Rolling coverage of the latest economic and financial news, including the latest eurozone growth figures

From JCB in Britain to airlines in Middle East, virus fallout disrupts global supply chains

The new Tory MPs appear to wish to continue with the austerity project, says former MP Liz McInnes, and Ken Veitch sees the damage being done by cuts in children’s services

Rishi Sunak must add finishing touches to ambitious package billed as new dawn of spending

Rolling coverage of the latest economic and financial news, as e-commerce giant Alibaba, digger maker JCB and fashion chain Ralph Lauren warn about coronavirus impact

The era of open markets and open borders is over, its demise hastened by the climate crisis, populism and now coronavirusOver the past 30 years China has become the world’s factory. For the past few weeks, the production line has been shut down by plant closures deemed necessary to halt the spread of coronavirus. Beijing fears there will be both short- and long-term damage from the outbreak. The country is on course for its first quarter of negative growth in decades, while earlier this week China’s ambassador to the World Trade Organization (WTO) called on other countries not to use coronavirus as an excuse to put up trade barriers.The fact that Zhang Xiangchen felt the need to make this appeal speaks volumes. China suspects there will be backdoor protectionism – and it is almost certainly right, because for years countries around the world have needed little encouragement to resort to protectionism. What’s more, the restrictions are not just on the movement of goods. Earlier this month, the US treasury announced curbs on foreign investment to protect critical technology, data and infrastructure from foreign sabotage. Donald Trump’s plans for a wall along the US border with Mexico are emblematic of a toughening up of controls on migration. An era of open markets and open borders – where trade and transnational capital flows rose rapidly as a share of global output – has run its course. The instruments of deglobalisation are being weaponised.Companies are realising that lengthy global supply chains have costs as well as benefits. Coronavirus has brought that home with a vengeanceRelated: Trump's greatest vulnerability is the economy – just ask poor Americans | Reverend William Barber Continue reading...

Public spending watchdog fears they could be over-exposed in a recession or property crashEnglish councils went on a massive £6.6bn commercial property spending spree over the past three years, buying office buildings and shopping centres to offset the impact of government funding cuts, the public spending watchdog has revealed.The scale of the rush to acquire revenue-generating investments to fund council services has left many local authorities potentially badly exposed in the event of an economic recession or a property crash, the National Audit Office (NAO) said. Continue reading...

Economists fear coronavirus could pull Germany into recession, but Europe’s Stoxx 600 index and Germany’s Dax hit fresh peaks

But Resolution Foundation analysis shows new Tory seats not among worst-off areasThe Labour party’s former political heartlands in the north of England, Midlands and Wales suffered from a tougher squeeze on wages and slower jobs growth than the rest of Britain over the past decade, according to a report.In a report in to Labour’s former “red wall” seats the Resolution Foundation said the party’s former strongholds had been through a decade of “relative economic decline” since 2010. Continue reading...

China and the EU are filling the void led by Washington’s return to isolationism. Collective leadership is the only way forwardDonald Trump’s “America first” policies are widely regarded as an abdication of global leadership, sounding the death knell of the post-second world war multilateral order that the US shaped and sustained.There is much truth to this view. At the same time, this troubling turn represents a reversion to longstanding US values. Acknowledging that the second half of the 20th century was an anomaly, rather than the norm, raises troubling questions about the nature of US leadership and the fate of multilateralism after Trump.Related: Donald Trump is a good president … but only for the top 1% Continue reading...

Readers respond to an article by Andy Beckett that said the left should welcome that centrists seem to be slowly coming to terms with today’s worldWell done to Andy Beckett (The centre can hold, but only if it challenges the status quo, Journal, 8 February) for articulating the recent failures of the political centre to ask hard questions of itself rather than blaming Jeremy Corbyn or lamenting populism.The centre has complacently stayed in the 1990s and failed to recognise that global economic growth can no longer provide for all. Small surprise that it was deserted in a variety of national elections and in the 2015 and 2017 Labour leadership contests. Continue reading...

