Post Covid-19, our priority should be to build resilient systems explicitly designed to withstand worst-case scenariosEven before the pandemic came along, the world economy faced a set of deepening crises: a climate emergency, extreme inequality and huge disruption to the world of work, with robots and AI systems replacing humans.Conventional economic theories have had little to offer. On the contrary, they have acted like a cage around our thinking, vetoing a range of progressive policy ideas as unaffordable, counter-productive, incompatible with free markets, and so on. Worse than that, economics has led us, in a subtle, insidious way, to internalise a set of values and ways of seeing the world that prevents us even imagining various forms of radical change. Continue reading...

Covid-19 taught us to be cautious, but that will make economic recovery all the more difficult“When things get back to normal” was almost as common a phrase as “shall we Zoom?” in the early days of this pandemic. We’ve since been on a steep learning curve. Not a soul thinks that the thing missing in their life is another video conference, and our expectations have caught up with the reality that we’ll be living with the effects of Covid-19 for years to come.In the economics sphere, this has seen confident predictions of immediate V-shaped recoveries give way to a focus on the damage that high, lasting unemployment might do. Ongoing social distancing will mean that many firms will be smaller or not viable until a vaccine turns up. Continue reading...

The government’s shake-up of planning laws threatens wildlife and habitats; the environment bill must be brought forwardThe government has repeatedly pledged to maintain high environmental standards. It appears, however, that important laws to protect the environment are now at risk. The prime minister has again claimed that environmental assessments hold up housebuilding, and has promised the “most radical changes” to the planning system since the Second World War. There are rumours of deregulatory measures, including those that weaken laws to protect habitats and wildlife. Furthermore, the government’s flagship environment bill has been delayed and its new body to enforce environmental laws after Brexit will not be ready in time.Countless reviews, including those commissioned by the government, have shown that environmental laws guide good development when implemented well. There is no public appetite for deregulation, with 93% of Conservative voters wanting to maintain or strengthen protections for habitats and wildlife. Continue reading...

Now is not the right time for the government to step back and abandon targeted financial supportIt was trailed as a desperately needed cash injection on the scale of Roosevelt’s New Deal. Yet when the prime minister set out his plans for infrastructure investment last week, they amounted to a tiny fraction – less than £100 per head – of the more than £4,000 per person spent by the US government after the Great Depression. The chancellor is expected to set out more detail this week on what he will do to save jobs and boost demand. But all the signs are that it will be unequal to the task of protecting people’s livelihoods in the wake of the biggest economic downturn for 300 years.The unprecedented scale of the economic shutdown necessitated by the pandemic paved the way for a huge package of financial support for individuals and businesses. There have undoubtedly been important gaps, but in the main, chancellor Rishi Sunak responded swiftly and pragmatically. Just over three months later, and it seems Sunak is determined to reset course, away from the large-scale intervention that the economy continues to require, and towards a more traditionally laissez-faire approach. Hence the move towards relaxing the lockdown to allow large swaths of the economy to reopen – despite the warnings from some prominent scientists that this is happening too soon – and the planned phase out of much government financial support in the coming weeks. Continue reading...

The world accepts that spending is the way out of this crisis. Why is the Bank anxious at the faint prospect of rising prices?Key figures at the Bank of England and the Treasury are displaying a disturbing tendency for caution when the recovery from a pandemic demands bold measures. From the murmuring of officials in background briefings to the speeches of prominent policymakers, every pledge “to do whatever it takes” to rescue the economy during the pandemic comes with a clear rider.Rishi Sunak will sound heroic this week when he tells parliament how Britain’s economy can escape the effects of Covid-19. Money will be pledged – more than the £5bn Boris Johnson mustered in his recent “FDR” speech. Behind the scenes, though, officials are concerned that the UK is weak and must be careful how it spends over the coming years.Even Germany accepts that the pandemic has knocked the stuffing out of its economy and inflation is of no concern Continue reading...

The chancellor has won praise for cushioning the impact of lockdown. But his economic update this week will be fraughtJust over a year ago, Rishi Sunak was a little-known junior minister taking a political gamble. The biggest decision he made last summer, having entered parliament four years earlier as MP for Richmond in North Yorkshire, was to pen a letter.Since he wrote to the Times newspaper to back Boris Johnson to replace Theresa May 12 months ago, Britain has changed beyond all recognition. The Covid-19 pandemic has inflicted the worst public health emergency and economic crisis in modern history – and now Sunak finds himself a key player in steering Britain to recovery in Johnson’s government. Continue reading...

