The coronavirus crisis provides an opportunity to stop two centuries of decline. But that’s going to take a lot of courageThe day the World Health Organization declared Covid-19 a global pandemic was also the occasion of Rishi Sunak’s budget. Announcing an extra £12bn to fight the virus, Britain’s newly appointed chancellor said the measures were “temporary, timely and targeted”.That was less than six months ago, but it now feels like a long time. Within days of the budget, Sunak’s three-Ts approach became redundant. The economy was in a deep freeze, and the country had gone into full lockdown. Continue reading...
Greater London, where number of closed outlets has increased by almost two-thirds, is hardest hit by riseThe number of empty shops on UK high streets has risen to its highest level in six years as city centres, and especially London, suffer from a dive in visitor numbers.Nearly 11% of shops remained vacant in July compared with 9.8% in January, with the number of empty premises rising in six out of 10 UK regions, according to retail analysis firm Springboard. Greater London suffered by far the worst blow, with empty shops increasing by nearly two-thirds. Continue reading...
Even as the economy sinks, the property market keeps surging. It sounds like good news, but is more likely a disaster in the makingUp, up and away! The rest of the economy is rapidly heading south, yet the property market keeps on rising. House prices hit a record high last month, according to Nationwide building society, and are increasing at the fastest rate since 2004. The news is striking, but it fits with reports of a “frenzy” in the market, where homes are selling at their asking price or more, and inner-city households are moving out to the suburbs and the countryside in search of gardens and home-office space. Back in July, the Bank of England’s chief economist, Andy Haldane, promised a V-shaped recovery. Two months later, that forecast has failed to apply to almost every sector – apart from asset markets.Some of this is a rebound in activity after lockdown, when property viewings and transactions came to a halt. But estate agents and chartered surveyors can also thank Rishi Sunak for his suspension of stamp duty on properties worth less than £500,000. Most of all, they owe the Bank a debt of gratitude for flooding markets with ultra-cheap money in response to the pandemic. Indeed, the state’s response to Covid-19 resembles, in some key aspects, its reaction to the banking crash of 2008. Ministers explicitly try to prop up the property market, while central bankers pump markets with money, much of which goes not into productive investment that might create jobs, but into speculative purchases of houses, artworks and shares. Continue reading...
The prime minister must choose between the promises he made to ‘red wall’ voters, Tory orthodoxy and heading into the political unknownOver the past four decades, Britain has been beset by slowing productivity, soaring inequality, an environmental emergency and repeated financial crises. Coronavirus has thrown into sharp relief existing disparities, and also created new ones. Those in power seem unwilling to deal with a broken system. They shy away from developing the ideas needed for reform. What’s offered is performance rather than policy. In this regard, Boris Johnson’s government excelled: it mouthed the words but didn’t mean any of them.That is why the leaks suggesting that the chancellor, Rishi Sunak, is contemplating a radical and redistributive budget – with taxes raised on the wealthy, big businesses, pensions and motorists – have to be taken with a pound of salt. These proposals would be the right ones to enact and, if Mr Sunak were to implement them, he would be stealing shamelessly from Labour’s 2019 manifesto. The chancellor defied his reputation as a state-shrinking Brexiter and splashed out during the pandemic, saving companies from bankruptcy and many people’s jobs – including his own. Continue reading...
Readers on the viability of working four days to kickstart the economy and boost jobsThe report by the thinktank Autonomy (Four-day working week could create 500K new jobs in UK, study says, 30 August) is very welcome – and timely. An additional day’s leisure would not only massively improve work-life balance, and indirectly help areas such as childcare, but of course stimulate the leisure, retail and hospitality industries, which have been hit very hard by the pandemic.Retail practices have changed hugely from 50 years ago, when shops closed at 5pm (earlier on Saturdays) and Sunday was a barren day, with virtually no shops open and little entertainment available, to today’s seven-day-week economy, with the ability to purchase goods and services 24/7. Continue reading...
As Roberto Azevêdo steps down early, eight candidates step up for poisoned chalice of being WTO director generalWanted: someone to step in and turn around a big and failing multilateral organisation. The post involves relocation to Geneva where the successful candidate will require the cunning of a Machiavelli, the political skills of Nelson Mandela and the thick skin of a rhinoceros. Plus a good dollop of luck.The job description for director general of the World Trade Organization did not quite go like that, but none of the eight people who have put themselves forward to succeed Brazil’s Roberto Azevêdo are in any doubt as to the extent of the challenge.The eight candidates to be the next director-general of the World Trade Organization are: Continue reading...
