Caroline Kay on the Bank’s governor from 1966 to 1973, who joined straight from school and worked his way to the topYour article (Andy Haldane: the funnyman central banker who’s not great at maths, 1 October) states incorrectly that if Andy Haldane became governor of the Bank of England, he’d be the first non-Oxbridge governor. How about Leslie O’Brien, governor from 1966 to 1973, who joined the Bank straight from school in 1927 and worked his way to the top through the ranks?I knew Lord O’Brien in his latter career as chair of the House of Lords committee for which I was clerk, in 1982. He was a delightful man to work for and his watchwords of integrity and prudence would serve many a banker, and indeed many an Oxbridge graduate in public life, very well.

Kristalina Georgieva warns against premature withdrawal of government measures

Rolling coverage of the latest economic and financial news, as the chancellor of the exchequer warns that many more jobs will be lost before the Covid-19 crisis is over

One reason is that big corporations have not faced the economic pain that small businesses have

Author Chris Goodall says tackling the climate crisis is neither difficult nor expensive and can help boost the economy

Opting for corporate hibernation doesn’t remove cinema chain’s urgent need for fresh fundsChoose your villain in the depressing no-action cinema thriller. The top nomination goes to the distributors of the James Bond franchise who have killed the Christmas season for the cinema industry by shunting the release of No Time To Die into next spring.Then there’s Andrew Cuomo, the New York state governor, who has helped to frighten Hollywood studios by closing the city’s screens. Cineworld itself, now planning to shut all its US and UK cinemas for an indefinite period, is hardly blameless. It is carrying $8.2bn (£6.3bn) of net debt, including lease commitments and its over-leveraged position existed before Covid-19 hit takings. Continue reading...

The chancellor’s speech signals that he wants to debate spending cuts, not increasesRishi Sunak is the Conservatives’ most modern politician in terms of style. But he is traditionalist in substance. In his conference speech, the chancellor extolled the virtues of good housekeeping to sell the idea that he would balance the nation’s books. The household analogy is a powerful one in politics because it seems to correspond to everyday observations about thrift. But it makes no sense to compare personal experience with the economics of a nation. The late Roy Jenkins, two decades after serving as a Labour chancellor, rightly said Margaret Thatcher was trading in lousy economics when she sold herself as a prudent housewife able to save Britain from Labour overspending.“I think it is nonsense,” he told the BBC, “because there is an essential difference between the position of a family budget and the national budget, and that is that on the whole a family cannot increase its income by increasing its spending, whereas a nation, a government, by increasing its spending [can] substantially increase the total of the national income”. It speaks volumes about how much of the debate around political economy has been conceded to the right that the current Labour shadow chancellor could not match the unapologetic Keynesianism of Lord Jenkins. Continue reading...

Higher public spending urged as way of boosting employment and GDP at relatively low costThe International Monetary Fund has told its member governments they can create millions of jobs and boost recovery prospects if they use higher public investment to respond to the severe economic challenge posed by Covid-19.Before its annual meeting this month, the Washington-based fund said historically low interest rates meant it was a good time to borrow for long-term infrastructure projects and said the spending would help tackle rising unemployment.Related: Without clarity and leadership, there's plenty to fear for the UK economy | Larry Elliott Continue reading...

Rolling coverage of the latest economic and financial news

Chancellor hints at tax rises or spending cuts to balance books after pandemic

Jets scheme will help those laid off during pandemic, chancellor to tell Tory conference

Zambia could become the first country to default on its debts amid the fallout from Covid-19, but it won’t be the lastZambia is running out of money to pay its debts. It has asked bondholders for breathing space so that it can put a restructuring plan in place. The copper-rich African state is at risk of being the first country to default on its debts since the start of the coronavirus pandemic.Not the last though. Zambia is the canary in the coalmine, a harbinger of a full-blown crisis that has been lurking in the background from the moment the seriousness of Covid-19 became apparent. Continue reading...

The chancellor and his cabinet colleague Michael Gove are both ‘on manoeuvres’ as Boris Johnson’s premiership floundersA friend who has always shared my distrust of Boris Johnson said to me recently that he had at least hoped our prime minister would “grow into the job”.Alas, as even former supporters – not least those who made the historic mistake of electing him leader – acknowledge, Johnson has not grown into the job. Day by day, he has grown out of it. Continue reading...

