Rolling coverage of the latest economic and financial newsNewsflash: A deputy governor at the Bank of England has warned that it is too early to declare victory" in the fight against inflation.Clare Lombardelli has told a conference at the Bank this morning that inflation has fallen steeply over the past two years. But, she is concerned that there are signs that the process of wage disinflation" may be slowing, which would keep the cost of living rising faster than the Bank's target.The outlook for wages and services prices is unclear from here.We need to see more evidence that wage growth and services inflation will continue their journey down to target-consistent rates.The UK economy has made good progress on disinflation. The shocks that drove inflation up have dissipated and inflation has returned to around target.But the more persistent components of inflation and uncertainties around how the labour market will evolve are cause for concern. So we need careful observation of all the relevant economic data and intelligence as we seek to gradually reduce policy restriction. Continue reading...

If Donald Trump imposes tariffs on EU imports the eurozone is likely to take a hit, causing euro to slide furtherThe euro risks falling to parity with the US dollar for the first time since late 2022 if a new transatlantic trade war weakens the already struggling eurozone economy, analysts have warned.The euro sank below $1.04 against the dollar, the weakest level since November 2022, last Friday after a survey of European purchasing managers showed eurozone private sector output has fallen this month. Continue reading...

A late Black Friday and a mild October mean seasonal sales have got off to a slow start, and hopes are not highShoppers may be preparing to swoop for Black Friday bargains this week, but retailers are expecting a cautious Christmas", with households concerned about high energy and housing costs, as well as the potential impact of the recent budget.Trade has been slow in the run-up to the US-inspired promotional spree, which is a week later than last year, as shoppers held off buying presents in the hope they can snap up a bargain. Continue reading...

The government's pact with voters relies on it delivering on its promise of growth but the early omens are unsettlingStarmer the farmer harmer": the placards sported by the army of angry landowners who rolled into Westminster last Tuesday sent a clear message to the prime minister, albeit while he was out of the country.By Thursday, the Treasury was hinting at a retreat, albeit a very modest one, on its plans to levy inheritance tax on larger estates, mooting a transitional regime for the oldest farmers, who may not have time to organise their affairs. Continue reading...

Stronger ties with the single market is the only way to stop the president-elect from having the last laughAs democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last, and the White House will be occupied by a downright fool and complete narcissistic moron."Those were the words of the great American journalist HL Mencken (in the Baltimore Evening Sun, 26 July 1920). The impending arrival back at the White House surely fulfils hisprophecy. Continue reading...

The shadow banking sector is trying its hand at trading in debt-based products such as collateralised loan obligationsWhen Margot Robbie made a surprise cameo in the 2015 film adaptation of Michael Lewis's book The Big Short, she did more to educate the general population about the risks of securitisation than most financial experts.The Australian actor's brief monologue, notoriously delivered from a champagne bubble bath, explained how banks were bundling up their growing cache of risky sub-prime mortgages into investable bonds, before slicing them up and selling them off for profit. Continue reading...

Traders at a big machinery show say inheritance tax changes affecting the rural economy have had an immediate impact on businessA shiny new tractor is pulling a huge orange trailer, while a commentator explains how best to manoeuvre it to tip grain, watched by a group of farmers wrapped up warmly in wellies, coats and bobble hats, some holding spaniels on leads.Others are checking out the latest models of combine harvesters and crop sprayers, parked on snowy ground at the Midlands Machinery Show, but few seem to be buying, and the changes to inheritance tax for agricultural properties announced in Rachel Reeves's October budget are never far from anyone's lips. Continue reading...

The government claims to be fixing the economy but households may face more pressure in the months aheadLabour swept to power in the wake of a cost of living crisis that hit households hard, with the price of food and energy rocketing alongside the impact of Liz Truss's disastrous mini-budget on mortgage rates.At 2.3%, inflation is nowhere the 10% peak after Russia's invasion of Ukraine, but it is creeping up, and could hit 3% in 2025, say forecasters. Continue reading...

New regulations could add up to 200 Chinese chip companies to a trade restriction list, according to emailThe Biden administration is set to unveil new export restrictions on China as soon as next week, the US Chamber of Commerce told members in a Thursday email.The new regulations could add up to 200 Chinese chip companies to a trade restriction list that bars most US suppliers from shipping goods to the targeted firms, the email from the powerful Washington-based lobbying group said, according to an excerpt seen by Reuters on Friday. Continue reading...