As parliament returns, Boris Johnson’s government faces a set of challenges it is woefully ill-equipped to meetIn a cringeworthy social media stunt before the last election, Boris Johnson mimicked the famous cue-card sequence in the film Love Actually, itself a parody of Bob Dylan’s Subterranean Homesick Blues video. The prime minister’s scrawled series of messages conveyed the ultimately winning trope of “get Brexit done”. As parliament returns on Tuesday, and the nation braces for what is likely to be an autumn of considerable discontent, words from another Dylan classic, My Back Pages, seem to sum up Mr Johnson’s current situation: “My existence led by confusion boats, mutiny from stern to bow.”The now notorious sequence of Covid-related U-turns performed by the government reflects a chronic lack of planning and foresight. Failing to reconcile the twin priorities of safeguarding public health and protecting the economy, ministers have vacillated, prevaricated and lurched first in one direction and then the other. As the days begin to shorten, the sky is turning dark with chickens coming home to roost. Continue reading...
Data shows rise in transport, healthcare and construction jobs while ‘white-collar roles’ lag behindDemand for office workers in the UK is lagging behind other types of work, according to data that suggests the labour market is undergoing an “asymmetric recovery” after the near-total freeze in hiring during the coronavirus lockdown.The proportion of workers with new jobs in industries that mainly employ people in so-called white-collar roles – such as media, software and finance – has lagged behind other sectors despite the gradual return to workplaces, according to data from LinkedIn, the work-focused social network owned by Microsoft.Related: WPP reveals only 3% of UK staff regularly work from office Continue reading...
French economist admired by Xi Jinping says he will not cut sections on inequality in ChinaThe latest book by the French economist Thomas Piketty appears unlikely to be sold in mainland China after he refused requests to censor it.The Chinese president, Xi Jinping, has expressed admiration for Piketty’s work, but Capital and Ideology, which was published last year, has not made it to the mainland China market due to sections on inequality in the country. Continue reading...
Several Conservative backbenchers argue that focus must be on supporting a continued economic recoveryThe chancellor, Rishi Sunak, has been urged not to introduce tax hikes in his November budget by Conservative backbenchers who argue they would damage economic recovery.The intervention followed speculation the Treasury could raise £20bn through extra levies to deal with the fallout from Covid-19.Related: Rishi Sunak urges diners to keep supporting eateries after Covid subsidy endsRelated: UK treasury minister calls for return to work to help economy recover from coronavirus Continue reading...
Modern monetary theory offers a radical solution but the SNP may be too economically conservative to try itOpinion polls suggest Scotland would vote decisively for independence if another referendum were held now. Brexit, which Scots rejected by a thumping majority, and Covid-19 have changed the political dynamics since 2014. Put simply, Scotland would rather be inside the European Union with Nicola Sturgeon in charge than outside it with Boris Johnson calling the shots.That, at least, is how things currently stand. The economic problems an independent Scotland might face, which were crucial in the 55-45% vote to stick with the union six years ago, no longer carry as much weight. Continue reading...
The e-commerce retailer is looking for £920m and a huge valuation from its stock market debut – but there are reasons to be waryWe are invited to view the imminent arrival on the London stock market of The Hut Group, a Manchester-based e-commerce retailer, as an uplifting story of smart technology, clever marketing and endless growth. Here’s a company that dodges Amazon’s thunderbolts and attracts some of the world’s biggest consumer companies – the likes of Nestlé and Procter & Gamble – to its “end-to-end” platform.In a retail world dominated by shop closures and redundancies, The Hut Group sings a different tune. It claims the flotation will create more millionaires than any other listing of a British company, thanks to founder and chief executive Matthew Moulding’s long commitment to employee share ownership.The notion that big brand owners will flock to use The Hut Group’s e-commerce platform has yet to be tested properly Continue reading...
