by Richard Partington Economics correspondent on (#5B0W4)
Covid-19 restrictions weigh heaviest on capitals with large retail, leisure, hospitality and office sectors, study showsLondon has suffered the biggest fall in job opportunities among Europe’s biggest cities, according to a report showing that national capitals across the region have been damaged most by Covid-19.Britain’s capital is also among five of the biggest cities in western Europe – London, Berlin, Madrid, Paris and Rome – that have recorded a larger drop in new job adverts than elsewhere in their respective countries, according to Indeed.Related: City of London faces Brexit uncertainty over access to EU markets Continue reading...
In economic terms Rishi Sunak’s saving of up to £4bn is chickenfeed, stupendously bad value for money and hence politically ineptBritain is on course to borrow the thick end of £400bn this year and so, according to Rishi Sunak, the aid budget has to be cut. The UK will always be a good global citizen, the chancellor said last week, but times are tough. There’s a pandemic going on and so hard choices have to be made.This argument failed to convince Andrew Mitchell, a well-regarded international development secretary under David Cameron, who is organising a rebellion among like-minded Conservative MPs. Rightly so, because it is utter nonsense. Continue reading...
Household income will rise by just £220 in five years, thinktank says, as unions warn of harm to self-employedBritain is on course for one of the worst periods of income growth since records began, according to an analysis outlining the economic fallout from the Covid-19 pandemic.With the government already under pressure to improve the financial aid it is providing, it emerged that real household disposable income is set to rise by just £220 from 2019 to 2024, the expected period of the current parliament, a lift of just 1%. Continue reading...
The boom of a century ago was checked by British self-harm – a story set to be repeatedBritain’s return to the gold standard in 1925 has become a byword for a self-inflicted economic fiasco. The idea was to seek stability by fixing a price for an ounce of gold on demand – trade and confidence in sterling would flood back and Britain would continue with the roaring 20s, the boom that followed the First World War and the 1918 flu pandemic.However, the exchange rate was pitched so high that industry, instead of seamlessly adjusting its prices and costs, was devastated. The consequent public austerity, deflation and attempted wage cuts triggered mass unemployment and the General Strike.No advanced country has ever tried to borrow so much for so long – and at the same time so ruptured its trade relations Continue reading...
The chancellor’s hawkish turn is strange in a man so relaxed about the loss of output, and revenues, from leaving the EUMy Irish mother taught me always to “try to see the good in people”. Alas, with this government it’s a bit of a problem. George Osborne and his needless austerity programme was bad enough. But this lot are taking bad government to new depths.Last week was very much Chancellor Sunak’s show. His speech on Wednesday was preceded by so many media leaks that very little came as a surprise. But I fear that behind that ingratiating smile lies an insouciant cynicism that, whatever it achieves for his almost naked ambition, will do this country no good at all.Frankly, both Brexits are 'hard'; it is just that no-deal would be even harder Continue reading...
by Dominic Rushe and Amanda Holpuch in New York on (#5AYZV)
Janet Yellen will likely be the US’s first female treasury secretary – but as Covid shutdowns loom, she will have to win Republican votes for any major initiativesTeresa Marez has never heard of Janet Yellen, likely to be the next treasury secretary of the United States. But she and millions of other Americans have a lot riding on the decisions Yellen will make if and when she is confirmed next year.The coronavirus has upended Marez’s life. Her savings are almost exhausted and she is worried about her unemployment benefits, which run out next week. “It’s so hard. It’s just such a mess,” said the mother of two in San Antonio, Texas. “We just need Congress to make a decision,” Marez said. “As long as they are in limbo, we are in limbo.”Related: Biden says 'America is back' at the head of the table – but is that a good thing?Thousands pour into Fair Park for North Texas Food Bank’s largest distribution yet during pandemic https://t.co/EzY6o8Gc2MJanet Yellen would be an outstanding choice for Treasury Secretary. She is smart, tough, and principled. As one of the most successful Fed Chairs ever, she has stood up to Wall Street banks, including holding Wells Fargo accountable for cheating working families.[Republicans] rammed through a supreme court nominee but have done nothing to help American families Continue reading...
Rolling coverage of the latest business and markets news, as England prepares to exit its national Covid lockdown4.22pm GMTThe FTSE 100 has managed to pare its losses and is now trading just 0.1% lower, having been down nearly 0.9% in morning trading.But the more domestically-focused FTSE 250 is still taking a hit, down 0.9% for the session.2.35pm GMTUS stock are climbing at the open:U.S. stocks open higher https://t.co/pwJnv88tel pic.twitter.com/e7pt0LonqZ1.51pm GMTLoss-making lender TSB has reportedly been put up for sale by its Spanish owners, less than five years after its £1.7bn takeover.Reuters, citing a source, says Goldman Sachs was hired in July to explore various options for the lender. However, it has now been tasked with the sale of TSB. There are no details about whether there is any deadline for its planned sale.1.08pm GMTBREAKING: Sabadell has given Goldman Sachs a mandate to sell its UK bank TSB.That’s according to Reuters, citing a source.1.05pm GMTWe’re less than an hour and a half out from the US market open.Wall Street is expected to trade higher in a truncated session following Thursday’s Thanksgiving holiday:12.28pm GMTSir Philip Green’s retail empire is teetering on the brink of administration, putting 15,000 jobs at risk as months of high street shutdowns take their toll, our retail correspondent Sarah Butler reports.Arcadia Group, which owns Topshop, Miss Selfridge, Dorothy Perkins, Wallis, Evans and Burton, admitted it was “working on contingency options” to secure its future after a “material impact” on sales from the coronavirus pandemic.The forced closure of our stores for sustained periods as a result of the Covid-19 pandemic has had a material impact on trading across our businesses.As a result, the Arcadia boards have been working on a number of contingency options to secure the future of the group’s brands. The brands continue to trade and our stores will be opening again in England and the Republic of Ireland as soon as the government Covid-19 restrictions are lifted next week.Related: Philip Green's Arcadia on brink of collapse, putting 15,000 jobs at risk11.49am GMTTime to check back in with European stocks.The FTSE 100 and 250 are the outliers, trading lower on the back of regional lockdown news, Brexit jitters and questions over the Oxford/AstraZeneca vaccine which is set to undergo a new trial.One would have thought the lifting of the month-long lockdown would have given a boost to investor sentiment, yet we’re rounding off a week where markets ground to a halt.The FTSE 250 was always going to be more sensitive to developments with business and society restrictions as it has a greater amount of UK-focused companies than the FTSE 100.11.21am GMTFollowing up on reports that the Sir Phillip Green-owned Arcadia Group is on the brink of administration, Reuters says the group is working on “contingency” plans.Arcadia has said that its boards have been working on a number of contingency options to secure a future of the group’s brands.
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...
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...
by Richard Partington Economics correspondent on (#5AVPW)
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...
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...
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
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...
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...
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.
by Richard Partington, Peter Walker and Larry Elliott on (#5AQEM)
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...
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...