Jamie Dimon says in shareholder letter economy on edge of ‘Goldilocks moment’ but upbeat news comes with caveatsThe US is about to enter a post-pandemic boom, according to JP Morgan boss Jamie Dimon, even though it has been “torn and crippled by politics, as well as racial and income inequality.”Related: Banks pledge to fight climate crisis – but their boards have deep links with fossil fuels Continue reading...

Fiscal monitor says rich should pay more tax on temporary basis to help support poor and vulnerable

Investor optimism rises after global body upgrades growth forecastsShares in the UK’s leading companies have closed at a post-pandemic high after hopes of economic recovery and calming words from the International Monetary Fund (IMF) boosted the optimism of investors.Related: Western economies recovering faster than expected from Covid, says IMF Continue reading...

Rolling coverage of the latest economic and financial news as businesses in England prepare to reopen on 12 April

Growth forecast upgraded amid US and UK vaccine programmes and stimulus packagesStronger recoveries from the Covid-19 pandemic in the US, the UK and other rich western countries will result in faster than expected growth for the global economy this year, the International Monetary Fund has predicted.The Washington-based IMF’s half-yearly World Economic Outlook (WEO) said successful vaccine programmes, businesses adapting to the challenges of lockdown and Joe Biden’s $1.9tn (£1.4tn) stimulus package had been key factors in the upgrade.Related: IMF calls for tax hikes on wealthy to reduce income gap Continue reading...

If the government intends to ‘build back better’ it needs to ensure better protection for workers

The long-running series in which readers answer other readers’ questions on subjects ranging from trivial flights of fancy to profound scientific and philosophical conceptsThe chancellor has borrowed an unprecedented amount of money. Who is lending it to him, and where did they get it?

Exiting the EU was not good for Britain. Greed did not bring us the vaccine. Johnson’s narratives will not stand the light of dayThere can be few people who have not at some stage in their lives felt that they had been “taken for a ride” or conned. Yet that, I think, will be the dawning realisation of a fair proportion of the 37% of the electorate who – without, in most cases, having the faintest idea of the implications – voted on 23 June 2016 to leave the European Union.Now, usually, if one is conned, it is over some relatively minor matter in the great scheme of things, and one learns one’s lesson. But when a significant part of a country is taken for a ride, it cannot be dismissed as a trivial matter from which it can easily recover.At a time when he pays lip service to carers, the man we have to call prime minister is a don’t-carer Continue reading...

To European eyes, the $2tn infrastructure plan may not be exceptional, but for America it seems revolutionaryFrom a European perspective, Joe Biden’s plans for a $2 trillion boost to spending on infrastructure is not a radical statement of intent. The money will be spread over eight years and raise the federal budget on capital projects by about 1 percentage point a year.And the US is starting from a very low base. Congress levies federal taxes that amounted to a little more than 16% as a proportion of national income (GDP) in 2019 and the total level of taxes, taking into account state and local charges, is 24.5% of GDP. By way of comparison, the UK’s share of tax levied as a percentage of GDP is around 37% and in France it is 46%. Continue reading...

The modernisation of China’s exchange-rate system could deal the currency a painful blow

Factory output growth in March hits 10-year high as new orders and employment expand at rapid pace

Rolling coverage of the latest economic and financial news

American Jobs Plan would rebuild roads, highways and bridges; confront the climate crisis and curb wealth inequalityJoe Biden on Wednesday unveiled what he called a “once-in-a-generation” investment in American infrastructure, promising a nation still struggling to overcome the coronavirus pandemic that his $2tn plan would create the “strongest, most resilient, innovative economy in the world”.Speaking at a carpenters’ training center outside of Pittsburgh, where he launched his campaign two years ago, Biden returned as president to elaborate on his campaign pledge to “rebuild the backbone of America”.Related: Biden’s $2tn infrastructure plan aims to ‘finally address climate crisis as a nation'Related: ‘I knew they were hungry’: the stimulus feature that lifts millions of US kids out of poverty Continue reading...

Global lender of last resort warns inequality exacerbated by Covid crisis could trigger social unrest

Statutory minimum wages go up on same day as inflation-busting increases to utility and phone billsApproximately 2 million of the UK’s lowest-paid workers will receive a raise from Thursday after increases to statutory minimum wage rates. However, many workers are unlikely to feel better off as the pay rise comes on the same day as inflation-busting increases hit household bills.Workers aged 23-24 are expected be the biggest beneficiaries after the government announced that they will start receiving the new minimum living wage of £8.91 a hour – up from the £8.20 a hour they are currently entitled to. Continue reading...

