The list of government failures as we enter the worst economic slump in 30 years should be a gift to Keir StarmerOn Monday the job axe fell at Hays Travel and DW Sports. On Tuesday it was the turn of Pizza Express and Currys PC World. On Wednesday it was WH Smith and M&Co delivering the grim news. A brutal shake-out of Britain’s labour market, caused by the deepest slump in three decades, has begun.Unemployment will carry on rising as companies that have kept staff on thanks to the furlough scheme are now having to make a contribution to their employment costs. Wage subsidies will be history by October, even for those businesses that remain shut. With the benefits bill rising and tax receipts falling, a Conservative party that once accused Gordon Brown of maxing out on the nation’s credit card is on course to borrow upwards of £300bn this year, comfortably a peacetime record.Related: The government must up its game to prepare for a second wave of Covid-19 | Keir Starmer Continue reading...

Economists worry expiration of $600 weekly lifeline will lead to sharp drop-off in household spending and set back the economyAnother 1.18 million people filed for unemployment benefits last week as economists worry the expiration of enhanced unemployment benefits will lead to a sharp drop-off in household spending and set back the US economy’s near-term recovery.Claims dipped last week after two weeks of rises and were the lowest since March but the latest figure from the department of labor marked the 19th week in a row that claims have topped 1m. Before the coronavirus pandemic gripped the US, the record for weekly claims was 695,000 in October 1982.new predictions of effects of alternative UI benefit supplements

Bank of England is considering pros and cons of drastic move as Covid-19 weighs on economy

With the power of ultra-low rates and QE fading, the Bank of England is now considering going negative

A second statewide lockdown could be on the cards if infections continue to rise but the economic impact worries residentsBusiness is slow at Studio 23, a hair salon just off the main drag in Pikeville, a small city in rural eastern Kentucky, so barber Derek Harris is outside chewing the fat with two maskless police officers while waiting for his first client.The salon reopened at the end of May, but business is down by about 20%, and Harris fears another statewide lockdown could be on the cards if coronavirus infections continue to rise. In Kentucky Covid-19 may not, yet, be a big problem but the economic impact is everywhere. Continue reading...

The complex history of how China and the US once embraced each other should inform how the current showdown is tackledThe Trump administration has floated the idea of sanctioning Chinese officials and members of the Communist party of China. Before we ask whether this is a good idea, let’s ask how Sino-US relations got to this stage.The US cold war with the Soviet Union was over ideology, but today’s standoff with China is different. The Chinese state has no ideology, no religion, no moral agenda. It continues wearing socialist garb but only as a face-saving pretence. It has, in fact, become a state-capitalist dictatorship. What the world sees today is a contest between the US system of free-market capitalism and Chinese state capitalism. How should we read this chessboard?Related: The US and China are entering a new cold war. Where does that leave the rest of us? | Timothy Garton AshAi Weiwei is an artist and activist. This article was translated from Chinese by Perry Link Continue reading...

Consumer spending rise cheers Bank but unemployment will double and GDP fall significantly

Coronavirus has accelerated the shift away from banknotes – central banks must act fast to catch upAs the Covid-19 crisis accelerates the long-term shift away from cash (at least in tax-compliant, legal transactions), official discussions about digital currencies are heating up. Between the impending launch of Facebook’s Libra and China’s proposed central-bank digital currency, events now could reshape global finance for a generation. A recent report from the G30 argues that if central banks want to shape the outcome, they need to start moving fast.Much is at stake, including global financial stability and control of information. Financial innovation, if not carefully managed, is often at the root of a crisis, and the dollar gives the US significant monitoring and sanctions capabilities. Dollar dominance is not just about what currency is used, but also about the systems that clear transactions and, from China to Europe, there is a growing desire to challenge this. This is where a lot of the innovation is taking place.Related: Will coronavirus mean the demise of banknotes? | Howard Davies Continue reading...