Eat out to help out saw busy restaurants and extra spending generally, but looming job losses could mean the whole nation tightening its beltBritain loves a bargain – even, as it turns out, during a global health emergency. Dismissed as a gimmick at first, the government’s eat out to help out scheme has proved hugely popular, dishing up more than 64 million discounted meals so far – equivalent to almost one for every person in the UK – since its launch a month ago.When the scheme finishes on Monday, chancellor Rishi Sunak, will be able to say that his policy successfully encouraged people back into restaurants, pubs and cafes between Mondays and Wednesdays in August, serving up a much-needed boost to the economy, and to the embattled hospitality sector in particular.We need to see what the plan is for protecting economic capacity over the coming period Continue reading...
Central banks risk triggering a cascade of defaults if they ever raise interest rates againWhy would you want to own anything when you can rent? It is a question being asked of cash-strapped millennials whenever they think about hitting the high street.John Lewis is the latest to tell young people they can have it all, or in most cases the bare necessities of modern life, if they would just learn to lease or rent whatever it is they need – a computer, sofa or desk chair. Don’t wait, says the department store, until you have the savings to pay for something outright (which may be never happen). Overcome those silly concerns about student loans, mounting credit card debts and a lack of savings by signing one lease or rent deal after another to get whatever you need.A life spent moving from rented home to rented home is generally not the joyful, freewheeling experience some older people think it is Continue reading...
The future of the north Devon yard bought last week by Harland & Wolff will depend partly on Boris Johnson fulfilling his promises about a string of naval contractsIt has been a lonely few months for Clifford Edwards. For the past 18 months he has been the sole employee at Appledore shipyard, near Barnstaple in north Devon.Soon, though, Edwards will be working alongside colleagues again and the spookily quiet 118-metre dry dock will once more reverberate to the sounds of men and women toiling in heavy industry.The prime minister assured us that he would do everything to assure a line of projects Continue reading...
by Michael Sainato in Orlando, Florida on (#57ESE)
Facing massive medical and funeral bills, families, some of whom are out of work, are seeking help through fundraisersOn the morning of 19 August, 74-year-old Miguel Ramos passed away while hospitalized for Covid-19 in Orlando, Florida. His wife, Leticia, also tested positive and is currently fighting to recover.Facing thousands of dollars in funeral and medical expenses, their daughter Nohemi Ramos started a GoFundMe to try to raise money to cover some of the costs.Related: ‘Coming here is a necessity’: demand for food aid soars in US amid job lossesWe would have been able to cover the costs if we were working, but since everyone got sick at home, no one was able to work and bills kept coming Continue reading...
Chair Jerome Powell says inflation will be allowed to rise above 2% to boost employmentShare prices on Wall Street rose to a fresh high after the head of the US central bank paved the way for years of more pro-growth policies by softening its approach to inflation.Jerome Powell, the chairman of the Federal Reserve, said he and his policymaking colleagues in Washington had unanimously agreed that inflation would be allowed to rise above its 2% target for some time in order to boost employment. Continue reading...
by Nina Lakhani in Pittsburgh and Beaver county on (#57BD6)
Nationwide the need for aid at food banks and pantries has surged amid worst unemployment rate in modern timesNeisha Davis cradles brown paper lunch bags in the crook of one arm, while holding on to Demitri, her wriggling baby son, in the other and keeping a careful eye on Naya, her four-year-old daughter, as she runs around the church car park with another little girl.It’s hectic but the free packed lunches have become a crucial part of their daily nutrition. So everyday at noon the family make the two-mile journey from Homewood, a low income predominantly African American Pittsburgh neighbourhood with no grocery stores, to the East End Community Ministry’s pop-up lunch stall in East Liberty.Hunger always impacts children hardestRelated: Making billions v making ends meet: how the pandemic has split the US economy in twoHonestly, I’ve broken down thinking about food. I’m here because I can’t let my pride stop me from doing what I need to do Continue reading...
In the short term, probably not, but with China weaponising the yuan stern challenges lie aheadThe recent sharp depreciation of the US dollar has led to concerns that it may lose its role as the main global reserve currency. After all, in addition to the Federal Reserve’s aggressive monetary easing – which threatens to debase the world’s key fiat currency even further – gold prices and inflation expectations have also been rising.But, to paraphrase Mark Twain, reports of the dollar’s early demise are greatly exaggerated. The greenback’s recent weakness is driven by shorter-term cyclical factors. In the long run, the situation is more complicated: the dollar has both strengths and weaknesses that may or may not undermine its global position over time.Related: Price of gold should not determine US monetary policy | Jeffrey Frankel Continue reading...
