We must act now to stop the pandemic inflicting long-term damage, says the head of the IMFUK economy shows signs of faltering before second Covid-19 waveIMF chief: Covid will widen inequality without global actionNever before in living memory have so many lives and livelihoods across the world been disrupted at the same time. The International Monetary Fund estimates the pandemic’s loss to the global economy at around $12tn (£9.4tn) over 2020-21. The poorest countries – with limited resources and constrained capacity – are hit hardest: growth in low-income nations will be at a standstill this year, compared with 5% last year.Without necessary action, this group of about 70 countries, representing more than 1 billion people, faces unprecedented human and economic devastation. The decades-long declining trend in global poverty is being pushed into reverse, with as many as 90 million additional people falling into extreme poverty, mostly in sub-Saharan Africa and south Asia.Related: IMF chief: Covid will widen inequality without global actionKristalina Georgieva is managing director of the International Monetary Fund Continue reading...

Our latest snapshot of key economic indicators shows UK plc is fast losing momentum

Thinktank warns chancellor will have to cut budgets, increase taxes or borrow moreA prolonged battle against Covid-19 would swallow up a large chunk of the government’s planned increase in public spending and force the chancellor into an unenviable choice between fresh austerity, higher taxes or more borrowing, a leading thinktank has warned.The Institute for Fiscal Studies said that even if only a quarter of the extra £70bn allocated by Rishi Sunak to fight the pandemic had to be repeated in future years, the Treasury would either have to find more money than set aside in this year’s budget or announce cuts.Related: Sunak's winter plan is the shadow chancellor's chance to fight back | Larry Elliott Continue reading...

Continue reading...

Readers air their views on economic and generational issues in the UK

Rolling coverage of the latest economic and financial news

Anneliese Dodds has been limited by Covid, but her questions about the job support scheme could prove canny

A Key West team is expected to enforce a new mandate allowing people to go maskless outdoors if they are 6ft apart – an impossible task among partygoersKey West code enforcement officer Paul Navarro was halfway through his shift and beginning to see signs of trouble. The crowds on lower Duval Street swelled just after 9pm, and social distancing quickly became impossible on the sidewalks.Navarro is the last line of defense against the high-risk behaviors which spread Covid-19 and is one of the principal enforcers of the Florida city’s mask mandate – an effort to protect public health and the local economy. Until 16 September part of that balancing act had included a strict mask mandate; now that rule has been loosened.Related: Can California's tourism industry survive a year unlike any other?We have the pressure of the business owners, [and] other pressure from people who want to do the right thing, which, at this point, I don’t know what that is Continue reading...

Losing a job reduces happiness as well as spending powerWe are entering the grim jobs-being-lost phase of this crisis: 695,000 fewer of us are on payrolls and the Bank of England expects unemployment to rise by 1.2m. The chancellor’s new measures will reduce, but far from halt, this tide.Economic policy specialists tend to focus on the financial effects of redundancies. And they are painfully large. A worker earning £20,000 loses 71% of their income if they lose their job and fall back on universal credit. Continue reading...

The chancellor held socially distanced breakfasts with key journalists, and his upbeat message struck a chordThe wave of flattering front-page headlines that followed the chancellor of the exchequer’s statement outlining his autumn strategy to tackle the tottering economy screamed out from news stands across the country.What was not known was that the often gushing coverage came after a Treasury mission to win the hearts and minds of national newspaper editors and political columnists at a crucial moment for the Conservative party. Continue reading...