The flaw at the heart of the prime minister’s policies is that Britain’s unequal economy is a product of Conservative thinking which remains fundamentally unchangedAfter an election governments tend to do two things. First, ministers take advantage of their opponent’s disarray by framing the script for the next parliament with a compelling narrative, deploying catchphrases that will make their story stick in the public’s memory long after the headlines have faded. Second they administer the bitter pill of spending restraint, so that fiscal goodies can be doled out ahead of the next election. BorisJohnson is bucking the trend by doing the first but not the second. He has taken high-stakes gambles to win power. Whether his latest bet pays off will depend on how right the prime minister proves to be about both politics and economics.Mr Johnson says he wants to keep the Labour votes he says were “lent” to the Conservatives in December’s election. At the top of the new government’s agenda is the idea of “levelling up” and squashing regional inequalities. This is a desirable goal, not least in swathes of the country where people have been left feeling disenfranchised and ignored. But this will take time. There is no quick fix to tackle entrenched problems such as: why pupils in the poorest areas in the north are four times more likely to attend schools graded less than good than their London counterparts; or why men in Manchester can expect to die nine years younger than those in leafy Hampshire; or why the average northern worker produces £4 less per hour than their counterpart in the south. Continue reading...

Economics | Scotland-Northern Ireland bridge | BBC licence fee | Stockport County FC | Marmalade | Pension waitImogen West-Knights (Journal, 6 February) informs us that it is, by definition, impossible to level up the needy without redistribution of wealth or opportunity from the wealthiest. Back when Adam Smith became a professor in 1751, GDP per capita in the UK was some $1,800 a year (by Angus Maddison’s inflation-adjusted numbers). Today it is around $39,000. Reality is telling us that the economy is not a zero-sum game.

UK economy flatlined in October-December, with service sector growth weak and manufacturing shrinking. But things may be picking up....

Zero growth figure reflects impasse in final three months of last year

Prospects for GDP growth look positive after flat figures for the end of last yearThe fact that the pound rose on the currency markets after news that the UK recorded no growth at all in the last few months of 2019 tells its own story. The economy performed badly – but not quite as badly as some had feared.In the end, a relatively strong December meant ministers were spared the task of having to explain why national output had fallen for a second time in three quarters. But that was largely due to the boost provided by the government.Related: UK GDP: British economy stalls amid political uncertainty Continue reading...

Yes, the Dow is at a record high and unemployment rates are lower than they have been in decades – but 140 million people are also poor or low wealthRather than offer a report on the State of the Union, Donald Trump used his annual primetime slot in the House of Representatives to host a re-election rally. The House speaker, Nancy Pelosi, summed up the sentiment of the House majority when she stood behind Trump and ripped the text of his speech in half. “I tore up a manifesto of mistruths,” she later said. But of all the lies he told, the president is proudest of the economy he claims is booming. Poor and low-income Americans know that the economy is, in fact, his greatest vulnerability.Yes, the Dow is at a record high and official unemployment rates are lower than they have been in decades. But measuring the health of the economy by these stats is like measuring the 19th-century’s plantation economy by the price of cotton. However much the slaveholders profited, enslaved people and the poor white farmers whose wages were stifled by free labor did not see the benefits of the boom.Every day in America roughly 700 people die from poverty Continue reading...

European commission chief picks out contradictions in UK approach to post-Brexit deal

Health check of sector seems to show thrifty approach still ingrained in shoppersBritain’s retailers have yet to benefit from any post-election pickup in the economy amid signs that thrifty and environmentally aware consumers are reluctant to part with their money.While business surveys have detected a “Boris bounce” after the decisive Conservative victory in December’s vote, the British Retail Consortium (BRC) said there had been only the faintest evidence that spending habits had changed.Related: Trafford Centre owner Intu confirms talks over £1bn cash call Continue reading...

