Treasury committee hopes to pin down chancellor on investment, the environment, NHS and universal creditRishi Sunak will face questions from MPs on the influential Commons Treasury committee this week over his spend now, pay later budget plan to combine emergency Covid support schemes with the biggest tax rises since 1993.The chancellor outlined tax rises on companies and middle-income workers to pay for an extra £65bn of financial support to see the UK through the pandemic, bringing total government spending on the crisis to more than £400bn.Related: Contested grants to hidden cuts: how ‘Scrooge’ Sunak's shine fadedRelated: Rishi Sunak and the Treasury need to think big and plan long term Continue reading...

Construction only just started at the key livestock port of Portsmouth, while the facility at Dover is just ‘a muddy field’A string of British ports are urging the government to delay the next wave of Brexit red tape, saying that border checkposts will not be ready for the July deadline, while inland customs facilities being built are also behind schedule.With the Brexit minister, Lord Frost, reportedly considering reviewing plans for full customs checks on all imported goods, pressure is building on ministers to push back their deadlines, and set out measures for scaling back controls. Continue reading...

The budget showed how strategic planning and investment loses out to quick fixes. A department for the economy is urgently neededImagine that the UK established a fully functioning department of the economy. Imagine it was led by a Cabinet heavy-hitter with the clout to resist the Treasury’s desire to strangle the new ministry at birth. Run with the idea for a moment that this new arm of the state had the task of tackling long-term challenges: weak investment, poor productivity, the north-south divide, and the transition to a net carbon-zero economy.Now stop daydreaming and wake up to the real world. There have been attempts in the past to siphon off some of the power of the Treasury to a new ministry – most famously the creation of the Department for Economic Affairs by Harold Wilson after the 1964 election. Wilson put George Brown, a heavyweight, in charge but it was still killed off with relative ease by the Treasury.Related: More long-term thinking is needed to protect the UK economy Continue reading...

Grants to ministers’ seats and plans to axe spending and lift taxes marred the chancellor’s post-Covid packageRichmond’s cobbled market square is quiet compared to the bustling Saturday mornings of pre-lockdown times, though there is a hubbub of well-heeled retirees bumping into people they know and stopping for a chat.“The jewel in the heart of North Yorkshire, the gateway to the Yorkshire Dales,” is how the town proudly brands itself. Tourism is important here. But even when visitor numbers are badly down, as they are now, there is an air of rural affluence about the place that suggests Richmond will survive hard times far better than most.Related: £1bn to ‘level up’ towns … but Tories already cut £2.4bn Continue reading...

The evangelists in government claim that a new era of greatness in trade and influence is on its way. But the evidence of disaster is piling upGlobal Britain is a catchy slogan. There is the delicious hint of recovered greatness – though this time not imperial but global. It also neatly deflects the charge that leaving the EU is rampant little Englandism; instead, it is the EU that is made to seem parochial and inward-looking. What’s more, it represents ambition.Global Britain will be a great power as we used to be – cutting trade deals with the world, sending our fleet east of Aden again to project naval power as part of a pivot to Asia; and taking the lead in upholding democracy and the rule of law. The wartime entertainer Bud Flanagan can rest easy. “Who do you think you are kidding, Remainers, if you think old England’s done.”To be the force for good it could and should be, Britain had to be more modest, casting itself as an honest broker Continue reading...

The chancellor appeared to have learned from the austerity disaster, but a glance beyond the short term shows he has notChancellor Sunak made much of his attachment to fiscal prudence in the run-up to last Wednesday’s budget – so much so that balancing the books seemed to become a moral crusade.This worried a lot of people. As that great Treasury permanent secretary of yesteryear, Sir Douglas Allen (Lord Croham) once observed: what matters is not balancing the budget, but balancing the economy.The empirical evidence suggests that freeports are not a great source of new investment: they merely divert the location of planned investment Continue reading...

While higher interest rates would add to the cost of financing the debt burden, central banks are unlikely to raise them soonThere was a warning after last week’s budget that Rishi Sunak’s recovery plans could be blown off course by a rise in inflation of such strength that it would force central banks to raise interest rates. A modest increase of just 1% in the interest paid on government debt would add between £20bn and £25bn to the cost of financing the UK’s debt and sink any hopes Sunak had of balancing day-to-day income and spending by 2026.Sunak said as much in his budget speech, using the prospect of higher interest bills as a reason to ramp up taxes on households and businesses in the second half of the parliament.Many in the febrile stock markets have bet that a surge in demand from US consumers will trigger rising prices Continue reading...

