjustified and irresponsibleWhen European Union leaders finally agreed on a groundbreaking economic recovery fund in July, there was understandable euphoria and relief. The huge €750bn package allowed the European commission, for the first time, to raise funds from the open markets on behalf of member states. The money would be distributed to the countries that needed it most, as the coronavirus pandemic led to soaring debt and unemployment. Hailing the deal, the German chancellor, Angela Merkel, said at the time: “Europe has shown that it is able to break new ground in a very special situation such as this one.”Depressingly, it seems that Ms Merkel spoke too soon. On Monday, Hungary and Poland effectively vetoed the recovery package, along with the EU’s latest seven-year budget. Unless a solution can quickly be found, the deployment of vital funding could be delayed far into 2021. As countries cope with the second Covid wave and Europe heads towards a double-dip recession, this would be disastrous and destabilising. In Italy, for example, where social unrest has broken out in cities such as Naples and Turin, the €209bn allocated from the fund represent an economic lifeline. Continue reading...

Andrew Bailey hails vaccine developments, saying success could trigger investment surgeRecent vaccine developments have signalled light at the end of the Covid-19 tunnel and could be the trigger for a post-crisis surge in investment, the governor of the Bank of England has said.Andrew Bailey hailed the results of clinical trials by Pfizer/BioNTech and Moderna as encouraging and said the prospect of treatments for the virus would remove a key source of uncertainty that had held back capital spending.Productivity is an economic measure of the efficiency of a workforce. It typically measures the level of output per hour of work, or per worker. Continue reading...

Covid exposes the key government role in maintaining the total level of spending in the economy at a level that keeps the country as close to full employment as possibleA great deal of poverty in Britain can be blamed on joblessness, insufficient hours of work, and low pay. The pandemic has emphasised that the penury that too many suffer in this country is nothing to do with the shortcomings of workers. It is do with a shortage of work. That is why the chancellor, Rishi Sunak, in next week’s mini-budget, should scrap plans to abolish, in April 2020, the £20 a week extra benefit payments going to 6m low-income households. A report by the Resolution Foundation reveals that the longer the pandemic has gone on, the harder the poorest have been hit. People who did nothing but stoically bear the brunt of the crisis ought not be made to pay for it.Coronavirus has thrown into sharp relief the inequalities in Britain. The bottom fifth of the working population have seen incomes cut sharply and their savings reduced to nothing. For the poor, there’s little or no cash to furnish even the barest of Christmases, while those at the top have seen cash pile up in bank accounts. What is needed, as the former prime minister Gordon Brown made clear at the launch of the Resolution Foundation report, is a U-turn. Without a rethink from Mr Sunak, around 700,000 people, including 300,000 children, will sink into poverty at a time of surging unemployment and plummeting living standards. Continue reading...

Rolling coverage of the latest economic and financial news

Countries reject package over attempts to link funding to respect for rule of lawThe EU is facing a crisis after Hungary and Poland vetoed the bloc’s historic €1.8tn (£1.6tn) budget and coronavirus recovery plan over attempts to link funding to respect for democratic norms.The move unravels months of negotiations over the scale and terms of the EU’s spending and sets the stage for a stormy videoconference meeting of the bloc’s leaders on Thursday. Continue reading...

John Marriott says Biden must succeed where Blair failed, Richard Yoell points out that Obama was cursed with a hostile and belligerent Senate, Philip Stenning is appalled by the idea of ‘tub-thumping left populism’, and Adam Hart argues that Covid-19 has forced neoliberal regimes to re-evaluateGeorge Monbiot (The US was lucky to get Trump – Biden may pave the way for a more competent autocrat, 11 November) is probably right about Barack Obama paving the way for Donald Trump, because the former failed to tackle big business. I would go even further and say that Tony Blair, another “breath of fresh air” at the time with his Tory-lite policies, more or less paved the way for our Trump – in the form of Brexit.Both politicians had a clear electoral mandate to bring about fundamental changes to their societies: in Blair’s case, to change our parliamentary institutions, as, when it came to corralling business, the UK was very much, and still is, a bit-part player. In the end, his successor handed over a poisoned chalice to the Tory/Lib Dem coalition to attempt to clean up the mess and, after its failure, to face the consequences. Joe Biden, besides confronting neoliberalism, needs to do to his country’s political system what Blair failed to do to his.

Academics call for urgent changes to Bank’s mandate to help UK hit carbon zero targetUrgent reforms of the Bank of England are needed to help decarbonise the financial system and boost green investment as Britain recovers from the Covid-19 pandemic, a group of leading academics has said.The New Economics Foundation thinktank and Positive Money campaign group said landmark changes needed to be made by the government to give Threadneedle Street more powers to cut carbon emissions.Related: No 10 and Treasury clash over spending on environmental agenda Continue reading...

