Short-term analysis of ways to save society, and indeed humanity, is uselessIn a biology lesson about the bacterial growth curve, the parallels with the climate crisis were hard to miss. Stick bacteria in a test tube with food and their population will grow exponentially until, eventually, they run out of resources and kill themselves off. Even a couple of decades ago, the comparison with humanity’s predicament felt glaringly obvious; and we have not really strayed since from the inevitable path to extinction.The hope seems to be that a big crisis might be the shock we need to change course. But we are living through the biggest global crisis for decades – and are travelling and consuming less as a result of the pandemic – yet it already seems unlikely that much will change. It’s easy enough to throw around the old adage “never waste a good crisis”. But when it comes to existential questions about the future of humanity, it has proved fairly useless.For a while after the 2008 crash, it looked as if things might change – economists designed global ‘happiness’ indicesRelated: Wellbeing should replace growth as 'main aim of UK spending' Continue reading...

The furlough scheme and ‘eat out to help out’ have seen his popularity soar. But few ministers survive a recession unscathedWhen Sajid Javid was thrown out of No 11 in February 2020, few outside Westminster had even heard of his successor. Rishi Sunak had been an MP for less than five years, a minister for two, and had just a few months of experience in the cabinet in the relatively junior role of chief secretary to the Treasury.Nor was Sunak helped by the manner of Javid’s departure – he resigned after Boris Johnson told him to sack all his advisers, a move Javid later said “no self-respecting minister would accept”. Sunak, in acquiescing to the decision, was portrayed as a young loyalist unlikely to ruffle any feathers.Related: End of UK furlough scheme ‘means needless loss of 2 million jobs’How people go to work, where they live and many other aspects of their lives are going to change, creating new industries and shrinking others Continue reading...

From Barber’s boom to Gordon Brown’s financial crisis, Britain’s current chancellor is treading a well-worn and precarious path

Threadneedle Street’s forecasting has been faulty. But it must still play its central role in protecting jobs and the economyThe UK is performing better than expected. That was the message from the Bank of England’s governor, Andrew Bailey, following its latest review of the economy.It was a message he almost muttered under his breath, as if knowing that almost anyone listening would yell back: “Oh no it isn’t!”The number of people visiting high streets and shopping centres, which dropped by 80% in the first weeks of the lockdown, was still down by a third last week Continue reading...

Brands and restaurants have decided the city’s sky-high rents are just too expensive for them

Surge in shares contrasts with Covid-related downturn and growing unemployment

Airline and hotel companies are hit by UK imposing a 14-day quarantine on arrivals from France

Retail sales dropped 1.1% in July while industrial production remains subdued

Experts say government must not risk pitting the economy against public healthThe lifting of coronavirus restrictions by the government could risk pitting the economy against public health, triggering a higher death toll and double-dip recession, two of the country’s top economists have warned.In a warning to ministers, Nicholas Stern, the leading climate economist and former Treasury mandarin, and Sir Tim Besley, a former rate-setter at the Bank of England, said an abrupt and premature easing of lockdown would be counterproductive in the fight to save jobs and reboot Britain’s economy from the coronavirus recession.Workplace rotation schemes to limit physical interaction and the spread of the disease.Subsidies for workplace testing to control outbreaks, particularly in key industries as well as sectors with more human contact.Boosting sick pay to remove a disincentive for self-isolation.Drawing up a recovery plan that capitalises on net-zero carbon commitments, boosting job creation in green industries. Continue reading...

Rolling coverage of the latest economic and financial news, as latest weekly jobless figures beat forecasts

Figures show 963,000 people filed for claims last week as pandemic’s devastating impact maintains grip on economyThe number of Americans who filed new claims for unemployment benefits last week dipped below 1 million for the first time in 21 weeks, but signs of the coronavirus pandemic’s devastating impact on the US jobs market remain.The latest figures from the labor department showed 963,000 people filing claims after 20 weeks of claims above 1m. Claims still remain historically high. Before the pandemic, claims were averaging about 200,000 a week and the previous record for claims was 695,000, set in 1982. Continue reading...

Industry says UK is prioritising post-Brexit trade talks with Washington rather than fight 25% tariffsThe Scotch whisky industry has attacked the UK government for its “inexplicably slow” action against hefty tariffs imposed on whisky imports by the US government.In an unusually critical statement, the Scotch Whisky Association accused UK ministers of prioritising post-Brexit trade talks with the US rather than fight against the 25% tariffs imposed on Scotch whisky and other goods by the US last October, in a dispute over European subsidies for the planemaker Airbus. Continue reading...