Economist who argued against neoliberalism and was one of those advising the Labour leadership on the development of policyJohn Weeks, who has died aged 79, was one of a group of prominent economists who, after the global financial crisis of 2008, began to push back against the dominant economic ideology of neoliberalism. Based in Britain after moving from the US in 1990, he took part in the Occupy movement against economic inequality and blogged on the Open Democracy and Social Europe websites. Latterly he was the driving force behind the Progressive Economy Forum (PEF), a body of academics and economists that was influential – although arguably not influential enough – in the development of Labour party policy during the Jeremy Corbyn years.As PEF coordinator, John established links between its economists and Labour’s shadow treasury office under the shadow chancellor, John McDonnell. Through various means, including the commissioning of papers on a universal basic income and shorter working hours, the setting up of a workshop with McDonnell’s office to consider Bank of England macro prudential policy, the staging of a series of public lectures and through informal meetings with McDonnell and members of his team, PEF was able to work up policies that appeared in the 2019 Labour manifesto. Continue reading...
Richard Murphy and Colin Hines stress the importance of the government spending money on creating jobs as well as on infrastructure to deal with the impact of coronavirus on people and the planetYour editorial (19 August) correctly points to the fact that the “money no problem” approach to tackling the short-term upheavals caused by coronavirus must now shift to tackling the climate crisis. If not, it risks the further alienation of young climate protesters, the exceptional Greta Thunberg and the countless environmental campaigners active over the past few decades. The catalyst for this is the need for new jobs in every community to counter the political, economic and personal trauma that will come in the wake of the coming tsunami of lost livelihoods across the country.An answer to the inevitable question of how to pay for such a transformation was provide by Larry Elliott’s observation (18 August) that the government’s money-printing programme of quantitative easing (QE) inflates the assets of the already rich, rather than helping rebuild the real economy. Given rising unemployment, it’s likely that QE is going to be required for some time to come. In that case, the government’s e-money printing presses must be used to help fund the employment of the millions of increased staff needed across all social sectors, from more care and health workers to teachers and police, while also funding investment in new climate-friendly infrastructure projects, such as making the UK’s 30m buildings carbon neutral and adapting existing infrastructure to deal with future heatwaves and flooding. This would be a serious start to healing the damage currently being inflicted on people as well as the planet.
Even if the only objective was low and stable inflation it would be a bad ideaThe price of gold reached an all-time high of $2,000 per ounce in early August. And while mainstream economists have treated gold as a sideshow since the world abandoned the gold standard in 1971, this recent price increase is a significant signal.Three explanations for the elevated gold price – related to US monetary policy, risk and investors’ growing desire for a safe-haven alternative to the dollar – have been offered. Each contains some truth.Related: Forget doom-laden headlines, the dollar has not gone into terminal decline | Barry Eichengreen Continue reading...
The pandemic has forced the Tories into a change of direction even sharper than Edward Heath’s. But the crisis is not abatingBoris Johnson is shaping up to be a busted flush. In a remarkably short time he has lost the confidence of the country, Europe and, more important from his own narrow point of view, the Conservative party.Johnson is probably the worst British prime minister since Lord North, who is remembered for having lost the American colonies. These days the best thing about North is that he is remembered in the name of rather a good racehorse.Commentators keep calling this a recession. It is not: it is a hammer-blow to the economy administered by a panic-stricken government Continue reading...
by Larry Elliott and Richard Partington on (#57722)
Despite looking anything but fearless as Covid-19 first struck, US markets have regained lost ground and reached new highs. We list the reasons whyNothing like the recovery in the US stock market has ever been seen before. After the Wall Street Crash of 1929, the time it took for shares to regain their previous peak was measured in decades. After the global financial crisis of 2008, it was measured in years. This time it has taken less than five months – from a low on 23 March – for the S&P 500 to regain all its lost ground and hit a new high. At the time, not even the most bullish trader would have been bet on such a rapid recovery, but five factors explain the remarkable turnaround. Continue reading...
Economics | The Guardian