Britain is condemned yet again to greater hardship by the government’s inept handling of the pandemicOn Thursday night, Britain’s restaurants and pubs emptied an hour early, to a chorus of protests from some of the inconvenienced revellers, alarm from the beleaguered hospitality industry and fury from many media commentators. The curfew is one of the additional restrictions imposed by the governments in Westminster, Wales and Scotland last week as Covid-19 infections continue to rise. Despite the concerns the move raised, on the brink of a second wave of coronavirus, the urgent question facing Britain is whether these restrictions go far and fast enough?The question has polarised political – and, to a lesser extent, scientific – opinion. There are echoes of mid-March, when many scientists were criticising the government for being too slow to act. But we should in theory be better poised to deal with a second wave: we know more about how the disease spreads; Boris Johnson’s government has had months to set up a test, track and trace infrastructure; the NHS has had time to prepare a strategy to keep elective treatment going; mask-wearing is much more prevalent.We know from the first wave that it is impossible to shield vulnerable people while the virus is spreading uncheckedRelated: Almost 90% of Covid tests in England taking longer than 24 hours to process Continue reading...

The battle between Treasury and health department has doomed us to a succession of contradictory gambits – and a long, hard winterIt would help if the cabinet could agree. Yet for the past seven months it has remained deeply divided, squabbling over the scientific advice and what Covid-19 might mean for the nation’s health and jobs.Britons have become familiar with a bewildering, almost weekly stream of tactical policies, twisting this way and that, many of them in direct opposition to each other.It is not hard to see that without financial protection in place for those affected, the virus will continue to spread Continue reading...

The new measures for workers on the furlough scheme are not generous enough to prevent a damaging rise in unemploymentThere are several moving parts in the engine designed by Rishi Sunak to keep the British economy motoring into next year. The most important is the replacement for the furlough scheme that has kept about 9 million workers in employment at some point in the last six months.Only days before the chancellor stood up to deliver his “winter economy plan” on Thursday, Boris Johnson announced a six-month extension to restrictions on sporting and cultural events and a new “rule of six”, restricting the number of people who could gather at any one time.We expect the unemployment rate to rise further, to at least 7% by the middle of next year Continue reading...

Young workers and those at the bottom end of the income scale will be the hardest hit

During the pandemic, the EU dropped its austerity-inducing budget rules and restrictions on its central bank’s ability to finance government spending. It get should rid of them permanentlyIn an emergency, the normal rules do not apply. Coronavirus has shown the EU can do things differently. Early on the commission dumped its obsession with balancing the books. The prohibition on monetary financing of government debt by the European Central Bank (ECB) was dropped. This allowed member states the freedom to mitigate the damage of a Covid recession without worrying too much about borrowing levels.That fear was well-founded. The EU had used high debt levels as a reason to intervene in public policy. Emma Clancy, an economist for the leftwing block of MEPs, has noted the commission had used debt burdens to ask member states to cut spending on, or privatise, healthcare services 63 times between 2011 and 2018. In the EU there is often an Olympian disdain for critics of its fiscal and monetary rules. This is understandable. No one likes to be reminded of one’s own mistakes. Continue reading...

UK borrowing has hits a new record high this year, and car production almost halved

What the new job support scheme and help for the self-employed means for workersThe chancellor unveiled a winter plan on Thursday which included schemes to protect what he referred to as “viable jobs” over the next six months. These include a job support scheme to replace furlough and an extension of help for some self-employed workers.Related: What is Rishi Sunak's job support scheme and how will it work?Related: Sunak warned winter economy plan not enough to stop wave of job losses Continue reading...

August’s near-£36bn borrowing figure follows unprecedented government spending

Chancellor says Britain faces winter of business failures and job losses due to Covid impact

The job support scheme looks fiddly, and unemployment looks sure to rise sharply“I cannot save every business, I cannot save every job,” said Rishi Sunak. We knew that, of course, because the chancellor has said it repeatedly since March and because he’s already on course to borrow about £370bn this financial year, a staggering sum. We can, though, say this: the new job support scheme (JSS) looks extremely fiddly, which may not help its aim.Giving a worker 33% of hours while paying 55% of his or her wages (which is how the figures work at the bottom end of the sliding scale) won’t appeal to every employer. Yes, those thinking about long-term training and recruitment costs will be attracted. The need to keep skills within a company matters.Related: What's missing from the chancellor's new scheme to save jobs? Continue reading...

