Economics | The Guardian

Greater Manchester’s Andy Burnham said government package would mean ‘failure and collapse’ for businesses

Rishi Sunak announces new furlough scheme with PM set to outline ‘three-tier’ approach to local lockdowns on Monday

We delve into detail of Rishi Sunak’s plan to protect firms forced to closeThe chancellor, Rishi Sunak, has announced an expansion of the job support scheme to protect companies and workers forced to close during coronavirus lockdowns this winter.Against a backdrop of slowing economic growth, fresh government restrictions and rising job losses as the furlough scheme ends, the development comes just two weeks after Sunak announced his winter economy plan. Continue reading...

Rolling coverage of the latest economic and financial news after UK growth figures were released for August

Rishi Sunak must act swiftly after latest figures wipe out hope of V-shaped recovery

GDP rose 2.1% but is lower than expected as Covid lockdown measures were relaxed

Rolling coverage of the latest economic and financial news, as budget airline easyJet warns it lost up to £845m last year

With UK’s Liam Fox eliminated the contest is now between Yoo Myung-hee and Ngozi Okonjo-IwealaThe World Trade Organization is set to be run by a woman for the first time in its 25-year history after it was announced that the final choice to be its new director-general will be between South Korea’s Yoo Myung-hee and Nigeria’s Ngozi Okonjo-Iweala.Britain’s former international trade secretary Liam Fox failed to make the final shortlist as the number of candidates was whittled down from five to two.The eight candidates to be the next director-general of the World Trade Organization are: Continue reading...

MPs also hear that national debt is now more sensitive to movements in interest rates

Bernie Evans is clear where the chancellor’s rhetoric will take the country, and Dave Hunter believes Labour can offer a credible alternative, if only it puts in the workRishi Sunak is not the first Tory chancellor to claim he has a “sacred responsibility to balance the books for future generations”, while doing nothing to ease graduates’ debts, improve young people’s chances in the housing market, increase social mobility, close pay ratios, or increasing spending on all aspects of state education (Rishi Sunak: hard choices ahead to tackle debt from Covid crisis, 5 October).Future generations would benefit far more if the need for food banks was eradicated and there were guarantees of jobs and decent pay. Continue reading...

Covid-19, climate crisis and war combine to reverse decades of progress on raising living standards

Rolling coverage of the latest economic and financial news

Donald Trump said talks on a stimulus package are off – and the problems will only get worseHaving long been buttressed by ample liquidity, financial markets are entering the final quarter of 2020 amid an increasingly tentative global economic recovery, unusual political uncertainties and lagging fiscal and structural policy responses. And these headwinds come on top of the Covid-19 crisis, which has left most countries struggling to strike a balance between protecting public health, achieving a return to a semi-normal level of economic activity and limiting infringements on individual liberties.In this context, the hope is that today’s generous liquidity conditions, enabled and supported by central banks, will continue to provide a bridge to a better 2021, not only reversing the economic and social damage but also delivering further gains to investors. But will this bridging operation, already deployed for several years to compensate for other headwinds, be sufficient to overcome what is an increasingly complex pandemic cocktail?Related: Why are stock market prices rising despite the Covid pandemic? | Kenneth RogoffThe longer the delay, the greater the problems that any future package will have to address Continue reading...

Jerome Powell says risk of providing too little support outweighs risk of providing too muchFailure to provide more support for households and businesses hit by the coronavirus pandemic could have “tragic” economic consequences, the Federal Reserve chair, Jerome Powell, warned on Tuesday.As Congress remains gridlocked over a new round of stimulus in the wake of the coronavirus recession, Powell warned: “The expansion is still far from complete.”Related: Making billions v making ends meet: how the pandemic has split the US economy in two Continue reading...

Caroline Kay on the Bank’s governor from 1966 to 1973, who joined straight from school and worked his way to the topYour article (Andy Haldane: the funnyman central banker who’s not great at maths, 1 October) states incorrectly that if Andy Haldane became governor of the Bank of England, he’d be the first non-Oxbridge governor. How about Leslie O’Brien, governor from 1966 to 1973, who joined the Bank straight from school in 1927 and worked his way to the top through the ranks?I knew Lord O’Brien in his latter career as chair of the House of Lords committee for which I was clerk, in 1982. He was a delightful man to work for and his watchwords of integrity and prudence would serve many a banker, and indeed many an Oxbridge graduate in public life, very well.

Kristalina Georgieva warns against premature withdrawal of government measures

Rolling coverage of the latest economic and financial news, as the chancellor of the exchequer warns that many more jobs will be lost before the Covid-19 crisis is over

One reason is that big corporations have not faced the economic pain that small businesses have

Author Chris Goodall says tackling the climate crisis is neither difficult nor expensive and can help boost the economy

Opting for corporate hibernation doesn’t remove cinema chain’s urgent need for fresh fundsChoose your villain in the depressing no-action cinema thriller. The top nomination goes to the distributors of the James Bond franchise who have killed the Christmas season for the cinema industry by shunting the release of No Time To Die into next spring.Then there’s Andrew Cuomo, the New York state governor, who has helped to frighten Hollywood studios by closing the city’s screens. Cineworld itself, now planning to shut all its US and UK cinemas for an indefinite period, is hardly blameless. It is carrying $8.2bn (£6.3bn) of net debt, including lease commitments and its over-leveraged position existed before Covid-19 hit takings. Continue reading...