A letter signed by 29 experts and activist groups says Cormann’s climate record should rule him out of secretary-general’s jobInternational climate change groups and influential advisers on the global shift from fossil fuels have written to the OECD expressing “grave concerns” over Australian politician Mathias Cormann’s bid to be its next secretary-general.Former Australian finance minister Cormann’s record in a government that “persistently failed to take effective action” to cut emissions while blocking international action meant he was “not a suitable candidate”, the letter says.Related: Mathias Cormann: the OECD candidate who helped destroy Australia’s carbon-trading schemeDear @OECD,

Group led by Bank of England economist ditched in favour of government’s ‘plan for growth’Business leaders have criticised Kwasi Kwarteng, the business secretary, for shutting down the Industrial Strategy Council, the government’s in-house thinktank plotting the regeneration of Britain’s hard-pressed regions.The decision to disband the council, which was led by the Bank of England’s chief economist, Andy Haldane, was called a “sad and bad” decision by Matthew Taylor, the chief executive of the Royal Society for Arts, Manufactures and Commerce. Continue reading...

Move raises hopes of post-Brexit trade deal and relates to dispute over state support for Boeing and AirbusThe White House has agreed to suspend retaliatory US tariffs on UK exports including scotch whisky, raising hopes of improved relations as talks continue about a post-Brexit transatlantic trade deal.In 2019, then US president Donald Trump imposed a 25% tariff on a range of EU exports, as part of a 16-year trade dispute over state support for aerospace rivals Boeing and Airbus. Continue reading...

Bodies including Institute for Fiscal Studies doubt chancellor’s spending cuts after Covid are deliverableRishi Sunak is under increasing pressure to provide more money for the NHS and struggling households amid criticism from tax and spending experts that his Budget plans to repair the Covid-19 damage to public finances were unrealistic.The Institute for Fiscal Studies and the Resolution Foundation, with the head of the Treasury’s own independent forecasting body, all questioned whether it would be possible to deliver the cuts in spending that are central to the chancellor’s strategy. Continue reading...

Number of 16-24s not in education, employment or training surges to nearly 800,000, ONS reveals

IFS says £80 per month benefit uplift should be cut gradually and doubts if Sunak can stick to his spending plans

Imminent economic blueprint has implications for planet – and whether Paris agreement likely to be metChina is to publish a new blueprint for its economy on Friday, with vast implications for the future of the planet – including whether the goals of the Paris climate agreement are likely to be met.The five-year plan, of which this will be the 14th since 1953, forms the cornerstone of economic governance for the one-party state, and sets out social and environmental aspirations as well as GDP and industrial targets.Net zero emissions springs from the Paris agreement, though the goal was not made explicit in the treaty’s text. World leaders set the 2C limit, and the aspirational limit of 1.5C, at Paris based on advice from the Intergovernmental Panel on Climate Change, the leading body of the world’s climate scientists, which has over years worked out that 2C was the threshold of safety, beyond which the ravages of climate breakdown were likely to become catastrophic and irreversible. Even at 1.5C, many low-lying areas could flood from sea level rises and storm surges.Related: World needs to kick its coal habit to start green recovery, says IEA head Continue reading...

Resolution Foundation analysis of budget warns real earnings will fall and barely rise in next four yearsThe real earnings of UK workers will fall this year and remain stagnant after that despite a strong economic recovery from the coronavirus pandemic, according to analysis of the budget that suggests the government will oversee one of the worst periods for UK living standards on record.Incomes will lag behind inflation during 2021-22 – meaning living standards will drop – and will only rise by an average of 0.3% annually over the course of the next four years, according to the Resolution Foundation, an independent thinktank. Continue reading...

Rishi Sunak’s budget has named the city as one of eight low tax zones to boost the economy after Brexit

Heather Stewart and Richard Partington run through the main budget headlines. Andrew Gimson and Nicola McEwen discuss the state of the union. Plus, Steven Morris speaks to Peter Robertson about how the Welsh food and drink industry has coped since BrexitToday Rishi Sunak presented his much-awaited budget in the House of Commons. Boris Johnson looked on from the front benches. All the while the rather important issue of keeping the union together will have been playing on his mind.In Wales, Brexit is impacting the way food producers can trade with the EU, and Pete Robertson, who heads the Food and Drinks Federation knows more than most. He speaks to Steven Morris about why it’s easier for the EU to import lamb from New Zealand, than it is from Wales at the moment. Continue reading...