The chancellor is hoping to boost a British economy emerging from lockdown. Here is how he might do itOn Wednesday, the chancellor will attempt to shore up Britain’s economic recovery from coronavirus as lockdown controls are lifted across most of England. But Rishi Sunak is facing a delicate balancing act while severe risks to public health remain.Although expectations that this will be a blockbuster summer statement are being downplayed, here are some of the policy changes the chancellor is thought to be considering for this week’s economic update.Epidemics of infectious diseases behave in different ways but the 1918 influenza pandemic that killed more than 50 million people is regarded as a key example of a pandemic that occurred in multiple waves, with the latter more severe than the first. It has been replicated – albeit more mildly – in subsequent flu pandemics. Continue reading...

Ministers accused of sexism for overlooking industry in lockdown easing plan

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Court hears Qatari leader spoke to then PM as bank was pressurised to accept government moneyA Qatari leader spoke to then prime minister Gordon Brown during the 2008 financial crisis as Barclays bank came under increasing pressure to accept government money, a former bank boss has told a high court judge.Former Barclays chief executive John Varley told Mr Justice Waksman how Qatari prime minister Sheikh Hamad spoke to Brown in October 2008 to “defuse” that pressure. Continue reading...

The White House has boasted the report is a sign of economic recovery, but millions of Americans are still out of workDonald Trump was quick to celebrate the US Department of Labor’s monthly job report on Thursday after it revealed a record 4.8m jobs came back in June as states reopened following coronavirus lockdowns.But while the White House has already boasted the report is a sign of successful economic recovery, the reality is that millions of Americans are still indefinitely out of work. And to make things worse, the report gets its data from a survey that was administered in the earlier half of June, before states such as California, Arizona and Texas reversed the reopening of businesses like gyms and bars in the wake of huge surges of new Covid-19 infections.State gov't employment a conspicuous outlier, down 25K jobs in June w/ no trend reversal thus far. Very important re deliberations over state fiscal relief. pic.twitter.com/NDXTev6fOjUnemployment is hitting women hard than men in this recession, and for Black and Hispanic women, unemployment rates are extremely high. The unemployment rate is 14.6% for Black women and 16.1% for Hispanic women. 14/ Continue reading...

Readers are unimpressed by the prime minister’s promise of £5bn to rebuild Britain

Rolling coverage of the latest economic and financial news, as the latest non-farm payroll beats forecasts

We must target public spending on green, labour intensive projects which have far more bang for their bucks than tax cutsAlthough it seems like ancient history, it hasn’t been that long since economies around the world began to close down in response to the Covid-19 pandemic. Early in the crisis, most people anticipated a quick V-shaped recovery, on the assumption that the economy merely needed a short timeout. After two months of tender loving care and heaps of money, it would pick up where it left off.It was an appealing idea. But now it is July, and a V-shaped recovery is probably a fantasy. The post-pandemic economy is likely to be anaemic, not only in countries that have failed to manage the pandemic (namely, the US), but even in those that have acquitted themselves well. The International Monetary Fund projects that by the end of 2021 the global economy will be barely larger than it was at the end of 2019 and that the US and European economies will still be about 4% smaller.Related: The post-coronavirus economic recovery must be led by the US | Mohamed El-Erian Continue reading...

Chief economist tells committee that coronavirus recovery is an opportunity to create jobs and greener planetThe British government should prioritise spending on green projects to create jobs and kickstart the economic recovery from the coronavirus crisis, the International Monetary Fund’s chief economist has said.Gita Gopinath, the IMF’s economic counsellor, said that mounting unemployment triggered by the Covid-19 crisis would require swift action to prevent lasting damage, and that spending on low-carbon projects could be used in response. Continue reading...

The paltry £5bn pledged bears no comparison to Roosevelt’s programme. Britain needs far more ambitious, green investment

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Sadly, it’s very easy to see how the early stirrings could be crushed by a surge in unemploymentIt’s obligatory these days, even if you’re the chief economist of the Bank of England, to play the game of ascribing a letter to the likely shape of the UK’s economic recovery, so here’s Andrew Haldane’s take: “It’s early days, but my reading of the evidence is so far, so V.”As a headline-grabber, it is excellent. Most of the forecasting world rejected the V-shaped thesis weeks ago. The IMF, as it knocked another chunk off its global GDP forecast for 2020 last week, summed up the mood: “A crisis like no other, an uncertain recovery.” Continue reading...

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The prime minister wants us to ‘clap for capitalists’, but will it be loud enough to reach their tax havens?The past few months have been a bit of a downer for Boris Johnson – just one bad news story after another. So it was time for a rewrite. The equivalent of Dallas series nine when it turned out everything had been a dream. Boris would go back to his happy place of last year’s general election campaign, when all he had to do was turn up and say the same old bollocks about “getting Brexit done” and “levelling up the country” and people would be fawning over his every word.So at the Dudley Institute of Technology in the West Midlands, Johnson rehashed one of his old campaign speeches for the relaunch of “Love Boris”. Only without the bits about Brexit, which was well and truly done now, given that this was the last day he could have asked the EU for an extension to the transition. Here was Boris at his most upbeat. His most vague. His most incoherent. God help baby Wilfred if Boris ever gets round to reading him a bedtime story. Continue reading...