The chancellor’s speech signals that he wants to debate spending cuts, not increasesRishi Sunak is the Conservatives’ most modern politician in terms of style. But he is traditionalist in substance. In his conference speech, the chancellor extolled the virtues of good housekeeping to sell the idea that he would balance the nation’s books. The household analogy is a powerful one in politics because it seems to correspond to everyday observations about thrift. But it makes no sense to compare personal experience with the economics of a nation. The late Roy Jenkins, two decades after serving as a Labour chancellor, rightly said Margaret Thatcher was trading in lousy economics when she sold herself as a prudent housewife able to save Britain from Labour overspending.“I think it is nonsense,” he told the BBC, “because there is an essential difference between the position of a family budget and the national budget, and that is that on the whole a family cannot increase its income by increasing its spending, whereas a nation, a government, by increasing its spending [can] substantially increase the total of the national income”. It speaks volumes about how much of the debate around political economy has been conceded to the right that the current Labour shadow chancellor could not match the unapologetic Keynesianism of Lord Jenkins. Continue reading...

Higher public spending urged as way of boosting employment and GDP at relatively low costThe International Monetary Fund has told its member governments they can create millions of jobs and boost recovery prospects if they use higher public investment to respond to the severe economic challenge posed by Covid-19.Before its annual meeting this month, the Washington-based fund said historically low interest rates meant it was a good time to borrow for long-term infrastructure projects and said the spending would help tackle rising unemployment.Related: Without clarity and leadership, there's plenty to fear for the UK economy | Larry Elliott Continue reading...

Rolling coverage of the latest economic and financial news

Chancellor hints at tax rises or spending cuts to balance books after pandemic

Jets scheme will help those laid off during pandemic, chancellor to tell Tory conference

Zambia could become the first country to default on its debts amid the fallout from Covid-19, but it won’t be the lastZambia is running out of money to pay its debts. It has asked bondholders for breathing space so that it can put a restructuring plan in place. The copper-rich African state is at risk of being the first country to default on its debts since the start of the coronavirus pandemic.Not the last though. Zambia is the canary in the coalmine, a harbinger of a full-blown crisis that has been lurking in the background from the moment the seriousness of Covid-19 became apparent. Continue reading...

The chancellor and his cabinet colleague Michael Gove are both ‘on manoeuvres’ as Boris Johnson’s premiership floundersA friend who has always shared my distrust of Boris Johnson said to me recently that he had at least hoped our prime minister would “grow into the job”.Alas, as even former supporters – not least those who made the historic mistake of electing him leader – acknowledge, Johnson has not grown into the job. Day by day, he has grown out of it. Continue reading...

Reductions in government support as the original furlough scheme ends point towards a brutal round of redundanciesThe UK economy continued its rapid rebound from the depths of the coronavirus lockdown in August, the latest official data on growth is expected to show on Friday, but many economists are braced for a grim winter as job losses mount.The Bank of England’s chief economist, Andy Haldane, predicted last week that GDP would be “only around 3-4% below its pre-Covid level” by the end of the third quarter, covering July to September. Continue reading...

The prime minister has been unable to resolve the tension between his party’s free-market orthodoxy and a desire to cater to new working-class votersBoris Johnson claims he is a “one nation Conservative”, bringing together the wealthy “classes” with the “masses”. Leaks from Downing Street signal a leftwing approach on economics and rightwing one on culture. Mr Johnson presents himself as the first Tory post-Thatcherite prime minister. His Brexit sales pitch was that he was prepared to sacrifice business profitability to regain “sovereignty”. Yet the Covid pandemic has shown Mr Johnson is unable to resolve the tension between his party’s free-market orthodoxy and a desire to cater to new working-class voters.Pre-crisis the British economy was characterised by low levels of business investment, a poor skills base, stagnating wages and the zombification of UK companies, which had taken on £1.2tn of corporate rated debt. Covid presented a chance to reset the economic model that has seen the share of wages fall as a share of the country’s gross domestic product. As providers of capital, investors might think that having a bigger share of economic output is a good thing. But companies also need customers who can afford to buy their goods and services. Continue reading...

Rolling coverage of the latest economic and financial news, as the US president confirmed he had Covid-19

Jobless rates have fallen sharply since hitting a record low in April, but the rate is still far higher than the 4.8% when Trump took officeThe US unemployment rate fell to 7.9% in September, the labor department announced on Friday, in the last snapshot of the jobs market ahead of the presidential election.Unemployment has fallen sharply since hitting a historic record of 14.7% in April after the coronavirus pandemic shut down the US. But the rate is still far higher than the 4.8% when Trump took office in January 2017 and the recent pace of recovery is slowing. The current level marks the worst job loss that any president has faced going into an election based on records going back to the second world war. Continue reading...

