New Bank governor’s reputation faced scrutiny at scandal-hit City regulatorAndrew Bailey, who will replace Mark Carney as the Bank of England governor, must roll his eyes every time he sees the phrase “safe pair of hands”. It comes to the fore almost whenever his name appears after 30 largely incident-free years at the Old Lady of Threadneedle Street.But his reputation has come under scrutiny since he quit as deputy governor in 2016 to become the finance industry’s consumer watchdog. Continue reading...

ONS revises up GDP growth from 0.3% to 0.4% but warns of slowdown signsThe British economy grew at a faster rate than initially thought in the three months to the end of September, according to official figures.The Office for National Statistics revised upwards its growth estimate for gross domestic product from 0.3% to 0.4%. Continue reading...

Bookies’ favourite Andrew Bailey emerges as the cautious option from a varied listThere were plenty of names bandied around as likely candidates to be the next governor of the Bank of England but in the end the government has chosen the person who has been the bookies’ favourite from the start.When it came to it, the only thing surprising about Sajid Javid’s decision to appoint Andrew Bailey to succeed Mark Carney was that the process took so long. And as the months dragged by, and Carney’s term was extended twice, speculation grew that Bailey would be overlooked. Continue reading...

Sajid Javid announces head of Financial Conduct Authority as replacement for Mark Carney

Layoffs are common, shifts have been cut – and workers in America’s manufacturing and farming heartlands are losing hopeWinter has come to Davenport, Iowa. Temperatures, at 14F (-10C), are well below freezing. But it’s the cold winds of Donald Trump’s trade wars that worry Shaun Buckles.Related: 'He pulled the wool over our eyes': workers blame Trump for moving jobs overseas Continue reading...

A marketised higher education system is not properly serving the interests of students nor the country as a whole, writes Chris PrattThe growth of financial incentives, lower entry requirements, unconditional offers and spurious advertising (Don’t mislead to attract students, says regulator, 19 December) is further evidence of a marketised higher education system that is not properly serving the interests of students nor the country as a whole.The product of this approach is the large proportion of university leavers going into jobs that don’t require a degree, one of the highest rates in Europe, while at the same time the UK has a growing skills shortage, including at graduate level. Some form of planning of courses and student numbers will be necessary if higher education is to do right by students and significantly improve its contribution to meeting the nation’s skill needs.

Rolling coverage of the latest economic and financial news

Much of growth in debt levels driven by China, says World BankEmerging market and developing economies (EMDEs) pushed their borrowing to a record $55tn (£42tn) last year, according to the World Bank, marking an eight-year surge that is the “largest, fastest and most broad-based in nearly five decades”.While much of the growth in debt levels was driven by China, the Washington-based development agency said most of the 100 countries covered by its analysis were affected, following an increased dependency on borrowing by both private and public sector organisations. Continue reading...

Two members of monetary policy committee vote for cut from 0.75% to 0.5%The Bank of England warned of mounting weakness in the British economy as it kept interest rates on hold despite two members of its rate-setting panel once again voting for an immediate cut.Sounding the alarm that economic growth would come close to flatlining in the final three months of the year, the Bank’s monetary policy committee (MPC) voted 7-2 to keep the official interest rate on hold at 0.75%.Related: Hedge funds hacked into Bank of England briefings Continue reading...

Progress lies in a sense of togetherness, forged in resistance to a decade of austerity. Labour needs to rebuild from the ground upA week seems barely long enough for the dust to settle on this election. Watching Boris Johnson tour old Labour heartlands in recent days has been salt in the wound; a charlatan selling snake oil to those he’ll betray before his new MPs have unpacked.Anecdotal accounts of racist and homophobic abuse are already emerging as the country’s bigots are emboldened. Continue reading...

Rolling coverage of the latest economic and financial news

Three-year low of 1.5% comes amid speculation that interest rates will be cut soonUK inflation remained at the lowest level in three years in November despite rising prices for a variety of goods including chocolate, concert tickets and package holidays.The Office for National Statistics (ONS) said the consumer prices index (CPI) held steady at 1.5% last month, the same level recorded in October, as the annual increase in some prices was offset by falling prices elsewhere, including for cigarettes and hotel rooms.Related: UK wage growth slows again but employment hits record high Continue reading...

