Property market posted an 11% rise in median values, masking rising homelessness and a widening social divide, critics sayNew Zealand house prices have defied the Covid-19 recession and soared to record levels, prompting warnings that the hot property market will damage the country’s long-term economic wellbeing and widen inequality.New Zealand, which already had some of the most unaffordable housing in the world, saw median prices rise 11.1 % in the year to September, while the median price in Auckland reached nearly $1m (US$660,000). Prices rose 2.5% across the country in September compared with August.Related: New Zealand must cast off its worries about government debt in its Covid recovery | Max HarrisRelated: New Zealand housing crisis: just 47 'affordable' homes built in six months Continue reading...

With scheme due to end on Saturday, Rishi Sunak is under pressure to extend protection measuresEconomists have urged the chancellor to extend the furlough scheme and ramp up support for businesses and workers amid rising concern that rapidly growing infection rates from Covid-19 will force the government to impose a national lockdown, triggering a double dip recession.With the furlough scheme due to end on Saturday and unemployment expected to increase sharply in the run-up to Christmas, Rishi Sunak is under pressure to extend the Treasury’s protection measures beyond the levels announced last week, or risk higher rates of business closures and an economic slump. Continue reading...

Rolling coverage of the latest economic and financial news, as European markets sink to their lowest point since May

Two-thirds of UK businesses were at risk of insolvency last month, according to official figures

Sources say it is unclear if move is attempt to sabotage trade body much criticised by TrumpThe US is blocking the appointment of Ngozi Okonjo-Iweala as the next head of the World Trade Organization despite the former finance minister of Nigeria winning the overwhelming backing of the WTO’s 164 members, it has emerged.Dr Okonjo-Iweala had moved a step closer to becoming the first woman and the first African to be director of the global trade watchdog after securing the support of a key group of trade ambassadors in Geneva. Soundings taken by a selection panel of three WTO trade ministers found she had far more support than her South Korean rival, Yoo Myung-hee.Related: 'It can’t be business as usual': the Nigerian frontrunner to be next WTO head Continue reading...

My friend John Loxley, who has died aged 77, was a socialist economist who wanted to change the world for the better. He was a teacher and adviser to politicians in Canada and assisted African governments and international development agencies in negotiating with the World Bank and IMF. He advised Nelson Mandela and the ANC on post-apartheid alternative economic policy.Born in Sheffield, John was the seventh of 12 children of John Loxley, a steelworker, and his wife, Elizabeth (nee Antcliff), a seamstress. He went to King Edward VII school, then to Leeds University, graduating in economics in 1963. Three years later he was awarded a PhD for his thesis on the East African monetary and banking system, and during the period of his research he lectured at Makerere University in Uganda. Continue reading...

As a new report spells out how financial institutions contribute to biodiversity loss, the clamour is growing for a new approach

Contrary to popular belief, Democratic presidents have been better for the economy than RepublicansIn a few days, Americans will choose a president. Opinion polling suggests that voters favour former Vice-President Joe Biden when it comes to social policy, foreign policy, the environment and managing the pandemic, not to mention personal character. But until recently, some polls indicated that on the economy, voters favoured Donald Trump.The general impression that the US economy does better under Republicans than Democrats is long-standing. But the facts do not support it. Continue reading...

Carolyn Fairbairn says the UK economy is in ‘suspended animation’ while issue remain unresolvedThe head of the UK’s leading employers’ organisation has stepped up pressure on the government to conclude trade talks with the EU so that the country can move on from the “suspended animation” of the past four years.Reflecting on her five years as director general of the CBI, Dame Carolyn Fairbairn said her biggest regret was that the issue had not been resolved earlier and warned ministers that businesses grappling with Covid-19 were unprepared for a hard Brexit. Continue reading...