To survive the challenges we must reinforce respect for science and nature, sensible public policy and the interconnected world

Assuming the financial package is completed, collapse or a full-blown state bailout should be off the table for a whileThe process was slow and spluttering, but Rolls-Royce got there in the end: there will be a fully underwritten rights issue to raise £2bn, plus a new £3bn debt package. If the civil aviation market comes out of hibernation by 2022, it should be enough.The UK’s premier engineering company didn’t even have to trot off to Singapore for sovereign wealth money. It appears that current shareholders said that, if new shares are to be printed at desperation prices, they’ll take them. Continue reading...

Bank chief economist attracted attention with a quirky speech this week, but not for the first time

Rolling coverage of the latest economic and financial news, as UK manufacturing recovery continues....but headcounts are still cut

Threat made as Matt Hancock announces latest lockdowns in Merseyside, Warrington and Teesside

With Covid cases and unemployment both rising, and a no-deal Brexit possible, a coherent strategy is urgently needed

Don’t let comparisons with Germany fool you. The policy encourages employers to keep a few staff and abandon the restThough the early days of the pandemic were terrible, they offered a fleeting glimmer of hope. Social scientists have debated for years whether it could be possible to transform the economies of the UK or US, where market forces have been unleashed on society, to more closely resemble the coordinated economies seen in Germany, France and Sweden, where workers are given a seat at the table and typically enjoy greater social protections. During the spring, with the Trades Union Congress (TUC) included in talks to design a previously unimaginable wage replacement scheme, the possibility of change looked tantalisingly close.Indeed, in the hours preceding the plan from the chancellor, Rishi Sunak, for the winter economy last week, many talked of a new “German-style” scheme to replace the furlough programme. The leaders of the TUC and the Confederation of British Industry (CBI) stood alongside Sunak as he prepared to make his speech, a show of unity that would have been surprising less than a year ago. The Kurzarbeit, the German policy of topping up pay for workers on reduced hours, which meant Germany was the only G7 country where employment did not fall following the financial crisis, was widely cited.Related: Fears for jobs grow as employers count cost of Sunak’s winter plan Continue reading...

Report warns of a cascade of job losses as coronavirus furlough scheme winds down

Andy Haldane has bemoaned ‘Chicken Licken economics’. So are things better than they seem?

Rolling coverage of the latest economic and financial news

Britain still experienced worst Q2 contraction of any major economy despite revised figure

Policy could be fine-tuned to help different groups, such as young people, whose lives are currently on holdCoronavirus – latest updatesSee all our coronavirus coverageDuring a pandemic, the virus and the economy feed back in a continuous circular loop of causality. You don’t need to be a trained economist or epidemiologist to see that.As the virus progresses, consumers respond to the risk to their health by cutting back spending on risky activities in leisure and hospitality, such as visits to pubs, cinemas, gyms, nightclubs and restaurants. How much they alter their behaviour depends on how much the virus is a threat to them and those they care for, or how much they know about it. And of course it also affects companies (whose profitability and outlook for the future worsens) and workers who, ultimately, may fall sick and not be able to work, or may fear turning up to risky workplaces. So the virus affects the economy.Related: Tory split on coronavirus has seen off any joined-up strategy | Phillip Inman Continue reading...

Andy Haldane says excess caution threatens economy’s recovery from Covid crisis

Political unrest hit tourism and retail, and coronavirus response has delayed recoveryHong Kong’s economy was already in recession when the pandemic hit in January. Six months of running battles between pro-democracy campaigners and local government had deterred many of the visitors who fuel the lucrative tourism industry, while the threat of violence on the streets and closures of shops had sent retail sales down nearly a quarter on the previous year.With much of Asia shut down by coronavirus restrictions during the winter months, there was little expectation of a recovery until the spring, when the level of infections fell to almost zero across mainland China and most of the rest of the region, and the measures could be eased.The national security law China imposed on Hong Kong in June 2020 has wrought profound changes on the region of more than 7 million people.Related: Demoralised but defiant, Hong Kong's spirit of resistance endures Continue reading...

Initiative aims to ensure low-income countries are not frozen out by rich nations

It’s a myth that Republicans handle the economy better – US recessions almost always occur under the GOPJoe Biden has consistently held a wide polling lead over US President Donald Trump ahead of November’s election. But, despite Trump’s botched response to the Covid-19 pandemic – a failure that has left the economy far weaker than it otherwise would have been – he has maintained a marginal edge on the question of which candidate would be better for the US economy. Thanks to Trump, a country with just 4% of the world’s population now accounts for more than 20% of total Covid-19 deaths – an utterly shameful outcome, given America’s advanced (albeit expensive) healthcare system.The presumption that Republicans are better than Democrats at economic stewardship is a longstanding myth that must be debunked. In our 1997 book, Political Cycles and the Macroeconomy, the late (and great) Alberto Alesina and I showed that Democratic administrations tend to preside over faster growth, lower unemployment and stronger stock markets than Republican presidents do.Related: Ten reasons why a 'Greater Depression' for the 2020s is inevitableRelated: The US is officially in recession thanks to the coronavirus crisis | Jeffrey Frankel Continue reading...

Concerned MEPs say definition of rule of law narrowed to unblock Covid recovery money