Number of visitors to UK retail destinations fell almost 40% in July from a year earlierShoppers continued to stay away from UK high streets last month despite the reopening of non-essential shops, pubs and restaurants following the lifting of lockdown measures.The number of visitors to UK retail destinations dropped by 39.4% in July compared with the same month a year ago, according to figures from Springboard, a data company that tracks footfall at consumer hotspots.Related: Shoppers shun high streets in England and Northern Ireland, data shows Continue reading...

The world owes solidarity to a people exhausted by decades of corrupt and negligent governmentBeirut has come to know the sound of explosions too well in its recent past, but none looked or felt like the blast that laid waste central districts of the city on Tuesday. The devastation is on a scale more usually wrought by earthquakes. The port at the heart of the Lebanese capital was annihilated. Shock waves ripped the facades from every building in neighbouring districts – and behind every shattered window are shattered lives. There are not enough hospital beds or a reliable supply of electricity. Infrastructure for storing and importing many of the city’s essential goods has been destroyed, making scarcity of food an imminent threat. A vast crater at the site of the detonation scars the coastline, but deeper still are the wounds to a nation that was already reeling from economic crisis, debilitated by pandemic and weary from political chaos and corruption.The explosion appears to have been accidental, a conflagration of chemicals taken from an impounded ship and left in a warehouse for six years, but tragic accidents are not random acts of nature. They have causes that can be investigated, roots in the choices that people have made. Sadly, citizens of Beirut know better than to expect answers. They are familiar with the negligence of a state that has been captured by sectarian interests, running services and utilities as mafia-style racketeering portfolios. A well-regulated port would not have been so vulnerable to industrial accidents of seismic proportions. Authorities in a functional democracy would be scrutinised and held to account. Continue reading...

Rolling coverage of the latest economic and financial news

People and businesses were already over-indebted before coronavirus. The government’s schemes have made things worseThe UK is drowning in private debt. At least £6bn of household debt – and probably much more – has been racked up by 4.6m people during the pandemic. More than one in eight people on furlough have defaulted on a payment. The Institute for Fiscal Studies has warned of a wave of “zombie companies”, kept afloat by Covid-19 loans, going bust this autumn. There will be no “V-shaped recovery” – and recognising the scale of over-indebtedness is key to understanding why.UK households and businesses were already over-indebted before the pandemic. Many were struggling to make ends meet. This made our economy extremely fragile – even more so than before the crash of 2008. And yet, back in April, the government chose to deal with the shutdown in large part by loading households and businesses with even more private debt. Businesses were encouraged to take out state-backed loans. Households got payment “holidays” on mortgages and credit cards. These measures did not lighten the increased financial burdens people were shouldering. They simply kicked the can down the road – with added interest.These debt burdens will not only ruin lives, they will also drag back the economic recovery itselfRelated: UK consumers repay record £7.4bn of debt in Covid-19 lockdown Continue reading...

Leading lobby group warns Rishi Sunak’s summer statement plans risk mass unemploymentBusiness leaders have warned Rishi Sunak that his multibillion-pound summer statement plan to save jobs is failing to prevent an unemployment crisis from taking hold.The British Chambers of Commerce (BCC) is demanding an urgent rethink from the chancellor, as the government starts scaling back its Covid-19 economic response, and warned that fewer than half of firms were planning to take up jobs support measures announced by Sunak last month. Continue reading...

The carbon economy amplifies racial, social and economic inequities, creating a system that is fundamentally incompatible with a stable futureFrom deep-rooted racism to the Covid-19 pandemic, from extreme inequality to ecological collapse, our world is facing dire and deeply interconnected emergencies. But as much as the present moment painfully underscores the weaknesses of our economic system, it also gives us the rare opportunity to reimagine it. As we seek to rebuild our world, we can and must end the carbon economy.Related: Environmental racism is killing Americans of color. Climate change will make it worse | Mustafa Santiago AliThis moment creates an opportunity to bring about a better future for ourselves and our childrenThis letter has been signed by more than 100 economists. See the full list of signatories here Continue reading...