Report reveals groups with highest rates of unemployment as job support scheme ends

Rolling coverage of the latest economic and financial news

Consumer spending’s loss of momentum in October signals flatlining of broader economy

Ballooning Tory spending in response to the pandemic does nothing to redistribute wealth, but it does buy votersIt has been said of Boris Johnson that he is now “more Castro than Castro” and that the economy is now more “socialist … than at any point in British history”. This is, of course, plainly not true. Socialism is normally understood as common ownership of the means of production, distribution and exchange – with power in the hands of workers and citizens, rather than shareholders – and the fundamental aim of a society of equals. The temporary expansion of state spending during a global pandemic is obviously not the same, and the current government is plainly relaxed about inequality.Yet it is hard to overstate the scale of that expansion. Between March this year and next, the Office for Budget Responsibility forecasts an increase in government borrowing of £372bn. That’s three times the annual budget for the entire NHS or about 15% of the entire UK pre-pandemic economy. So what are the wider implications of this expansion in state spending?Related: Debt may be cheap, but the UK's poor productivity will cost us dear Continue reading...

Even with effective vaccine, hospitality sector will struggle to return to 2019 levels

Investors’ summer optimism gives way to insecurity as curfews and lockdowns return

The repercussions are everywhere, from reduced retail footfall to losses at train companiesIt took time, but the Industrial Revolution profoundly changed the way people worked. Out went cottage industries and in came giant factories. People migrated from rural areas to the cities.Gradually, as economies became more service-sector driven, the big factory was replaced by the big office, but the principle remained the same: employees left their home in the morning for their place of work and returned in the evening. Continue reading...

Survey finds nearly two-thirds of entrepreneurs believe their business may not survive pandemic

Many low earners are in jobs hit hard by the coronavirus, and help for them feeds straight back into the economy

Review finds testing flaws meant support went to many workers who lost no income but not to others who hadRishi Sunak’s flagship scheme to help the self-employed through the pandemic has handed £1.3bn to workers who saw no loss of income while giving nothing to 500,000 people left without work, new analysis has revealed.In a sign of major flaws in the £12.7bn self-employment income support scheme (SEISS), more than 400,000 workers were able to claim support despite losing no income in the crisis. Continue reading...

Small firms are borrowing big sums to survive. They must be given the option of a debt-for-equity swap with the TreasuryBritain is sleepwalking into a debt crisis that will undermine its prospects of a sustainable recovery.It’s not the debts of the government that are at issue; it is the monumental amount of borrowing by the private sector, much of it from the Treasury, that will hang like a dead weight on the shoulders of thousands of businesses, possibly for a decade.Of course the government would be in the game of 'picking winners' – something the Treasury has always rejected Continue reading...

Labour says hundreds of thousands of people will be left struggling under new scheme

IHS Markit index shows growth is at its weakest since the recovery from lockdown began

Covid has tanked the gains he made in the economy and any new stimulus could be too lateIt all looked so simple for Donald Trump as he took the stage at the World Economic Forum in Davos in January this year. At the start of an election year, the annual gathering of the global business elite was an opportunity to launch his campaign.It was one Trump eagerly seized. The next 30 minutes was one long boast, detailing how a US economy that had allegedly been on its knees under Barack Obama had been transformed under his stewardship. Continue reading...

Chancellor announces new support deal amid concerns over mass unemployment

Hospitality and leisure bosses welcome grants but remain wary of uncertain future

Latest updates: Boris Johnson says he ‘share people’s frustrations’ as figures reveal new low in reaching contacts; further areas added to tier 2 restrictions. This live blog is now closed – please follow the global live blog for latest updates

Rolling coverage of the latest economic and financial news

U-turn on job support scheme leaves many self-employed feeling aggrieved

There are many means by which government and the market can improve opportunitiesInequality has been seizing ever more of the public’s attention in recent years, reflected everywhere from papal encyclicals and economic tomes by French socialists to technical academic debates and the demotic language of politicians and pundits. The health and economic effects of the Covid-19 pandemic have further elevated these concerns.But which aspect of inequality should we be worried about? There are inequalities of opportunity and inequalities of outcome; there is overall inequality and there is inequality at the tails of the distribution. Should we be more worried about absolute or relative positions – mobility or stability? What is really more important, the distribution of the economic pie or the level and growth of living standards?Related: Can central banks keep holding off the Covid economic crisis? | Mohamed El-Erian Continue reading...