Chancellor announces ‘job support scheme’ to subsidise wages of people in work; VAT cut extended for hospitality and tourism sector until end of March

Rolling coverage of the latest economic and financial news

Chancellor appears to defend decision to reopen swathes of economy amid coronavirus

The replacement for the UK furlough scheme is similar to Germany’s Kurzarbeit

Rishi Sunak outlines plans that will take over from furlough programme

The chancellor is unveiling measures to protect jobs in the Covid crisis

Chancellor will announce employment package to replace furlough scheme

Latest PMI surveys show growth slowed at UK companies this month, while eurozone service sector shrinks

UN body figures show people in Americas and lower to middle-income nations hardest hit

LSE analysis says long term economic hit will be two to three times as large as Covid impact

Cips/Markit estimates show outlook for business is at its weakest since May

Exclusive: option part of wider emergency package to help firms through second wave of Covid-19

Austerity policies will choke off recovery and risk a double-dip recession, says UnctadThe global economy faces a lost decade after the Covid-19 pandemic unless policymakers spurn austerity measures in favour of a comprehensive recovery plan built on investment in sustainable growth, the United Nations has said.In its annual trade and development report, the UN’s economic arm said a repeat of the cost-cutting conducted by governments after the financial crisis of 2008-09 would choke off recovery and risk a double-dip recession in 2022.Related: We must increase lending to the world’s poorest countries now – or pay the price later Continue reading...

Bank of England forecasts for 7.5% unemployment this winter may have to be revised up considerablyIt is March 2021. In the UK, the clocks are about to go forward and the government is about to ease restrictions imposed six months earlier in response to a rise in Covid-19 cases. A long, hard winter is over.But at what cost? That was the question exercising politicians, business leaders and economists after the prime minister announced curbs on opening hours for pubs and restaurants, and backtracked on the government’s previous advice that people should stop working from home. Economists at Bank of America think Britain is on course to contract in both the final three months of this year and the first three months of next. Continue reading...

Manufacturer insists supplies will not run out as long as customers don’t panic buy

Lobby groups say latest advice is ‘extraordinarily reactive’ as TUC tells PM to ‘get a grip’

City says economic fightback is running out of steam as new restrictions are announced

Governor Andrew Bailey says policy has mixed results but will stay in Bank’s ‘toolbox’

Unintelligible nonsense | Snow White | Sustainable wrappers | Grey pound | ForecastingThe saving grace with Van Morrison’s bizarre decision to produce songs attacking lockdown (Van Morrison criticises ‘fascist bullies’ in anti-lockdown Covid songs, 18 September) is that few will be able to follow what he is singing about, thanks to his notoriously – and mostly wonderfully – poor diction.

Stop-start policies are harming UK plc and the fight against Covid-19. Rishi Sunak needs to plan ahead nowWhat a difference a matter of weeks makes – in that little time England has gone from eat out to help out to the brink of national lockdown.After a summer of positive news for the economy as lockdown measures were relaxed and optimism started to return, the autumn is looking set for a painful reprise of the events of earlier this year. Continue reading...

Loss of access, loss of wealth, loss of face: even Thatcher would not have inflicted something like Brexit on BritainWhatever one thinks of the handling of the pandemic, or of the poor contingency planning in earlier years, the one thing one cannot blame this government for is the virus itself.Alas, the same cannot be said of the imminence of Brexit in tooth and claw, as opposed to the transition now under way. Among the “briefings” emanating from Downing Street have been suggestions that the economic consequences of Brexit will be subsumed by the undoubted economic horrors occasioned by Covid-19.This monstrous government is prepared to throw away vital resources in favour of the freedom to conclude worse trade deals than they already have Continue reading...

