Backing of EU27 paves way for new arrangements between UK and EU to come into force on 1 January

Resolution Foundation says lockdowns and tier 4 restrictions will lead to depressed growth in 2021The fresh wave of coronavirus restrictions could lead to the economy being 6% smaller by Easter than official forecasters had predicted just last month, one of the UK’s major economic thinktanks has warned.The Resolution Foundation said the national lockdowns in Scotland and Wales and the tier 4 restrictions imposed in much of England would lead to depressed growth until Easter, and lead to 4.3% growth in 2021 compared with the 5.5% forecast by the Office for Budget Responsibility (OBR). Continue reading...

There’s no sign that ministers will use the twin shocks of the pandemic and Brexit to fix a broken system that is failing too many peopleWhen the UK entered the coronavirus age in March, state resources and collective commitment were mobilised on a scale not seen since the second world war. Decades ago, Britain had revealed itself, thanks in part to being able to marshal the industrial might of the empire, to be a formidable world power. Its economy was energised with breakthroughs in radar, atomic power and medicine.Although the story of the pandemic has not yet ended, there appears to be no such transformation in sight under Boris Johnson. Rather depressingly, familiar trends of greed, incompetence and cronyism are reasserting themselves. This is bad news for an economy where there has been a collapse of socially useful innovation. Britain’s lack of hi-tech manufacturing capabilities, notably in medical diagnostic testing, was cruelly exposed by the pandemic. Continue reading...

A quick look at the past 30 years explains why British voters were clear they wanted to leave the EUThirty years ago this month there were crunch trade talks in Brussels. After four years of discussions, attempts to secure a new global deal were not going well. Inside the negotiating room, the US and EU teams were at loggerheads. Outside, on the streets of the Belgian capital, farmers were rioting over proposed cuts in agricultural subsidies.As deadline time for the first editions of the UK papers loomed, the press room was graced by the arrival of the Daily Telegraph’s man on the spot: a young Boris Johnson. The paper’s news desk had belatedly twigged that there was a story in these collapsing trade talks and had told Johnson to find out what it was. Continue reading...

Threatening us with even more austerity is the last thing the chancellor should be doing in the midst of this profound crisisIn The Alchemist, the poet Ben Jonson, a rather more considerable figure than his near-namesake Boris Johnson, allows his principal character, Face, to make use of the plague for all manner of subterfuge.Until recently, the hardcore Brexiters were assuming that the latest plague, Covid-19, would divert attention from the predictable horrors of Brexit. Oh no. It is not turning out like that. Even during the “transition” period the monstrosity of it all was beginning to dawn on people. Why, the latest YouGov poll tells us that between 10% and 13% of Leave voters now regret their vote.His rationale is to prepare for the next crisis – 'building up the resilience you need to deal with the future shock'. But this IS the next crisis. This is the future shock Continue reading...

Borrowing has risen unsustainably during the pandemic among businesses, the government and consumersAs we look forward to 2021, there is much to be hopeful for. Vaccines pending, much of normal life will return and the economy can recover even more quickly than predicted by the Bank of England and the Treasury’s independent forecaster, the Office for Budget Responsibility.While bedding in a Brexit deal will prove to be difficult in the weeks and months after 1 January, there is the prospect of businesses beginning to see through the fog of uncertainty that has clouded the past four years. Continue reading...

A deal that makes us poorer, reduces global influence and imperils the nation’s integrityAny deal is better than no deal. But the agreement that Boris Johnson struck with the European Union on Christmas Eve is no political triumph, no diplomatic feat. It will one day surely be regarded as one of the greatest-ever deceits inflicted on the British electorate. We were told that a free trade agreement with the EU would be “one of the easiest in human history” to get, that we were “going to get a great deal”. We were told that a free trade agreement would give us “the exact same benefits” of EU membership without any of the obligations or financial costs.Yet the deal Johnson has reached will inflict all the costs he denied it ever would. It will take some weeks to fully digest the many pages of legal text. But it is already clear that this deal will have enduring consequences for Britain in the coming decades: for the wellbeing and resilience of communities across a highly unequal nation; for the potential for the UK to be an influence for good in an increasingly unstable world; and perhaps even for the very integrity of our nation. Johnson’s act of national harm could not come at a worse time. It will set in train significant economic damage during a global pandemic that has left the NHS and economy reeling. Continue reading...

Centre for Economics and Business Research says it expects this to happen half a decade sooner than it forecast a year agoChina will overtake the US as the world’s biggest economy before the end of the decade after outperforming its rival during the global Covid-19 pandemic, according to a report.The Centre for Economics and Business Research said that it nowexpected the value of China’s economy when measured in dollars to exceed that of the US by 2028, half a decade sooner than it expected a year ago. Continue reading...

