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

Gail Mitchell grapples with the confusing new guidance, while Harvey Sanders is worried about Boris Johnson’s laissez-faire attitude. Plus letters from Philippa Edmunds, Colin Rogers, Paul Garrod and Penny AldredNow let me see if I’ve got this right (Pubs and places of worship: what 4 July lockdown rules mean for England, 23 June). Single people can only be in a bubble with one other household, but bigger households can meet with numerous other households and can stay overnight, but must stay 2 metres apart. And you can go into a pub as long as you stay 2 metres apart, unless you can’t stay 2 metres apart, then you must stay 1-plus metres apart. You can go up to the counter in a shop, but not in a pub or restaurant. You have to give your name and address if you go to a pub, but not in a shop. You have to wear a mask on a bus, but not in a shop (not sure about pubs). You can have your hair cut from 4 July, but not your nails painted or legs waxed.But that’s only in England. It’s completely different in Scotland or Northern Ireland. You can’t go to Wales, but you can go to Spain, but you can’t go out for two weeks when you come back. So just remind me: are we still supposed to be washing our hands?

Guardian’s monthly economic tracker paints mixed picture with businesses forced to close despite rising spending

‘One-size-fits-all’ view risks period of mass unemployment, says Anneliese Dodds

World Economic Outlook says UK economy is on course to shrink by 10.2% in 2020

Beloved by Silicon Valley tycoons and tyranny-fearing libertarians, are cities atop the waves Earth’s next frontier?A white steel pole rises out of the sea off the Caribbean coast of Panama, poking above the waves like the funnel of a sunken steamship. Launched into the water last month, this is no shipwreck, but the base of what will soon become a floating home and, in the eyes of its makers, the first step towards building a brave new post-Covid-19 society, out on the open ocean.

The global economy must not suffer the consequences of the US doing too little, too lateWhat does the future hold for the global economy? As it stands, the most likely answer, unfortunately, is lower growth, worsening inequality, distorted markets, and rising financial risks. But this outcome is not preordained. With timely changes to the policy paradigm, policymakers can lay the groundwork for a more dynamic, inclusive, and resilient economy.The economic damage wrought by the Covid-19 crisis in the second quarter of 2020 was even worse than expected: economic activity plummeted, inequality rose, and elevated financial markets decoupled even further from economic reality. And with a vaccine yet to be developed, the path out of the pandemic – and the associated economic crisis – remains deeply uncertain.Related: Lack of international cooperation will hinder economic recovery | Howard DaviesRelated: Ten reasons why a 'Greater Depression' for the 2020s is inevitable Continue reading...

Study shows gulf in income inequality widening further as result of Covid-19 pandemicWhite households in the UK have incomes 63% higher than black households, and even after taxes and benefits are nearly a fifth better off, according to official figures.The Office for National Statistics (ONS) also found that income inequality in the UK has widened over the past two years – partly due to the benefits freeze – and indicated that it is likely to widen further as a result of the Covid-19 pandemic. Continue reading...

Rolling coverage of the latest economic and financial news, as the latest PMI reports show the global recession is easing

UK manufacturing returned to growth while activity in services sector contracted

Jonathan Watts continues his road trip in Hartlepool, where some see an opportunity to emerge from the past into a greener future

Measures on VAT, business rates and training could be part of his July stimulus packageRishi Sunak is drawing up plans for temporary tax cuts and spending measures to reboot the British economy after three months of lockdown.Faced with the deepest recession in three centuries triggered by the coronavirus outbreak, the chancellor is expected to unveil the financial support package in early July. Continue reading...

Quantitative easing reduced government borrowing costs as Covid-19 crisis hit markets

My father, Simon Quin, who has died aged 77, was an economist with a long career at the International Monetary Fund (IMF). Simon’s passion was helping developing countries, especially in Africa, to improve their economic management in support of growth and alleviation of poverty. He travelled extensively, advising officials in central banks, ministries and statistical offices on data required to make better-informed economic policy decisions. He believed income inequality was the root of many of society’s ills.His contributions enhanced the quality of statistical work at the IMF and countries worldwide. His way of addressing issues from a different, often provocative angle was a signature, as was his delivery – with a quiet, mischievous smile – of some new insight which he knew would require his colleagues to think again. Continue reading...

Motor vehicles and transport equipment sub-sector leads decline during lockdown

Move to stimulate spending as part of Covid-19 recovery plan makes sense, says politicianThe former chancellor Alistair Darling has urged the government to consider an emergency cut in VAT amid growing speculation that the Treasury will make a tax cut on consumer spending the centre of a plan to boost Britain’s post-Covid-19 recovery.Rishi Sunak will announce a package of measures in early July intended to help those sectors of the economy, such as retailing, recover from the impact of a three-month lockdown.Electric vehicle-charging infrastructure investment, a rare example of a “shovel-ready” project.Gigabit-capable broadband, due to probable changing patterns of working in future.Investment in energy R&D, notably hydrogen, to help the UK decarbonise.Health-related infrastructure such as green walking and cycling routes.Transport upgrades, including support for local authorities, national parks and landowners such as the National Trust to encourage walking and cycling.Improving (and where possible adding to) public parks, sport, leisure and swimming facilities. Continue reading...