Too much is being read into the greenback’s recent weakening against the euroThe dollar is in freefall! The global greenback is doomed! screamed recent headlines. Actually, such sensational headlines are “too sensational”, to echo that noted authority on currencies, Miss Prism, in Oscar Wilde’s The Importance of Being Earnest.The dollar’s fall in July to a two-year low against the euro was the immediate impetus for these stories. In fact, the dollar’s recent slide is one in a series of readily explicable fluctuations. When the Covid-19 pandemic went global in March, the dollar strengthened on the back of safe-haven flows into US Treasuries, as it does at the start of every crisis. By May, the Federal Reserve, acting as global lender of last resort, had accommodated this mad scramble for dollars by pouring buckets of liquidity into financial markets and the greenback gave back its early gains.When seeking to understand events, we shouldn’t make the perfect the enemy of the goodRelated: What the weakening dollar means for the global economy Continue reading...

Economics writer Aditya Chakrabortty describes how the coronavirus crisis has sent Britain plunging into a record recession and what it means for the millions of people fearing for their jobsBritain is officially in its deepest recession since records began following the unprecedented economic shutdown in response to the coronavirus crisis. It has left millions of people fearing for their futures and especially their employment. In the past six months, the UK has shed nearly 750,000 jobs.Economics columnist Aditya Chakrabortty tells Mythili Rao that the chancellor’s initial response of the government-backed furlough scheme was pivotal. But as Rishi Sunak looks to wind down the scheme by October it risks pitching people out of work just as the economy is beginning its recovery. Continue reading...

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Britain’s economy shrank by a fifth in the last quarter, much worse than the US or the eurozone

The dire economic stats reflect a perception that the government’s Covid strategy is at best confused and at worst chaotic

High numbers of workers furloughed in both towns but tourists drive Lakes boom, while airline-dependent centre strugglesIf there was a corner of the UK that felt the sharp impact of recession first, it was the tourist honeypot of Windermere. Visitors disappeared overnight, just as shops and bars were readying for the booming spring and summer months.Nearly 19,000 workers in the area were furloughed – 40% of the eligible workforce – earning South Lakeland the unwanted title of “furlough capital of the UK”. The neighbouring area of Eden had the country’s second highest furlough rate, with 39% of the workforce placed on the government scheme that covers 80% of a temporarily laid off employee’s wages. Continue reading...

Decline of 20.4% caused by coronavirus is worst among G7 for a number of reasons

Job losses and possibility of second closures likely to hinder emergence from recession

'I’ve said before that hard times were ahead and today’s figures confirm that hard times are here,' says the chancellor.Britain has entered the deepest recession since records began, as official figures on Wednesday showed the economy shrank by more than in any other G7 nation during the coronavirus outbreak in the three months to June.The Office for National Statistics said gross domestic product (GDP) fell in the second quarter by 20.4% compared with the previous three months – the biggest quarterly decline since comparable records began in 1955

Latest slump deeper than 2008-09 financial crisis, deindustrialisation of 80s or oil shocks of 70s

GDP falls 20.4% – the worst of any G7 nation in the three months to June

The falling value of the greenback heralds a larger, gradual fragmentation of the international economic orderA near 10% drop in the value of the US dollar since its March high has given rise to two distinct narratives. The first takes a short-term perspective, focusing on how a depreciation could benefit the US economy and markets; the second takes the long view, fretting over the dollar’s fragile status as the world’s reserve currency. Both narratives contain some truth, but not enough to justify the emerging consensus around them.Several factors have combined to put downward pressure on the greenback (as measured by the DXY index of trade-weighted currencies) in recent weeks, resulting in a depreciation that has reversed almost half of the appreciation of the last 10 years within the space of months.Related: Will Covid make countries drop cash and adopt digital currencies? | Kenneth RogoffRelated: Trump's weaponisation of the dollar could threaten its dominance | Jeffrey Frankel Continue reading...

Many have taken jobs in new industries, while others are underemployed and struggling with bills

S&P edges towards all-time record with oil prices and hospitality stocks rising as investor optimism reboundsUS stock markets moved closer to record highs on Tuesday after investors bet on a fresh round of government spending to lift the economy and counter the effects of the Covid-19 pandemic.The S&P 500, seen as the broadest measure of US investor sentiment, raced to a 10-point gain by mid afternoon to leave it just 16 points short of the all-time high reached in February.Related: Global stock market rally is a gamble, IMF warns investorsRelated: Reality and the stock market don't always align. Don't be fooled into thinking the economy is back on track | Greg Jericho Continue reading...

