Opposition party’s ‘disgusting’ protest prompts scuffle in Taipei legislative yuan

Our latest snapshot of key economic indicators shows travel down and inflation up amid double-dip recession

Guardian analysis shows retail sales booming and financial markets picking up around world

From job security to contact tracing, we must make a public-private effort to advance in five key areas

It’s too easy to cut overseas aid and screw the public servants who have kept the country running while the government has been busy ladling out money to its friends, writes Nick Ward. Plus letters from Sue Rabbitt Roff, Adrian Cosker, Ian Hodge, Rae Street, Bill Bradbury, Tim Tozer and Margaret Squires

Weak growth and pressure on NHS and welfare budgets will add to Covid woes, warns IFS thinktankBritain’s struggle to emerge from the Covid-19 pandemic will result in pay packets being squeezed and taxes rising to fill a £40bn hole in the public finances, two leading thinktanks have warned.Despite record peacetime borrowing of £394bn this year, the Resolution Foundation and the Institute for Fiscal Studies said the run-up to the next general election would be marked by a hit to earnings and pressure on the government to balance the books. Continue reading...

The government has borrowed huge amounts during the pandemic, but this is no reason for renewed austerityThe November spending review arrived with a loud reminder of how austerity has distorted the public’s understanding of fiscal policy. Journalists used fatuous analogies to explain the situation facing chancellor Rishi Sunak, claiming the government had “maxed out” its credit card and had “no money left”. These soundbites weren’t just economically illiterate: they were indicative of a deeply conservative worldview.Attitudes to fiscal policy can be divided broadly into three camps: the fundamentalists, the centrists and the heretics. Fiscal fundamentalists pray to the god of small government. They are outraged that a Conservative chancellor who has borrowed £400bn to fight the Covid-19 pandemic – taking public debt from 85% to 100% of GDP – wasted the opportunity to make the necessary cuts to prevent Britain facing ruin. As true believers, they refuse to confront the facts that the UK government is borrowing at record low interest rates and that next year, it will pay back £20bn less in interest than it had planned for.Daniela Gabor is professor of economics and macrofinance at UWE Bristol Continue reading...

Foreign secretary says it is not known when 0.7% target, set in law, will be restored

People are crying out for inspirational leadership, secure jobs and investment. But all we get is austerity in disguiseAlthough it was billed as delivering “the people’s priorities”, Rishi Sunak’s spending review only demonstrates how distant the chancellor is from the experiences and priorities of our people.The million workers who are predicted to lose their jobs by the end of the year – and the millions of others who have had their wages cut – will be unimpressed by cute slogans while Sunak bathes in the adoring glow of a pliant media. If, like workers at Heathrow, you’ve been ruthlessly fired and rehired with your wages savagely cut – or you have seen your jobs shipped abroad by a taxpayer-funded company, as workers at Rolls Royce in Barnoldswick have done – you would feel entitled to shout, “What about us?”Related: Sunak's Covid rescue plan 'will fail to help long-term wage stagnation'Related: UK aid cuts 'unprincipled, unjustified and harmful', say experts and MPs Continue reading...

Decade-long squeeze on pay packets in UK set to continue despite extra Treasury spending, thinktank saysThe government’s plans to rescue Britain from the Covid crisis will fail to end a decade-long squeeze on wages, leaving average pay packets by the middle of the decade £1,200-a-year below the level forecast before the virus outbreak, a leading thinktank has said.The Resolution Foundation said the combined effects of weaker pay growth and higher unemployment will prolong Britain’s living standards squeeze, despite the extra spending by the Treasury.Related: Rishi Sunak’s £4.8bn ‘levelling-up’ UK fund met with scepticism Continue reading...

Chancellor says in spending review that UK will have to keep spending despite record peacetime borrowing

Groups warn chancellor’s plan may pit local communities against each otherThe government will launch a “levelling-up fund” for England worth £4bn to support towns and communities with regeneration projects, Rishi Sunak has said.The chancellor used his spending review statement to announce details of the new funding package as part of Boris Johnson’s election promise to boost the economic prosperity of areas outside London and the south-east of England. Alongside the £4bn for England, there will be funding worth £800m for Scotland, Wales and Northern Ireland.Related: By freezing pay and benefits, Sunak will be levelling down, not up | Polly ToynbeeRelated: Some of England's most deprived towns left out of £3.6bn funding scheme Continue reading...

Rishi Sunak’s move in spending review could result in pension holders receiving thousands of pounds less in incomeThe government will stop using the retail prices index measure of inflation in 2030, the chancellor has announced, in a move that will spell bad news for investors and retirees with payouts linked to it.The RPI has not been used as an official national statistic since 2013 but it is still the figure used for returns on index-linked gilts issued by the UK government. It is also used when calculating annual increases in rail fares and student loan interest. Continue reading...