From February to May, 11.5 million women lost their jobs compared with 9 million men – underlining how women are more vulnerable to sudden losses of incomeDenise Frederick hasn’t stopped working since the pandemic began. But the nanny and home carer in New York City has also seen her pay cut in both jobs and she is uncertain about how long she will have either with the coronavirus outbreak far from under control.Like many women, the economic fallout from the coronavirus pandemic has hit Frederick hard. For the first time in history, the US is in a “shecession” – an economic downturn where job and income losses are affecting women more than men.Related: Plan to slash $600 lifeline threatens misery for millions of AmericansWe didn’t do enough in the 2008 recession to make sure there was an even recoveryThe cracks in our system that were here before the pandemic have now become catastrophesThis article was amended on 4 August 2020 to correct a fact about primary caregivers. Continue reading...

Data shows nearly 30% more people visited high streets compared with same time last weekBritish high streets received a boost from the launch of the government-backed discount dining scheme on Monday, according to industry figures, as restaurants also reported a rise in interest from customers.Data on shopper visits showed that by 3pm on Monday the number of people hitting the high street was up nearly 30% on the same day last week, while across all destination including retail parks and shopping centres the rise was 19%. Although the numbers from the retail specialist Springboard capture all shopping outlets, they will have covered many of the 72,000 cafes, pubs and restaurants that have signed up to the half-price “eat out to help out” scheme.Related: Back to normality? Businesses hope for 'eat out to help out' scheme boost Continue reading...

To achieve greater happiness we need to see ways in which society’s product is distributed more equally, writes Jeremy CushingLarry Elliott (New UK coronavirus restrictions will test optimism over economic recovery, 2 August) suggests we will soon be able to see whether the absence of growth will make people happier and society more stable. I don’t believe it is part of the anti-growth thesis that a reduction in growth as such will make us happier.First, the basis of the thesis is that growth is dysfunctional because in so many ways it is leading us to disaster. Reversing growth is required if we are to avoid disastrous outcomes, but will not in itself make us happier. Continue reading...

There is an urgent need for wide-ranging debt relief in the midst of the coronavirus pandemicWhile the Covid-19 pandemic rages, more than 100 low- and middle-income countries will still have to pay a combined $130bn in debt service this year – around half of which is owed to private creditors. With much economic activity suspended and fiscal revenues in free fall, many countries will be forced to default. Others will cobble together scarce resources to pay creditors, cutting back on much-needed health and social expenditures. Still others will resort to additional borrowing, kicking the proverbial can down the road, seemingly easier now because of the flood of liquidity from central banks around the world.From Latin America’s lost decade in the 1980s to the more recent Greek crisis, there are plenty of painful reminders of what happens when countries cannot service their debts. A global debt crisis today will push millions of people into unemployment and fuel instability and violence around the world. Many will seek jobs abroad, potentially overwhelming border-control and immigration systems in Europe and North America. Another costly migration crisis will divert attention away from the urgent need to address climate change. Such humanitarian emergencies are becoming the new norm. Continue reading...

Some have reasons to be cheerful despite the gloom but flip-flopping in Whitehall is not helping growthRecords are there to be broken, so it would be unwise to claim that there will never be a worse performance by the US or eurozone economies than was seen in the spring of 2020. It would, though, take something truly spectacular: a nuclear war, a meteor strike, a pan-continental climate catastrophe or a more severe pandemic than Covid-19.It is worth reflecting for a moment on just how dire the recent economic news has been. The UK is a bit behind the US and the eurozone and does not report its second-quarter growth figures until 12 August but it is already known that the economy contracted by about 25% in only two months – March and April. Even with a pick-up in activity in May and June, activity was probably still about 15% below its pre-crisis level at the start of the third quarter.Related: Coronavirus England: Boris Johnson looking at second-wave lockdown scenariosGovernments, even rightwing governments, have been forced into wartime-like levels of intervention Continue reading...