Reductions in government support as the original furlough scheme ends point towards a brutal round of redundanciesThe UK economy continued its rapid rebound from the depths of the coronavirus lockdown in August, the latest official data on growth is expected to show on Friday, but many economists are braced for a grim winter as job losses mount.The Bank of England’s chief economist, Andy Haldane, predicted last week that GDP would be “only around 3-4% below its pre-Covid level” by the end of the third quarter, covering July to September. Continue reading...

The prime minister has been unable to resolve the tension between his party’s free-market orthodoxy and a desire to cater to new working-class votersBoris Johnson claims he is a “one nation Conservative”, bringing together the wealthy “classes” with the “masses”. Leaks from Downing Street signal a leftwing approach on economics and rightwing one on culture. Mr Johnson presents himself as the first Tory post-Thatcherite prime minister. His Brexit sales pitch was that he was prepared to sacrifice business profitability to regain “sovereignty”. Yet the Covid pandemic has shown Mr Johnson is unable to resolve the tension between his party’s free-market orthodoxy and a desire to cater to new working-class voters.Pre-crisis the British economy was characterised by low levels of business investment, a poor skills base, stagnating wages and the zombification of UK companies, which had taken on £1.2tn of corporate rated debt. Covid presented a chance to reset the economic model that has seen the share of wages fall as a share of the country’s gross domestic product. As providers of capital, investors might think that having a bigger share of economic output is a good thing. But companies also need customers who can afford to buy their goods and services. Continue reading...

Rolling coverage of the latest economic and financial news, as the US president confirmed he had Covid-19

Jobless rates have fallen sharply since hitting a record low in April, but the rate is still far higher than the 4.8% when Trump took officeThe US unemployment rate fell to 7.9% in September, the labor department announced on Friday, in the last snapshot of the jobs market ahead of the presidential election.Unemployment has fallen sharply since hitting a historic record of 14.7% in April after the coronavirus pandemic shut down the US. But the rate is still far higher than the 4.8% when Trump took office in January 2017 and the recent pace of recovery is slowing. The current level marks the worst job loss that any president has faced going into an election based on records going back to the second world war. Continue reading...

To survive the challenges we must reinforce respect for science and nature, sensible public policy and the interconnected world

Assuming the financial package is completed, collapse or a full-blown state bailout should be off the table for a whileThe process was slow and spluttering, but Rolls-Royce got there in the end: there will be a fully underwritten rights issue to raise £2bn, plus a new £3bn debt package. If the civil aviation market comes out of hibernation by 2022, it should be enough.The UK’s premier engineering company didn’t even have to trot off to Singapore for sovereign wealth money. It appears that current shareholders said that, if new shares are to be printed at desperation prices, they’ll take them. Continue reading...

Bank chief economist attracted attention with a quirky speech this week, but not for the first time

Rolling coverage of the latest economic and financial news, as UK manufacturing recovery continues....but headcounts are still cut

Threat made as Matt Hancock announces latest lockdowns in Merseyside, Warrington and Teesside

With Covid cases and unemployment both rising, and a no-deal Brexit possible, a coherent strategy is urgently needed

Don’t let comparisons with Germany fool you. The policy encourages employers to keep a few staff and abandon the restThough the early days of the pandemic were terrible, they offered a fleeting glimmer of hope. Social scientists have debated for years whether it could be possible to transform the economies of the UK or US, where market forces have been unleashed on society, to more closely resemble the coordinated economies seen in Germany, France and Sweden, where workers are given a seat at the table and typically enjoy greater social protections. During the spring, with the Trades Union Congress (TUC) included in talks to design a previously unimaginable wage replacement scheme, the possibility of change looked tantalisingly close.Indeed, in the hours preceding the plan from the chancellor, Rishi Sunak, for the winter economy last week, many talked of a new “German-style” scheme to replace the furlough programme. The leaders of the TUC and the Confederation of British Industry (CBI) stood alongside Sunak as he prepared to make his speech, a show of unity that would have been surprising less than a year ago. The Kurzarbeit, the German policy of topping up pay for workers on reduced hours, which meant Germany was the only G7 country where employment did not fall following the financial crisis, was widely cited.Related: Fears for jobs grow as employers count cost of Sunak’s winter plan Continue reading...

Report warns of a cascade of job losses as coronavirus furlough scheme winds down

Andy Haldane has bemoaned ‘Chicken Licken economics’. So are things better than they seem?

