The former Australian prime minister Malcolm Turnbull says his country’s trade deal with the EU is ‘not one Britain would want, frankly’As the 31 December deadline for a Brexit trade deal with the EU looms, Boris Johnson has again warned the UK to stand by for the possibility of an “Australia-style” deal. It sounds like something two countries that rely on international trade might reasonably want to embark on, but what would it actually mean?Now is the time for the public and businesses to get ready for the Australian option on January 1st. pic.twitter.com/lLJfmIy9XI“Be careful what you wish for. Australia’s relationship with the EU is not one, from a trade point of view, that Britain would want.”
by Lisa O'Carroll Brexit correspondent on (#5BFQ5)
The UK and EU are still far apart on key issues – will Britain really crash out in three weeks?Boris Johnson and the European commission president, Ursula von der Leyen, met in person over a three-hour scallop and turbot dinner to try to unlock the Brexit trade negotiations deadlock. As expected, both sides agreed to continue talking – but they agreed that the gaps between their positions remain wide. Continue reading...
Analysis: now does not seem a good moment for the PM to plunge Britain into a last-ditch battle with the EUBrexit deal or no Brexit deal, the UK faces a rocky few months as businesses, left dangling until the last minute, find out what kind of relationship the UK is going to have with the EU from 1 January.All eyes are on the last-minute talks between Boris Johnson’s team at No 10 and their counterparts in Brussels. Not much else matters ahead of the climax on Sunday. Continue reading...
GDP grew just 0.4% in October with economy expected to contract again due to November lockdownsBritain’s economic recovery from the first wave of Covid-19 had almost come to a standstill as fresh restrictions affecting the hospitality sector were imposed in the autumn, according to the latest official data.Figures from the Office for National Statistics showed that national output – or gross domestic product – rose by 0.4% in October. Continue reading...
Analysis: While there are similarities with the 2015 clash between Athens and Brussels, there are also key differencesIt was a marathon even by the European Union’s standards. For hours, leaders of countries in the eurozone argued, haggled and shouted at each other. After breaks for refreshment, they argued, haggled and shouted some more. Rumours swirled around the packed media room. Eventually, as Brussels was waking to a new morning, the 17-hour overnight summit staggered to an end.All participants were in agreement that victory had been snatched from the jaws of defeat. Despite the brinkmanship, a deal was eventually done – as seasoned EU watchers had always said it would be, even when all hope seemed lost. Continue reading...
In a holiday shopping season with rampant rates of Covid-19 infection, we must protect frontline workers before it’s too lateThere are few scenes more sordid than the surging wealth gains of the world’s billionaire class during an unprecedented pandemic when millions have lost their lives, health, and livelihoods.As the US heads into another wave of Covid-19 infections, the wealth of 650 American billionaires has increased by over $1tn since mid-March, the beginning of the pandemic lockdowns.The contrast between billionaires making no sacrifice and their workers making the ultimate sacrifice is unethical and corruptRelated: Amazon workers are fighting for their rights. This holiday season, think of them | David Adler and James SchneiderChuck Collins directs the program on inequality at the Institute for Policy Studies, where Omar Ocampo is an inequality researcher. They are co-authors of the report Billionaire Wealth vs Community Health: Protecting Essential Workers from Pandemic Profiteers, which was produced by Bargaining for the Common Good, the Institute for Policy Studies, and United for Respect Continue reading...
The pandemic has worsened existing economic hardships for young adults – and taken a serious toll on mental healthDavid Little of Tampa, Florida, obtained his master’s degree in architecture and was excitedly waiting for his girlfriend to finish her degree before the couple moved to Philadelphia. The coronavirus pandemic halted those plans as they both struggled to find work matching their education.“I have no idea what I’m doing right now. My plans were completely ruined by all of this,” said Little, 26, who was working as a valet before he was laid off in April. “There are no jobs out there even nationwide for entry level architecture grads, there is no real end in sight, and with my girlfriend not having any income because she’s also in architecture, it’s causing tension that wouldn’t normally be there.”Related: Biden pledges '100m shots in 100 days' as he introduces health teamIn the US, the National Suicide Prevention Lifeline is at 800-273-8255 or chat for support. You can also text HOME to 741741 to connect with a crisis text line counselor. In the UK and Ireland, Samaritans can be contacted on 116 123 or email jo@samaritans.org or jo@samaritans.ie. In Australia, the crisis support service Lifeline is 13 11 14. Other international helplines can be found at www.befrienders.org Continue reading...
by Richard Partington Economics correspondent on (#5BDAY)
Tax experts and economists outline ‘fairest, most efficient’ way to repair public finances and quickly raise £260bnThe government has been urged to launch a one-off wealth tax on millionaire households to raise up to £260bn in response to the coronavirus pandemic, as the crisis damages Britain’s public finances and exacerbates inequality.The Wealth Tax Commission – a group of leading tax experts and economists brought together by the London School of Economics and Warwick University to examine the case for a levy on assets – said targeting the richest in society would be the fairest and most efficient way to raise taxes in response to the pandemic.How would a wealth tax work?Related: Make UK super-rich pay one-off wealth tax, says Fabian Society Continue reading...