The party faces an unpalatable budget choice: no new spending, raise taxes on the rich, or break its own fiscal rulesDid anyone expect triumphant Tories to take a leaf out of Jeremy Corbyn’s defeated manifesto? But there it is, leaked to the Financial Times and the Sunday Telegraph. Plans are (just possibly) afoot to raise fat sums from the rich to spend in the new Tory seats of the north. Yes, even reviving Ed Miliband’s £2bn mansion tax. Despite four abysmal election failures, might Labour yet claim significant ownership of radical new tax policies?You have to pinch yourself to believe the newly radicalised Tories are about to clean up Britain’s unjust tax systemRelated: Austerity is grinding on – it has cut too deep to ‘level up’ | John Harris Continue reading...

Moves comes as Britain launches consultation on creation of up to 10 of the zones

Construction and retail badly hit as 1,400 firms went into administration last yearThe number of firms collapsing into administration across England and Wales rose by nearly 5% to more than 1,400 last year, according to the accountancy firm KPMG.Brexit uncertainty and economic turmoil created a particularly tough year for the building and construction industry, while the real estate and property sector also suffered, it found. The demise and ongoing restructuring of a large number of high street retailers has had a “profound” impact on commercial property income and values. Continue reading...

In places such as Newcastle, budget cuts have taken a heavy toll. Much of what has closed is not coming backSeven years ago, pretty much to the week, I paid my first visit as a journalist to Newcastle upon Tyne. The ostensible reason was a fuss about the city council’s proposal to cut its arts budget to zero, and a campaign of opposition endorsed by such alumni of the city as Bryan Ferry and Gordon “Sting” Sumner. But that controversy was only a small, distracting aspect of a much bigger story: the fact that the coalition government’s austerity was now threatening some of the most basic parts of Newcastle’s social fabric, as councillors faced cuts of around £100m, spread over three years. Then as now, they were led by Nick Forbes, the imaginative, engaging politician who remains in post, and is these days also the leader of the Local Government Association’s Labour group, which represents councillors from across England and Wales, and had its annual conference at the weekend.£37m was cut in 2013-14, followed by £38m, then £40m and so on, until the council had lost £300m by the end of 2019Related: Tory plans to ‘level up’ the north are laughably inadequate | Polly Toynbee Continue reading...

China plays a hugely important world role – and the effects of the crisis could be choppy and lastingAt time of publication, the coronavirus had infected close to 40,000 people, the vast majority of them in China, killed more than 800 and spread to almost 30 countries. Given China’s huge importance to the global economy, the ripple effect could be choppy and lasting. Continue reading...

If Boris Johnson really wants to tackle inequality, he’d increase benefits above inflation, argues Ruth Lister. Plus letters from Celia Thomas and Professor Emeritus Nick SpencerImogen West-Knights is rightly sceptical of the government’s “levelling up” mantra (Johnson’s vow to ‘level up’ is as meaningless as it sounds, Journal, 6 February). If the government genuinely wants to “level up” rather than “sidestep the thorny issue of gaping economic inequalities”, it could make a start by raising working-age and children’s social security benefits by more than inflation this year following the four-year freeze.You also report (6 February) the National Institute of Economic Research’s warning that it would take Boris Johnson more than two full terms to level up the economy. Important as investment in disadvantaged areas is, it will take time for their inhabitants to feel the benefits. An above-inflation benefits increase would have an immediate effect and, as the money is likely to be spent quickly and locally, would boost those same local economies. At the same time, it would help the many on low incomes living elsewhere. Continue reading...

Zero-hours contracts and under-employment have slowed UK pay rises while housing is too dear for the low paidTurn the clock back to the mid-1990s. The UK economy is on the mend after its second deep recession in a decade but the scars are deep. Britain has an unemployment problem and a poverty problem. What’s more, the two are linked because the majority of poor people live in workless households.Times have changed. The percentage of people in work is now higher than it has ever been and unemployment, using the internationally agreed yardstick, is below 4% and at its lowest since the mid-1970s.Related: Inequality makes climate change much harder to tackle | Larry ElliottHow many people are affected by poverty in the UK?Related: UK inequality 'among worst of developed countries' Continue reading...