Forget the wealth tax - there are many other easier ways to enforce policies more likely to land a Democratic presidentThree years ago, Donald Trump’s victory in the US presidential election triggered a search for explanations of what is still a shocking outcome. One immediately came to dominate: his Democratic opponents had been insufficiently aware of the problem of income inequality, or had neglected to propose effective solutions.That is presumably the logic behind the radical proposals to tackle inequality coming from some of the leading candidates for the 2020 Democratic presidential nomination. Senator Elizabeth Warren, for example, has proposed an annual tax (originally of 2%, but now up to 6%) on the richest Americans’ wealth.Related: Governments should turn back the clock over trade policy Continue reading...

Sterling has lost two cents against both the euro and dollar amid City fears of no dealThe pound has given up the gains made since the general election after Boris Johnson said he would write Britain’s exit from the EU next year into law without an extension in the transition period.Sterling tumbled by about two cents against the dollar and the euro on the international money markets, as the decision to enshrine time-limited Brexit negotiations into law caught investors by surprise. Continue reading...

Fears over election and future EU trade put sector in a tailspin, with car industry hardest hitManufacturing output in the UK tumbled this month at the fastest rate since the 2008 financial crisis as uncertainty surrounding Britain’s trading relationship with the EU and the outcome of the general election hit domestic and foreign orders.According to the latest monthly CBI industrial trends survey, the volume of manufacturing production in December dropped at a rate not seen since September 2009, keeping the UK sector deep in recession. Continue reading...

There’s little pressure among UK banks for deregulation – instead, France could be a bigger threatThe idea that London might have a post-Brexit future as a kind of deregulated “Singapore-on-Thames” is one of the more curious notions to have emerged in the three and a half years since the UK’s citizens voted narrowly to leave the EU in the fateful June 2016 referendum. In fact, at least as far as the financial sector is concerned, the bigger threat to European regulatory harmony could come from France.The phrase “Singapore-on-Thames” is shorthand for Britain becoming a low-tax, lightly regulated economy that can out-compete the sclerotic, over-regulated eurozone from a strategic position only 20 miles or so offshore. The general idea was first mooted a couple of years ago by Philip Hammond, then Britain’s chancellor of the exchequer, as a means of encouraging the EU to strike a friendly Brexit deal with the UK. Continue reading...

Rolling coverage of the latest economic and financial news

Stores try to win customers amid consumer uncertainty and heavy competitionRetailers are offering bigger than ever pre-Christmas clothing discounts this year in an effort to win customers against a backdrop of consumer uncertainty, heavy competition and relatively mild weather.Average price cuts could top 50% by Christmas Eve for the first time according to the advisory firm Deloitte, which analysed more than 800,000 online and in-store products. Continue reading...

OBR forecast means tax rises rather than tax cuts will be needed, say analystsThe scope for significant tax cuts in the new government’s budget has been reduced after gloomier predictions for the public finances from the Treasury watchdog showed higher levels of public borrowing and a deterioration in the British economy.The Office for Budget Responsibility (OBR) warned that government borrowing was on course to be about £20bn higher than previously expected in each year to 2023-24, dramatically cutting the government’s room for manoeuvre after Boris Johnson’s election victory.Related: The Tories need to turn on the spending taps in the north now | Larry Elliott Continue reading...

Trade tensions have eased and markets are steady, but politicians must make growth inclusiveThis being December, my natural inclination is to review the past year’s economic and financial developments to help policymakers and investors anticipate what might be coming in 2020. This year is ending on a relatively positive note, especially when compared with the same time last year. There is hope of a global growth pickup, trade tensions have lessened and central banks have reaffirmed they will maintain ultra-low interest rates and continue to provide ample liquidity. Financial volatility is subdued, and there are reasonable expectations of solid investor returns across many asset classes.As tempting as it is to dwell on current financial and macroeconomic conditions, doing so risks obfuscating a key element in the outlook for the future. There is a curious contrast between the relative clarity of expectations for the near term and the murkiness and uncertainty that comes when one extends the horizon further – say, to the next five years. Continue reading...