Rolling coverage of the latest economic and financial news

Expansion in second half of 2020 and increase in household savings raise hopes for recovery this year

Twelve months after the pandemic struck the Guardian’s economic tracker reveals real risk of lasting damage

Our latest snapshot of key economic indicators shows the deficit soaring but unemployment holding steady

Huge fiscal support has safeguarded jobs and demand, but only skills and training can prevent long-term economic scarring

Rolling coverage of the latest economic and financial news

We knew leaving the EU would weaken us. Now we can see it will limit the ability of the government to rein in big techWhat do lipstick, cravats, gold chains and poker chips have in common? The answer is that they are among a host of items that the US is threatening to impose punitive import tariffs on if the UK proceeds with its plan to implement a tax on big tech. The new duties are intended to raise $325m – the amount the US government believes the exchequer will raise from the 2% tax on revenues of tech firms.In some respects, this is just part of the merry-go-round in international trade (though actual merry-go-rounds have also been slapped with new tariffs) as countries ruthlessly pursue their national interests. But it matters because it reveals Britain’s newfound weakness in international trade from outside the EU – and how that weakness may limit the ability of the government to curb the power of big tech.Related: Data shows collapse of UK food and drink exports post-BrexitRelated: Any success for 'global Britain' still hangs on its relationship with the EU | Mujtaba Rahman Continue reading...

The long-running series in which readers answer other readers’ questions on subjects ranging from trivial flights of fancy to profound scientific and philosophical conceptsThe chancellor has borrowed an unprecedented amount of money. Who is lending it to him, and where did they get it?

Analysis: Buhari’s deputy wants to create jobs, feed pupils and cut red tape. Is he too high-profile for his critics?The role of vice-president is one that John Adams, the first person in the US to hold the position, called “the most insignificant office that ever the invention of man contrived”.Nigeria’s Patience Jonathan captured the situation in her sarcastic response to a journalist who asked about her husband, Goodluck Jonathan, when he was vice-president. She said: “He is in his office reading newspapers.”Related: 'I'm a fighter': WTO's first female, African head ready for battleHere you have a man of ideas, marrying that into his role as a man of action Continue reading...

Liquidation of Bill Hwang’s Archegos Capital Management sparked a fire sale of more than $20bn assets

Businesses beset by ‘nightmare’ combination of mounting costs and paperwork as well as delivery delaysSmall businesses have reported a marked drop in exports to the EU as another company bemoaned the post-Brexit “nightmare” of delivery delays and increased costs.The Federation of Small Businesses (FSB), a lobby group, said 35 of the 132 exporters it surveyed had temporarily suspended trade with the EU or stopped it permanently. One in 10 of the exporters surveyed said they were also considering giving up trade with EU customers. Continue reading...

Freedom of information data will increase calls for country to be granted debt amnestyWhen Dominic Raab, the foreign secretary, was in Sudan in January he offered £40m in aid to help its poorest people, who are facing unprecedented food scarcity in a debt-laden country where austerity is deepening.Sudan, ruled by an unelected military-led transitional government after longtime ruler Omar al-Bashir was deposed in 2019, owes the UK almost £900m. But the Observer can reveal that almost 80% of that was accrued from interest, leading to calls for an unconditional debt amnesty. Continue reading...

Red tape and a labour shortage leave retailers and millions of lockdown gardeners with scant pickingsDelphiniums, lupins and other hardy perennials are hard to come by. Roses, fruit trees and house plants are in short supply. As for garden furniture, and equipment, if you think you can walk into a garden centre today and buy whatever you desire, think again.Garden retailers across the UK are facing a “perfect storm” of Brexit and the pandemic, according to the Horticultural Trades Association (HTA). Demand is two to three times higher than normal, thanks to the extra three million people who have taken up gardening during lockdown. Meanwhile, supply has fallen by around 50% over the past year. Continue reading...