Former president of the World Bank determined to alleviate poverty in less developed countries“If you have wealth, you have to share it,” was the watchword of the former president of the World Bank James Wolfensohn, a larger than life, egotistical, supremely confident, inveterate networker, but fundamentally a good and witty man. Wolfensohn, who has died aged 86, made a great deal of money and gave a great deal away.The zenith of his career was his two-term presidency of the World Bank, between 1995 and 2005, where his zest and passion for poverty alleviation left an indelible mark. Unafraid to confront the reality that too much of the World Bank’s lending found itself in anonymous offshore bank accounts held by recipients, he set up an anti-corruption task force, unthinkable before he arrived for fear of legitimising the bank’s critics while potentially smearing some innocent borrowers. Continue reading...

Analysis: perils of walking away mean it is no great surprise Boris Johnson, for all his threats, has opted for deal

Rolling coverage of the latest economic and financial news, as the London stock market closes for Christmas

Average pay seems to be up but only because so many low-paid jobs are being lost and thus no longer counted

Analysis: A new Covid variant, tougher lockdowns, record redundancies and clogged ports have arrived as Brexit turmoil looms

Our latest snapshot of key economic indicators show retail sales falling, job losses soaring, GDP growth and stock market stalling

Post-Christmas supplies at risk, say hauliers, with 4,000 lorries stuck in Kent and thousands more idling at warehousesAbout 4,000 lorries, and thousands more small vans, are now waiting to cross the Channel after a two-day French ban on freight arriving from the UK, with food transport firms warning that potential disruption levels now range between “a shambles and a catastrophe” just as January and the end of Brexit transition looms .Representatives of the Food and Drink Federation and the Road Haulage Association (RHA) told MPs on Tuesday that the hundreds of lorries queued on the M20 into the port of Dover, and at a temporary parking facility at Manston airport in Kent, were only a part of the problem. Many more vehicles, they said, were parked elsewhere in Kent, or waiting to depart from factories and warehouses.Related: Covid: France to reopen UK border for French and lorry drivers, reports say Continue reading...

Rolling coverage of the latest business and markets news, as borders continue to shut in response to the UK’s new Covid strain

Beholden to the private sector, the chancellor fought an autumn lockdown – and we’ve all paid the price

Analysis: Recovery after the first Covid lockdown was faster than expected, but massive borrowing continues

ONS revises GDP figure for the third quarter to record 16% but government borrowing surges

Democrats say ‘last-minute’ package, approved by Senate shortly before midnight, falls short of US needs

Analysis: Tighter restrictions for longer will lead to slower growth and higher public borrowing

Rolling live coverage as lorry drivers banned from France because of new coronavirus strain and US agrees stimulus package

Haulage sector sounds alarm over 48-hour block on cargo from UK to France after new strain emerges

Business leaders say fresh restrictions could lead to further job losses without more help

Christmas may be the focus but restrictions will probably be in place well beyond festive season

In his book A Journal of the Plague Year, Daniel Defoe describes 17th-century behavior that is unmistakably familiar today

A new study confirms tax cuts for the rich do not benefit the rest. Recovery from the pandemic is a chance to change courseHow should the huge financial costs of the pandemic be paid for, as well as the other deferred needs of society after this annus horribilis?Related: Jeff Bezos became even richer thanks to Covid-19. But he still won't protect Amazon workers | Robert ReichYou don’t need a doctorate in ethical philosophy to think that now might be a good time to redistribute some of richesRelated: Joe Biden's economic team beats Trump's goon squad – but it faces a steep challenge | Robert ReichRobert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a columnist for Guardian US Continue reading...

The hawks are warning – once again – about the economy overheating. But a vaccine alone will not cause thatThere is always an economist somewhere agonising about inflation. As we head towards Christmas with an inflation rate falling towards zero – it dipped to 0.3% in November – you might think they were mostly keeping their counsel.Not a bit of it. The inflation worriers are out and about, spreading their gloomy message of imminent rising prices as the economy overheats uncontrollably post-Covid, post-Brexit.Consumers, desperate to cheer themselves up, will join the borrowing binge, increasing the pressure on prices Continue reading...

The pandemic and its attendant recession have left millions across the country with little money and little to celebrateThere will be no presents under the Christmas tree this year for Sierra Schauvilegee and her children. Schauvilegee lost her job as a nurse when the residential care facility she worked for permanently closed down at the start of the coronavirus pandemic. Finding new work has proved impossible.“This is the first year my children will not open a single gift, nothing under our tree,” said Schauvilegee, who lives in Ingalls, Kansas. “I used all my savings to survive and I begged my mother to move in until I received rental assistance and food stamps, that is all I literally have.”Related: 'The numbers floored me': hunger in Pennsylvania hits highest level since pandemic's startRelated: 'It's terrible and no one cares': millions at risk of eviction with no stimulus agreed Continue reading...

Rolling coverage of the latest business and markets news, as Brexit jitters and retail data put investors on edge

Coronavirus curbs across country end six-month run of rising salesCoronavirus – latest updatesSee all our coronavirus coverageRetail sales fell by 3.8% in November on the previous month as the coronavirus lockdown in England and restrictions elsewhere in the UK shut much of the high street.Ending a six-month run of rising sales, the figures revealed the impact of the pandemic on the sector as the infection rate increased across the country. Continue reading...