New graduates and school leavers across the UK have paid the price of lockdown, says survey

The EU probe of the search engine’s deal for Fitbit is a harbinger of a future in which Big Tech is central to healthcareHealthcare is going to be one of the biggest corporate battlegrounds of the next 20 years.In the UK, public and private health spending already accounts for 10% of national income (GDP). In the US, health spending eats up around 17% of the economic pie. As the last of the baby boomers settle into retirement by 2030, those figures are expected to rise by at least half and, if social care is added, possibly double by 2040.There is little appetite in the US Congress to tackle corporate overreach, though a reinvigorated anti-trust agenda is part of the Joe Biden manifesto Continue reading...

Resolution Foundation claims half of those furloughed in April have not returned to work

Pandemic creates employment boom in new sectors despite devastation of economy

Rolling live coverage of business, economics and financial markets as European economy suffers its worst recession since at least 1995

Data reveals contraction in second quarter wiped out more than decade of expansion

Republican infighting has delayed an expansion to the weekly cash benefit – so what happens if a deal can’t be reached?For millions of unemployed Americans dealing with the worst economic crisis since the Great Depression a $600 payment each week from the government has been a vital lifeline, allowing them to keep their homes and put food on the table despite losing their jobs.Related: US economy suffers worst quarter since the second world war as GDP shrinks by 32.9%Related: Trump suggests delaying presidential election as dire economic data released Continue reading...

Opposition seeks to protect jobs as it urges government to keep helping worst-hit sectors

The US has recorded its biggest shrinkage ever and without soon-to-expire government benefits things would be much worseEconomic data released on Thursday by the government revealed that during April, May and June, the US economy experienced the most severe shrinkage in its history. The details paint a worrying picture of the US’s chances of an imminent recovery.Related: US economy suffers worst quarter since the second world war as GDP shrinks by 32.9% Continue reading...

Companies are stashing away their government-funded bounce-back loans for a reasonWay back when Britain had a much bigger industrial base than today, ICI’s results were seen as a sign of how well things were going. Times change, and these days it is not a manufacturing giant like ICI but a high street bank that has taken on the role of the economy’s bellwether.If what’s happening at Lloyds Banking Group really is a reflection of what is happening to the UK as a whole – and there is a good argument for that – there is plenty to be concerned about. Lloyds has a big presence in the mortgage market, car loans, credit cards and business lending. It is almost entirely UK-focused. Continue reading...

Drop in quarterly gross domestic product comes as 1.43m people file for unemployment benefits, a second week of increases, amid Covid-19 pandemicThe US economy shrank by an annual rate of 32.9% between April and June, its sharpest contraction since the second world war, government figures revealed on Thursday, as more signs emerged of the coronavirus pandemic’s heavy toll on the country’s economy.The record-setting quarterly fall in economic growth compared to the same time last year came as another 1.43 million Americans filed for unemployment benefits last week, a second week of rises after a four-month decline.Related: 'What’s going to give?': millions fret as Republicans threaten to halt $600 weekly lifesaver Continue reading...

Bank of England says it’s a V so far. But data suggests the spending revival could wane in autumn

Analysis of pandemic’s effects on businesses examines work, growth and stock markets

Guardian analysis shows hit to workers gathering pace despite boost from lockdown easing

Energy giant hit by massive change in fortunes as Covid-19 crisis forces writedown in asset valuesRoyal Dutch Shell has reported a deep financial loss after a record writedown on the value of its oil and gas assets due to the collapse in global market prices triggered by coronavirus.The Anglo-Dutch oil giant revealed a net loss of $18.3bn (£14.1bn) for the second quarter of 2020, down sharply from a net profit of $3bn over the same period last year and $2.7bn in the first three months of 2020. Continue reading...

