Figures show unexpected resiliency of job market as Fed keeps interest rates high try to tamp down 3.4% inflationThe US economy added 272,000 jobs in May, a sign the labor market remained strong amid high interest rates, the Bureau of Labor Statistics announced on Friday.The number of May jobs was far higher than the 190,000 economists had expected and topped April's gains, when a revised 165,000 jobs were added to the economy. The report offered a mixed view of the jobs market. The unemployment rate rose to 4% for the first time since January 2022, up from 3.9% in April. Continue reading...

Average price of a home dipped by 0.1%, says Halifax, bringing cost of typical property down to 288,688

Institute for Government calls for credible vision' to tackle crisis engulfing NHS, prisons and local councilsPolitical parties must be honest with Britain about the immediate crisis of collapsing public services facing the next government, according to a hard-hitting report that lays bare the crisis affecting the NHS, criminal justice system, prisons and local government.In a direct challenge to Rishi Sunak and Keir Starmer to come clean with voters, the Institute for Government thinktank said most state services are performing worse than at the time of the 2019 general election, and substantially worse" than when the Conservatives first took office in 2010.NHS waiting times had been the longest on record, and targets for elective care, A&E and cancer treatment have not been met since 2016. The number of people waiting for more than 12 hours in A&E has tripled to 1.5m since 2019.People are struggling to see their doctor, despite more appointments being delivered than ever. The numbers of patients per GP had risen by 18% since 2015.Prisons were at a crisis point. Capacity would be used up shortly after the election, resulting in further early releases of prisoners and delayed court cases. Even so, funding was set to fall by 5.9% each year relative to demand in the next parliament.In the last six years, there had been six times the number of section 114 (bankruptcy") noticed filed by local authorities than in the previous three decades, forcing cuts to key services. Residents in those areas face rising council tax bills and vastly reduced services such as libraries, waste collection and adult and children's social care. Continue reading...

Rishi Sunak failed during TV debate to make clear how he had calculated Labour's spending policies, says OSRThe UK's statistics watchdog has warned the Conservatives over Rishi Sunak's claim that Labour would raise taxes by 2,000, saying it failed to make clear how the figures were calculated.In a rap over the knuckles for the prime minster, who made the claim during a leadership debate on ITV on Tuesday evening, the Office for Statistics Regulation (OSR) said the case demonstrated how all party campaigners needed to offer the public a transparent view of tax and spending policies. Continue reading...

Exclusive: ONS official's remarks, not intended as comment on overall state of the economy, were later used by SunakThe UK's statistics watchdog has closed an investigation into remarks made by an official about the economy going gangbusters" that were cited by Rishi Sunak.It was looking into the comments made by chief economist of the Office for National Statistics (ONS) last month amid concerns that politicians could misuse economic data in the run-up to the election. Continue reading...

European Central Bank lowers borrowing costs for first time in almost five years, but won't pre-commit to further cuts

ECB reduces rate to 3.75% across eurozone, putting it ahead of US Federal Reserve and Bank of EnglandThe European Central Bank has eased the pressure on borrowers across the eurozone after cutting its main interest rate for the first time in almost five years.Citing a sustained fall in inflation, the ECB said its deposit rate would be cut to 3.75% from a record high of 4%, putting it ahead of the US Federal Reserve and the Bank of England, which have yet to cut interest rates. Continue reading...

Exclusive: After ruling out rises in VAT, income tax or NICs, shadow chancellor said to be weighing other options to raise cash in an autumn budget

A 0.25 percentage point cut to main lending rate is forecast amid growth in Germany, Italy and SpainThe European Central Bank is expected to cut interest rates for the first time in almost five years at its meeting on Thursday after a survey of private sector businesses showed activity expanded at the fastest pace in a year while inflation cooled.The latest HCOB purchasing managers' index (PMI) data, compiled by S&P Global, showed private sector output expanded in most economies covered by the euro currency after growth in Germany, Italy and Spain was only marginally offset by a downturn in France. Continue reading...

All you need to know about Rishi Sunak's tax claim, from who costed the figures, and how, to why it's so controversialTax dominated the first head-to-head debate between Rishi Sunak and Keir Starmer with the prime minister making an eye-catching claim about what Labour's plans would involve.Sunak claimed independent Treasury officials" had costed Labour's policies and they amount to a 2,000 tax rise for everyone". Starmer dismissed the claim as absolute garbage". Today, Labour's frontbench have gone further, accusing Sunak of telling a big desperate lie". Continue reading...