Ray Dalio, who has a near $19bn fortune, is one of a handful of the 0.01% to go public with concerns about the system that created that wealthRay Dalio, the billionaire investor, has just released his first children’s book. It’s a bedtime story he hopes will inspire a new generation of entrepreneurs and leaders. There are other stories that keep Dalio awake at night.Related: Harry and Meghan attend exclusive JP Morgan event in MiamiRelated: Wuhan facing 'wartime conditions' as global coronavirus deaths reach 724Related: Intu the unknown: retail landlord faces up to a fundamental threat Continue reading...

The language of Leave is already shifting from optimism to realism, but awareness of what awaits us is dawning too slowlyThe prime minister tells us he wants to bring the country together. This is rich from the politician who made a major contribution to tearing it apart.In theory, Johnson is monarch of all he surveys: the British political system resembles, in Lord Hailsham’s famous phrase, an elective dictatorship. And Johnson already manifests dictatorial tendencies.It is likely to be a slow-burning crisis, and the real culprits will continue to blame the EU Continue reading...

If the choice comes down to tyrant or oligarch, we must choose the latter. But our democracy would still be in perilWe haven’t seen his name on any of the ballots in the first four states, but that’s about to change. I’m talking, of course, about multibillionaire presidential hopeful Michael Bloomberg.Bloomberg has a chance of winning the presidency because his net worth is more than $60bn.Related: Why Democrats share the blame for the rise of Donald Trump | Robert ReichThe heart of Bloomberg’s campaign message is that he has enough money to blow Trump out of the waterRelated: Sinking in the Swamp review: dispatches from the belly of the Trumpian beastRelated: 'Real power is fear': what Machiavelli tells us about Trump in 2020Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His next book, The System: Who Rigged It, How We Fix It, will be out in March. He is a columnist for Guardian US Continue reading...

The shopping centre owner is taking emergency action to stabilise its struggling malls and collapsing share priceOn a midweek evening before the first payday after Christmas, the Lakeside shopping centre in Essex is buzzing with couples, teens and families with their children. They are browsing the shops, but not everyone is buying.Becky lives not far from the centre in east London and is visiting with her three-year-old daughter and sister to “kill a bit of time”. “We come here all the time,” she said, “not even for the shopping. We come here mainly to eat. The free parking is a huge draw.” Continue reading...

Pace of hiring beat economic forecasts as unemployment rate remained at a 50-year low of 3.6%US employers added another 225,000 in January as the record-breaking streak of job creation in the American economy entered its 11th year.Related: Iowa caucus results: Buttigieg and Sanders both claim victory – live Continue reading...