A splurge of investment is needed in long-forgotten smaller towns such as Burnley and StokeFifteen years ago the idea of the prime minister paying a weekend visit to Sedgefield would have attracted little or no media interest. That, though was when Tony Blair was in Downing Street and represented the County Durham seat as its MP.When Boris Johnson turned up on Blair’s old patch on Saturday it was very big news indeed because Sedgefield is now coloured blue on the political map of Britain. In large parts of the country, from Blyth Valley to Bolsover, working-class communities have abandoned Labour and turned to the Conservatives. The Tories are the party of the working classes.Related: If the rich are getting richer, then where are they hiding it? | Torsten BellRelated: Today’s weak economy shouldn’t aid the Tories: but that was true in 1992 too | Larry Elliott Continue reading...

Beijing knows the US presidents needs at least the appearance of a thriving economy before next year’s electionAt the beginning of September, Chinese president Xi Jinping incensed Donald Trump by imposing a flurry of new import duties on US goods, including semiconductor chips and mobile phones.It was a retaliation too far for the US president, especially when the stock market reaction was to send shares in America’s second most valuable company at the time, Apple, tumbling by almost 5%. For many observers it was just another skirmish in the tit-for-tat trade war that had rumbled on for 20 months. But in Washington it came as a shock, and was the driving force behind Trump’s premature announcement the following month of an interim deal – one that after much wrangling finally came to fruition, or at least appeared to, last week. Continue reading...

How can we believe that a party wedded to deregulation and flirting with Trump’s America will ever govern for ‘one nation’?The Chinese proverb is “be careful what you wish for”. My own adapted version is “be careful what you vote for”. I make no apology for having devoted so many columns to what on Thursday became the lost cause of Remain. The pro-European cause in this country has, alas, suffered from a colossal failure of leadership. The failure to make the case for our EU membership goes back a long way, as does the drip-drip of the vile anti-European campaign in the Murdoch press, and the obvious suspects in other sections of the media.The sequence of events was well brought out in Denis MacShane’s prophetic book Brexit – How Britain Will Leave Europe in 2015. (What lies in store is outlined both in MacShane’s latest volume, Brexiternity, and Sir Ivan Rogers’s recent magisterial lecture at Glasgow University.) As MacShane wrote in 2015: “The referendum on Europe is not on the benefits or cost of EU membership, but a wider protest about economic and social change which appears inside Britain to produce as many losers as winners.”For reasons that I fail to understand, Corbyn and his allies, such as Seumas Milne, believe that the EU is some kind of capitalist conspiracy Continue reading...

Donald Trump hailed the agreement, but others think it masks a process of deglobalisation as the two superpowers struggle for hegemonyThe trade war between the US and China may never be settled, experts fear, even after the two sides agreed on an outline “phase one” deal.Economists and investors have been poring over the weekend’s announcement, which appeared to end a dispute that has roiled financial markets for 17 months.Related: China confirms 'phase one' trade deal with USA limited deal is recognition that a broad deal is impossible. Both realise that phase one is all they can get.Related: Governments should turn back the clock over trade policy Continue reading...

Political thinkers were calling for more checks on the wealthy long before Bernie Sanders and AOC. Should we have listened?

Maximising output and finding better ways to measure it should be policymakers’ priorityDecember is usually a time for looking back on the past year and forward to the year ahead. In 2019 we have witnessed rising political extremism (on both the left and right) and polarisation, increased government instability and growing tensions between central and subnational governments. Each trend will continue in 2020. Almost everywhere one looks, there is a growing gap between what people demand of governments and what governments can deliver. The reasons vary but a significant underlying cause explains many of the grievances: sluggish economic growth.While rising inequality – a problem that the data suggest is real but overstated – has moved to the centre of public debate, the key issue is that living standards are not improving fast enough among those who are falling behind. In the US, the policies being proposed to address this issue include much higher marginal income-tax rates, a large tax on wealth and massive new entitlements and subsidies, implying larger deficits and far more government control of the economy. Unfortunately, this policy mix promises to reduce, not increase, living standards. To expand the economic pie, allowing people and firms to interact freely in markets, is a much better option than relying on government planners or bureaucrats. The government’s role should be limited to setting and enforcing fair rules of the game.Related: Can the eurozone economy be revived without budget deficits? | Barry Eichengreen Continue reading...

There may be short-term boost but more cuts and deregulation will not wash in new Tory seatsA soaring pound. Shares rising to record levels on the stock exchange. With the threat of a Labour government removed, it was a familiar story in the City once details of the exit poll were released. The previous time the Conservatives won four elections in a row was 1992, and there were echoes of John Major’s unexpected victory as election night unfolded.For a start, on neither occasion did the Tories have much of an economic record to defend. Britain is not in recession – as it was in the run-up to the 1992 election – but it has come pretty close to it. Growth has stalled in the past three months. Factory output is down. Business investment has fallen. Continue reading...