The fate of wrecked Spanish trading ships in the 16th century teaches us valuable lessons for todayEconomic history is to economics what historical fiction is to literature – underappreciated, but recently returned to the limelight. Hilary Mantel’s Wolf Hall reinforced the idea that reimagining the past could be literature, while the first global pandemic in 100 years proved that history can be as useful to economists as spreadsheets. Economic history also teaches you things squeezed out by British schooling’s mania for Henry VIII and the Nazis.Take new research on the Manila galleons – ships working the lucrative trade route between Manila and Acapulco from the late 16th century. It examines a puzzle: why were vessels on this route, a monopoly of the Spanish crown, three times more likely to sink than those journeying between the Netherlands and East Asia? Continue reading...

A company steeped in oil and gas production may not find it easy to convince investors of its environmental credentials‘This is serious stuff,” said BP’s Bernard Looney. The chief executive, speaking last week at the oil giant’s three-day investor event, was talking tough on the need to tackle the climate crisis. He could just as easily have been referring to the existential tightrope that BP, and others in the fossil fuel industry, will need to walk between investor confidence and the rising public pressure to slash their greenhouse gas emissions.Over the course of three days and 10 hours of executive presentations, Looney’s new leadership team sought to convince investors that their plan to become a carbon neutral company will allow them to toe this line successfully. BP’s nascent renewable energy interests will grow while the oil production business that has powered the company for over 110 years will begin to shrink within the next decade. A whiplash of clean energy innovation, carbon capture technologies and emissions offsetting schemes will then power the company to net zero carbon by 2050. Continue reading...

This week Katharine Murphy catches up with finance writers Greg Jericho and Shane Wright on the state of Australia’s economy. They discuss the government’s decision to reduce jobseeker, Victoria’s impact on the national economy and the October budget Continue reading...

Ex-UK international trade secretary and prominent Brexiter faces female frontrunners from Kenya and NigeriaLiam Fox, Britain’s former international trade secretary, has reached the last five in the race to be the next head of the World Trade Organization (WTO), the global customs and tariffs watchdog.Fox, who was nominated by the British government for the post, will go into the second round of voting against nominees from Kenya, Nigeria, South Korea and Saudi Arabia. Continue reading...

Rolling live coverage of business, economics and financial markets as retail sales volumes rise by 0.8% in August

Report shows schools in the most deprived areas worst affected by government’s austerity policyState schools in England have suffered their worst decline in funding since the 1980s, with secondary schools and those in the most deprived areas the worst affected by the era of austerity, according to analysis by the Institute for Fiscal Studies.The decline that began after the Conservative-led coalition government took office in 2010 is so deep, the additional £7bn pledged by the current government will not be enough to reverse the cuts by 2023, leaving school spending 1% lower than in 2009-10, the IFS notes.When I first started, I had to do a big restructuring, which led to about a dozen redundancies of support staff, and that was very difficult. I was a new headteacher, but we got through it. Continue reading...

Bank of England is investigating ways of removing obstacles to step, aimed at boosting economyThe Bank of England could cut interest rates to below zero next year after officials said preparations were under way to allow the central bank to support the economy with lower borrowing costs.In a move that would bring the BoE into line with the European Central Bank and the Bank of Japan, the monetary policy committee (MPC) said it was seeking to overcome obstacles to negative interest rates that would allow further cuts from the current 0.1% base rate.Gross domestic product (GDP) measures the total value of activity in the economy over a given period of time. Continue reading...

Cost of sugar, bread and transport soar, while promised World Bank aid is yet to arriveMillions of people in Sudan are facing hardship as the cost of food and transport soars amid economic turmoil in the country.The cost of some staple foods like bread and sugar has increased by 50% over the past few weeks, driving inflation to a record high of 167%, up from 144% in July.Related: 'We had to eat our seeds for planting': 10 million in Sudan facing food shortages Continue reading...

Finance minister says figures don’t reflect the thousands of lives saved and reduced burden on health system