Rolling coverage of the latest economic and financial news, after data showed 225k jobs were added to the US economy in January1.48pm GMT1.44pm GMTNaeem Aslam, a chief market analyst at online trading platform AVA Trade, says excitement about the bumper US jobs figures won’t last long:The US NFP number rocked the markets. Throughout this week, we have seen investors brushing away all ill thoughts about markets and today’s number has put a final seal on this. The bottom line is that the data has confirmed that the US job market is solid and tight.Having said this, we do have concerns that the positive impact of this jobs report may not last long because the fact that China has delayed its release of economic number, and major warnings coming from Burberry, indicates that investors are likely to see tumultuous time.1.40pm GMTJob growth surged in January. The U.S. added 225,000 jobs last month, well above Wall Street expectations. https://t.co/UT5yTyHDB8 pic.twitter.com/ZwjXSk9S551.36pm GMTMore details on US jobs figures:The unemployment rate ticked up to 3.6%, versus forecasts for the rate to remain steady at 3.5%.1.31pm GMTUS non-farm payrolls have come in at 225k for the month of January.That compares to a Reuters poll forecasting 160k, and is much higher than December’s tally which was revised up from 145k to 147k.12.53pm GMTFoxconn, the electronics company that supplies Apple, has begun manufacturing its own surgical masks, allowing Chinese workers to churn out iPhones uninterrupted as the coronavirus crisis continues.The Taiwanese company’s production lines have been shut down because of the disruption caused by the outbreak, slowing down the supply chain that feeds Apple’s global retail network.Related: Foxconn makes masks for its iPhone workers amid coronavirus crisis12.10pm GMTMihir Kapadia, the CEO of Sun Global Investments, says the coronavirus could have a long term effect on the stock market:The short-term rally in global stocks has expectedly began to show signs of slowing as the growing death rate and the economic impact the coronavirus has had has become more understood. Despite the efforts of the Chinese government to contain the virus and its wide spreading impact, the death roll has doubled in a week while more than 31,000 have been infected in what is a sign that the situation is not slowing.Investors have wisely been playing a cautious game, but it will take time for any government action to come into effect.However the fact that much still remains unknown about the coronavirus, and the key question whether it has yet reached his peak, could potentially have a long-lasting effect on the markets even if it is contained and dealt with.11.30am GMTNearly a quarter of US companies in China expect their revenues to fall by at least 16% this year due to the coronavirus.That’s one of the stark statistics from a new American Chambers of Commerce in Shanghai survey released today.11.03am GMTThursday’s bounce didn’t last for European stocks. Today, a mix of profit-taking and coronavirus jitters seem to be weighing on markets.Germany’s Dax is down 0.5% while the French Cac is down 0.3%.Happy jobs day everyone. Don’t forget to get in your #NFPGuesses10.36am GMTThe Financial Conduct Authority has fired a warning shot at insolvency practitioners (read: administrators) after learning that there have been illegal attempts to sell customers’ personal data after a company goes bust.Passing on that data may breach key data protection rules like GDPR.We are aware that some insolvency practitioners and FCA-authorised firms have attempted to sell clients’ personal data to claims management companies (CMCs) unlawfully.This can happen either before or after a firm has gone into administration and where it is likely claims for compensation will be made to FSCS (Financial Services Compensation Scheme).CMCs using such personal data may not be acting in the customers’ interests. CMCs seeking to rely on legitimate interest grounds for processing such data are highly unlikely to meet the requirements of the GDPR.CMCs that intend to buy and use such personal data must be able to demonstrate how they have considered the fair treatment of customers and how their actions comply with privacy laws.9.52am GMTOvernight, S&P Global Ratings estimates that Chinese GDP growth will fall to 5% for 2020. That is down from forecasts for 5.7% growth before the outbreak.And this might be a bold prediction, but S&P is also claiming that the virus could be contained by March 2020.We expect the effect to be more drawn out than in SARS given the longer time to reach peak infections and the more vigorous policy response, especially travel restrictions, in this episode.Household consumption will take the main hit, especially spending on discretionary goods and services as individuals avoid public spaces to minimise the risk of infection.9.38am GMTOne of our readers got in touch with concerns about our post on Halifax house price data for January.He made the point that “better than expected” made it sound like higher costs for housing was a positive result, full stop.9.13am GMTBurberry’s finance chief Julie Brown has said the impact of the coronavirus on the business has been more significant than recent protests in Hong Kong.Footfall at the 44 stores that are still open in mainland China have dropped by up to 80%, with customers staying home amid the outbreak.It is more serious in Hong Kong than the protests8.46am GMTOne story is rocking the banking world this morning and that’s the surprise resignation of Credit Suisse CEO Tidjan Thiam.It follows a bitter boardroom battle that escalated after a spying scandal that engulfed the Swiss bank last year.The bank’s board announced on Friday morning that it had “unanimously accepted” the 57-year-old’s resignation and that Thomas Gottstein, the current head of Credit Suisse’s home business in Switzerland, will take over as chief executive. The board also gave its full support to the chairman, Urs Rohner, to complete his term until April 2021.Thiam and Rohner have been in conflict since it emerged that the Zurich-based bank had hired a corporate espionage company to follow Iqbal Khan, the former head of the bank’s wealth management division, shortly after he left for a position at rival UBS. Credit Suisse insisted it was a one-off incident but then months later admitted a second executive had been tracked by private detectives.Related: Credit Suisse chief Tidjane Thiam ousted after spying scandal8.38am GMTThe Halifax House Price Index has come in higher than expected, with prices rising 0.4% month-on-month compared to Reuters poll for a flat reading.On an annual basis, January house prices were 4.1% higher than the same time last year to reach an average of £240,054.A number of important market indicators continue to show signs of improvement. We have seen a pick-up in transactions with more buyer and seller activity consistent with a reduction in uncertainty in the UK economy.However, it’s too early to say if a corner has been turned. The recent positive figures may actually represent activity that would ordinarily have been expected to take place last year, but was delayed by economic uncertainty. So while housing market activity has undoubtedly increased over recent months, the extent to which this persists will be driven by housing policy, the wider political environment and trends in the economy.8.23am GMTYou can read the full Burberry release here: 8.11am GMTEuropean markets are back in the red after a bounce yesterday:8.03am GMTBurberry’s London-listed shares are down 3.2% at the start of trading, making it the worst performing stock on the FTSE 100.7.50am GMTGood morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Luxury goods group Burberry has become the latest company to warn that its business is being knocked by the coronavirus outbreak, which has forced the company to temporarily close more than a third of its 64 stores in mainland China.We are taking mitigating actions but the benefit in the current year will be limited given the proximity to our March year end. We also intend to continue our key growth initiatives in preparation for a recovery in luxury demand. We will provide a retail trading update following our financial year end.We are extremely grateful for the incredible effort of our teams and our immediate thoughts are with the people directly impacted by this global health emergency. Continue reading...

