An edict seen by some as un-Conservative is exposing divisions over the prime minister’s cautious approach to the pandemicIn the fortnight before the UK went into lockdown, Boris Johnson appeared in a video chat with Dr Jenny Harries to answer a series of questions about coronavirus. The deputy chief medical officer went over the regular symptoms, the low risk of large gatherings and the cons of face masks for all. She told a nodding prime minister that masks should only be worn if a medical professional tells you to, otherwise you could contaminate the mask and transfer the virus: “It’s really not a good idea and it doesn’t help.”Fast forward four months and that advice – along with several other parts of their conversation – has gone out of the window. The government has announced that face coverings will soon become compulsory in shops and supermarkets. Following in the footsteps of Scotland, and after a weekend of mixed messages from ministers, the new rule will come into effect on Friday 24 July, with a £100 fine for anyone caught not wearing one. Continue reading...

Agricultural groups call for more government help to access new markets amid concerns over heavy reliance on ChinaAustralia’s barley industry has raised fears it is bearing the brunt of “a fracture” in the relationship with China, as Canberra rejected the latest travel advice issued by Beijing as “disinformation”.A parliamentary inquiry on Tuesday heard calls from Australian agricultural groups for more help from the government to access new markets, amid concerns over the risks caused by a heavy reliance on China.Related: Australia's Hong Kong intervention was hardly strident but that didn't matter to ChinaRelated: China trade tension to hit Australian beef and wool exports, Rural Bank says Continue reading...

GDP for May at 1.8% disappoints analysts expecting a bigger boost after lockdownThe British economy returned to growth more slowly than expected in May as coronavirus lockdown restrictions were gradually relaxed after the sharpest plunge on record a month earlier.The Office for National Statistics said gross domestic product (GDP) grew by 1.8% in May as the economy staged a modest recovery from April, when GDP crashed by a fifth during the first full month of lockdown. Continue reading...

Significant pressure on high street outlets as consumers remain wary of health risks

Incoming head of OBR says lack of forecasting means emergency measures’ success will be hard to gaugeRishi Sunak’s multibillion-pound economic response to Covid-19 has been criticised for lacking transparency by the incoming head of the Treasury’s independent tax and spending watchdog.Richard Hughes, the economist picked by the chancellor to lead the Office for Budget Responsibility, told MPs on the Commons Treasury committee that taxpayers lacked enough information to know whether the measures outlined by Sunak at last week’s summer statement would be cost effective. Continue reading...

Declining job retention bonus was honourable and underlined £9.4bn scheme’s shockingly poor designRishi Sunak, the chancellor, readily conceded last week that there would be a “dead weight” cost to his policy of offering firms a £1,000 bonus for every employee recalled from furlough and kept in employment until the end of next January. That weight is the waste of rewarding firms for doing what they would have done anyway as the economy reopens.So it is good news, of a sort, for Sunak that some are too embarrassed to take the money. Primark was first out of the blocks at the weekend. The fashion retailer didn’t need a financial incentive to get 30,000 furloughed staff back in the shops and warehouses, so it would decline the kind offer of £30m of public money. Well played. Continue reading...

Rolling coverage of the latest economic and financial news

IoD says half of companies questioned cannot fully plan for end of transition period due to lack of clarity on rules

Campaign group One, founded by U2 frontman, is calling for a reorganisation of aid spending

Vulture funds want to change Argentina’s debt structure. We need to stop them from setting a dangerous precedentIn the wake of Covid-19, there is an urgent need for sovereign debt restructuring, including debt relief. In the circumstances caused by the pandemic, many countries’ repayment obligations could have devastating social consequences if they are not adjusted. Financial markets face risks of sovereign default.While some ad hoc relief has already been promised by official creditors, indebted poor countries are again facing private creditors without a sovereign-debt restructuring mechanism – the global equivalent of a bankruptcy regime. In the absence of such a framework, called for by the United Nations General Assembly and advocated by many experts and stakeholders, there have nevertheless been some constructive innovations in contractual approaches to sovereign debt. These address at least some of the collective-action problems of restructuring, including opportunistic holdout behaviour.Related: Invest in the green economy and we'll recover from the Covid-19 crisis | Joseph Stiglitz Continue reading...