Office for Budget Responsibility says tough decisions needed to fill spending gap by 2024

Combining pay freezes with levelling up, the chancellor seems intent on cementing the deal that gave Johnson his landslidePick a Labour chancellor, any Labour chancellor, from Stafford Cripps to Alistair Darling. Now imagine the jeers, the jibes, the public derision they would endure after confessing in parliament to racking up a budget deficit of almost £400bn, total debt of more than £2tn and the sharpest dive in GDP in three centuries; they would be exiled to some speck in a faraway sea. Yet this afternoon Conservative Rishi Sunak, who only moved into No 11 in February, did all that, warned of “an economic emergency”, and still made it look like a not utterly awful day at the office.This must be what they mean by the “natural party of government”.Related: We needed long-term spending and higher taxes. Rishi Sunak gave us foreign aid cuts | Tom KibasiAditya Chakrabortty is a Guardian columnist and senior economics commentator Continue reading...

Latest updates: Liz Sugg, minister for the overseas territories and sustainable development quits; nurses, doctors and NHS workers to get pay rise

Rolling coverage of the latest economic and financial news

Analysis: Public sector and foreign aid face cuts, but the chancellor dodged tough decisions

Rishi Sunak has said the UK faces an 'economic emergency' that requires a public sector pay freeze, with the exception of some NHS workers and those on the lowest wages.Announcing the spending review in the Commons, the chancellor said he could not justify a significant pay increase for all public sector workers amid job and wages cuts in the private sector

UK’s ‘economic emergency’ leads to cut in foreign aid and partial public sector pay freeze

The chancellor has delivered the spending review – here are the main points, with political analysis

Aid agencies say debts should be restructured or cancelled due to the pandemic and warn other countries could followZambia has become the first African country to default on its debts since the pandemic, leading to fears that a “debt tsunami” could engulf the continent’s most heavily indebted nations as the financial impact of coronavirus hits.A hastily-arranged G20 finance minister meeting in Saudi Arabia failed to sort out Zambia’s debt, after the southern African country missed a $42.5m (£32m) coupon payment on its bonds in October. Missing another payment on 14 November meant a technical default.Related: ‘People are suffering’: G20 to call on private lenders to suspend debt repaymentsRelated: Africa leads calls for debt relief in face of coronavirus crisis Continue reading...

With the UK economy in its steepest decline for centuries, we look at what the chancellor could announce on Wednesday

Rolling coverage of the latest economic and financial news

Colin Hines and Kevin Donovan respond to an editorial on Rishi Sunak’s economic strategy

To one sort of capitalist, the insecurity and chaos that Brexit will bring is horrifying. To the other, it is highly profitableWhere there is chaos, the government will multiply it. Where people are pushed to the brink, it will shove them over. Boris Johnson ignored the pleas of businesses and politicians across the UK – especially in Northern Ireland – to extend the Brexit transition process. Never mind the pandemic, never mind unemployment, poverty and insecurity – nothing must prevent our experiment in unassisted flight. We will leap from the white cliffs on 1 January, come what may.Perhaps, after so much macho bluster, the government will take the last of its last chances and strike a deal this week. If so, with scarcely any time for refinement, the agreement is likely to be rushed and bodged. In any event, pain will follow. Disruption at the border is likely to be felt across the nation. Continue reading...

Business group says autumn lockdown not nearly as damaging to sales as Covid shutdown in springA surge in shopping from home has eased the pressure on retailers caused by England’s four-week lockdown and tighter restrictions in the rest of the UK, according to a survey from the CBI.The employers’ organisation reported that while the level of spending was well below normal there were also clear signs of consumers substituting online purchases for visits to stores in person.What’s the problem? Continue reading...

The chancellor’s spending review will hit the north hardest: prepare yourselves for a new austerity

Rolling coverage of the latest economic and financial news, as the UK Treasury Committee questions the Bank of England

Freezing public sector wages is an attack on those already hardest hit by the pandemic, writes Marion Doherty. Plus letters from Alan Millington, Pete Dorey and Gary BennettWhy does the Guardian (New UK spending row as Rishi Sunak puts squeeze on public sector salaries, 20 November) continue to use “squeeze”, “restraint” and “belt-tightening” to describe what are vicious cuts to the wealth and health of working people? These cuts will disproportionately fall on women, BAME people, lone parents and the most economically deprived parts of the country. Using such language normalises the significant attacks by this government.Such an attack is not just aimed at the public sector, but at depressing wages for all workers. With rising poverty, inequality and the hypocrisy of the government’s levelling-up rhetoric, the Guardian needs to tell it like it is. With shareholder dividends being thrown around, who should pay for the crisis is not a difficult question. The answer is not workers.

Economy shrinks as service sector suffers steepest fall in activity since May

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