Halifax shows rate of growth at 4.1%, partly due to sales delayed amid 2019 uncertaintyUK house prices are rising at their fastest annual rate for nearly two years, according to Halifax, prompting claims that the property market is heading into the crucial spring season in reasonable shape.Halifax said house prices rose by 0.4% in January, adding just over £1,000 to the average pricetag of £240,054. This was enough to lift the annual rate of price growth to 4.1% – the highest figure since February 2018. As recently as October 2019, this annual figure was below 1%.Related: Why are Britain’s new-builds all so ugly? | India Block Continue reading...

Carmaker among growing list of multinationals affected by Chinese outbreakFiat Chrysler has warned it could close a plant in Europe as the coronavirus outbreak wreaks havoc on a rapidly expanding list of global companies.The carmaker, one of Europe’s largest, joined Virgin Atlantic and Nintendo in adding its name to the list of affected companies on Thursday. Continue reading...

Markets rally after Beijing unveils plan to halve extra levies on 1,717 US products

There’s no sign of the huge sums of money that would be needed to redress stark regional inequalitiesBoris Johnson’s mighty pledge to narrow the gap between the richest and poorest regions in the UK is the policy with everything – except the monumental sums to make it happen. The National Institute of Economic and Social Research reports today that the amount suggested so far gets nowhere near: it is probably generous in thinking the process could be anywhere near done in a decade. Every government talks of doing it, but Johnson’s capture of so many northern seats gives him a mighty new incentive to “level up”, as the Tories now call it.Related: The Tories’ ‘Dave from Bolton’ ad shows how well they understand social media | Eleanor Margolis Continue reading...