Even before the pandemic the global economy was facing a range of potentially devastating tail risksIn February, I warned that any number of foreseeable crises – “white swans” – could trigger a massive global disturbance this year. I noted: “… the US and Iran have already had a military confrontation that will likely soon escalate; China is in the grip of a viral outbreak that could become a global pandemic; cyberwarfare is ongoing; major holders of US treasuries are pursuing diversification strategies; the Democratic presidential primary is exposing rifts in the opposition to Donald Trump and already casting doubt on vote-counting processes; rivalries between the US and four revisionist powers are escalating; and the real-world costs of climate change and other environmental trends are mounting.”Since February the Covid-19 outbreak in China did indeed explode into a pandemic, vindicating those of us who warned early on that the coronavirus would have severe consequences for the global economy. Owing to massive stimulus policies, the Greater Recession of 2020 has not become a Greater Depression. But the global economy remains fragile and even if a V-shaped recovery from highly depressed output and demand were to occur, it might last for only a quarter or two, given the low level of economic activity. Continue reading...

Jerry Nadler unimpressed with Mark Zuckerberg’s answer on Instagram deal, while Amazon boss Jeff Bezos accused of hypocrisy

Exclusive: No 10 had ‘change of attitude’ after pressure from business, says commissioner

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

Santander sets aside £2.8bn after being pushed to the first loss in its 163-year history

Analysis by Labour finds percentage rise of benefit claimants far outstrips other areasTourist hotspots across the UK are bearing the brunt of the ailing jobs market, an analysis of data on unemployment benefit claims since the Covid-19 lockdown has shown.Figures from Labour show that in areas heavily reliant on tourism the rise in the number of people seeking unemployment benefits in recent months is an average of 65 percentage points higher than in other areas. The data has prompted Keir Starmer to warn that holiday towns are facing a jobs crisis. Continue reading...

Thinktank says ending Covid-19 wage subsidy scheme from August could cost 1.2m jobsThe government closing its furlough scheme this autumn is a “mistake” that will drive up unemployment by 1.2 million by Christmas, one of the UK’s leading economics thinktanks has warned.Sounding the alarm over the mounting risk to jobs, the National Institute of Economic and Social Research (NIESR) said extending the wage subsidy scheme until the middle of next year would dramatically cut the number of redundancies across Britain and would probably pay for itself.Related: Selfridges to cut 450 jobs as Covid-19 causes 'toughest year' Continue reading...

Retailers report best sales in more than a year after the easing of lockdown restrictions

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

Reports that Covid-19 could be transmitted by handling cash gave people another reason to steer clear of paper money

Analysis comes as some new vacancies in UK are receiving hundreds of applicants each

Boss warns of crisis as pandemic leaves company with no orders since March

Investors buy precious metal as concerns grow over global economy and US-China row

Thinktank predicts economy will shrink by 20% in April to June putting back a full recovery 18 months later than forecastThe UK’s economic recovery from the Covid-19 crisis could take 18 months longer than expected with hopes of a V-shaped recovery fading fast, according to a leading economic forecaster.Britain’s economic output is not expected to return to its 2019 level until the end of 2024, the EY Item Club said on Monday in its latest projections on the health of the UK economy. It had previously expected GDP to match fourth-quarter 2019 size in early 2023. Continue reading...

These economic times demand bold intervention to reconstruct our shattered economy and rebuild Australian workplacesIn 2018, treasurer Josh Frydenberg established a permanent media brand in Australian politics with an unwisely self-produced short video.It was unexceptional Tory scaremongering about the evils of taxation, but his words weren’t why the footage went viral. Audiences were stunned by the direction. In it, the treasurer shuffles down a hill and speaks like a man compelled into performing the script of a hostage video for a killer robot that’s cunningly disguised as his own suit.Related: Economists on the Treasury update: 'the bottom line is we need more stimulus' | Emma Dawson, Chris Edmond and Cherelle MurphyThe enduring “success” of the neoliberal era is really measured in how effectively it transferred wealth to the richRelated: Can we now have a less brain-dead conversation about debt and deficit? | Katharine Murphy Continue reading...