Rolling coverage of the latest economic and financial news, as global markets recover some of their huge losses in Q1

Green campaigners and housing experts warn Boris Johnson’s recovery plan could swiftly become a liabilityBoris Johnson’s plan to build tens of thousands of new homes risks locking in high carbon emissions for decades to come, if they are built to today’s poor efficiency standards instead of being designed for net zero carbon.The prime minister’s plans to “build, build, build” form the centrepiece of his “new deal” to lift Britain’s economy out of the coronavirus recession. About £12bn will go to building 180,000 new homes to relieve the housing crisis, while new hospitals and schools will be constructed to improve degraded public services.Related: How does Boris Johnson's 'new deal' compare with Franklin D Roosevelt's? Continue reading...

The prime minister’s announcement of his coronavirus recovery plan ranged from simplifying the planning system to clapping for capitalists

FDR’s ‘expansionary’ plan amounted to £4,300 per head; Johnson’s to less than £100It’s easy to see why Boris Johnson wants to be seen as the new Franklin Delano Roosevelt. Like FDR, he is in charge of an economy in deep trouble. Like FDR, his sympathies are with the capitalist not the communist. Like FDR, he accentuates the positive.So it was perhaps inevitable that the prime minister harked back to the New Deal of the 1930s when he announced in Dudley that higher spending on infrastructure was key to the UK’s recovery from recession and to the government’s levelling up agenda. Continue reading...

Economic activity has picked up but unemployment could prove a major concern, says Bank’s chief economist

Unions say economic plan is not big enough, while CBI and green groups say there is more to doBusiness leaders and trade unions have warned Boris Johnson that his plan to reboot the British economy from the coronavirus pandemic is not big enough to protect jobs and boost growth.Carolyn Fairbairn, the director general of the CBI, said the prime minister’s speech could build the foundations for recovery, but she added: “Foundations are there to be built on. More is needed to prevent the uneven scarring unemployment leaves on communities.” Continue reading...

The promise of £5bn to rebuild Britain is a far cry from the US recovery scheme of the 1930s

PM pledges to deliver manifesto pledge of ‘levelling up’ country after Covid-19 crisis

UN body says pandemic a bigger blow to employment than it previously fearedModest progress in workplace gender equality risks being reversed by the disproportionate impact of the deepening global jobs crisis caused by the Covid-19 pandemic, the International Labour Organisation has said.The Geneva-based ILO said its latest update showed restrictions on activity during the second quarter had led to an even bigger blow to employment than it previously feared, and that women had been hit harder than men. Continue reading...

Covid-19 debts could lead to government demands for low interest rates, says global bank

GDP figures show impact of coronavirus pandemic was worse than first thought

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The prime minister has called for a new, investment-led approach to the economy as he said coronavirus had been 'an absolute nightmare' for Britain. Johnson said it was time for a 'Rooseveltian approach to the UK', referencing the former US president’s programme of economy-boosting public works in the 1930s under his New Deal policy, including new spending on schools

UK industrial areas fear diluting investment pledge will compound already huge hit to manufacturing from Covid-19Boris Johnson has been warned that failure to stick to the government’s levelling-up agenda will add to the already serious economic problems faced by Britain’s manufacturing heartlands.A new report from the industrial communities alliance (ICA) – an all-party group representing local authorities in the industrial regions of England, Scotland and Wales – said the prime minister should resist pressure to water down promised support.Related: The Guardian view on levelling up: easy to say, hard to do | EditorialRelated: The Guardian view on Boris Johnson’s ‘levelling up’: there’s no quick fix | Editorial Continue reading...

Influential committees call for bold investments to recover and grow in ‘cleaner and greener way’MPs have joined growing calls from business leaders and environmentalists for the government to use its post-coronavirus economic recovery plan to accelerate investments aimed at tackling the climate crisis.The chairs of two influential cross-party select committees have warned the chancellor, Rishi Sunak, that time is running out to “avert an even greater future global crisis caused by climate change”. Continue reading...

Region that has so far avoided worst of outbreak still suffering economic fallout, with reports of theft and need for food handouts soaringA quarter of businesses in the Pacific are not confident they will survive the coronavirus pandemic despite the region largely avoiding the pandemic health crises seen elsewhere, a survey of businesses across the region shows.Ninety per cent of businesses have lost money, and many are already struggling with the effects of recent natural disasters. Sixty-five per cent have been “negatively impacted” by weather, including extreme rainfall or temperatures, flooding, drought or rising sea levels over the past year, a further survey by Pacific Trade Invest Australia found.Related: 'Escape the pandemic in paradise': Fiji opens its borders seeking billionaires Continue reading...