Rolling coverage of economics, markets and business as Chinese tariff cuts on US goods help to stimulate markets to record highs

Thousands on board Diamond Princess cruise ship in offshore quarantine in Japan after 10 people test positive, as China death toll passes 490. This blog is closed.2.50pm GMTHere are the main points from today so far:2.36pm GMTTurkey will now also be taking temperatures of all arriving airline passengers in new prevention measures aimed at halting the spread of a virus outbreak that has killed hundreds of people in China, AP reports.Turkish health minister Fahrettin Koca said thermal cameras installed at Turkish airports would begin screening all arriving passengers Thursday. Previously, Turkey was screening travelers from China, Japan, Taiwan, Thailand, Hong Kong, Singapore, Korea and Malaysia.2.06pm GMTThe Department of Health said 468 people in the UK have now tested negative for coronavirus, according to a report by PA Media.All the 1,500 people who arrived on direct flights from Wuhan in January have either left the UK or are now outside the 14-day incubation period for the virus.1.51pm GMTRachael Maskell, the MP for York Central, has criticised the government’s response to the coronavirus outbreak.York Press reports that Maskell called on the Government to ‘get a grip’ after it emerged that the York student with coronavirus spent a night in student accommodation.1.36pm GMTSean, who didn’t want to give his last name, said it was “incredibly eerie in Beijing today”. The 34-year-old manager of an English language school said there was heavy snow and few people on the street. “I worked from a cafe today, and was the only one inside.”He described the Foreign Office’s advice to ‘leave China’ last night as “a huge over-reaction and disregard for expats that actually live here and call China their home”.1.25pm GMTA Southampton student who went into isolation after feeling ill after returning from China has been given the all-clear from the new coronavirus, PA media reports.Paramedics were sent to the Mayflower halls of residence at the University of Southampton on Monday to take the student to hospital after they contacted the NHS saying they felt ill.Related: Coronavirus: what is self-isolation?1.08pm GMTThousands of medical staff in Hong Kong have gone on strike in a bid to get the government to completely seal the border with mainland China, AP reports.Hong Kong’s hospital authority says 4,600 medical staff, mainly nurses, didn’t turn up for work on Wednesday.12.55pm GMTSome Britons in China have been in touch with the Guardian to say they have no plans to leave the country any time soon.

Boris Johnson would need two full terms as PM to fulfil election vow, says thinktankIt would take Boris Johnson two full terms as prime minister to fulfil his pledge to “level up” the British economy, according to one of the UK’s leading economic thinktanks.The National Institute of Economic and Social Research (NIESR) said Johnson’s plans would probably take more than a decade to raise the level of economic output across the country, due to capacity constraints. Continue reading...

Lucas for COP 26 | Fuel tax shortfall | Pro-Brexit economists | Marmalade | Earwig jamFollowing the sacking of Claire O’Neill as president of the forthcoming climate change talks in Glasgow, and her subsequent criticism of Boris Johnson (COP 26: Cameron was asked by PM to take over – but he said no, 5 February), I would suggest that the only UK politician of sufficient integrity, dedication and expert knowledge on the subject of climate change to take over is Caroline Lucas MP.

Impact of Chinese outbreak has already rippled out well beyond world’s No 2 economyThe impact of coronavirus on the global economy is growing and spreading daily. What started as a medical emergency in the Chinese city of Wuhan has led to planes being grounded, cruise ships being quarantined, theme parks being shut and car plants being mothballed.TV footage of deserted streets and empty shops tell their own story: China’s economy, which was already slowing, is going to suffer a major hit as the authorities seek to stop the virus from spreading. Continue reading...

Relying on GDP to decide if we are in a recession is silly, the unemployment rate should be the measureIn the face of the bushfire and the coronavirus, the Reserve Bank has taken a fairly upbeat view of the economy. When announcing that the cash rate would remain at 0.75%, the RBA suggested that the bushfires and the coronavirus would “temporarily weigh on domestic growth” but that overall things were doing OK. With luck this will be the case, but given the speed of events we should make sure we do not wait for GDP growth to determine whether or not we are likely to have a recession.To be fair to the RBA, the central bank can hardly come out and say things are stuffed and a recession is on the way – that would be a self-fulfilling prophecy.Related: Bushfires and the coronavirus will hit Australia's economy – but they won't knock it out | Greg Jericho Continue reading...