There has been a surprising lack of volatility during the pandemic and US election, but this could changeWith alternative assets such as gold and Bitcoin thriving in the pandemic, some top economists are predicting a sharp fall in the US dollar. This could yet happen. But so far, despite inconsistent US management of the pandemic, massive deficit spending for economic catastrophe relief, and monetary easing that the Federal Reserve chair Jerome Powell says has “crossed a lot of red lines”, core dollar exchange rates have been eerily calm. Even the ongoing election drama has not had much impact. Traders and journalists may be getting worked up about the greenback’s daily travails, but for those of us who study longer-term exchange-rate trends, their reactions to date amount to much ado about nothing.To be sure, the euro has appreciated by roughly 6% against the dollar so far in 2020, but that is peanuts compared with the wild gyrations that took place after the 2008 financial crisis, when the dollar fluctuated between $1.58 and $1.07 to the euro. Similarly, the yen-dollar exchange rate has hardly moved during the pandemic, but varied between ¥90 and ¥123 to the dollar in the great recession. And a broad dollar exchange-rate index against all US trading partners is currently sitting at roughly its mid-February level.Related: Markets boosted by Japan's 'Zoom boom' recovery and vaccine hopes – business live Continue reading...

Pandemic highlights big gap between what Covid restrictions we support and whether we actually abide by themAnyone tuning in early on Halloween to see the Strictly contestants strut their stuff would have found themselves watching the prime minister giving a press conference from Downing Street.Boris Johnson had his serious face on and little wonder because he was telling people in England that a fresh four-week lockdown was coming. To give the gloomy message extra weight, he was flanked by his chief medical officer and his chief scientific officer.New national restrictions are due to come into effect in England on Thursday, after MPs vote on them, and remain in place at least until 2 December. Continue reading...

No sane government would contemplate a future without a proper deal with the EUBritish business and finance are holding their breath. Few can quite believe that a British government could drive the British economy this close to the brink. Surely no sane government, entrusted with our collective wellbeing, could calmly contemplate imposing on its citizens immense trade disruption, transport chaos, shortages in medicine, fresh foods and key technologies? Then there’s the rise in unemployment created by two lockdowns and widespread bankruptcies. Even a minimalist deal, as John Major said last week, will be far more brutal than anyone expects.Yet for what? A utopian conception of sovereignty that even in the full flush of empire never held true? Surely rationality must prevail and a deal that goes well beyond the skinny Canada-style deal with the EU – which Boris Johnson says is all he wants – will be struck?Related: Downing Street denies internal crisis has harmed Brexit talks Continue reading...

Politically and medically, the world is changing fast: but a chaotic No 10 ploughs unheedingly along the path to departureEver since the end of the second world war, British governments of both major parties have aimed, in their own way, to improve the standard of living of the people. This apology for a Tory government, headed by Boris Johnson, is the first to make it an object of economic policy to make the country poorer.But before we get into the almighty cock-up that is Brexit, let us at least welcome the good news about the victory of president-elect Joseph Biden, and the apparent breakthrough in the search for an effective vaccine to fight Covid-19.The evidence is mounting of impending chaos at the docks, disruption to supply lines and shortages of goodness knows what essential goods Continue reading...

He must reassure the country that austerity will not return: a tax on property assets, however unpopular, would be an answerIt is clear from Rishi Sunak’s recent statements that he wants to defer any talk of tax rises until at least next year. The chancellor is minded to ignore the pressure from many of his own backbenchers to deal with the government’s spending deficit while the health crisis is still in full swing.And he can feel comfortable that his stance has broad support following assessments by the International Monetary Fund and the Organisation for Economic Co-operation and Development, both of which have backed unrestrained Covid-19 spending.Deutsche Bank proposed making staff pay 5% tax for each day they work remotely as a way to rebuild the public finances Continue reading...

News of potentially effective vaccine helps persuade politicians to keep policies to prevent lay offs and bankruptciesThe timing could hardly have been better. In the week that the daily number of US Covid-19 cases relentlessly hit new records and just days after England followed much of the rest of Europe into lockdown, Pfizer and BioNTech announced their vaccine was 90% effective against the virus.The news came too late to prevent a new hit to growth in the final three months of 2020. Nor will it be enough to prevent the central banks in the US and the eurozone from piling in with fresh stimulus packages in the weeks to come. Continue reading...

Retailers blame surge in Christmas imports, Brexit preparations and vast backlog of NHS equipment at FelixstoweRetailers are warning a logjam at the country’s biggest container port could result in product shortages this Christmas, as it emerged 11,000 containers of government-procured PPE is clogging up Felixstowe.Congestion at Felixstowe is a problem for the whole country as the Suffolk port handles approximately 40% of all the containers coming into and out of the UK. Continue reading...