Small and medium-sized firms badly hit as huge drop in apparel sales helps fuel 18% slide in all-non food exportsUK exports of clothing and footwear to the EU have dived since Brexit, according to a new study that shows the extent to which complex regulations and red tape at the border have deterred firms from sending goods across the Channel.Exports of clothing and footwear sold to EU countries have fallen from 7.4bn in 2019 to 2.7bn in 2023, helping fuel an 18% slump in sales of all non-food goods exports to countries covered by the EU single market, according to the consultancy Retail Economics and online marketplace Tradebyte. Continue reading...

Firms that employ millions in manufacturing, hospitality and construction already struggling to plugs gaps after BrexitThe battle between the Conservatives and Labour to show they are tough on migration risks damaging sectors that are vital to the economy, industry figures have warned.Rishi Sunak unveiled a Conservative pledge to cap visas awarded to migrant workers on Monday, promising bold action to reduce immigration" amid pressure from a Reform party reinvigorated by the return of Nigel Farage as leader. Continue reading...

Labour and the Conservatives want to reduce national debt, but Resolution Foundation says promises detached from reality'Britain's next government will need to fill a shortfall of up to 33bn in the public finances unless it is prepared to push through a fresh round of severe austerity measures, a thinktank has warned.The Resolution Foundation said the debate between Labour and the Conservatives over the funding of specific pledges was detached from reality", with election promises based on cuts that would be hard to deliver. Continue reading...

May recorded the lowest spending growth since February 2021, Barclays' snapshot of card activity showsConsumer spending growth is at its weakest in more than three years as higher council tax bills and the rising cost of broadband and mobile phones eat into household budgets, a report has said.The monthly snapshot of credit and debit card activity from Barclays found an improvement in consumer confidence as a result of falling inflation was not leading to a pickup in spending. Continue reading...

Rolling coverage of the latest economic and financial news, as wholesale gas prices rise after disruption to supplies from NorwayJust in: UK factories have returned to growth, with the most rapid expansion in output in over two years.The latest poll of purchasing managers across UK manufacturing found that activity grew across the sector in May.All three product categories covered by the survey (consumer, intermediate and investment goods) and all three size definitions (small, medium and large) registered concurrent expansions for the first time in over two years.Rates of [price] increase accelerated in the consumer and intermediate goods sectors, but eased at investment goods producers. Continue reading...

New lower rates of 3.75% and 4.75% respectively are likely to be introduced this week after drops in inflationBorrowers in the eurozone and in Canada are expected to get some relief from high interest rates this week.After recent drops in inflation, the European Central Bank (ECB) and the Bank of Canada (BoC) are forecast to lower their benchmark rates in the coming days. Continue reading...

Exclusive: level at highest in more than 30 years, say campaigners, who want rapid and effective' relief schemeDebt payments by the 50 countries most vulnerable to the climate crisis have doubled since the start of the coronavirus pandemic and now stand at their highest level in more than three decades, campaigners have warned.The Debt Justice charity said countries at the highest risk of being affected by global heating were paying 15.5% of government revenues to external creditors - up from less than 8% before Covid-19 and 4% at their lowest recent point in 2010. Continue reading...

Net migration has benefits but has done nothing to address downward trend in per capita GDPImagine that during the election campaign Rishi Sunak announced that by 2038 he expected migration to boost the population by 3.7m - more than the current number of people living in Wales. What would your response be?It's a question worth asking, because such an increase is precisely what has been seen since David Cameron pledged in 2010 to reduce net immigration to the tens of thousands annually. In the current parliament alone, net migration to the UK has been 2m. Continue reading...

Senior adviser who worked for Tony Blair and Gordon Brown says there is an urgent imperative' for a new government to address wealth inequality in Britain Why Labour must adopt radical new tax policies - including on wealth and capital gainsA key New Labour adviser who worked for Tony Blair and Gordon Brown in Downing Street says there is an overwhelming economic and ethical case" for Keir Starmer's party to impose higher taxes on wealth if it wins the general election.Writing in the Observer Patrick Diamond, professor of public policy at Queen Mary University of London, and his colleague Colm Murphy, a lecturer in British politics, say a Labour government will need to look at radical ways to raise money, not least because the plans for higher economic growth that the party is relying on may never materialise. Continue reading...