Rolling coverage of economics, business and markets as UK services grows at fastest since September 2018

From carmakers to airlines and hotels, the impact of the outbreak is punishing firms worldwide

More clarity since election bolsters consumer spending and business investmentBritain’s economy rebounded in January as fading political uncertainty since Boris Johnson’s election victory helped service sector companies record the strongest upturn in activity since mid-2018.The services sector – which includes banking, insurance, restaurants and hotels – makes up about 80% of the economy. According to the latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply, business activity grew for the first time since August. Continue reading...

Reserve bank governor Philip Lowe says latest outbreak could wreak more economic damage than SarsThe coronavirus outbreak may further hurt an economy already suffering from bushfires and drought, the governor of the Reserve Bank says.In a speech to the National Press Club in Sydney, Philip Lowe said the RBA was closely monitoring the economic effect of the epidemic, which has killed more than 490 people.Related: Australians evacuated from Wuhan to New Zealand face 17,000km flight marathonRelated: Chinese students arriving in Sydney reportedly detained after coronavirus travel banRelated: Bushfires and the coronavirus will hit Australia's economy – but they won't knock it out | Greg Jericho Continue reading...

Spending and tax measures are in favour, but central banks’ monetary policy has a role to playWill the next recession be worse than you think? With the major central banks having little space for further interest-rate cuts, might the next cyclical downturn become a crash? In theory, fiscal policy can go far in filling the void. The past decade has seen a rise in fiscal evangelism among many economists and policymakers, and it is indeed likely that fiscal fine-tuning will be widely tested in the next downturn. Are they right?I am sceptical. Fiscal policy is far too politicised to substitute consistently for modern independent technocratic central banks, which until now have largely taken the lead in short-term stabilisation. Fiscal policy takes the lead in fundamental but hugely contentious issues – concerning growth, long-term stability and allocation – that need to be decided in a democratic fashion, at least in advanced economies. And yet academic depictions of fiscal policy as an objective technocratic tool often make one feel like we are living in an episode of the American television series The West Wing.Related: Politicians pander to the 'folksy' Midwest - but ignore the region's radical history | Jessa Crispin Continue reading...

Britain’s departure from the EU should be a glitch in world trade arrangements, and not the new normalBoris Johnson got not one but two wins last year on Brexit: a fresh withdrawal agreement with the European Union and an election victory that gave him an 80-seat majority in parliament. But while these events matter quite a bit for Mr Johnson and his political future, they did not make much of an impact on the British economy. Mr Johnson’s premiership rests on the nostalgia of Brexit; its true believers think they were better off in an imagined past, before Britain joined the European Community. They will keep backing the prime minister because he says that the trappings of that past can be restored, even without any economic benefit.That explains why a big part of the story of Brexit is about fishing, farming and factories. Before the UK joined the common market, manufacturing employed about a third of the workforce. That figure has now shrunk to less than a tenth. Farmers and fishermen, who voted enthusiastically for Brexit, make up a tiny proportion of national income – 0.6% and less than 0.1% respectively. Almost all of the rest of us are working in the service sector – which takes in everything from law firms and media companies to cabs and hairdressing. Work has become more precarious, but disposable income, in real terms, is roughly double what it was before we entered Europe. Continue reading...

Despite coronavirus concerns, share prices stabilise over hopes it can be containedFears that a coronavirus-inspired plunge in Chinese share prices would prompt a global selloff proved unfounded as investors in Europe and the US shrugged off the biggest fall in the Shanghai stock market in five years.Shares in London and New York rose – helping to reverse a part of last week’s falls – despite a drop of 9% at one stage in China’s main stock market index. Continue reading...

Sterling hit by tough talk on trade deal while investors count coronavirus cost