The borough council has lost a third of its budget and the results are plain to seeThurnscoe in South Yorkshire has a population of 8,500 and a local economy that speaks volumes about modern British history. Until the demise of the coal industry it was a pit village, where 80% of the male workforce earned their living from mining.Now, on the site of the former Houghton main colliery three miles down the road, there is a vast distribution centre run by the online fashion giant Asos.Related: Exclusive: Labour councils in England hit harder by austerity than Tory areas Continue reading...

Exclusive: analysis by Guardian and Sigoma shows poorer, Labour-held areas lost over a third of spending powerLabour councils have borne the brunt of local government cuts over a decade of austerity, according to an analysis by the Guardian.It highlights for the first time the extent to which poorer, largely Labour-held areas of England had their funding slashed on average by at least a third, while more affluent, largely Conservative areas received greater protection.Related: 'Things vanish off the edge': Barnsley counts the cost of a decade of austerityRelated: Economists prove to be not keen on cuts after all | Torsten Bell Continue reading...

Governments can opt to repeat the failure of austerity or take the opportunity to invest in the futureIt all takes some explaining. The government has borrowed more than £100bn in two months and the national debt ratio is bigger than the economy’s annual output, but investors don’t care a bit.Orthodox economic theory says rising budget deficits lead to rising interest rates because the financial markets get nervous and demand a higher price for lending to the state. Not these days. There have even been examples of investors paying for the privilege of lending to the British government.Related: How worrying is Britain's debt? Surprisingly, we economists say: not very | Ethan Ilzetzki Continue reading...

Research suggests joblessness will stay high for years after the pandemicWe are in a jobs crisis with 600,000 fewer employees on payroll and 2 million more of us on universal credit. Tackling this economic and human tragedy will become the central economic challenge of the early 2020s.The Bank of England expects almost one in 10 of the workforce to be unemployed, the highest for 25 years. But will unemployment fall as swiftly as it has surged? Continue reading...

A government spending money hand over fist will turn to the private sector, wooing it with assets going cheapA mix of enthusiasm and panic inside the government is set to produce a toxic trail of poor decision-making, probably just in time for the next budget. The enthusiasm flows from the potential for a broad and far-reaching revolution ministers can see in the worst health and economic crisis for several generations.This could be the best opportunity since the second world war to reshape Britain’s way of life, recasting the relationship between citizens and state. From a Tory perspective, ministers can champion self-reliance and sideline collective organisations that put barriers in the way of change.Property developers are among the Tories' biggest donors. They can’t wait to get their hands on land at knockdown prices Continue reading...

Government borrowed a record £55bn in May on back of coronavirus crisis

Leaders clash over coronavirus recovery funds, with Germany pushing for swift resolution

Rolling coverage of the latest business news, as new public data reveals the growing costs of the Covid-19 pandemic

Supermarkets also drive 12% rise, although sales are still below pre-lockdown levels

It may have tumbled to 0.5% this week but economists warn that it may not lastThis week we saw some rare good news on the economic front; inflation tumbled to only 0.5%, its lowest rate in four years. Savers can even earn “real” interest, with National Savings offering instant-access accounts paying 1% interest. Don’t laugh at the paltry amount – it has been a long time since they have come anywhere near to beating inflation.How long will the good news last? It’s one of the thorniest questions vexing economists and money managers alike. Half think that huge job losses, a deep recession and vast spare capacity in the global economy will see inflation banished for years. The other half thinks the trillions of dollars, euros and pounds from pandemic-inspired government stimulus packages must, with almost mathematical inevitability, result in higher inflation.Related: UK inflation falls to 0.5% on back of cheaper petrol and toysWages and prices are likely to remain depressed as job losses cascade through the economy in the second half of 2020 Continue reading...