12m adults struggling to pay bills, with BAME people worst hit, official figures show

Chancellor to meet employers groups and unions amid pressure from lockdown-hit areas

Crisis creates highest debt-to-GDP ratio since 1960

Rolling coverage of the latest economic and financial news

Sean Rickard and Clive Spragg take issue with an article by Larry Elliott. Plus letters from Christopher Hill and SP Chakravarty on post-Brexit trade dealsLarry Elliott (Boris Johnson’s split from Brussels echoes Henry VIII’s break with Rome, 18 October) seems too willing to accept that the UK’s economic performance has been constrained by EU membership and that models showing the economic cost of Brexit should be treated with scepticism because behaviour can change. Behaviour can change, but not always for the best. Rather than observing that, post-Brexit, the government can nurture industrial regeneration, it would be wise to understand why the UK has spent less on state and regional aids than comparable EU members, and why they have achieved more impressive productivity growth.As to his outmoded view that a fall in sterling’s value will relieve some Brexit pain, all we can say for certain is that it will make the country poorer. Since the financial crash, sterling has lost some 25% of its value, yet the current account continued to decline until the Covid recession reduced import demand. Continue reading...

UK chancellor will set out one-year plan covering budgeting needs of departments

Covid crisis means government’s long-term economic agenda must wait

Centre for Policy Studies plan includes new limits on child benefit and foreign aid cutsA right-of-centre thinktank with close links to Downing Street has called for the pensions triple lock to be scrapped, the aid budget to be cut and child benefit further limited as part of £30bn worth of spending cuts designed to spare the UK from post Covid-19 tax increases.The Centre for Policy Studies (CPS) said its nine-point plan would ensure that the government was getting value for money and ensure that frontline services were protected as the Treasury took steps to repair the public finances.Related: UK economy nears 'perilous turning point' on Covid-19Introduced in 2011 by the coalition government, the triple lock guarantees that the basic state pension will rise by a minimum of either 2.5%, the rate of inflation or average earnings growth, whichever is largest.A cut of 160,000 in public sector administrative staff at an estimated saving of £3.5bn.The sale of high-value council homes and replacing them with cheaper properties (£1.5bn).Reducing the number of quangos and combining their back-office functions (£3bn).Streamlining local government and its administrative costs (£1bn).Improving e-procurement and data sharing (£4.5bn).Making child benefit part of the child tax credit system and tightening eligibility (£1bn). Continue reading...

New Economics Foundation estimates 2.7m roles at risk of redundancy despite new job support scheme

Brazilian president’s stance on deforestation remains stumbling block for South America agreementBrussels is in talks with Brazil’s far-right nationalist president, Jair Bolsonaro, over commitments on the future of the Amazon as it seeks to persuade Emmanuel Macron and other EU leaders and parliaments to ratify the trade deal the bloc has negotiated with South America.The ratification of the draft trade agreement between the EU and the “Mercosur” or Southern Common Market free-trade zone – which spans Brazil, Uruguay, Paraguay and Argentina – has been in doubt almost since it was announced last June.Related: This is my message to the western world – your civilisation is killing life on Earth | Nemonte Nenquimo Continue reading...

Rolling coverage of the latest economic and financial news, as MPC member Gertjan Vlieghe says UK may need more stimulus to fight Covid-19 crisis

Gertjan Vlieghe says the surge in Covid cases means the Bank will need a range of measuresNegative interest rates in the UK edged closer on Monday after a Bank of England policymaker warned the central bank would need extra firepower to boost the economy following the surge in Covid-19 cases.In a gloomy assessment of the next few months, Gertjan Vlieghe, who sits on the monetary policy committee, the bank’s interest rate setting body, said the second wave of Covid-19 was holding back consumer spending and suppressing business investment, which would push unemployment higher.What would happen to my mortgage? Continue reading...