Rolling coverage of the latest economic and financial news

It is often said the tycoons know how to put America's fiscal house in order - but the smart money says that's not the caseWhen the US presidential election was called for Donald Trump, the yield on 10-year US government bonds increased from 4.3% to 4.4%, and the 30-year bond yield rose from 4.5% to 4.6%, with both remaining at those levels 10 days later.As the bond market declined - higher yields mean lower prices - the stock market rose. Clearly, investors expect the next Trump administration to produce higher government budget deficits and more debt. Continue reading...

Dr Jon Mulberg on why GDP isn't the best gauge of economic healthThe use of alternative metrics to GDP has a long history within the environmental movement (Housework to green energy: the new markers of growth in rival metric to GDP, 19 November).GDP was never meant to be a measure of national or even of economic wellbeing. It simply measures sales, and is always the same figure as national expenditure. The person who invented the measure - SimonKuznets - called it national income, which it also mirrors. Continue reading...

UK records the second highest October borrowing since 1993, while crypto-friendly Trump pushes up bitcoinThe jump in UK borrowing last month (see opening post) makes it hard for Rachel Reeves to reverse any of the unpopular tax decisions in last month's budget, says Sandra Horsfield, economist at Investec:Certainly, the pressure on public finances looks here to stay, unless the Chancellor receives unexpectedly good news on growth and therefore tax revenues in future.Tempting though it may be politically to reverse some of the more unpopular decisions taken in the Budget, Labour's hands to do so, without offsetting other unpalatable choices, look tied for now.After a good start to the period, helped by strong back-to-school sales, we saw increased trading volatility in October, particularly in North America and the UK, reflecting elevated promotional activity and mild weather.Against this backdrop, we maintained our commercial discipline, improving gross margin by 0.3%pts while still delivering 5.4% organic sales growth. In addition, we made further, strong progress on our long-term growth strategy including opening 79 new JD stores across the world. Continue reading...

Debt interest payments push public finances deeper into the red in fresh blow to Rachel ReevesThe UK government borrowed more than expected in October as debt interest payments pushed the public finances deeper into the red, piling pressure on Rachel Reeves as she attempts to grow the economy.Borrowing rose to 17.4bn last month, the second highest October figure since monthly records began in 1993 and despite a rise in inheritance tax receipts.

Figure is above Bank of England target after energy bills push up pricesInflation could rise above 3% next year after it increased to 2.3% in October, heaping pressure on the Bank of England to delay further interest rate cuts until the spring.Figures released by the Office for National Statistics (ONS) on Wednesday showed that a rise in energy bills pushed up the consumer prices index (CPI), reversing a downward trend this year in inflation, which was 1.7% in September. Continue reading...

US carmaker to lay off 14% of its European workforceSterling rose after the higher-than-expected inflation figures were released, as did the yield - or interest rate - on government bonds.The pound rose as much as 0.25%, and is now marginally higher at $1.2687.With inflation rising again, we need some serious action to tackle the root causes of the cost-of-living crisis.For a start, that means taking on the profiteers who have driven sky high prices and bringing the energy system back into public hands. Continue reading...

Rate cut unlikely until 2025 as energy prices blamed for stronger-than-expected inflation of 2.3%

Some experts liken tariffs to a game of whack-a-mole, with trade flows simply rerouted if the potential rewards are big enoughBusinesses are bracing for the economic impact of a second Trump presidency, which, if his campaign promises are to be believed, will mean tariffs across nearly all imports to the US, especially those from China.But amid the gloom over the spectre of a renewed global trade war, some manufacturers may be looking to those who already have a playbook on dealing with aggressive US levies, such as China's solar companies. Continue reading...

A letter by 79 firms voicing significant concerns' over the budget is likely to do little more than irritate Rachel ReevesWhile the farmers took to the streets of Westminster, the shopkeepers protested in the old-fashioned way. They wrote a polite letter to the chancellor voicing their significant concerns" over the sheer scale" of budget measures that, they say, will push up their industry's costs by 7bn next year and make job losses inevitable and higher prices a certainty". A total of 79 firms signed, including all the FTSE 100 crew - Tesco, Sainsbury's, Next, Marks & Spencer, B&Q owner Kingfisher, JD Sports and the AB Foods-owned Primark.This display of unity will irritate the Treasury but, almost certainly, will not cause Rachel Reeves to rethink. The chancellor has already told firms how to deal with the rise in employer national insurance contributions (NICs), the most contentious measure and one that comprises 2.33bn of the 7bn. They should absorb it through lower profits or perhaps through lower wage growth", she has said. Continue reading...