The Brown-era adage Prudence with a purpose' could be the way to obtain the economic stability that has eluded every UK government since the 2008 financial crisis Read more: Starmer must introduce wealth tax after Labour wins election, top Blair aide saysKeir Starmer appears destined for Downing Street. Even so, as the election campaign rumbles on, his party will be challenged to articulate a compelling platform that secures not only the keys to Number 10 but also the economic stability that has eluded every UK government since the 2008 financial crisis. That will demand fiscal discipline delivered not only through a prudent approach to public spending but also fundamental reform of our tax system.In headline policy, Labour is committed to fiscal rules on spending and debt. Rachel Reeves promises to move towards balanced current spending and to secure a falling debt-to-GDP ratio by the fifth year of the forecast. As her speech on Tuesday argues, Labour believes such rules will underpin stability" and growth". Continue reading...

There is still an expensive war to fight, and if EU and UK politicians insist on using taxpayer funds for it, there will be little left to spend on public servicesThere were hopes that 2024 would be a good year. Economists talked of a soft landing, by which they meant a solid rebound from last year's high-inflation, high-interest shock. A drop in inflation would spark cuts to the cost of borrowing while trade expanded, unemployment stayed low, and household disposable incomes increased.This cheerful scenario was going to be played out across Europe and allow the EU and UK to pursue many of the goals, not least tackling climate change, that were delayed as ministers sought to protect business and household finances from the fallout from the pandemic and the Ukraine war. Continue reading...

Dublin does not seem a fair city to those who move there to work but can't afford a home. Ireland's coalition government says it is acting on housebuilding, but bosses and staff say it must try harderIreland's economy is absolutely booming," says Stephen O'Dwyer, the founder and owner of Dublin's Tang cafe/restaurant chain. But it has left people facing a very unequal and difficult society to work in."At the top of O'Dwyer's concerns is housing, which is cited by businesses large and small as a significant barrier to Ireland's economic growth. The capital is not alone: cities from Cork to Limerick report acute housing shortages and rising levels of homelessness. Continue reading...

The two Tory PMs both told voters the economy had turned a corner - but there is little comparison now with 27 years agoWith a Labour victory looking increasingly probable, John Major's pitch to voters in 1997 was simple. Britain had come a long way, the then prime minister said in his foreword to his party's manifesto. We must be sure that we do not throw away what we have gained, or lose the opportunities we have earned."Sound familiar? It should, because it is exactly the same argument Rishi Sunak is deploying as he seeks to defy the opinion polls and win a fifth successive general election victory for the Conservatives. Continue reading...

BCC calls for improved relations with the EU to cut the costs for business, while sticky inflation worries marketsThose IT problems at TSB appear to be solved!A TSB spokesperson tells us:We're aware some customers had issues logging into our app and online banking this morning. This issue is now resolved and we're sorry for any inconvenience it caused." Continue reading...

Central banks may not aim for such an outcome but will probably adjust interest rate decisions in a way that makes it more likely than deep recessionListening to central bankers, one would think that the recent bout of high inflation was merely an excusable post-pandemic forecasting error made under extreme uncertainty. But while this narrative now prevails in markets and the financial press, it presumes a level of central-bank independence that is simply unrealistic in today's volatile economic and political environment. And even if central banks manage to get inflation back down to 2% in the foreseeable future, the likelihood of another inflationary surge within the next five to seven years has significantly increased.This is not to say that individual central bankers are untrustworthy. The problem is that most central banks are not as independent as many believe. In a global environment marked by political polarisation, onerous government debt burdens, geopolitical tensions, and deglobalisation, central-bank autonomy cannot be absolute. As unelected technocrats, central bankers may have short-term operational independence but governments ultimately control appointments and oversee budgets. In many countries, the government also has the power to reset monetary mandates. Continue reading...

Sticking to the Tories' nonsensical fiscal rules, as it says it will, would be a political and economic mistakeLabour knows what it is like to inherit an economic mess. It did so in 1974, when Britain was on the verge of a period of high inflation and rising unemployment. It did so in the even tougher circumstances of 1945, and it will do so again if it wins on 4 July.Things are not as bleak as they were when the second world war ended, but coping with the twin shocks of the past five years - a pandemic and a European war - has been a struggle. Repairing the damage will be costly and time consuming.Larry Elliott is the Guardian's economics editor Continue reading...

Royal Mail's parent company IDS agrees takeover offer but BHP's pursuit of Anglo fails

It's worth remembering the RBA's 2% to 3% inflation target is an arbitrary goal. Do we really need to hit households again with higher rates?