With his £1,000-per-employee bonus plan, the chancellor is effectively saying, ‘If you give me £3, I’ll give you £2 in return’, writes Chris SimmondsWhile Rishi Sunak’s furlough scheme has been a much-needed and welcome lifeline to many, the sums don’t add up for his plan to pay businesses £1,000 per employee still in work by the end of January (UK business leaders warn over closure of furlough scheme, 8 July).I currently have 44 employees on furlough, most of whom I will be forced to release from the scheme at the end of August, because there is no revenue to pay the employers’ contribution. But let’s say, for the sake of argument, that all 9 million people currently on furlough are still on it when it ends in October, and their employers can afford to pay them £520 a month for the three months for the period November to January to qualify for the £1,000-per-employee bonus. Employers, many with no other revenue coming in, would be paying out £1,560 per employee to then get £1,000 back. The minimum cost to employers would be £14bn, with the government reimbursing £9bn. What the chancellor is effectively saying is: “If you give me £3, I’ll give you £2 in return.”

Nations are entering the critical economic phase of the pandemic: how to get consumers spending again

Brexiters are drawn to the romance of hard-bitten seafarers, so why not repurpose it to boost theatres?On the quay at Port Isaac yesterday evening, lit by a midsummer moon, I stood before an assembled shoal of grizzled Cornish fishermen, fat Henry V in Fred Perry, waving my Olivier award like a sword. “I know you. You’ve survived storms at sea, gales that tear trees from fields. You’ve withstood winds that raise roofs, and endured the tossing of tempests. And if you have the courage to do all that, my fishermen friends, then maybe, just maybe, there’s a future for all of you… on the stages of British theatres!” A cheer went up. Oliver Dowden, the new secretary for digital, culture, media and sport, stood behind his film crew, loving what he saw. I knew he would.The mythic allure of the British fishing industry was central to the dishonest Brexit campaign of 2016, a propaganda war that finally delivered the most incompetent and cynical government in our union’s modern history. As part of the 2016 offensive Michael Gove claimed the fishing business owned by his father, Ernest, was destroyed by EU policies. That June, however, Ernest contradicted his addled son, citing factors including competition for docking space from North Sea oil vessels as other reasons for his voluntary sale, complicating his son’s expedient and confected anti-EU narrative. Continue reading...

With bad news on jobs, and ongoing risk from Covid-19, hopes for a V-shaped recovery look misplacedHow quickly can Britain’s economy rebound after the pandemic? Last week, the chancellor, Rishi Sunak set out an upbeat recovery vision, with a plan to get restaurants buzzing again. It was perhaps the swiftest gear change in years: just days earlier, restaurants in England were banned from opening. In Leicester, they remain closed. But from August the government will pay 50% of diners’ bills in an attempt to get them eating out.This week the economic outlook is likely to be much less appetising. On Tuesday, the tax and spending watchdog, the Office for Budget Responsibility, will publish a report on the path ahead for Britain. It probably won’t make for uplifting reading.Footfall on high streets is at half last year’s levels, even after non-essential shops, pubs and restaurants reopened Continue reading...

New research from Sweden reveals that good genes don’t make you a success but family money, or marrying into it, does

Crashing out of the EU would put paid to the prime minister’s ambitions to become a big-spending RooseveltDoes Boris Johnson want to go down in history – or just down and down? At present all the signs are that, if he goes on in the direction he and his frightful lieutenant Dominic Cummings are heading, he will go down (and down and down) as having run the most disastrous government most of us can remember. Moreover, he will be forgiven by neither this generation nor the next.We shall come back to that. First we must consider the big news of the moment, Chancellor Rishi Sunak’s summer statement – a mini-budget whose scope necessitates a redefinition of mini-budgets. It was breathtakingly huge, but necessary. Inevitably, there were gaps, where an effort to rescue jobs and compensate for the damage caused by a government-imposed depression helped many victims but neglected some. But, on balance, a rightwing chancellor and a Treasury whose traditional raison d’être is to keep an eye on spending levels have together risen to the occasion, with a little help from our “build, build, build … spend, spend, spend … end austerity” prime minister. Continue reading...