US president congratulates Boris Johnson on triumph that paves way for US-UK deal

Markets welcome greater certainty over Brexit as sterling surges to $1.34The pound staged its biggest rally in almost three years and shares surged after the Conservative party secured a decisive victory in the general election.Sterling jumped more than 3 cents against the US dollar to $1.35, marking its highest level since May 2018 and its biggest rise since 2017. The gains were later trimmed to 2.5 cents, at $1.3414. The pound also rallied strongly against the euro to €1.20, hitting a high not seen since shortly after the EU referendum. Continue reading...

Sterling jumps two cents against dollar after news Tories were set to win majority of 86

Donald Trump tweets that a trade deal with China is very close, as Christine Lagarde chairs her first ECB monetary policy meeting

Expectation is Washington may scrap plans to increase tariffs on fresh range of Chinese goods

New ECB boss says plan to put €20bn a month into financial system may not push growthNew European Central Bank (ECB) boss Christine Lagarde has kept open the possibility of a fresh stimulus package for the eurozone after admitting that a plan to inject €20bn a month into the financial system was unlikely to push growth and inflation back to target.Speaking after her first policy meeting as ECB president, Lagarde said the central bank would keep interest rates at historic lows and maintain the plan hatched by her predecessor Mario Draghi to re-start quantitive easing to cut the cost of borrowing and boost growth.2019: 1.2%, unchanged2020: 1.1%, up from 1.0%2021: 1.4%, down from 1.5%2022: 1.6% - a new forecast2019: 1.2%, up from 1.1%2020: 1.1%, down from 1.2%2021: 1.4% - unchanged2022: 1.4% - a new forecast Continue reading...

Aramco, the world’s biggest Co2 producer, is now world’s largest listed company after floating today

Shutdown of court will leave UK at mercy of EU in its trading relationship after transition period

Southern Africa’s third largest economy is a textbook example of the increasing debt facing a fast-growing continentZambia’s capital, Lusaka, was having a power cut, so the only light in the restaurant was from Fumba Chama’s mobile phone. The rapper, better known as PilAto, had just finished uploading a new track to Twitter. The bitter-sweet lyrics (in Bemba) of Yama Chinese describe the concerns of many Zambians: “They put on smart suits and fly to China to sell our country. The roads belong to China. The hotels are for the Chinese. The chicken farms are Chinese. Even the brickworks are Chinese.” Continue reading...

The death of an old student of mine, who was homeless, brought home how toxic and unkind this country has becomeThe plight of homeless people, and our reaction to it, are part of the hideous tangle this country has got into. There are so many strands leading into this appalling knot, that if we pull any one of them, the tangle gets worse.So the question of why decent men and women find themselves able to walk past people begging in the street, or huddled up in doorways with only layers of cardboard to keep out the cold, is all mixed up with the flagrant deficiencies of Britain’s democracy, and the craven desire to suck up to the US that brought us the “war on drugs” among other idiocies, and the extraordinary grip that the public schools seem to have on the levers of power.Lies, cowardice and betrayal leak from the very pores of our political leaders; trust limps after them like the poor little dog following the murderer Bill Sikes in Oliver TwistRelated: Election polls UK 2019: Tories maintain lead over Labour as campaign enters final days Continue reading...

Lib Dems could be handed victory by disillusioned Conservatives and tactical Labour votersDaniel Humphrey, a St Albans entrepreneur who set up the country’s first whisky subscription club, might have been part of the former Conservative leader David Cameron’s blueprint for the “big society”. He loves the city he grew up in, plays in several sports teams, worked with local councillors on air pollution initiatives, and organised a whisky festival in St Albans this summeras part of an effort to build community spirit.St Albans, in the London commuter belt, feels like a picture of conservative prosperity to a casual visitor, with its Norman cathedral – sheltering one of Britain’s oldest Christian shrines – elegant period homes and hillside high street of boutiques and smart cafes. Continue reading...