Investors bet Covid vaccines and stimulus measures will propel economy forward in 2021

Chancellor says extra time will help cushion economic blow, with budget set for 3 March

Rate-setting committee says rapid rise in Covid-19 infections will deliver bigger hit to UK economy than forecastThe Bank of England has kept interest rates at the lowest levels on record after warning that rapid growth in coronavirus infections will deliver a bigger hit to the UK economy than expected in the final months of 2020.Threadneedle Street’s monetary policy committee (MPC) voted unanimously to keep the official interest rate on hold at 0.1% while also leaving the Bank’s quantitative easing bond-buying programme unchanged at £895bn after pumping an additional £150bn into the economy last month. Continue reading...

Talks on reducing charges on items such as Scotch whisky follow UK move to drop levy on BoeingThe UK and the United States are hoping to reach an agreement on reducing trade tariffs, according to Robert Lighthizer, the US trade representative in Donald Trump’s outgoing administration.In an interview with the BBC, Lighthizer said he was in talks with the UK’s international trade secretary, Liz Truss, which could remove hefty tariffs imposed by the US on goods including Scotch whisky. Continue reading...

Sustained economic efforts rather than simple repetition of one-off measures are required in four areasAs excited as we all understandably are about the arrival of the first Covid-19 vaccines, the immediate road ahead remains treacherous. The US, in particular, could be on the verge of a horrible scenario in which slippages in each of four areas – public health, the economy, policy and household behaviour – end up making those in the other areas even worse. Over the next few weeks, they risk setting in motion a vicious cycle that, if it materialises, could shatter the lives and livelihoods of many more people, even though vaccines are in sight.Fortunately, through individual and collective action, the US has the means not only to arrest these dynamics but also to transform them into a virtuous cycle. This will require a set of sustained efforts rather than simple repetition of one-off measures.Related: Why the Covid economic crisis has hit poorer nations less deeply than fearedThe Fed's ample and predictable liquidity injections continue to decouple Wall Street from Main Street Continue reading...

Rolling coverage of the latest economic and financial news

Analysis: lower prices may have been welcomed by consumers but also reflect tough periodBritain has often had a problem with inflation. But far from the old enemy of past decades, when galloping price increases served as a pernicious tax on the poorest households, today inflation is worryingly low.The annual rate fell in November to just 0.3%, among the lowest levels since 1989. During the coronavirus pandemic, lower prices will have been gladly welcomed by hard-pressed consumers. But the low inflation rate also reflects a difficult period for the UK economy, and for retailers in particular. Continue reading...

Europe facing post-Covid finance squeeze as indebted businesses crash affecting economy

ONS says consumer prices index fell to 0.3% in November from 0.7% a month earlier

Rolling coverage of the latest economic and financial news

Coronavirus closures will put millions of pounds worth of festive food at risk, firms warn

Government advisers say pandemic has highlighted vital economic contribution of migrant workersThe economic recovery from the Covid-driven recession will be hampered by a post-Brexit shortage of key workers including nursing assistants, senior care workers and dental nurses, the UK government’s migration advisers have warned.In its annual report, the Migration Advisory Committee (Mac) said many of the roles with the highest vacancies in the UK, such as veterinary nurses and welders, require a significant level of training, which could cause a delay in filling jobs and “hinder future economic recovery”.Related: While 'low-skilled' migrants are saving us, the government is cracking down on them | Maya Goodfellow Continue reading...

Sir Michael Marmot says children’s lives could be harmed for ever if deprivation not tackled

Unemployment rate increases to 4.9%, fuelled by job losses in retail and hospitality

Covid crisis is accelerating change, study by Fabian Society and Community findsMore than half of furloughed jobs in the UK are at the highest risk of automation as the Covid crisis accelerates workplace technology change, driving up redundancies and inequality across the country, according to a report.The two-year commission on workers and technology, chaired by the Labour MP Yvette Cooper, found that workers in sectors hit hardest by the pandemic – such as hospitality, leisure and retail – face a “double whammy” as their jobs are at the most risk of being replaced by machines. Continue reading...

ONS survey shows some people faced greater threat to mental health, incomes and life expectancy

Rolling coverage of the latest economic and financial news

Former Siemens chief Juergen Maier says disruption will last at least six months even if trade deal is reachedBrexit will hit the British economy like a “slow puncture”, a leading industrialist has warned, with disruption to business to last at least six months even if a trade deal is reached.Juergen Maier, the former chief executive of German electronics giant Siemens, warned that businesses were starting to shift parts of their operations to other countries in the EU while at the same time decrying the “nationalist” headlines over the weekend claiming Angela Merkel wanted the UK to “walk on broken glass” to secure a Brexit deal.Related: Brexit stockpiling causing 10-mile tailbacks in Calais Continue reading...

Committee says £20 a week increase should stay and ministers need to ‘wake up’ on unemploymentA Lords committee has urged the government to make permanent an increase in the value of universal credit benefits to address poverty and job losses triggered by the coronavirus pandemic.In a report calling for a “new deal” for jobs to prevent a surge in unemployment next year, the Lords economic affairs committee said there was an urgent need to reform the benefits system and make additional plans for job creation. Continue reading...