Job losses, homelessness, school closures and acute hunger set to rise dramatically without urgent support, Christian Aid warns

The World Bank’s flawed and misunderstood poverty benchmark has led to a deceptively positive picture and dangerous complacency

Rolling coverage of the latest economic and financial news as England’s leisure businesses prepare to re-open

Small business owners want to know when – or if – a recovery will take place. I do too – and I have seven key metricsIs the pandemic over? Not even close. Cases are rising and no one really knows if, when or how the dreaded “second wave” will occur. There are lots of economists, analysts and experts pontificating on the future of the US economy. Don’t believe any of them. No one really knows.Related: For small business owners, the pandemic proves it: millennials were right Continue reading...

Grim day in UK retail as Boots announces plans to cut 4,000 jobs and John Lewis Partnership shuts eight stores

Chancellor failed to offer financial help to nurseries in summer statement

Thinktank predicts budget deficit of £350bn this year and tax rises from 2022

Thinktank fears deficit will go higher, new job retention plan is wasteful, and questions stamp duty and VAT cutsBritain is in the middle of an unprecedented crisis but some things never change. On the day after a budget or a mini-budget, the chancellor of the exchequer can expect to have what he considers a flawless package picked apart by the Institute for Fiscal Studies.Rishi Sunak’s summer statement was not accompanied by new forecasts for the economy and the public finances but there was still plenty for the thinktank that specialises in all things to do with tax, spending and budget deficits to get its teeth into. Continue reading...

Now that it has its own financial hubs on the mainland, Beijing may be prepared to risk the fate of its golden gooseLast week, the Chinese government passed a broad national security law criminalising dissent in Hong Kong. While the law has already had a chilling effect on protests, the consequences for Hong Kong’s economy are unclear. Since 1 July, Hong Kong’s stock market has climbed. Some foreign businessmen in Hong Kong have dismissed the law’s potential effect on business. This incredulity is unsurprising: for decades Hong Kong has thrived as a gateway for international capital into and out of China. Surely Beijing wouldn’t kill its own “golden goose”?But investors and businessmen, used to the unencumbered movement of capital, may have lost sight of recent changes. Contemporary China is different today to just 10 years ago, let alone to the 1990s when Hong Kong was handed over by the British. Now a global power that commands one-sixth of the world’s GDP and is increasingly authoritarian, it is approaching Hong Kong with a new rationale that is both political and economic.If Hong Kong loses its legal and economic institutions, investors can skip straight to Shanghai, Shenzhen and BeijingRelated: China's grip on Hong Kong eroding its status as financial hub, investors believeJames Lin is an assistant professor of international studies and history at the University of Washington Continue reading...

Victoria records 165 new cases, with 30 linked to outbreaks and 135 under investigation. Follow live news and updates

Economic experts, unions and Labour sound warning after summer statementRishi Sunak has been warned he will need to act far more decisively to prevent mass unemployment this autumn after unveiling a £30bn mini budget designed to tempt nervous consumers out their Covid-19 hibernation.The chancellor announced a short-term cut in VAT for hospitality and tourism and an August “eat out to help out” discount scheme as the government sought to send out a message to the public that it was safe to leave their homes and enjoy themselves.Related: Summer statement 2020: the chancellor's key points at a glanceThe coronavirus lockdown has prompted some of the UK’s most prominent companies to announce large-scale job losses. The aviation, automotive and retail sectors have been among the worst hit, as businesses adjust to dramatically reduced revenue projections. Continue reading...