Rolling coverage of the latest economic and financial news, as nearly three quarters of a million people drop off payrolls since March

State and local governments facing deep shortfalls wrestle with the devastating economic impact of the coronavirusEvery day, New Yorkers throw out 10,000 tons of trash – a third of which is food and yard scraps that could skip the incinerators and landfills and be turned into compost.Over the last several years, a curbside pick-up program allowed New Yorkers to compost their food and yard scraps by putting them in a brown bin from the city that would be picked up just like trash. Continue reading...

Sunny weather and reopening of shops boost sales, but GDP figure expected to confirm recession

Rolling coverage of the latest economic and financial news, as fast food chain tries to recover severance pay from ex-CEO

Personal loans and credit card debt expected to fall 16% as lending to businesses surgesConsumer borrowing from UK banks will fall at the fastest rate on record in 2020, amid the recession caused by the coronavirus pandemic, forecasts suggest.Banks are expected to lend 15.9% less to consumers via personal loans and credit cards, according to forecasts by EY Item Club, the economic forecasting arm of the accounting firm. Continue reading...

Survey of 2,000-plus employers suggests wave of job losses will hit when furlough scheme endsAs many as a third of UK employers expect to cut jobs by October, according to a survey that suggests that the economic impact of the coronavirus pandemic will accelerate in the coming weeks.About 33% of more than 2,000 companies, charities and public sector bodies in the poll said they expected to make redundancies in the third quarter of 2020, according to figures from the Chartered Institute of Personnel and Development (CIPD) and Adecco Group, a staffing company. Continue reading...

Official measure to be declared this week as coronavirus lockdown shrinks GDP by 21% in second quarterBritain’s economy will be officially declared in recession this week for the first time since the 2008 financial crisis, as the coronavirus outbreak plunges the country into the deepest slump on record.Figures from the Office for National Statistics on Wednesday are expected to show that gross domestic product (GDP), the broadest measure of economic prosperity, fell in the three months to June by 21%.Related: Negative UK interest rates were once unthinkable. But tough times lie ahead | Larry Elliott Continue reading...

Bans on junk food ads and five-a-day advice miss the point. To cut obesity people need support and jobsBoris Johnson has made obesity a political issue. The prime minister accepts that one of the reasons he nearly died from Covid-19 was that he was carrying too many pounds.Johnson is not the first prime minister to “declare war” on obesity. In recent decades there have been plenty of campaigns designed to make people exercise more and eat more healthily. There have been exhortations to eat five a day, sugar taxes, bans on the advertising of junk food, but none of them have made a difference. Obesity levels in England have doubled in the past quarter of a century.Related: No 10 plans weight loss drive to ready UK for expected Covid-19 second wave Continue reading...

Shareholder payout to stay despite 73% fall in quarterly profits due to impact of Covid-19Saudi Arabia’s state-owned oil giant still plans to pay $75bn (£57bn) to its shareholders this year even as the impact of the coronavirus caused its profits for the last quarter to plummet by 73%.The global slowdown in oil demand during the pandemic pushed Saudi Aramco’s net income for the second quarter down to $6.57bn, from $24.7bn in the same period last year and $16.6bn in the first quarter of 2020. Continue reading...

Dominic Cummings’s trust-breaking trip to Barnard Castle has become this government’s Black Wednesday momentFor many years, the phrase “Whitehall farce” denoted long-running comedies at the Whitehall theatre, a stone’s throw (or two) from Downing Street and assorted government departments. One of my favourite stories is of the time my friend the economist Lord Peston – father of the broadcaster Robert – returned unexpectedly to the office he shared with Lord Rix, once a star of Whitehall farces, and expressed his embarrassment at the sight of Rix changing for dinner with his trousers down. “No need to be so shocked, Maurice,” said Rix: “In the old days people used to pay to see me like this.”Well, the lockdown may have closed theatres, but the Whitehall farce is alive and well, and has been taking place at least twice daily in Downing Street. We are undergoing the worst economic depression in memory – some believe in history – and we have as a prime minister a man who is all at sea and so dependent on his key adviser, Dominic Cummings, that he could not bring himself to sack him even though Cummings made a laughing stock of the government’s entire lockdown policy with his trip to Barnard Castle “to test his eyesight”.How do they confront these enormous events? They decide to conduct a war on the civil service whose loyalty and trust they require Continue reading...

In a dramatically unequal society, a one-off wealth tax provides a clear and decisive route to balancing the Treasury’s booksEven before the coronavirus pandemic struck, the divisions between the super-rich and the rest of society were growing increasingly extreme. But as the virus infects the world economy, plunging millions into unemployment and pushing finances to breaking point, those divisions are set to get worse.Last week, Mark Zuckerberg’s fortune passed $100bn (£76bn) for the first time, adding him to an exclusive club of the world’s centibillionaires, after Facebook’s shares surged on news it was to launch a rival to the video-sharing app TikTok.History suggests wealth taxes can help repair government finances while promoting inclusive growth for the future Continue reading...