From test and trace to care homes, it’s time to bring public services back in house and award contracts to social enterprisesEngland’s “world-beating” test-and-trace service has failed to materialise. Riddled with problems since its inception, it has been described as barely functional, with demand up to four times that of capacity and 90% of tests failing to hit the 24-hour turnaround target.But the problems with test and trace go far deeper than the incompetencies of this government. Over the last 30 years, Britain has shifted from having a market economy to being a market society where large swathes of public services are outsourced to the private sector. NHS test and trace is a prime example of this model, with management consultants such as Deloitte and Serco running large parts of a system where shareholder value appears to have trumped the needs of our frontline services.Related: UK coronavirus live: Johnson to hold press conference, following talks with Burnham about Greater ManchesterRelated: Private equity and care: a sector propped up by debt Continue reading...

Even the IMF believes that fiscal restraint is not the right way to deal with pandemic debt – but the UK can’t seem to move on“There’s no money left.” That is the ominous refrain repeated in hushed tones across Whitehall and public services. It is the same idea that scarred the UK economy for much of the past decade and inflicted misery on millions. Could austerity be set to return?At an international level, the consensus has certainly turned against austerity. Both the International Monetary Fund and the World Bank now advocate for fiscal activism rather than restraint. Continue reading...

Minister battles to rescue retailers amid fears for 50,000 shops and hundreds of thousands of jobs

FT economics columnist and author who influenced Wilson and Thatcher“No one is more senior to another on this paper, except for Sam Brittan.” Thus spoke Sir Gordon Newton, the longtime editor of the Financial Times, when one of his staff was claiming precedence over another.Newton was referring to Samuel Brittan, his prize economics commentator, whom he had hired as part of a graduate recruitment policy in the 1950s, among a formidable crop that included Nigel Lawson and William Rees-Mogg. Continue reading...

Beijing was fast to respond and increased public investment; it has not faced a second waveBy its own standards, China’s economy is having a bad year. After four decades of stellar growth, the east Asian country will barely expand at all in 2020.But just about every country – big or small – has faced a hit from the Covid-19 pandemic, and China has suffered less than most. Whereas most western industrialised nations are still struggling to get back to where they were before the virus struck, Beijing has reported that there was year-on-year growth in the third quarter.Related: China becomes first major economy to recover from Covid-19 pandemic Continue reading...

As long as the economy is structured around the City – the south will find it easier to bound back from Covid

Year-on-year expansion, while slightly lower than analyst expectations, represents a dramatic reversal

Former Labour prime minister’s proposal part of plan to prevent spike in youth unemploymentThe former prime minister Gordon Brown has called for employers to be given a wage subsidy of £100 a week to hire workers under 25 as part of a plan to prevent youth unemployment exceeding levels seen in the 1980s.Brown said 1.5 million young people would need help to find work over the next year, adding the government’s £2bn ”kickstart” scheme announced in the summer would not be sufficient.Provision of quality work experience.Training geared to new jobs, in sectors such as care, IT and logistics, jobs linked to the recovery from lab technicians and contact tracers, to care workers and teaching assistants, not training for continued unemployment.Help with job searches – which Brown said were a vital element of getting into work, as demonstrated by Labour’s 2009 future jobs fund.A wage subsidy for employers in the order of £100 a week for six months to take a young person on full-time. Continue reading...

Many would have thought the Tudor king needed to avoid a no-deal break but history has proved otherwiseBoris Johnson’s assertion that the UK should prepare for a no-deal Brexit has left the financial markets unconvinced. Brinkmanship is the name of the game, they say. Before negotiations can be concluded there always has to be a crisis when it appears all is lost, then both sides give a little and success is plucked from the jaws of failure.The big banks in the early 1530s did not employ armies of economists to opine about political events but had they done so the analysts of the 16th century would probably have been saying the same about Henry VIII’s divorce from Catherine of Aragon as they are now about Brexit. Henry is bluffing. He is not really prepared to break with Rome. A schism will do neither side any good, but there will be more damage to England than to Catholic Europe.Related: Boris Johnson is dancing with danger by threatening a crash-out Brexit | Andrew RawnsleyRelated: Boris Johnson takes note of Trump's game theory to keep EU guessing on Brexit | Larry Elliott Continue reading...