The mood may be one of despair, but this election is critical to the country’s future. The best hope lies with Labour, despite its flawsBritain has not faced a more critical election in decades than the one it faces on Thursday. The country’s future direction, its place in the world and even its territorial integrity are all at stake, primarily because this is a decisive election for Brexit. The choice is stark. The next prime minister is going to be either Boris Johnson, who is focused on “getting Brexit done” whatever the consequences, or Jeremy Corbyn, who with a Labour-led government will try to remodel society with a programme of nationalisation and public spending. Continue reading...

Eurostat figures for 2017 show seven British areas in poorest category, up from three in 2008Britain’s regions have failed to keep pace with the rest of Europe since the 2008 financial crash, according to figures that show the number of areas among the EU’s poorest has more than doubled.In 2008 the number of struggling regions, defined as areas with a GDP per head of the population worth 75% or less of the EU average, stood at three – southern Scotland, west Wales, and Cornwall and the Isles of Scilly. Continue reading...

UK economy failed to grow over the August-October period, reports the Office for National Statistics in its latest growth report

A flatlining economy would normally be big news but the torpor fits neatly into both Labour and tory narrativesIt’s as if somebody has hit the pause button on the economy. After going backwards in August and September, the UK failed to register any increase in activity in October either. The economy has flatlined since the summer and over the course of 2019 will have averaged around 0.2% growth per quarter.Unlike in the spring, there was no artificial boost to activity caused by businesses stocking up on goods ahead of the end of October deadline for leaving the European Union, which meant the October GDP estimate was even worse than the 0.1% the City had been expecting. Any modest build-up in inventories was negated by the bleakest month for the construction sector in more than two years. Even higher energy output in response to the cold snap in October failed to turn growth positive.Related: UK economy flatlines in run-up to general electionRelated: Ted Baker bosses quit as it warns over profits plunge Continue reading...

Chancellor said end to uncertainty would ‘unleash a tidal wave’ of investments

Latest GDP figures for October show falls in manufacturing and construction industriesBritain’s economy stalled in the three months to October following steep falls in the manufacturing and construction industries, according to the last official economic data before voters head to the polls on Thursday.The Office for National Statistics said its monthly assessment found that a broad swathe of the UK’s industrial sectors struggled in the autumn months to leave GDP growth at zero. Continue reading...

Recipients have used the money to apply for better jobs, spend more time with their children, or save for better housing

Countries such as Germany are dead set against borrowing to fund fiscal stimulusThe eurozone is in a bind. Despite successive doses of monetary stimulus by the European Central Bank, inflation remains stubbornly below target. Conventional monetary policy, and even quantitative easing, evidently have limited potency when interest rates are at or near zero.Monetary sceptics worry that lowering rates further will damage Europe’s banks. Additional asset purchases beyond the monthly level of €20bn (£16.8bn) already agreed, they warn, will impair the liquidity of financial markets. By pushing up asset prices, the ECB could expose the financial system to stability risks when those lofty prices return to earth.Related: Public borrowing is cheap but ramping up debt is not without risk | Kenneth RogoffThis impasse has prompted suggestions that the ECB should pursue fiscal policy by stealth Continue reading...

ManpowerGroup says Brexit and global trade woes have dented business confidenceEmployers in Britain have “hit the pause button” on job hiring, according to a survey of the labour market that shows demand for new workers has tumbled to a seven-year low.ManpowerGroup said years of strong jobs growth had ended in 2019 as Brexit uncertainty and a slowdown in global trade took their toll on business confidence.Related: Brexit uncertainty prompts more UK firms to prepare for job cuts Continue reading...

Central bank boss went on to lead response to 2008 financial crisis under President Obama

The former Fed chairman used monetarist shock treatment to cure the US of its serious inflation habitSome would choose the Bundesbank’s Karl Otto Pöhl. The recently retired former European Central Bank president Mario Draghi would have his supporters. But the man they would have to beat for the title of the most influential central banker is Paul Volcker, the former chairman of the Federal Reserve, who has died aged 92.Volcker shaped the modern world in three key ways: as chairman of the Fed, he used monetarist shock treatment to cure the US of the serious inflation habit it had developed in the 1970s; he did so by jealously guarding central bank independence; and he created the conditions for a 25-year bull market on Wall Street that only ended with the onset of the 2007 financial crisis.Related: Paul Volcker, US Fed chief under Carter and Reagan, dies at 92 Continue reading...