TUC and thinktanks call for immediate action to stem rising tide of redundancies

Firms ‘heartbroken’ as alcohol sales are excluded from tax relief in summer statementThousands of local pubs are at risk of closure after alcohol was excluded from government measures aimed at stimulating the hospitality and leisure sectors across the UK, the industry has warned.Restaurants, cafes, hotels and attractions such as zoos and cinemas all stand to gain from a six-month cut in VAT from 20% to 5%, which the government said would cost £4.1bn and help 150,000 businesses. The reduction in sales tax will apply to food, accommodation and attractions.Related: Summer statement 2020: the chancellor's key points at a glancePretty disappointing nothing for wet led pubs today. Anyone else think so? Continue reading...

Sunak wins plaudits for taking drastic measures to revive UK’s pandemic-stricken economy

Summer statement’s focus on energy efficiency welcomed but disappointment that no boost for renewables

Labour demand and supply hit by lockdown, particularly in retail and hospitality

DBC Reed, Alan Healey and Rae Street respond to an article by Polly Toynbee. Plus Margaret Squires on the truth of the magic money tree and David Napier on Rishi Sunak’s ‘smart’ mugAs a long-term supporter of the oldest and most radical form of wealth tax, the Henry George land tax (which Andy Burnham was trying to get the Labour party behind 10 years ago), I can claim to have some experience with popular prejudices in favour of large holdings of wealth that Polly Toynbee wrestles with in her excellent article (To save the arts and all else we hold dear, a wealth tax now seems the only answer, 6 July).Most people think wealth is a good idea and just needs sharing out in their direction. The most popular method is increases in house prices that you don’t have to work for. But house prices rises simply spread poverty, as the high rents and property values ruin capitalism by leaving people who have to work without the money to buy the totality of production they are engaged in. Continue reading...

Chancellor delivers summer statement in the Commons on UK economic recovery from pandemic

Scientists claim widespread conservation can bring rewards if right policies are followedNearly a third of the world’s oceans and land area could be placed under environmental protections without harming the global economy, and even produce bumper economic benefits if the right policies were followed, according to a global assessment.Ecosystems around the world are collapsing or hovering on the brink of disaster, with a million species threatened with extinction. But if at least 30% of the planet’s land and oceans were subject to conservation efforts, that mass extinction could be avoided and vital habitats restored, scientists estimate. Continue reading...

Chancellor announces £9bn reward for firms bringing back furloughed workers

Confusion over NSW-Victoria border closure as the state’s northern border closes for the first time in a century. Follow the latest news

Ahead of Rishi Sunak’s statement we look at public finances, economic growth, jobs, retail and the housing marketRishi Sunak is preparing to deliver his set-piece tax and spending update on Wednesday against the backdrop of a deep recession and the threat of a sharp rise in unemployment.Here are five key charts that will underpin the policymaking behind the chancellor’s announcement. Continue reading...

Chancellor expected to announce comprehensive tax and spending package

Six-month placements aim to help those hardest hit by the Covid-19 lockdown

Goal to eradicate poverty by 2030 ‘completely off track’, says outgoing special rapporteur, with Covid-19 likely to impoverish millions more

Gloomy forecast comes 10 days before EU leaders meet to discuss €750bn recovery planEurope is facing a deeper-than expected recession in 2020, while the UK economy is forecast to shrink by almost 10% this year, the European commission has said.Brussels is forecasting an 8.3% drop in GDP for the 27 economies of the European Union in 2020 followed by a 5.8% rebound in 2021. The eurozone is forecast to contract by 8.7% this year, with 6.1% growth in 2021. Both are worse declines and weaker rebounds than the historic downturn that the commission had forecast in May. Continue reading...