Rolling coverage of the latest economic and financial news

Britain still experienced worst Q2 contraction of any major economy despite revised figure

Policy could be fine-tuned to help different groups, such as young people, whose lives are currently on holdCoronavirus – latest updatesSee all our coronavirus coverageDuring a pandemic, the virus and the economy feed back in a continuous circular loop of causality. You don’t need to be a trained economist or epidemiologist to see that.As the virus progresses, consumers respond to the risk to their health by cutting back spending on risky activities in leisure and hospitality, such as visits to pubs, cinemas, gyms, nightclubs and restaurants. How much they alter their behaviour depends on how much the virus is a threat to them and those they care for, or how much they know about it. And of course it also affects companies (whose profitability and outlook for the future worsens) and workers who, ultimately, may fall sick and not be able to work, or may fear turning up to risky workplaces. So the virus affects the economy.Related: Tory split on coronavirus has seen off any joined-up strategy | Phillip Inman Continue reading...

Andy Haldane says excess caution threatens economy’s recovery from Covid crisis

Political unrest hit tourism and retail, and coronavirus response has delayed recoveryHong Kong’s economy was already in recession when the pandemic hit in January. Six months of running battles between pro-democracy campaigners and local government had deterred many of the visitors who fuel the lucrative tourism industry, while the threat of violence on the streets and closures of shops had sent retail sales down nearly a quarter on the previous year.With much of Asia shut down by coronavirus restrictions during the winter months, there was little expectation of a recovery until the spring, when the level of infections fell to almost zero across mainland China and most of the rest of the region, and the measures could be eased.The national security law China imposed on Hong Kong in June 2020 has wrought profound changes on the region of more than 7 million people.Related: Demoralised but defiant, Hong Kong's spirit of resistance endures Continue reading...

Initiative aims to ensure low-income countries are not frozen out by rich nations

It’s a myth that Republicans handle the economy better – US recessions almost always occur under the GOPJoe Biden has consistently held a wide polling lead over US President Donald Trump ahead of November’s election. But, despite Trump’s botched response to the Covid-19 pandemic – a failure that has left the economy far weaker than it otherwise would have been – he has maintained a marginal edge on the question of which candidate would be better for the US economy. Thanks to Trump, a country with just 4% of the world’s population now accounts for more than 20% of total Covid-19 deaths – an utterly shameful outcome, given America’s advanced (albeit expensive) healthcare system.The presumption that Republicans are better than Democrats at economic stewardship is a longstanding myth that must be debunked. In our 1997 book, Political Cycles and the Macroeconomy, the late (and great) Alberto Alesina and I showed that Democratic administrations tend to preside over faster growth, lower unemployment and stronger stock markets than Republican presidents do.Related: Ten reasons why a 'Greater Depression' for the 2020s is inevitableRelated: The US is officially in recession thanks to the coronavirus crisis | Jeffrey Frankel Continue reading...

Concerned MEPs say definition of rule of law narrowed to unblock Covid recovery money

New mortgage approvals surged to 84,700 last month, as German harmonised inflation drops to -0.4%

Guardian analysis shows mounting fears of double-dip recession as activity weakens

Kristalina Georgieva says support for most vulnerable countries must be stepped up

We must act now to stop the pandemic inflicting long-term damage, says the head of the IMFUK economy shows signs of faltering before second Covid-19 waveIMF chief: Covid will widen inequality without global actionNever before in living memory have so many lives and livelihoods across the world been disrupted at the same time. The International Monetary Fund estimates the pandemic’s loss to the global economy at around $12tn (£9.4tn) over 2020-21. The poorest countries – with limited resources and constrained capacity – are hit hardest: growth in low-income nations will be at a standstill this year, compared with 5% last year.Without necessary action, this group of about 70 countries, representing more than 1 billion people, faces unprecedented human and economic devastation. The decades-long declining trend in global poverty is being pushed into reverse, with as many as 90 million additional people falling into extreme poverty, mostly in sub-Saharan Africa and south Asia.Related: IMF chief: Covid will widen inequality without global actionKristalina Georgieva is managing director of the International Monetary Fund Continue reading...