Relocation to Amsterdam will give better access to European markets ‘regardless of Brexit outcome’Commonwealth Bank of Australia has said it will move its European headquarters from London to Amsterdam in the coming months after Britain’s departure from the EU.The departure comes despite declarations by the UK’s prime minister, Boris Johnson, that the British economy would “thrive” with an “Australian-style” trade deal with the EU, which many describe as a euphemism for a no-deal crash out of the bloc. Continue reading...
by Robert Booth Social affairs correspondent on (#5BB0S)
Dame Louise Casey makes plea as report shows 1 million people in UK struggle for foodFormer government adviser Dame Louise Casey has urged Boris Johnson to deliver a “Beveridge moment” and overhaul welfare, as she launched an urgent appeal for public donations of food and money to get the poorest through winter.Harking back to Sir William Beveridge’s 1942 report that led to the founding of the welfare state, Casey said an equivalent to the Sage expert panel of scientists advising on the response to Covid-19 was needed to tackle sharp rises in poverty and to “work out how the legacy of this pandemic isn’t the quadrupling of food banks”.Related: Firm given free school meals voucher contract despite ‘limited evidence’ of capability Continue reading...
by Richard Partington Economics correspondent on (#5BB0Q)
Business leaders and unions spell out threat to food, farming and manufacturingBusiness leaders and trade unions have urged the government to strike a last-minute Brexit agreement as they warned that the UK economy is ill equipped for a disruptive no-deal scenario.With talks between Boris Johnson’s government and Brussels on a knife-edge, the warnings from leaders in business and industry came as the pound slid on the global currency markets on fears that talks could end this week without a deal. Continue reading...
The UK, US and EU plan to spend to create growth – but they must be realistic about costsEncouraging news about more effective antiviral treatments and promising vaccines is fuelling cautious optimism that rich countries, at least, could tame the Covid-19 pandemic by the end of 2021. For now, though, as a brutal second wave cascades around the world, broad and robust relief remains essential. Governments should allow public debt to rise further to mitigate the catastrophe, even if there are longer-term costs. But where will new growth, already tepid in advanced economies before the pandemic, come from?Macroeconomists of all stripes broadly agree that productive infrastructure spending is welcome after a deep recession. I have long shared that view, at least for genuinely productive projects. Yet infrastructure spending in advanced economies has been declining intermittently for decades. (China, which is at a very different stage of development, is another story entirely.) The US, for example, spent only 2.3% of GDP ($441bn, or £331bn)) on transportation and water infrastructure in 2017, a lower share than at any time since the mid-1950s.Related: Crossrail work to continue after £825m government loan Continue reading...
Millions of self-employed workers are set to lose their benefits after Christmas and lawmakers have yet to find a solutionSuzy Young, an artist in Winterport, Maine, cheered when Congress enacted an innovative program that provided unemployment benefits to artists, freelancers and the self-employed after Covid-19 hit the US. But like many others, Young – whose art sales have plunged in recent months – is angry that this pandemic aid program is due to expire the day after Christmas.Related: Joe Biden's economic team beats Trump's goon squad – but it faces a steep challenge | Robert ReichWe need to help people out here from starving. We need Congress to hear us, we’re in the worst place Continue reading...
Inflation and policy errors would put an end to any consumer spending spreeLondon’s blue-chip FTSE 100 index closed at a nine-month high on Friday, finally recouping all the ground lost since the UK went into lockdown in March. The City is not alone. In New York, shares are at levels never seen before. As someone once said: they think it’s all over.And in a sense it is. Current share prices do not reflect the current state of the major global economies, which, outside of China and a few other Asian countries, is grim. Rather, they are looking ahead and trying to predict what life will be like in six months or a year’s time.Related: OECD: UK economic recovery will lag behind all rivals bar ArgentinaThe pent-up demand story is already evident in the housing market Continue reading...
Coronavirus vaccines promise a rapid economic rebound, but many of the 2.6 million thrown out of work have a grim futureWhen the prime minister announced, in the last week of October, a second national lockdown in England, the best thing to do, it turns out, was to buy shares in pub companies, airlines, gyms, retailers and restaurant operators – in other words, those businesses that were about to get clobbered again.No stock-picking skill was required. Everything has gone up. Here’s a sample of representative names: JD Wetherspoon up 37%; easyJet 88%; the Gym Group 64%; Marks & Spencer 60%; and Restaurant Group, owner of Wagamama, 83%. Continue reading...