Resolution Foundation calls for job protection to last until end of 2021 amid coronavirus crisisThe biggest job creation package in peacetime is needed to prevent the worst unemployment crisis in Britain for a generation, a leading thinktank has warned.Sounding the alarm as job losses mount, the Resolution Foundation called on the government to continue subsidising the wages of workers in the sectors of the economy hardest hit by the Covid-19 crisis until at least the end of next year.Related: Rishi Sunak is a reluctant Keynesian. But he has no choice | William Keegan Continue reading...

Infrastructure projects will help revive economy after Covid-19 crisis, PM will say

If coronavirus cases spike again consumers will lock down their spending and activity regardlessThe weather was hot. The risks of catching Covid-19 had diminished. The two-metre social distancing rule was being cut to one metre. Boris Johnson said the months of hibernation were coming to an end.Everything screamed the same message: time to say goodbye to the lockdown and hit the beach. Cue panic on the part of ministers and local officials fearful of a second spike in infections.Related: The low-paid need Britain to reopen. But this outbreak isn’t over Continue reading...

Many of the country’s poorest workers are shut out of their workplaces; but fears for public health remain realBritain is emerging from lockdown. After three months of tight controls bringing society to an effective standstill, the beaches are packed, the parks are full and pubs are readying for an influx of drinkers next weekend.Ministers believe the gradual easing of restrictions is the single most important step the government can take to help companies to stay afloat and to keep people in work – aiming to minimise the risk of a jobs crisis this summer.Hopes among retailers for a revival on the high street will be dashed by lingering fears among shoppers Continue reading...

The chancellor is a rightwinger and Treasury man. But a government that closes its economy must spend to fill the gap‘You are Keynesian?’ ‘I wouldn’t be one with my own money, I’ll tell you that,’ said Kaufmann.”This delightful quotation comes from John le Carré’s A Perfect Spy. I wonder if our relatively new chancellor, Rishi Sunak, knows it.But we are also told that he is planning tax increases and public spending cuts in an autumn budget. God help us! Continue reading...

Financial agility and adaptability will be essential if we are to weather the coronavirus crisisWhy is this crisis so hard for economic policymakers? Because it is huge, but also hugely uncertain.We are used to economic factors causing recessions – weak bank deregulation for the financial crisis or the exchange rate mechanism for Black Wednesday. Both were bad recessions, but their paths were clearer once we’d tackled the underlying economic causes by nationalising banks or leaving the ERM. Continue reading...

The crushing impact of Covid-19 means the chancellor must act quickly and imaginatively to create jobs and encourage growth

Rolling coverage of the latest financial and economic news, as investors reacted to another rise in Covid-19 cases in the US

Columnist John Harris has spent the past decade touring the country and reporting on what devastating budget cuts have meant to communities. Looking back, he sees some signs of hope amid the devastation. But will the government change its approach for the impending Covid-19 economic crash?When George Osborne delivered his spending review in June 2010 it ushered in what would become a decade of austerity measures. As budgets were slashed for children’s centres, libraries, parks and welfare, they were accompanied with the phrase “we are all in this together”.The Guardian columnist John Harris has been touring the country for the entire decade, chronicling the devastation that those cuts have made in local communities for his award-winning series Anywhere But Westminster. He tells Rachel Humphreys how his latest reporting on the Barnsley village of Thurnscoe is illustrative of what austerity does to a place. He finds children’s centres cut, the landscape blighted with litter and unmown verges, parks in disrepair and libraries curtailed. Continue reading...

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Rishi Sunak’s furlough scheme was a start. But unless more action is taken to protect jobs, a grim winter awaits

Claims have fallen for 12 weeks in a row but remain historically high as about 47 million have filed for benefits in 14 weeksAnother 1.48 million people filed for unemployment insurance across the US last week, as the grim economic toll of the coronavirus pandemic continued and infection rates picked up in many states.Related: Trump administration sent $1.4bn in stimulus checks to dead people - liveThis article was amended on 25 June 2020. An earlier version of the final paragraph referred to a probable increase of 3% when it meant three percentage points. Continue reading...

Report identifies gap between market optimism and depressed state of economiesThe global stock market rally represents a gamble by investors that central banks will ignore the risks of a buildup in debt and continue to provide support at the current record levels, the International Monetary Fund has warned .In an update to its half-yearly global financial stability report, the IMF said central banks had been pivotal in the recovery of share prices from their Covid-19 trough but there was now a gap between the optimism of financial markets and the depressed state of economies. Continue reading...

Rolling coverage of the latest economic and financial news, as the IMF predicts a deeper recession and a slower recovery