The public doesn't understand how economic growth is measured, let alone enjoy much of it. So why is it central to this election?Great news this morning!" beamed Rishi Sunak on Wednesday. Not every release from the Office for National Statistics gets its own prime ministerial post on Instagram, but inflation falling to 2% was, the Tory leader claimed, a personal victory. When he moved into No 10, it was 11%, he reminded voters. But we took bold action, we stuck to a clear plan and that's why the economy has turned a corner."Not so fast, Mr Sunak. The prices of food and petrol remain about 25% higher than two years ago. More than one in five households say that they are strugglingto pay their bills or to make ends meet. The cost of living crisis was always much bigger than a number on the consumer price index: it was a catch-all term, taking in everything from a punitive welfare system and poorly paid and insecure work to rising expenses. Millions of households were in a cost of living crisis long before it made the front pages; long after the term falls out of fashion, they will still be in one. Continue reading...

Leading economists and policy experts believe the ambitious reforms proposed by Keir Starmer and Rachel Reeves will help grow the economy.

The cost of gas, electricity and garden furniture has plunged ... but cocoa and vets' services cost a lot more Labour says pressure on family finances still acute as inflation falls to 2%The UK's annual inflation rate fell to 2% in May, in line with the forecasts of City economists.The Office for National Statistics compiles the overall reading using the consumer prices index but also logs prices for individual goods and services. Here we look at how the cost of many of those everyday items has changed over the past year. Continue reading...

Inflation returns to target for first time since July 2021; breakfast cereal, crisps, vegetables become cheaperPrices for recreational and cultural goods and services rose at an annual rate of 4.1% in the year to May, down from 4.6%, today's inflation figures showed.Prices of pets and related products, and books fell between April and May this year, compared with a monthly rise a year ago. Prices of package holidays and cultural services rose this year by less than a year ago. Continue reading...

Rachel Reeves warns cost of living crisis is not over, as inflation hits official target for first time in three years

It will take time for voters to forget the financial toll from the highest inflation in four decades - and time is not on the PM's side

Largest annual rise since records began in 1987 sees forecast of average 1,660 extra debt amid cost of living crisisUK households are expected to rack up extra unsecured debts of more than 1,600 this year, including on loans and credit cards, as the cost of living crisis continues to bite, according to a TUC analysis.The TUC said its analysis showed that unsecured household debt - including loans and credit cards but excluding mortgages and, for this exercise, student loans - was on course to increase by 9.4%, or 1,660, in real terms on average per household this year. Continue reading...

Exclusive: Changes early in expected new government intended to stop repeat of catastrophic Truss mini-budgetLabour has challenged the Conservatives to match its commitment to strengthen the economic watchdog within the first 100 days of government.Rachel Reeves, the shadow chancellor, has pledged to introduce legislation giving the Office for Budget Responsibility greater powers in Labour's first king's speech. Continue reading...

Institute for Fiscal Studies praised Conservatives' ambition but said by some measures gap had widenedProgress towards a series of levelling up goals set by the UK government has been glacial", and achieving them by the target date of 2030 will require a big increase in resources for struggling areas, a leading thinktank has said.The Institute for Fiscal Studies (IFS) said that, on many measures, regional inequality had widened and the UK had gone into reverse.The share of pupils in England meeting expected standards at the end of primary school dropped from 65% in 2018-19 to 60% in June 2023, against a target of 90% by 2030. In only 10 English local authorities - all in London - did at least 70% of 11-year-olds meet this target.The total number of further education and skills courses completed in England fell by 14% between 2018-19 and 2022-23. In the lowest skilled areas, the decline was almost 20%. The goal for 2030 is to have 200,000 more people successfully completing high-quality skills training annually, driven by 80,000 more people completing courses in the lowest skilled areas.A 21-percentage-point gap in the average employment rate between the best and worst-performing local authority areas in the UK - the widest it has been since at least 2005. The aim is to have rising pay, employment and productivity in every area of the UK, and a smaller gap between the top performing areas and others.The Conservatives' aim is for local transport connectivity across England to be significantly closer to the standards of London, but the gap between the use of public transport in London (39% of journeys) and in the rest of the country (7%) during 2022-23 was at its second-widest level since 2002-03, as passenger numbers failed to recover to pre-pandemic levels. Continue reading...