Thinktank says proposal to pay for scheme by scrapping shared prosperity fund would downgrade efforts to level up country

An incisive analysis of how the controversial ideology has permeated modern lifeIn 1945, Antony Fisher visited the neoliberal economist Friedrich Hayek at the London School of Economics. Fisher, an old Etonian whoworked in the City, shared the Austrian's belief that the nascent postwar welfare state would eventually lead to totalitarianism. Fisher wanted Hayek's advice. Should he go into politics? No, the professor said, something like a thinktank would have far more decisive influence in the great battle of ideas".Fisher went on to found the Institute of Economic Affairs (IEA), the outfit widely credited, among other things, with incubating Liz Truss's disastrous premiership. Fisher later moved to the US, where he set up the Atlas Network, an umbrella organisation that now covers more than 450 thinktanks, including influential groups such as the Cato Institute and the Heritage Foundation. Many are charities. Few name their donors. Continue reading...

Democrats try to connect the dots as some in Saginaw wonder if Trump is just a better fit with the economy'Less than six months before the US presidential election on 5 November, anxiety over the economy looms large. While official figures show a significant recovery since the pandemic, many Americans aren't buying it. As election day approaches, the Guardian is dispatching reporters to key swing counties to gauge how they are feeling - and how they might vote.Joe Biden should be worried about Janel Turner, owner of Kreole Qweenz, a gumbo shop in downtown Saginaw, Michigan. Continue reading...

This live blog is now closed, you can read more on this story hereRachel Reeves, the shadow chancellor, is giving a speech on the economy in Derby.She says her proposition is that Labour is the natural party of British business".Yes, I would describe myself as a Christian socialist in the best traditions of that [term] because that's about putting people first and to do that, you've got to have a set of policies that will deliver for people.I think it's the best tradition of the things that have been delivered in the UK, whether it's the national parks or the NHS, have come from people with a similar background to mine. Continue reading...

CBI data for May suggests slowdown in price growth is encouraging shoppers in Britain to buy moreSales in British shops have bounced back in May, according to retail data that suggests slowing inflation is encouraging customers to buy more.A net balance of +8% of retailers told a Confederation of British Industry (CBI) survey that sales volumes were up this month compared with the same period a year earlier - a sharp improvement on the -44% year-on-year figure for April. The balance is the difference between companies who answered that the number of items was up" or down". Continue reading...

Biggest drop since November 2021 as unseasonable' weather pushes retailers to continue promotionsShop price inflation has eased to the lowest level since November 2021 after retailers cut the price of big purchases such as furniture and TVs as households keep a tight rein on spending amid cost of living pressures and poor weather.Prices rose at an annual rate of 0.6% in May, down from 0.8% in April - the slowest pace since November 2021 - according to the latest monitor from the British Retail Consortium (BRC) trade body and the market research firm NielsenIQ. Continue reading...

The economy is growing again and inflation is only just above government's 2% target, but it is all too little, too lateWinning five elections in a row is something no party has managed in modern times, and there are reasons for that.Voters tire of the ruling party and want something new and fresh. Even more importantly, being in power for a long time increases the chances of bad stuff happening that tarnishes the government's reputation. In the last 50 years, there has been a recession or economic crisis every 10 years or so on average: the mid 1970s, the early 80s, the early 90s, the late 2000s and the early 2020s. Continue reading...

Both major parties will try to conduct their campaigns without mentioning Brexit. But we cannot afford not to discuss itThings can only get better" was a Labour party slogan before the 1997 general election. The reason why Rishi Sunak has surprised the nation, and what my old colleague Alan Watkins used to call the chattering classes", by calling for a snap election is that Sunak and his chancellor, Jeremy Hunt, have apparently decided that things can only get worse.With low inflation figures - at last - and the possibility of a cut in interest rates, the two of them have been talking the economy up as though there were no tomorrow. Continue reading...

Hastings has the highest number of young people in England in bad health. But, amid a national epidemic of forced economic inactivity, there is hopeOn a Wednesday night in Hastings, a handful of under-18s gather in the back of a former newspaper building for a weekly Dungeons and Dragons night. Around the table, a teenager peers from behind a floppy fringe, telling the other players of a monster with jaws wide enough to swallow a man whole. Behind him, two boys are playing pool. For the moment, there's not an iPhone in sight.Sidney Ewing, the youth worker overseeing the programme, says the majority of young people who come to the centre feel uncertain about their future. Their most popular night is for 16-to-18s, she says, a generation who lost two critical years of their education to Covid, with only screens for school and socialising. A lot of them say they aren't ready to go to university or start work because of their mental health," she says. You hear that a lot: I need to sort myself out first.'" Continue reading...