Even Adam Smith, whose writings have been misused by rightwingers, believed there was an ethical dimension to sellingMark Carney stuck it to laissez-faire capitalists in his Reith lecture last week. There has always been a moral dimension to selling stuff, the former Bank of England governor told any listening free marketers. Their own bible would tell them so.The bible in question was written by Adam Smith, the 18th-century Scottish moral philosopher and economist whose phrase “the invisible hand” is trotted out by every pro-market evangelist keen to justify the idea that governments should let businesses get on with selling, unfettered except by the most basic regulations.Carney believes forcing companies to be transparent gives shareholders the ammunition to impose moral obligations on the managers of their assets Continue reading...
The first female US Treasury secretary must tackle the damage wreaked by the pandemic while keeping Wall Street happyOf all the 78 US Treasury secretaries since Alexander Hamilton first took up the office in 1789, few have faced an in-tray piled quite so high as the one that will greet the first woman in the job: Janet Yellen.The choice of the Brooklyn-born doctor’s daughter to succeed Steve Mnuchin was a statement of intent by president-elect Joe Biden. Where many of her predecessors have been scions of Wall Street, Yellen’s background is in economics and public policy, and she has made it clear that her priorities are with Americans struggling to get by rather than with investment bankers. “There is a huge amount of suffering out there,” she said in September as she urged Congress to agree a new stimulus package.The appointment was probably one of the most well received in the history of the US Treasury Continue reading...
Janet Yellen and fellow leaders have called for more government intervention and a stronger safety netJoe Biden’s incoming economic team is filled with firsts. The lineup that the incoming president introduced this week will, if approved, place women and people of color at the controls of the US economy during one of the darkest periods in recent history.While the team is historic, it also faces a historic challenge. Unemployment has fallen dramatically since the early days of the coronavirus pandemic. It fell to 6.7% in November. But it remains 3.2 percentage points above its level before Covid-19 struck, jobs growth is slowing sharply, long-term unemployment is growing and people of color are still suffering hardship at far higher levels than white Americans.Related: 'Help is on the way': Biden introduces economic team as pandemic ragesImagine a world where Mitch McConnell is not in the Senate. Now let's go make that happen. https://t.co/iOwO3GgDf1 Continue reading...
While he was at Sussex University John Weeks did much to bring the concept of the informal sector to world attention. At the time, it was limited to a single study – of illegal brewing in Ghana – by Keith Hart. In the ILO Kenya Report on Employment, Incomes and Equality (1972), Weeks contrasted the popular view of informal sector activities as “primarily those of petty traders, street hawkers, shoeshine boys and other groups underemployed” on the streets of the big towns with the evidence he had found. The bulk of employment in the informal sector was economically efficient and profit-making, though small in scale and limited by simple technologies. Carpenters, masons, tailors and other tradesmen, along with cooks and taxi drivers, provided goods and services for a large though often poor section of the population.“From the vantage point of central Nairobi, with its gleaming skyscrapers, the dwellings and commercial structures of the informal sector look indeed like hovels,” he wrote. “For observers surrounded by imported steel, glass and concrete, it requires a leap of the imagination and considerable openness of mind to perceive the informal sector as a sector of thriving activity and a source of Kenya’s future wealth.” Continue reading...
Analysis: exasperation as fates and fortunes of large industries reliant on efforts to expand much smaller oneAn island nation can be forgiven for a preoccupation with fish. But with less than a month until the UK’s trade with the EU moves to new rules – whether under a deal or no-deal scenario – it is possible that continuing attempts to gain a win for British fishing industry could scupper much larger parts of the UK economy.Fishing is a politically charged issue on both sides of the Channel. Boris Johnson has talked of the UK becoming “an independent coastal state” and exploiting the “recapture of our spectacular natural marine wealth”, while Michel Barnier, the EU’s chief negotiator, has warned the UK against using fish as a “bargaining chip” (apparently not a pun on Britain’s national dish). Meanwhile, far bigger industries in the UK economy are left waiting. Continue reading...
President-elect says he won’t sign any new agreements until US is more competitiveBritain’s hopes of securing an early trade deal with the US have been dashed by a warning from Joe Biden, the president-elect, that America will not sign a trade deal with anyone until the US has sorted out its competitiveness.Britain had been closing in on a trade deal with the administration of Donald Trump, a fierce opponent of the European Union, but Biden has said in a New York Times interview that his priorities will be to improve investment in US manufacturing and the protection of American workers. Continue reading...
by Richard Partington Economics correspondent on (#5B2NJ)
Thinktank says Brexit represents double threat to UK growthThe UK’s economic recovery from the coronavirus pandemic will lag behind every other major economy apart from Argentina, according to the Organisation for Economic Cooperation and Development.Warning the UK and other countries to resist cutting government spending in order to ensure a stronger rebound, the club of 37 rich nations said severe risks to growth and jobs still remained despite the prospect of a vaccine being deployed earlier than first anticipated. Continue reading...