Rolling coverage of the latest economic and financial newsIceland's chairman, Richard Walker, says Kantar are correct that the cost of living squeeze isn't over - before squeezing in a plug for his supermarket:Back in January, Walker (a former Conservative supporter) announced he was backing Labour, saying Keir Starmer understood how the cost of living crisis has put an unbearable strain" on families. Continue reading...

Bad weather makes consumers trim supermarket shop and rethink summer purchases despite slower food price rises

Institute for Public Policy Research urges Labour and Conservatives to reverse planned cutsInvestment in the UK has trailed other G7 countries including the US and Germany since the mid-1990s, according to a report that urges Labour and the Conservatives to reverse planned cuts to investment or risk long-term damage to economic growth.The Institute for Public Policy Research (IPPR) thinktank found the UK was bottom of the G7 league for investment in 24 out of the last 30 years, using figures from the Organisation for Economic Co-operation and Development (OECD). Continue reading...

The UK can't continue with policies that have produced a productivity slump and record amounts of insecure workIn the manifestos of both the Conservative and the Labour parties, there is a commitment to implementing the NHS long-term workforce plan to ensure that the country will be able to populate the health service with UK-trained doctors and nurses. However, neither of the parties are suggesting that they will fund the 30bn it would cost to employ the tens of thousands of staff they say they will train. Instead, voters are expected to believe that the confidence fairy will turn up when the next government arrives - and businesses will invest, leading to economic growth.It is magical thinking to believe that, without actually doing anything, private spending in Britain will be stimulated to such an extent that it will more than compensate for the anticipated public sector cutsthat depress it. Continue reading...

Rolling coverage of the latest economic and financial news

Authority has debts of 1.8bn after years of local government funding cuts and has failed to find an auditorWarrington council's inability to find an auditor to sign off its accounts has led the credit rating agency Moody's to withdraw its monitoring of the authority, amid mounting concern about the broader crisis in local government funding.In a statement, Warrington borough council said Moody's Investors Service was no longer providing it with a credit rating, a crucial metric used by potential lenders to assess a borrower's creditworthiness. Continue reading...

Governments should use fiscal policies to atone for technology-related carbon emissions, urges report

Across the EU and US, strong anti-incumbency sentiment shows voters in west are unhappy with direction of travel

For 45 years, Britain has been blighted by Conservative ideologies that promised a path to prosperity, but achieved nothing of the sortThe Tory party in three weeks' time promises to be in a more ruinous, even life-threatening position than Labour was in the aftermath of the 2019 general election. Labour at least had a route to recovery after an epic defeat - to blend mainstream and centre-left opinion around a pragmatic programme for government, to eliminate all traces of antisemitism and to marginalise its toxic extremists. The question was whether its leadership, membership and trade union backers would have the capacity and want power sufficiently to pull it off. They have.Today's Tories and their blindly ideological press - which has had such an important role in reducing the party to the political carrion on which Nigel Farage's Reform now preys - has no such shared grasp of the task ahead. There is no longer a strong centre right existing as a coherent formation that could anchor such a recovery, or skilled politicians who might lead it. Instead, over this parliament the party has disintegrated into a babble of rightwing cults ranging from Trussite libertarians to National Conservatives" stressing the traditional virtues of family, faith and national community. The response to the desperate condition in which millions now live and the wider crises of stagnant productivity and investment, intensified by Brexit, is to blame immigration, working-class fecklessness and high taxes - even if those are moderate by European standards. Continue reading...

An improving economy was supposed to boost Sunak's campaign. But growth is flatlining, and there is little hope of an interest rate cut this weekConservative party members could be forgiven for believing that the economy had become their friend after the Liz Truss mini-budget debacle faded from view.Heading into 2024, there was an expectation of a return to growth. And the first three months of data showed that a bounceback from last year's recession was in train and that household disposable incomes were on the rise. Continue reading...

Keir Starmer and Rachel Reeves will need skill and stealth to make progress amid financial and institutional adversity How to reverse austerity? Scrap some of the tax-relief schemes worth 204bnEveryone wants the Labour leadership to be more honest with the electorate about how it will pay for policies designed to drive growth, tackle the climate crisis and improve living standards.Without a jolt to the economy from tens of billions of pounds of extra spending, they argue, growth will remain sloth-like, only inching ahead, and the Labour project will be doomed. Continue reading...