Our latest snapshot of key economic indicators shows UK plc is fast losing momentum

Thinktank warns chancellor will have to cut budgets, increase taxes or borrow moreA prolonged battle against Covid-19 would swallow up a large chunk of the government’s planned increase in public spending and force the chancellor into an unenviable choice between fresh austerity, higher taxes or more borrowing, a leading thinktank has warned.The Institute for Fiscal Studies said that even if only a quarter of the extra £70bn allocated by Rishi Sunak to fight the pandemic had to be repeated in future years, the Treasury would either have to find more money than set aside in this year’s budget or announce cuts.Related: Sunak's winter plan is the shadow chancellor's chance to fight back | Larry Elliott Continue reading...

Continue reading...

Readers air their views on economic and generational issues in the UK

Rolling coverage of the latest economic and financial news

Anneliese Dodds has been limited by Covid, but her questions about the job support scheme could prove canny

A Key West team is expected to enforce a new mandate allowing people to go maskless outdoors if they are 6ft apart – an impossible task among partygoersKey West code enforcement officer Paul Navarro was halfway through his shift and beginning to see signs of trouble. The crowds on lower Duval Street swelled just after 9pm, and social distancing quickly became impossible on the sidewalks.Navarro is the last line of defense against the high-risk behaviors which spread Covid-19 and is one of the principal enforcers of the Florida city’s mask mandate – an effort to protect public health and the local economy. Until 16 September part of that balancing act had included a strict mask mandate; now that rule has been loosened.Related: Can California's tourism industry survive a year unlike any other?We have the pressure of the business owners, [and] other pressure from people who want to do the right thing, which, at this point, I don’t know what that is Continue reading...

Losing a job reduces happiness as well as spending powerWe are entering the grim jobs-being-lost phase of this crisis: 695,000 fewer of us are on payrolls and the Bank of England expects unemployment to rise by 1.2m. The chancellor’s new measures will reduce, but far from halt, this tide.Economic policy specialists tend to focus on the financial effects of redundancies. And they are painfully large. A worker earning £20,000 loses 71% of their income if they lose their job and fall back on universal credit. Continue reading...

The chancellor held socially distanced breakfasts with key journalists, and his upbeat message struck a chordThe wave of flattering front-page headlines that followed the chancellor of the exchequer’s statement outlining his autumn strategy to tackle the tottering economy screamed out from news stands across the country.What was not known was that the often gushing coverage came after a Treasury mission to win the hearts and minds of national newspaper editors and political columnists at a crucial moment for the Conservative party. Continue reading...

Britain is condemned yet again to greater hardship by the government’s inept handling of the pandemicOn Thursday night, Britain’s restaurants and pubs emptied an hour early, to a chorus of protests from some of the inconvenienced revellers, alarm from the beleaguered hospitality industry and fury from many media commentators. The curfew is one of the additional restrictions imposed by the governments in Westminster, Wales and Scotland last week as Covid-19 infections continue to rise. Despite the concerns the move raised, on the brink of a second wave of coronavirus, the urgent question facing Britain is whether these restrictions go far and fast enough?The question has polarised political – and, to a lesser extent, scientific – opinion. There are echoes of mid-March, when many scientists were criticising the government for being too slow to act. But we should in theory be better poised to deal with a second wave: we know more about how the disease spreads; Boris Johnson’s government has had months to set up a test, track and trace infrastructure; the NHS has had time to prepare a strategy to keep elective treatment going; mask-wearing is much more prevalent.We know from the first wave that it is impossible to shield vulnerable people while the virus is spreading uncheckedRelated: Almost 90% of Covid tests in England taking longer than 24 hours to process Continue reading...

The battle between Treasury and health department has doomed us to a succession of contradictory gambits – and a long, hard winterIt would help if the cabinet could agree. Yet for the past seven months it has remained deeply divided, squabbling over the scientific advice and what Covid-19 might mean for the nation’s health and jobs.Britons have become familiar with a bewildering, almost weekly stream of tactical policies, twisting this way and that, many of them in direct opposition to each other.It is not hard to see that without financial protection in place for those affected, the virus will continue to spread Continue reading...

The new measures for workers on the furlough scheme are not generous enough to prevent a damaging rise in unemploymentThere are several moving parts in the engine designed by Rishi Sunak to keep the British economy motoring into next year. The most important is the replacement for the furlough scheme that has kept about 9 million workers in employment at some point in the last six months.Only days before the chancellor stood up to deliver his “winter economy plan” on Thursday, Boris Johnson announced a six-month extension to restrictions on sporting and cultural events and a new “rule of six”, restricting the number of people who could gather at any one time.We expect the unemployment rate to rise further, to at least 7% by the middle of next year Continue reading...