With Hungary and Poland vetoing the EU budget and Covid recovery fund, the case for issuing perpetual bonds has never been strongerI have written a lot in the past about the desirability of the EU issuing perpetual bonds. But today I am proposing that individual member states should do so.Right now, it would be impossible for the EU to issue perpetual bonds, because the member states are too divided. Poland and Hungary have vetoed the next EU budget and the Covid-19 recovery fund, and the so-called Frugal Five (Austria, Denmark, Finland, the Netherlands and Sweden) are more interested in saving money than in contributing to the common good. Investors will buy perpetual bonds only from an entity that they believe will continue to exist for the foreseeable future. That was true of Britain in the 18th century (when it issued consols) and of the US in the 19th century (when it consolidated individual states’ debt). Sadly, it is not true of the EU today.Related: Brexit: what will change for Britons in the EU on 1 January? Continue reading...
Markets respond as manufacturing in China and South Korea grows at fastest pace in a decadeHopes that the world will bounce back from the ravages of coronavirus in the new year have been buoyed by strong growth in output from Asia’s huge manufacturing centres, led by an accelerating post-pandemic boom in China.China’s factory activity expanded at the fastest pace in a decade in November, a closely watched survey showed on Tuesday, in the latest sign that the world’s second-largest economy is recovering to pre-pandemic levels.Related: Why China's dramatic economic recovery might not add upRelated: How the Covid vaccine success can fuel a sustainable UK economic recovery Continue reading...
The question is not whether the state picks losers, but whether government failure is better – or worse – than the market failure it seeks to correctRichard Nixon, a Republican president, apparently declared in 1971 that “we are all Keynesians now”. Mr Nixon seemed to admit that a serious shift in thought on the right of politics had occurred. But the decades of Thatcherism and Reaganism proved it to be a rhetorical move, not an ideological one. Rishi Sunak, the Conservative chancellor, attempted the same sleight of hand in last week’s budget.Mr Sunak unveiled a national infrastructure bank and a strategy to tilt spending towards the north. He also repeated his March promise of £100bn in public investment. While the money, reorientation and the institution are welcome, they are less substantial and radical in scope than that prescribed by mainstream economics. This will lead to predictably poor outcomes for employment and GDP in the UK. Continue reading...
Doug Simpson, Dr Nicholas Falk and Susan Zagor respond to an article by Martin Kettle on the polarisation of politics. Plus Terry Ward on Labour’s source of inspirationPerhaps the liberal democratic managed capitalism desired by Martin Kettle did exist in the 1950s, including the new welfare state in the UK (The toxic polarisation of our politics can be reversed, but it will take humility, 26 November). It didn’t prove robust – the Conservatives moved to the right and embraced free-market capitalism; regulation exists but is weak and largely captured by “experts” from the relevant market sectors.It is difficult to see how the idealised consensus can be created today, especially within one state. Multinational companies moving activities to poorly regulated locations and tax havens means that regulation must be multinational. The EU is attempting to regulate and tax tech and online firms, cooperation with which the UK has abandoned. The replacement of Donald Trump by Joe Biden doesn’t mean that economic nationalism will go out of fashion. Continue reading...
Stamp duty cut contributes to property boom but Britons cautious about credit card debtUK mortgage approvals reached their highest level in 13 years last month as tighter Covid-19 restrictions failed to dent strong demand for home loans.Figures from the Bank of England showed there were 97,500 loans approved by lenders in October – the highest figure since September 2007, the month at the start of the financial crisis when queues formed outside branches of Northern Rock. Continue reading...
After Donald Trump, the US should work with others on the climate crisis and economic stimulusLike the Joni Mitchell song puts it, “You don’t know what you’ve got ’til it’s gone.” For example, classroom education was often deemed boring by students and obsolete by tech visionaries. Then, Covid-19 made it difficult or impossible to meet in person. Now we yearn for in-class experiences.Perhaps the same is true of international economic cooperation. Multilateral institutions such as the World Trade Organization, the International Monetary Fund, and the UN agencies have long been unpopular among much of the public for supposedly encroaching on national sovereignty. But then Donald Trump came along and made international cooperation wellnigh impossible. While other G20 leaders discussed pandemic preparedness at their recently concluded summit, for example, Trump evidently tweeted more false accusations of electoral fraud and then played golf.Related: The US is on ‘inequality autopilot’ – how can Biden's treasury pick help change course? Continue reading...
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...