Rolling coverage of the latest business and markets news, as rising Covid cases overshadowed enthusiasm for a vaccine3.02pm GMT2.48pm GMTUS regulator the Securities and Exchange Commission has charged the ex-Wells Fargo chief executive John Stumpf for his role in misleading investors about the success of its core business.He’s agreed to pay $2.5m to settle the charges.2.32pm GMTWall Street is open for trading and stocks are broadly higher:1.41pm GMTThe FCA is not getting much applause for its proposed censure of Carillion and its warning to executives- at least not from Prem Sikka, professor of accounting at the University of Sheffield and emeritus professor at the University of Essex:Need evidence of UK regulatory failure? Look no further than Carillion collapse. Thousands lost jobs, savings, pensions. After nearly 2 yrs, the FCA censures directors, no financial penalty. That is not a deterrent . FCA is unfit to be a regulator.https://t.co/EkXERsoV1i1.35pm GMTDATA FLASH: The US producer price index (PPI) for October rose 0.5% year-on-year.That is higher than economist expectations for a 0.4% rise.1.23pm GMTDespite a pullback today, the London stock market is heading for its best week since April amid rising hopes that a coronavirus vaccine can trigger a faster economic revival from the pandemic than first anticipated.The FTSE 100 index of leading UK company shares is on track to end the week more than 300 points higher, a rise of almost 7%, despite a modest sell-off on Friday as City investors bet it would still take time to deploy the vaccine and for Britain’s economy to stage a full recovery.Related: FTSE 100 set for best week since April as Covid vaccine triggers hopes for economy12.56pm GMTBREAKING: Spanish bank Santander is set to cut 4,000 jobs in Spain and cut around 1,000 branches.That’s according to Reuters, citing local news agency EFE.12.32pm GMTPrime minister Boris Johnson’s spokesman has confirmed that Brexit talks will be paused over the weekend but will resume in Brussels net week, according to Reuters.The spokesman added that familiar differences remain in EU trade talks over a level playing field and fisheries.Related: Brexit standoff blamed on No 10 infighting over Cummings' departure12.16pm GMTTesco has apologised after its grocery website was overwhelmed with shoppers trying to book delivery slots for Christmas.

Index of leading UK companies ends week 7% up after Pfizer/BioNTech announcement

Britain’s economy returned to growth in the third quarter, but September slowdown worries economists

GDP recovery could have been stronger with better planned job support and consistent messaging, say unions and firmsThe bounceback in the UK economy in the third quarter was record breaking, but the response from business groups, trade unions and many economists was that it might have been so much stronger.If only the government had signalled in July it would keep the furlough scheme in place until next March, as it was subsequently forced to do.Gross domestic product (GDP) measures the total value of activity in the economy over a given period of time. Continue reading...

Growth surge follows easing of first lockdown but ONS data reveals recovery slowing fastBritain’s economy grew at a record quarterly rate of more than 15% as lockdown restrictions were eased in the summer but the recovery was losing momentum even before new curbs came in, the latest official figures have revealed.Data from the Office for National Statistics showed that national output expanded by just 1.1% in September – the last month before fresh action was taken to limit the spread of Covid-19.Gross domestic product (GDP) measures the total value of activity in the economy over a given period of time. Continue reading...

Household borrowing and arrears linked to pandemic have soared to £10.3bnBritain is “sleepwalking into a debt crisis” after a steep rise in emergency borrowing by low- and middle-income households to cope with the Covid-19 jobs crisis.Research by the debt charity Stepchange found that household borrowing and arrears linked to the coronavirus pandemic have soared 66% since May to £10.3bn. The number of people who are in severe debt has risen to 1.2 million – nearly doubling since March – with a further 3 million people at risk of falling into arrears after taking on extra short-term loans.Related: Financial first aid: how to make it through the second Covid lockdown Continue reading...

Report commissioned by Rishi Sunak recommends tax raid that could raise up to £14bnA tax raid on buy-to-let properties and other forms of wealth could raise up to £14bn to help repair the government’s battered finances, after a report commissioned by the chancellor recommended a major overhaul of capital gains tax.Flagging a tax squeeze on the well-off to help pay for coronavirus, the maximum capital gains tax (CGT) rate of 28% could be raised by Rishi Sunak closer to income tax rates, where the top rates are 40% and 45% in England and Wales.Related: UK recession fears and rivalries take the shine off Rishi SunakRelated: Sunak now prefers risk of doing too much to risk of doing too little Continue reading...

Deutsche Bank report argues that the proceeds should help lower-paid workers

HBOS whistleblower who had warned against its unsustainable lending and the sale of financial products such as PPIIn the years leading up to the economic crisis of 2007-08 few challenges were made to excessive and opportunistic financial activity and since then few individuals have been called to account for the damage it caused. Paul Moore, who has died aged 61 of colitis, set in train a rare whistleblowing reproach to bankers whose laxness led to incalculable harm and misery.As head of group regulatory risk at HBOS, which came into being with the merger of Halifax and the Bank of Scotland in 2001, Moore had oversight responsibility for the bank’s compliance with the Financial Services Authority regulations. Continue reading...

Rolling coverage of the latest economic and financial news

Job furlough scheme fails to stop 314,000 people losing job in three months to September