Increase in national insurance contributions and national living wage will add to costs, says BRC

Sustainability-focused inclusive income formula accounts for non-monetary factors overlooked in GDP, says ONSFor generations, the economy's progress has been measured by a single figure: gross domestic product (GDP). But the UK's official number cruncher, the Office for National Statistics (ONS), is developing an alternative way of judging what constitutes economic growth, with a view to declaring whether the way we are doing business is more or less sustainable than the previous year.The rival metric to GDP supplements all the money transactions in the economy with everything from housework to renewable energy's knock-on environmental benefits, according to the ONS. Continue reading...

PM says budget stabilised the economy, while mortgage rates are individual decisions for the banks'Keir Starmer has conceded he was disappointed in the UK growth figures last week, but denied that his government's budget was responsible for a recent rise in mortgage rates.The prime minister told journalists travelling to the G20 summit in Rio: What we have done with the budget is to stabilise the economy and that, in my view, was the essential first step. Continue reading...

Further plans include blows to food stamps that could threaten millions of Americans to fund tax cut extensionsDonald Trump's economic advisers and congressional Republicans are discussing possible cuts to Medicaid, food stamps and other government welfare programmes to cover the costs of extending the president-elect's multitrillion-dollar 2017 tax cut.The cuts could mean new work requirements and spending caps, according to the Washington Post, citing sources involved in the talks, including aides in Trump's transition team. Continue reading...

Survey shows households' economic fears, while Goldman Sachs predicts impact of increase in employer NICsTax rises in the budget have sapped consumer confidence and will lead to sharp reductions in private sector pay growth next year, two separate reports have said.In a blow to Rachel Reeves's efforts to boost growth, a survey by S&P Global Market Intelligence showed that consumer confidence dropped this month after households said the outlook for the economy had deteriorated and the prospects for their own finances had worsened. Continue reading...

Rolling coverage of the latest economic and financial newsUK consumer confidence has fallen this month, as households grow gloomier about their financial prospects.The latest poll of consumer sentiment, just released by data firm S&P Global, shows that households reported that their current finances continued to deteriorate in November, while pessimism about the financial outlooks for the year ahead has risen.November is seeing households grow somewhat gloomier again, failing to build on the underlying improvement seen in the months leading up to the General Election.Consumer confidence has fallen back since spiking higher in July amid the election buzz, as ongoing pressure on household finances has resulted in squeezed spending, higher debt and lower savings. Continue reading...

National insurance increase and higher interest rates mean company failures will stay high, says Begbies Traynor

Carlos Cuerpo calls on G20 leaders to act and says election results show citizens want redistribution of wealthSpain's economy minister has urged the world's richest countries to be brave" and redouble efforts to reach an agreement on a global minimum tax on the world's 3,000 billionaires, saying recent elections have shown citizens are demanding redistribution of wealth".Speaking during a visit to London before the gathering of G20 leaders in Rio de Janeiro on Monday, Carlos Cuerpo said the plan had gained political momentum since the summer, when finance ministers agreed to work together to ensure that ultra-high-net-worth individuals are effectively taxed". Continue reading...

Prime minister wants bilateral at G20 to lead to closer ties with China, which he sees as key to faster growthKeir Starmer will become the first UK prime minister in six years to meet the Chinese president, Xi Jinping, promising to turn the page on UK-China relations by building a pragmatic and serious relationship".Starmer and the chancellor, Rachel Reeves, have been pursuing a thawing of relations with the world's second-largest economy on pragmatic grounds, suggesting that the UK cannot achieve its growth ambitions without better terms with China. Continue reading...

Productivity and quality in a sector that is its workforce will require even more money after national insurance risesKemi Badenoch's second go at prime minister's questions last Wednesday was judged a flop at Westminster but she did draw attention to one genuine issue: the impact of the national insurance rise for social care.It is 14 years since the Tories sank Andy Burnham's plan for a death tax" to fund social care. Over that time, as demand has continued to rise, there have been patches and sticking plasters, including the social care precept, and the decision to fill gaping holes in the workforce with a surge in overseas workers. Continue reading...