Concerns set out over supply of materials with military applications, and impact of subsidies on global marketChina's role in providing assistance to Russia in its war against Ukraine, and its harmful overcapacity" in the production of cheap goods, have been targeted by G7 leaders despite misgivings from Germany.On the second day of the annual summit, being held in Puglia under the Italian chair, the US drove home a 36-page communique that condemned Chinese subsidies for products such as solar panels and electric cars which it said were leading to global spillovers, market distortions and harmful overcapacity ... undermining our workers, industries, and economic resilience and security". Continue reading...

Rolling coverage of the latest economic and financial news

Senior economists have complained to BBC about Laura Kuenssberg comparing Whitehall spending to taking out a credit cardPoliticians have often struggled to explain how governments borrow money to fund their spending. The implications of higher or lower borrowing are also difficult to assess when the figures run into hundreds of billions of pounds.The temptation is to simplify the arguments by comparing the nation's finances to a household budget or a credit card. The shadow chancellor, Rachel Reeves, has talked about the Conservatives maxing out the credit card", and Keir Starmer and Rishi Sunak have also used the analogy. Continue reading...

Rolling coverage of the latest economic and financial news

Dutch hauliers say facilities at border posts where some trucks are held for up to 20 hours are inadequate

Labour would restore economic growth, and crack down on the waste and fraud that ran rampant under the Tories

Instead of cutting rates, central bank keeps them between 5.25% and 5.5%, where they have been for nearly a yearThe Federal Reserve held interest rates at a two-decade high on Wednesday, as it awaits more signs of inflation cooling.Officials at the US central bank expect to cut rates just once this year, according to projections released on Wednesday after their latest two-day meeting. Continue reading...

UK GDP failed to grow in April, as wet weather hit retailers and construction firms, while US inflation has slowed to 3.3%

Move, to be applied provisionally from July, would trigger duties of more than 2bn a year

GDP figures are not strong enough to help in general election but not weak enough to prompt interest rate cut

April growth figure 0% as Britain held back by poor retail and construction activity amid wet weather

Standards of living lag behind G7 countries US, France and Germany, as 50th summit approachesA failure to invest in the UK's main regional cities has held back economic growth and meant standards of living lag behind the US, France and Germany, according to a report before the 50th G7 summit in southern Italy this week.The Centre for Cities thinktank said the major difference between the UK and its main rivals was the low level of productivity in cities such as Manchester, Birmingham, Glasgow, Sheffield and Nottingham. Continue reading...

First cuts not expected until late summer or early autumn despite evidence jobs market is cooling

Latest UK labour market report shows signs of cooling, as jobless rate hits highest since 2021

International cooperation that allowed poorest countries to close gap with wealthiest has fractured, says report

Bank of England will want to delay rate reduction until level of pay increases eases

Thirteen leading businesswomen back Labour's shadow chancellor and her commitment to a genuine plan for economic growth'In our lifetimes, we have seen incredible progress for women - in business, politics and all across society. We have been part of that change, and been supported and inspired by women who went before us.There are, however, telling gaps in the area of economic policymaking. There has still been no woman governor of the Bank of England, or permanent secretary to the Treasury. Damningly, the post of chancellor of the exchequer is more than 800 years old - and every one has been a man. Continue reading...

Investors are rattled after far right parties make gains in European elections, while analysts at JP Morgan say a Labour win would support UK stocksThe euro continues to bob around a one-month low this morning, at $1.0763 against the US dollar:French banks are being hit by the political uncertainty created by Emmanuel Macron's snap election.Investors are assessing Macron's gamble in attempting to reassert his authority after voters shifted en masse to the Far-right during the EU elections, in both France and Germany. The euro has dropped sharply against the dollar, to $1.074, the lowest in a month amid the surprise turn of events. Continue reading...

Antonio Soprano says he was told to walk to a McDonald's for food as there was none at SevingtonAn Italian lorry driver has described the UK's new post-Brexit controls as a mess" after his lorry was held at a government-run border post for more than two days.Antonio Soprano, 62, who was stopped while bringing plants into the country from central Italy, said he was offered nothing to eat during his 55-hour ordeal and instead was told by border officials that he should walk to a McDonald's more than a mile away to get a meal. Continue reading...