Key hurdles are size and weight of container vessel, which is as tall as a 20-storey block of flatDredge and pull, dredge and pull. Dislodging a vessel that has become lodged in sand is simple, in theory. If the vessel is as long as New York’s Empire State building is tall, then the process gets more complicated.Dredgers, tugboats and excavators, guided by world-leading consultants in salvaging ships, have been working for days to free the 220,000 tons, 400 metre-long Ever Given that became stuck in the Suez canal last Tuesday.Related: At least 20 livestock ships caught in Suez canal logjam Continue reading...

Covid deficits are forcing councils into selling land to developers – and now US money is finding its way into the NHSBritain has an endless supply of family silver to sell. Unlike some earls and duchesses, who find they are down to their last Rubens and must sell the estate to make ends meet, the creative folk in Whitehall never run out of options.Local authority land provides an inexhaustible supply of assets, and it has never been more available than now, as the pandemic careers through council finances like an out-of-control double-decker bus.There is always more, if you know where to look. It’s the same when ministers look around for less tangible things to sell – such as contracts that tie Britain’s taxpayers to commercial agreements for decades Continue reading...

Analysis: 12% of global shipping uses the canal with any delays disrupting supply chains, fuelling shortages and hiking pricesWorld trade’s pre-eminent shortcut – the Suez Canal – is facing “massive” disruption which could cause cargo delays around the globe, shipping experts warned on Friday.The narrow, 120-mile passage of water linking the Red Sea and the Mediterranean allows ships of colossal proportions to navigate a relatively direct route from Asia to Europe, rather than taking a 3,500-mile diversion around Africa. Continue reading...

Sector staged modest comeback in February, with easing of England’s outside Covid restrictions in sight

New fund to help firms outside retail, leisure and hospitality sectors with taxes they pay on premises

February cost of food, non-alcoholic drinks, games, and toys increased at lower rate than in January

If economies recover and stimulus turbocharges pent-up demand, a lot of bank credit could result from central bank moneyThe increasing risk of a return of inflation in the US and Europe is beginning to galvanise debates among economists. One key source of inflation fears is the expectation that, once the Covid-19 pandemic has been overcome by vaccines, pent-up demand will explode in an orgy of consumption.Moreover, today’s unprecedentedly large government bailout programmes will have powerful inflationary multiplier effects.Related: Why central banks should forget about 2% inflation | Jeffrey FrankelRelated: BioNTech's Covid vaccine is a triumph of innovation and immigration | Hans-Werner Sinn Continue reading...

A further 18,000 may close in 2021 as researchers fears full impact of Covid crisis has yet to comeMore than 11,000 outlets permanently disappeared from high streets, shopping centres and retail parks in Great Britain last year, with independent retailers and villages faring far better than chain stores and city centres.A net total of 9,877 chain outlets and 1,442 independent retail, restaurant and leisure premises closed their doors in England, Wales and Scotland in 2020, according to the Local Data Company (LDC). The analysis covered 680,000 outlets in 3,000 shopping locations.Related: UK government urged to avoid third Covid lockdown after 67,000 retail jobs lost Continue reading...

Rolling coverage of the latest economic and financial news

Jobless rate drops to 5% in three months to January, representing 1.7 million people

Industrial Strategy Council says plan relies too heavily on infrastructure spending and one-off fundingA government watchdog led by the Bank of England’s chief economist has said Boris Johnson’s plans for “levelling up” Britain are unlikely to succeed because they rely too heavily on infrastructure spending and one-off funding schemes controlled from Westminster.Pouring cold water on the prime minister’s election promise to rebalance Britain’s regionally lopsided economy, the Industrial Strategy Council (ISC) said the levelling-up agenda risked failure even though its ambitions were vague and would struggle to stand up to scrutiny.Related: Tories accused of levelling up 'stitch-up' over regional deprivation fund Continue reading...

ONS figures come as report says youth unemployment could reach 1m without concerted action

Analysis: Rishi Sunak’s measures have held unemployment down, but cliff edges create instabilityIt is clear from the latest unemployment figures that the furlough scheme is working. With more than 5 million people on the government’s main wage subsidy, it has proved its worth yet again as a method of job protection, cushioning the blow from the pandemic as the UK entered a third lockdown.Thousands of British companies have learned from the first two lockdowns. They have adapted to life online and kept goods and services moving, albeit mostly within the boundaries of the UK after the government left exporters to deal with the worst possible exit from the EU short of leaving without a deal.Related: UK unemployment falls for first time in Covid-19 pandemic Continue reading...