The government's budget has caused a rupture with the farming community, who have vowed to fight their corner'It could scarcely be a more idyllic morning on Marcross farm. Autumn sun beams down across the Vale of Glamorgan. While it can blow a gale on the south Wales coast, today is perfectly still and the sky bright blue. After a hiccup with the electricity, milking is well under way. Yet despite the apparent serenity and beauty of the surroundings, the mood among the Evans family, who own and run the farm, is gloomy.They have battled for years to make the farm viable and invested heavily in technology to make that a reality. They have diversified to help cover costs - they have a caravan park nearby. Like farmers across the country, however, they are now seriously worried that the government's inheritance changes to farming land could scupper their best-laid plans. Continue reading...

Amid sluggish UK productivity and global insecurity, pulling closer to Europe is diplomatically and economically vitalAchieving the fastest sustainable growth in the G7 was the Labour party's highest-profile pledge going into the general election last July. Chancellor Rachel Reeves has said that boosting growth is at the heart of everything she does". But there was concerning news last week with new figures showing the economy grew by just 0.1% in the three months to the end of September, falling significantly short of expectations.Some business leaders have linked this anaemic growth to uncertainty in the run-up to last month's budget. But it will largely still be a product of factors outside the new chancellor's control, including the decisions of the last Conservative government. Continue reading...

Fears over the health secretary's plan are understandable. But patients and doctors alike are now fleeing the service for other providersThere is going to be lots of angst in Labour ranks about the government's proposed health reforms. At first glance they appear to be a reheated collection of Blairite targets and financial strictures that smack of privatisation by the backdoor.When the former health secretary and arch-Blairite Alan Milburn was installed by his successor Wes Streeting to oversee the shake-up, it was easy to see how fears of a rightward shift might be being confirmed. Continue reading...

The president-elect's unpredictability on trade has experts guessing about his impact on the UK economy - but some find glimmers of hope in the gloomFour years ago, when Donald Trump last occupied the White House, Liz Truss was sent on a mission. Carrying a bottle of British gin on her flight to Washington, the trade secretary had a gift for her US counterpart to show what Americans were missing out on.Back then, while still formally a member of the EU, Britain was hit with 25% US import tariffs on distilled spirits as Trump's administration waged trade battles on multiple fronts, slapping border taxes across a range of goods sold by America's allies and enemies alike. Continue reading...

New remit given to FCA by chancellor raises fears of a weakening of rules meant to avert another financial crisisThe financial regulator has been ordered to encourage more risk-taking across the City, raising concerns that the Labour government is in danger of watering down rules meant to avoid another financial crisis.In an official remit" letter addressed to Financial Conduct Authority (FCA) boss, Nikhil Rathi, the chancellor, Rachel Reeves, said regulations meant to protect consumers should not stand in the way of sensible risk-taking" by investors and the wider financial sector, which includes banks, asset managers and insurers. Continue reading...

Latest UK GDP growth report shows UK grew by just 0.1% in July-September, a slowdown on the first half of the year

European Commission figures predict German economy, usually the engine of the EU, will contract O.1% this year

Bank of England governor says Brexit has weighed on UK economy, while Donald Trump will also complicate matters

Summer slowdown raises questions of whether Reeves's bleak outlook in the run-up to the budget hindered growth

Rolling coverage of the latest economic and financial news

Progressive senators urge party to learn the right lessons' from election defeat and take fight to US billionaire classElizabeth Warren delivered a rallying cry to Democrats in the wake of Donald Trump's election victory, calling on the party to show it stands ready to unrig this economy" as the president-elect works with billionaires to overhaul it.Calling on allies to learn the right lessons" from Kamala Harris's defeat last week, the Democratic senator set the stage for a big battle" over economic policy as Trump returns to the White House. Continue reading...