The president thinks that as long as they buoy the stock market, they’re helping the US economy – and that’s pure rubbishSince the start of the pandemic, American billionaires have been cleaning up. As more than 50 million Americans filed for unemployment insurance, billionaires became $637bn richer. Facebook’s Mark Zuckerberg’s wealth has ballooned 59%. Amazon’s Jeff Bezos’s, 39%. Walmart’s Walton family has added $25bn.Big drug company CEOs and their major investors are doing nicely, too. Since the start of the pandemic, Big Pharma has raised prices on over 250 prescription drugs, 61 of which are being used to treat Covid-19. Continue reading...

Official economic data for June will be out this week. But unconventional indicators can help gauge conditions right nowThis week it will be confirmed that Britain’s economy is in the deepest recession for at least a century. Yet only a few days ago, the Bank of England heralded a return to growth, forecasting a more rapid recovery than previously feared.Official growth figures due to be published on Wednesday by the Office for National Statistics are expected to show a 21% plunge in gross domestic product (GDP) in the three months to June. After GDP slumped by 2.2% in the first quarter, this will confirm two consecutive quarters of falling output – the technical definition of a recession. Continue reading...

Unemployment rate falls to 10.2% from 11.1% but remains three times pre-pandemic figureThe US economy added 1.8m jobs in July after a record gain in June, as signals mounted that a resurgence of coronavirus cases in some states is weighing on the labor market recovery.Related: Coronavirus US: death toll tops 160,000 as relief package impasse continues – live updates Continue reading...

Rolling coverage of the latest economic and financial news, as BoE warns one million jobs will be lost by Christmas

The list of government failures as we enter the worst economic slump in 30 years should be a gift to Keir StarmerOn Monday the job axe fell at Hays Travel and DW Sports. On Tuesday it was the turn of Pizza Express and Currys PC World. On Wednesday it was WH Smith and M&Co delivering the grim news. A brutal shake-out of Britain’s labour market, caused by the deepest slump in three decades, has begun.Unemployment will carry on rising as companies that have kept staff on thanks to the furlough scheme are now having to make a contribution to their employment costs. Wage subsidies will be history by October, even for those businesses that remain shut. With the benefits bill rising and tax receipts falling, a Conservative party that once accused Gordon Brown of maxing out on the nation’s credit card is on course to borrow upwards of £300bn this year, comfortably a peacetime record.Related: The government must up its game to prepare for a second wave of Covid-19 | Keir Starmer Continue reading...

Economists worry expiration of $600 weekly lifeline will lead to sharp drop-off in household spending and set back the economyAnother 1.18 million people filed for unemployment benefits last week as economists worry the expiration of enhanced unemployment benefits will lead to a sharp drop-off in household spending and set back the US economy’s near-term recovery.Claims dipped last week after two weeks of rises and were the lowest since March but the latest figure from the department of labor marked the 19th week in a row that claims have topped 1m. Before the coronavirus pandemic gripped the US, the record for weekly claims was 695,000 in October 1982.new predictions of effects of alternative UI benefit supplements

Bank of England is considering pros and cons of drastic move as Covid-19 weighs on economy

With the power of ultra-low rates and QE fading, the Bank of England is now considering going negative

A second statewide lockdown could be on the cards if infections continue to rise but the economic impact worries residentsBusiness is slow at Studio 23, a hair salon just off the main drag in Pikeville, a small city in rural eastern Kentucky, so barber Derek Harris is outside chewing the fat with two maskless police officers while waiting for his first client.The salon reopened at the end of May, but business is down by about 20%, and Harris fears another statewide lockdown could be on the cards if coronavirus infections continue to rise. In Kentucky Covid-19 may not, yet, be a big problem but the economic impact is everywhere. Continue reading...

The complex history of how China and the US once embraced each other should inform how the current showdown is tackledThe Trump administration has floated the idea of sanctioning Chinese officials and members of the Communist party of China. Before we ask whether this is a good idea, let’s ask how Sino-US relations got to this stage.The US cold war with the Soviet Union was over ideology, but today’s standoff with China is different. The Chinese state has no ideology, no religion, no moral agenda. It continues wearing socialist garb but only as a face-saving pretence. It has, in fact, become a state-capitalist dictatorship. What the world sees today is a contest between the US system of free-market capitalism and Chinese state capitalism. How should we read this chessboard?Related: The US and China are entering a new cold war. Where does that leave the rest of us? | Timothy Garton AshAi Weiwei is an artist and activist. This article was translated from Chinese by Perry Link Continue reading...

Consumer spending rise cheers Bank but unemployment will double and GDP fall significantly