The Beatles' home city is pulling out all the stops for the arrival of the US megastar's world tour in the UKThe name of music royalty hangs from Liverpool's historic buildings. Art installations mark the biggest pop hits. An army of loyal fans is about to invade. But this isn't Beatlemania. This is Taylor Town.For one fortnight only, Liverpool will be transformed into a Taylor Swift playground" to give the US megastar a proper scouse welcome" as her history-making world tour lands in the UK. Continue reading...

We analyse a key point of contention in the general election campaign: the government's record on pay, housing, energy and food billsIt is a simple question - and it will be at the heart of the general election campaign. After 14 years of Conservative government, people are asking: am I any better off? Continue reading...

From unemployment to inflation, the key data the Tories and Labour must explain to votersRishi Sunak's slim chance of pulling off a victory against the odds in July's general election depends on voters buying the argument that tough decisions taken since he became prime minister are paying off.That claim will be tested over the next six weeks - with every piece of economic news more closely scrutinised than usual for evidence that the UK's tentative economic recovery is gaining momentum or has started to falter. Continue reading...

Growth across British services firms has cooled noticeably this month in an early blow for PM Rishi Sunak's election campaign.

Companies in the oil, hotel, meat and other sectors are price-gouging the US public. They're not hiding it, eitherIn 2022, the Biden administration and the oil industry were in a brutal fight over oil prices. The president was demanding that domestic oil producers invest and drill more to address spiking costs, but Texas frackers were recalcitrant. Whether it's $150 oil, $200 oil, or $100 oil, we're not going to change our growth plans," the Pioneer CEO, Scott Sheffield, said, echoing comments from other leaders at different domestic firms. Profits would go to investors, not to more rigs to address pain at the pump.The oil barons won the fight. Profits in the oil industry jumped from virtually nothing in 2020 to the hundreds of billions in 2021, and then doubled again in 2022. And yet, economists did not see any sort of plot at work. Don't blame the oil companies for their high profits," said the economist Olivier Blanchard. It is not price gouging, just how markets work."Matt Stoller is a writer and former policymaker who focuses on the politics of market power and antitrust Continue reading...

While price growth has fallen sharply, with April's 3.4% lower than March's 3.5%, it is still higher than Fed's medium-term goal of 2%Policymakers at the Federal Reserve have expressed concern over stalling progress in their fight to bring down inflation.Although price growth has fallen sharply since peaking at its highest levels in a generation two years ago, it has remained stubbornly above where officials want it to be. Continue reading...

Economies decide elections but with growth tentative, inflation sticky, and tax cuts unlikely, why would the PM wait

Anglo agrees to enter talks with larger rival, though BHP calls its 38.6n offer final'Financial markets have scaled back their expectations for an interest rate cut in June, and August is also looking slightly less likely. They are forecasting a reduction by September, though.Before today's inflation data, which showed services inflation is more stubborn than expected, markets had fully priced in two rate cuts this year, one by August and another one before the end of the year. Investors are now split on whether there will be a second reduction.The cost-of-living crisis is not over - no matter how much ministers pretend it is. Prices are still going up. Food and energy bills are much higher than a couple of years ago. And many are being hit by soaring mortgage repayments.That's because household budgets have been decimated by the highest price rises in the G7 and wages have flatlined over the last 14 years.Pay packets are still worth less today than in 2008, with working people on course to end this Parliament poorer than at the start. Continue reading...

From olive oil to cocoa and carpets to holiday centres, how the cost of everyday things varies

ONS says budget deficit 1.5bn higher than previous year due to extra spending on benefits and weaker tax revenuesJeremy Hunt's plans for pre-election tax cuts have received a setback after higher spending on benefits and lower tax receipts pushed government borrowing above 20bn last month.The Office for National Statistics (ONS) said the budget deficit - the gap between public spending and tax receipts - was 1.5bn higher than a year earlier and the fourth highest for an April since records began. Continue reading...

Exclusive Harris poll for the Guardian shows the majority of Americans think the country's in recession - but it isn't. Test your own knowledge here

Exclusive Harris poll for the Guardian shows 55% believe economy is shrinking, in troubling sign for president's re-election bid

Service sector inflation, monitored closely by Bank of England, barely budged in April