Family farmers are sick with worry after the end of inheritance tax relief on agricultural property - and the breakup of farms will hit food security, writes Cheryl Cottle-HunkinWe're a father-and-daughter duo working on our sheep and beef farm in north Devon. Despite our farm being relatively small, we too have been feeling the immediate stress and worry of Labour's budget announcements, and thousands of others are similarly feeling the strain (Tax changes in budget last straw for UK farmers after years of being squeezed', 8 November).Mental health has always been a massive issue in the farming industry. There are so many uncontrollable variables to contend with: disease, climate, supermarket prices, not to mention all of the uncertainties following Brexit. We're literally counting trees and measuring hedgerows in a bid to claw back money lost since leaving the EU, as if we somehow need to prove we're custodians of the countryside. A complete mockery. Continue reading...

The consumer price index rose at annual pace of 2.6% after September saw lowest rate in more than three yearsA key measure of US inflation has risen for the first time since March, underlining its bumpy ride down to lower levels.The consumer price index (CPI), which measures price growth across a basket of goods, ticked up to an annual pace of 2.6% in October - from 2.4% in September, which had been the slowest rate in more than three years. Continue reading...

ABS confirms wage price index rose an annual rate of 3.5% in September quarter, bringing some relief to households battling cost of living pressures

During the US time out, Australia and its allies must remain steady and seek to deepen cooperation among themselvesThe idea of open international exchange that framed the Australian reforms of the late 20th century and its subsequent economic success are being challenged in the 21st century. The challenge is intensified by the restoration of Donald Trump as president of the United States. He is committed to higher protection, tax cuts that will set record highs for budget deficits, a trade war with Australia's largest trading partner with a risk of worse, and separation of the United States from the rules-based international trading system. He is also committed to withdrawal from international cooperation and domestic action to reduce climate-changing emissions of greenhouse gases. Global financial crisis is not out of the question.These developments will damage Australian interests. Global long-term interest rates set a base against which Australian rates settle, and will be higher than they would otherwise have been. International inflation will be higher, increasing Australia's own inflation challenge. Australia is the developed country that has most to lose from a failure to stop global heating. Australia has more to gain economically than any other country from success in the world achieving net zero carbon emissions, as an exporter of zero-carbon goods to countries which lack rich renewable energy and biomass resources of their own. Continue reading...

Beijing's model is hitting roadblocks. It needs to move toward more home-grown spending - even if one-party politics makes that hardChina faces what the economist Albert Hirschman noted decades ago: explosive growth is unbalanced, and success embeds that unevenness into political, business and cultural institutions, making change tough. China now stands at this crossroads.The Asian giant's economic growth, which previously relied on exports and a debt-driven construction boom, is facing headwinds: the disastrous crash from a real estate investment spree, big losses hitting the banks, and local governments facing a crippling debt crisis. With households highly indebted, China cannot just build more apartments to sell. Sustaining an export-led boom will become harder as anti-dumping measures and Donald Trump's tariffs hit. All this when Chinese firms report plunging profits. Continue reading...

28 years of lessons | Sarah Winman's Still Life | Crocodile infestations | Running bores | Brexit and Donald TrumpI am so sorry to find that I have read Larry Elliott's last column as economics editor (From Thatcher to Trump and Brexit: my seven lessons learned after 28 years as Guardian economics editor, 10 November). I have always relied on him for explanations of the murky world of economics that are clear, concise and explain the context. My understanding of economics has always been shaky, but Larry'sarticles have given me quitea few lightbulb moments. Ishall treasure the final column.

Rise in unemployment comes amid concerns over increase in employers' national insurance contributions

Labour market is in pretty good shape, but all eyes will be on impact of tax rises on employers

Keir Starmer can show UK is open for business', says former Bank of England chief economist Andy HaldaneThe UK can strike a US trade deal with Donald Trump while also rebuilding EU relations after Brexit to cement its status as a beacon of stability" in an increasingly volatile world, a leading economist has said.Andy Haldane, the former Bank of England chief economist, said Keir Starmer's government could show the UK was open for business at a time when so much else of the world is looking inward - whether to the EU, or the US, it could really pay dividends". Continue reading...

Price has more than doubled in a year as traders hope Trump will favour crypto when he returns to White HouseThe price of bitcoin has risen above $87,000 for the first time as it benefited from traders' hopes that Donald Trump will favour cryptocurrencies when he returns to the White House.Bitcoin reached a record high of $87,198, before slipping back slightly on Monday. The price has more than doubled from about $37,000 12 months ago. Continue reading...