Underlining his credentials as a creative thinker, the economist and Labour candidate for Swansea West offers a hopeful vision of the nation's future - spurning leftwing utopianism as well as tackling 14 years of creeping declineAs proposed national rallying cries go, perhaps this one lacks swagger. But its modesty is deliberate, as the economist and Observer columnist Torsten Bell's surprisingly hopeful new guide to halting this country's crumbling decline explains. Chest-beating political promises to put the Great back into Great Britain are, he writes, really just distracting from the real issue, which is that the British are exceptional all right - only not in a good way. We stand out from our pack of medium-sized, richer-than-average countries for our low productivity, chronic wage stagnation and American-style high inequality (but sadly without the higher growth of the US).We have truly world-beating housing costs, higher than any other Organisation for Economic Co-operation and Development (OECD) country but Finland, but magically still deliver less living space per capita in return than famously cramped New York; we boast, if that's the word, fewer hospital beds than all bar one other OECD nation. Continue reading...

TUC says only Costa Rica had similar increase in first quarter as ONS data expected to show further rise in AprilUnemployment is rising in the UK at the fastest pace among 38 of the world's richest countries, according to an analysis by the Trades Union Congress (TUC).In a release a day before official labour market figures are expected to show another increase in joblessness in Britain, the union body looked at data from the Organisation for Economic Cooperation and Development (OECD) covering the first three months of this year. Continue reading...

Experts believe Beijing will retaliate with measures that could hit European exports from cheese to cognacThe EU is expected to notify China that it will impose tariffs on electric vehicle imports this week, firing the starting gun on a potential summer trade war with Beijing.A formal pre-disclosure of tariffs could happen as early as Wednesday, after a lengthy investigation into China's state subsidies for its car manufacturing, which is predicted to conclude that massive support continues to be concentrated on the EV sector. Continue reading...

First men's summer tournament since pandemic plus favourable European kick-off times will boost long-struggling UK pubs and bars

Data shows that when Americans' preferred party is in the White House, they're more likely to boast of a booming economy - even if it's untrueWhen he delivered his State of the Union address in March, Joe Biden framed the state of the American economy as a true success story, pointing to the historically low unemployment rate and falling inflation as signs of the country's robust recovery from the early days of the coronavirus pandemic.I inherited an economy that was on the brink. Now, our economy is literally the envy of the world," the US president said. And it takes time, but the American people are beginning to feel it." Continue reading...

Tax bombshell' claims undid Labour in 1992 but the Conservatives' catalogue of chaos' and the PM's actions mean fears are misplaced

With Brexit fast becoming a tragedy, Keir Starmer needs to forge a closer relationship with EuropeOn the day before the 1992 general election, the bookmakers at Ascot were offering odds of 6-1 against John Major's Conservatives winning. I was with the economist Roger Bootle, and we agreed that Labour, well ahead in the polls, was bound to win. It was pointless betting on the Tories, even at those odds. When the results came in we kickedourselves.When I told Lord Kinnock, the Labour leader at the time, this story years later, he jokingly said I should have telephoned him from Ascot. He said that on driving back from canvassing in south Wales the previous week he and his wife, Glenys, had had an uneasy feeling that, notwithstanding the polls, the election was slipping away" from them. Continue reading...

Resolution Foundation report suggests parties are dodging the economic challenges facing the countryRishi Sunak's pre-election claim that the UK economy is now going gangbusters" is undermined today by a report which argues that growth since 2010 has been unspectacular" and has been the result of a rising population, caused principally by high levels of immigration.The study, Life in the Slow Lane, from the politically independent Resolution Foundation, will add to the consensus among economists and academics that the fundamentaleconomic problems and challenges facing this country are being dodged by the parties during the general election campaign. Continue reading...

Neither Labour nor Tories have committed to axing already announced rises, Resolution Foundation warns

The ruling ANC is on a pioneering path to transform the Covid grant into a scheme that aims to combat povertySouth Africa is facing the most dramatic political shift since the end of apartheid after the African National Congress lost its majority in the general election of 29 May. Weeks of difficult negotiations between the ANC and its rivals on how best to form a governing coalition are expected.One commitment that unites most parties - including the incumbent ANC and its biggest rival, the Democratic Alliance - is to maintain or increase income support for adults, which includes monthly Covid payments to the poorest households. Continue reading...