Boris Johnson says ‘build back better’, but buried in the budget are plans for a new dose of austerity

Outsourcing catch-up tutoring to teenagers in Sri Lanka is part of a bigger project to weaken, and cheapen, public servicesThe erosion of job security and the prospects of millions of UK workers due to casualisation and outsourcing is widely recognised to have transformed the experience of work. Between 2000 and 2016, the number of zero-hours contracts increased fourfold. Such trends are meeting with increased resistance. Last week, Uber drivers won the right to a minimum hourly wage and holiday pay.Through the replacement of permanent staff with service contracts, public sector employers such as the NHS have been part of the shift towards more precarious employment. The exposure of a company that was paying Sri Lankan teenagers £1.57 an hour to tutor primary school pupils shows that schools in England are now being pushed down a similar path. Parents and teachers want to make the most of the £1.7bn catch-up fund provided by the government. But as difficulties with the scheme emerge, it seems far from clear that it will boost schools and teachers. On the contrary, the use of public funds to build a system that supplements lessons by qualified teachers with far cheaper ones delivered via the internet, by unqualified people thousands of miles away, could undermine them. Continue reading...

Some of the poorest areas will suffer disproportionate burden for longer if government does not act, warns CEBRA year of Covid-19 lockdowns has cost the UK economy £251bn – the equivalent of the entire annual output of the south-east of England or nearly twice that of Scotland, according to a report published on Monday.Analysis by the Centre for Economics and Business Research found that while the whole of the country had suffered huge damage from restrictions on activity since the first national lockdown began, some poorer regions had suffered the most. Continue reading...

Markets aren’t working when a system makes Elon Musk billions by adding his company Tesla to the US stock indexThe late economist Hyman Minsky was a pioneer in understanding finance’s grip on the US economy – and the consequences for society. In the 1980s, he predicted the rise of “money manager capitalism” and foresaw that institutional investors would become masters of the universe. Today, we are in a world of “money machine manager capitalism”, where algorithms control the buying and selling of securities. Those paid to pick shares, mindful perhaps that their sales pitch was being undermined, claim such passive investing is “worse than Marxism”. The rise of the robots has been undeterred by such criticism.The pioneer of this approach is the US firm BlackRock, which is the world’s largest asset manager and last year became Britain’s biggest one too. Humans still set the rules that computers follow. But artificial intelligence is blurring the distinction. Computers run investment portfolios offering cheap “exchange-traded funds” that automatically track indices of shares and bonds. This has been so successful that the big three – US firms BlackRock, Vanguard and State Street – now manage $19tn in assets, roughly a tenth of the world’s quoted securities. Continue reading...

Consumer price rises loom while dearth of semiconductors slow production from Samsung to FordConsumers are facing price rises and shortages of products from TVs and mobile phones to cars and games consoles as a global shortage in semiconductors grows.The shortage in chips, the “brain” within every electronic device in the world, has been steadily worsening since last year.Related: Honda to close UK plant for four days owing to supply chain problems Continue reading...

State power and capitalism’s innovation have staved off disaster, but the challenge is long-termTo the dates 4 August 1914 and 3 September 1939 can now be added a third: 23 March 23 2020, the day the government declared war on Covid-19 and announced a lockdown to combat the virus.It’s strange how history repeats itself. The same mixture of overconfidence and under-preparedness that marked the start of the first and second world wars was evident a year ago. Basic kit was in short supply and the country’s leaders were in denial about the threat. Continue reading...

Previous acts of British economic self-harm have been rectified through crisis. It seems we will be learning the hard way againIt has been well publicised that the collapse in economic activity last year, occasioned by the officially induced lockdown, was the biggest for some 200 years. The British economy experienced a bigger hit than most other advanced economies; but it was only the UK that suffered the additional blow of the self-harm caused by Brexit.The damage is already apparent to businesses and traders that are struggling to cope with the huge impact of the red tape imposed by Britain’s departure on exporters and importers. The recently published overseas trade figures were truly shocking. But, as my Guardian colleague Polly Toynbee observed last week, the extent of the crisis is not yet apparent to many readers of the Brexit-supporting tabloid press, for the simple reason that the problems are under-reported there, and the welcome early success of the British vaccine programme is being misleadingly attributed to the freedom of manoeuvre allegedly afforded by Brexit.The answer, notwithstanding all the conflict at present – and things may well get worse before they get better – is to acknowledge the folly Continue reading...