OECD says unemployment is likely to triple even if a second wave is avoided

Proposed £3bn environmental funding for UK contrasts with Germany’s £36bn investmentEnvironmental groups have reacted with disappointment to details of the government’s Covid-19 economic rescue package released by the Treasury.On Monday night the government announced some details of the announcement expected on Wednesday, including a £1bn energy efficiency upgrade for public buildings and insulation for some social tenants, who could save up to £200 a year on their energy bills as a result. A Green Jobs Challenge fund will provide £40m for green charities working on improving England’s landscapes, with the money to be spent on projects such as tree-planting and cleaning up rivers. A further £50m will go to innovative approaches to reducing greenhouse gas emissions from social housing.Related: Invest in the green economy and we'll recover from the Covid-19 crisis | Joseph Stiglitz Continue reading...

The effects of this economic downturn will likely be felt for years as people born between 1997 and 2012 try to start careers and build savings with an economy that was struck to rubbleGraduation was supposed to be one of the best moments of Stephany Torres’s life.As a first-generation student at the University of California Los Angeles, Torres was looking forward to celebrating her new degree with friends and family. After graduation, she was supposed to have an internship at a law firm in Los Angeles, making new connections and getting more insight into the type of law she wants to study. Continue reading...

Pandemic accelerates developments in sustainability from businesses and consumersThe queues were “absolutely crazy”, says Gavin Hudson, the owner of the cycle repair startup Butternut Bikes. As lockdown descended he began fixing old bikes in the parking lot of a Methodist church in north London, before moving his services to a furloughed pub in Crouch End. However, the surge in demand for cycle repairs meant the pop-up was soon able to afford a permanent address.“Some people come in and tell us they haven’t been on a bike in 10 years,” Hudson says. “They are dragging all kinds of bikes, covered in cobwebs, out from the shed to get back on the roads. It’s great. I think it’s really true that there are few problems in society today that can’t be made better by getting people walking and cycling more.”Related: UK public 'supports green recovery from coronavirus crisis'The number of people considering the purchase of an electric vehicle is rising Continue reading...

Exclusive: Talks may result in ‘lighter touch approach’ than with other commercial loans

To prevent inequality from increasing, we need a recovery plan with care at its heartIt is several months since the public was alerted to stark differences in the level of threat posed by Covid-19 according to their age, sex and underlying health. As the pandemic progressed, it became clearer that people of colour and those on lower incomes faced a heightened risk. Men in the UK have died from Covid-19 at almost twice the rate of women, with the most pronounced difference in older age groups. Among the working population, male security guards and taxi drivers have had the highest death rates.The economic and social effects of the pandemic follow a different pattern. The lockdown meant thousands of women and children were trapped in homes where they were vulnerable to abuse, while women were more likely to lose their jobs as well as carrying a disproportionate share of the domestic burden created by the closure of schools and nurseries. They are also overrepresented in the caring jobs where pressure has been most intense: 82% of adult social care jobs are held by women, as are 89% of nursing and health visitor posts. Continue reading...

Like Brown in 2005, Sunak plans to help the vulnerable – but the similarities end thereJust like Gordon Brown 15 years ago, Rishi Sunak has spent June working on an aid package. As was the case in 2005, details of the chancellor’s plan to help the vulnerable will be announced on 8 July.There, though, the similarity ends. Sunak’s focus is the UK economy and in particular those about to lose their jobs as a result of the Covid-19 pandemic. The doubling of work coaches in job centres tells its own story: the government knows unemployment will soar in the coming months. Continue reading...

Post Covid-19, our priority should be to build resilient systems explicitly designed to withstand worst-case scenariosEven before the pandemic came along, the world economy faced a set of deepening crises: a climate emergency, extreme inequality and huge disruption to the world of work, with robots and AI systems replacing humans.Conventional economic theories have had little to offer. On the contrary, they have acted like a cage around our thinking, vetoing a range of progressive policy ideas as unaffordable, counter-productive, incompatible with free markets, and so on. Worse than that, economics has led us, in a subtle, insidious way, to internalise a set of values and ways of seeing the world that prevents us even imagining various forms of radical change. Continue reading...