Government’s independent forecaster also says Covid crisis will cost equivalent of £14,000 for every householdBritain’s economic growth will accelerate next year at the fastest rate since official records began as the economy rebounds by 7.3%, according to the government’s independent economic forecaster.With Covid restrictions set to remain until the summer, delaying the start of the recovery, the Office for Budget Responsibility said the economy would surge ahead in 2022 at the fastest pace since 1948. Continue reading...

Chancellor applies biggest tax increase to businesses but sweetens the pill with £25bn in investment

Analysis: Not quite the ‘same old Tories’, but ‘levelling up’ clearly has a narrow meaning for the chancellorRishi Sunak both is, and isn’t, a typical Tory: he’s an extravagantly rich, public school-educated former hedge fund manager; but also a coke-swigging Star Wars fan with a slick Twitter game who works from home in a hoodie. And his budget on Wednesday was, and wasn’t, a typical Tory budget.Labour has repeatedly accused the Conservatives in recent weeks of wanting to return to “business as usual”. But the political and economic terrain has been changed dramatically by the past 12 months, in ways that are likely to be long-lasting. Continue reading...

Latest updates: chancellor extends furlough, universal credit uplift and stamp duty holiday

The chancellor set out his roadmap for Britain’s economic recovery, but will it be enough? Our experts give their viewGaby Hinsliff is a Guardian columnistMiatta Fahnbulleh is chief executive of the New Economics FoundationKaty Balls is the Spectator’s deputy political editorTom Kibasi is a writer and researcher, and a former director of the Institute for Public Policy Research Continue reading...

Analysis: chancellor’s budget sticks with military theme as final reckoning of virus’s impact remains some way off

Tax increases required for businesses and workers to repair public finances, says chancellor

Firms planning to expand despite being hit by Brexit port delays and falling orders due to CovidOptimism across the services sector improved for the fourth consecutive month in February to its highest level since 2006, reflecting hopes that the Covid-19 vaccine rollout will lead to a strong economic rebound.The IHS Markit survey found that business leaders were planning to expand their activities over the next 12 months despite several months of falling orders during the UK’s third lockdown and port delays after the Brexit trade deal was reached with the EU in December. Continue reading...

Rishi Sunak has delivered his budget – here are the main points, with political analysis

Rolling coverage of the latest economic and financial news

Speaking to colleagues before delivering budget, chancellor says borrowing has reached levels usually seen only in wartime

Millions in precarious jobs are betting scant savings on worthless stocks and cryptocurrencies via share-dealing appsThe US economy’s K-shaped recovery is under way. Those with stable full-time jobs, benefits, and a financial cushion are faring well as stock markets climb to new highs. Those who are unemployed or partially employed in low-value-added blue-collar and service jobs – the new “precariat” – are saddled with debt, have little financial wealth, and face diminishing economic prospects.These trends indicate a growing disconnect between Wall Street and Main Street. The new stock market highs mean nothing to most people. The bottom 50% of the wealth distribution holds just 0.7% of total equity market assets, whereas the top 10% commands 87.2%, and the top 1% holds 51.8%. The 50 richest people have as much wealth as the 165 million people at the bottom.Related: Wall Street versus the Redditors: the GameStop goldrush – podcastRelated: Why the GameStop affair is a perfect example of 'platform populism' | Evgeny MorozovRelated: The GameStop affair is like tulip mania on steroids | Dan Davies Continue reading...

Analysis: the five key charts which underpin chancellor Rishi Sunak’s budget planThe UK economy is at a pivotal moment, as the chancellor gives his budget speech with businesses and workers under the most pressure since the pandemic struck a year ago.Here are five key charts that will underpin Rishi Sunak’s statement on Wednesday afternoon. Continue reading...

Rolling coverage of the latest economic and financial news

But chancellor will tell MPs that historic tax and spending support will end as soon as UK plc emerges from Covid crisisRishi Sunak will use tomorrow’s budget to signal that the government’s unprecedented and continuing support for jobs and businesses must end once the economy has emerged from the Covid-19 pandemic.The chancellor will pledge to use all the tax and spending firepower at the government’s disposal to limit joblessness and business failures as the UK gradually lifts the restrictions that have left the economy almost 10% smaller than it was a year ago. Continue reading...

Kwasi Kwarteng says emphasis now is on trying to provide critical support rather than reducing deficit

Danger of young people’s futures being blighted by climate and Covid crises, say campaigners

FTSE gains more than 100 points after concerns over bond sell-off ease

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