Jump seems consistent with idea of V-shaped economic recovery but is too soon to tell

Younger generations have accepted extraordinary constraints to protect us from coronavirus. We can’t justify a system that favours wealthy pensionersA volcanic eruption is about to explode the government’s triple lock on pensions. There is no way the Tories can or will keep their pledge/bribe, introduced by the coalition government in 2011, to guarantee the state pension will always rise by either 2.5%, the rate of average national earnings growth or the rate of inflation, whichever is higher. The policy was maintained during a decade of near-stagnant incomes for most. Abandoning it – however rational and inevitable in these extraordinary economic times – will hurt. With the political stage strewn with Covid-19 memorials to older people who died partly through the neglect of care homes, this risks marking the end of Tory hegemony over the pensioner vote.Here’s why the triple lock’s future is in question. This year, the earnings of millions plunged by 20% when they were furloughed, while pensioners were still getting their 2.5% rise. Next year, with luck, many people will see incomes bounce back, while others will be unemployed with no earnings to count; if average earnings soar, freakishly, by 18%, then pensioners get an 18% rise too in a dismal recession for most. The triple lock will go or be suspended, but after that, should it return?By suspending the triple lock, the chancellor could rebalance all pensioner subsidies and redirect them towards the poorestRelated: Furlough effect leaves Rishi Sunak with 'triple lock' pensions dilemmaPolly Toynbee is a Guardian columnist Continue reading...

QE increase of £100bn shows Bank’s answer to all economic problems is still to print cash

Quantitative easing expanded to help Britain recover from coronavirus crisis

To build a fairer, greener society, money must be made to serve the people, not the other way aroundIn the past few months, the world’s central banks, above all the US Federal Reserve, have rescued the global economy from complete collapse for the second time in a generation. Wading unto the breach and armed with the knowledge of how close capitalism came to a system failure in 2008, they have fired the “big bazookas” of monetary policy, pumping trillions of dollars into the world’s giant pool of money, effectively creating wealth out of nothing.Since 2 March, the Fed’s total assets have leapt by more than half. Since 2008, its balance sheet has grown to 30% of the size of the US economy. Central bankers seem confident their actions will find public approval. “A firefighter has never been criticised for using too much water,” the governor of the Bank of Canada said.The stock market’s worst fears seem to have been allayed by congressional action and the Fed’s promised bond-buying spreeRelated: Pity the central banks' lockdown dilemma: do they fight inflation or deflation? | Larry ElliottQuinn Slobodian is an associate professor of history at Wellesley College, Massachusetts Continue reading...

Proportion of people aged 15 and over in work has shrunk from 62.5% to 58.7%, ABS says

Drop to near four-year low in May likely to prompt fresh stimulus by Bank of England

State pensioners will receive 18% increase if chancellor does not scrap manifesto promise

Printing money to ward off recession is the right approach - but it’s fraught with risk

Australian and New Zealand ministers say they are eager to do deals with the UK as their economies emerge from the coronavirus crisis

Analysts say year-on-year increase is most dramatic hit to UK labour market for 100 years

US Fed and IMF predict recession for most economies in 2020 because of impact of Covid-19

With FCO spending focused on middle-income trading partners, the world’s poorest countries may end up with lessTony Blair used to have a line in his speeches to the effect “every Labour government has created a department for international development, and every Tory government has got rid of it”.It has taken a while for this Conservative government to fulfil this historic mission. David Cameron saw the preservation of the department, and the commitment to spend on 0.7% on aid as central to giving the Conservatives a modernising message. He often cowered in front of the Daily Mail, but not on the issue of aid, and its contribution to Britain’s reputation. On Tuesday he took the unusual step of branding the merger as a mistake. Continue reading...

Live rolling coverage of business, economics and financial markets as stocks rise strongly in Europe and futures point to Wall Street gains

The pandemic-induced collapse has brought a formal declaration faster than in 2008On 8 June, the business cycle dating committee of the National Bureau of Economic Research declared that economic activity in the US had peaked in February 2020, formally marking the start of a recession. But we already knew that we were in a recession that had likely begun around that date. So, why does the NBER’s formal declaration matter?It is no secret that measures of employment fell sharply from February to March. Real (inflation-adjusted) personal consumption expenditure (PCE) and real personal income before transfers both peaked in February as well. Official measures of GDP are released only quarterly but the economic free-fall in late March was enough to pull first-quarter GDP growth down to an annualised rate of -4.8% (relative to the last quarter of 2019).Related: US has officially entered first recession since 2009 Continue reading...

Experts say coronavirus outbreaks are almost inevitable given the close-knit nature of college life, and many social events might not returnWhen Nicole Spriggs-Moye of Washington DC imagined what her first year in college at Louisiana State University would look like, she imagined meeting new people and exploring new places. She envisioned bonding with her new roommate and joining the Black Student Union and student radio station. She planned to find mentors in her professors, who would teach her mass communication and pre-law.Related: 'Adapt and overcome': class of 2020 inherits worst labor market since the Great DepressionA lot of us feel displaced right now being at home and not having our friends, peers and professors close with usRelated: Ivanka Trump complains of 'cancel culture' after university cancels her speech Continue reading...

The furlough scheme has given employers breathing space, but its impact will be reduced by autumn

Why would households spend savings when unemployment is a distinct possibility?

Two senior civil servants say Whitehall did not devise economic plan after 2016 simulation