Recessions blight young people’s prospects for decades. We need New Deal-type policies now to help themYouth unemployment and its scarring effects on the careers of young people were a major concern in the 2008-09 recession. Now that hopes for a “V-shaped recovery” from the Covid-19 pandemic are vanishing, the issue of scarring is again relevant.Past research has shown that those who enter the labour market during a downturn carry the costs of doing so into middle age. These come in the form of lower wages and higher risk of unemployment. Whereas the work and pensions secretary, Thérèse Coffey, may claim it is “too early to set anything like that at all” (BBC Today Programme 19 May), the evidence is clear: recessions do lasting damage to young people.Related: Young workers most likely to have lost jobs during Covid-19 crisisRelated: How do we stop an unemployment pandemic? | Ewan McGaughey Continue reading...

The government has borrowed more in April than expected for the whole year. It can’t be paid back via austerity

Consumer spending plummeted 18% in April revealing stark impact of coronavirus restrictions

After the financial crisis, green investment paid dividends. Coronavirus presents an even greater opportunityEverest is once again visible from Kathmandu, after decades shrouded in pollution. Greenhouse gas emissions have fallen to levels last seen in 2006. Nature has returned to our streets with a quack and a flurry, and people are waking to birdsong in inner cities as the roar of traffic recedes.Clear skies bring little cheer at the food bank, however. Birdsong might lift the heart, but it won’t pay the rent.Related: Coronavirus fallout to slow global growth in renewable energyRelated: Decarbonisation is our future. It must be factored into the coronavirus recovery | Pradeep Philip and Will Rayward-SmithFiona Harvey is the Guardian’s environment correspondent Continue reading...

Rolling coverage of the latest economic and financial news

Variable-rate mortgages may fall a little, and it seems unlikely banks will charge to hold savingsThe governor of the Bank of England, Andrew Bailey, has paved the way for negative interest rates, saying officials are actively considering all options to prop up the economy.The Bank’s base rate stands at 0.1%, the lowest level on record, so it would not take much to take it into negative territory. The UK would not be the first country to have a negative rate at its central bank – Japan and Sweden are among those that have done so. Continue reading...

Rise of PMI after April historic low due to coronavirus is good news, but economic activity is still falling

Coronavirus and looming Brexit means recovery ‘measured in years, not months’, says survey

As inflation plummets, the bond market believes the coronavirus recession will be so severe that the rate will go lower yetRoll up! Who wants to lend to the UK government for three years for zero interest?Lots of people. The debt management office – a busy place these days – shifted £3.8bn worth of three-year gilts on Wednesday at a yield of -0.003%. If buyers hold their paper for the full three years, they will get back slightly less than they invested. Continue reading...

Governor says all options are open after UK sells first ever bond with negative yield

Rolling coverage of the latest economic and financial news, as UK central bank tells MPs it is keeping its ‘lower bound’ under review

His nation-building work programmes are an unsurpassed example of what governments can do when markets collapse

Andrew Bailey is obliged to write to Rishi Sunak after fall to 0.8%. What might he say?

Expecting employers to pay up to 40% of staff wages will result in a second wave of huge job losses

Coronavirus lockdown and consequent oil price collapse send rate plummeting

Call to avoid more inequality and climate breakdown when coronavirus crisis endsGlobal leaders must heed the lessons of the financial crisis of 2008 when they look to repair the damage from the coronavirus pandemic, leading experts have warned, to avoid entrenching disastrous social, health and environmental inequalities and hastening climate breakdown.The 2008 global financial crisis and recession marked the last time the world experienced a convulsion comparable in scale to the coronavirus crisis, though starkly different in its nature. Governments responded first with economic rescue and stimulus packages worth trillions in taxpayer cash, followed in many cases by austerity programmes to cut back public spending. Continue reading...

Pace will slow for first time in 20 years with fewer windfarms and solar plants being built but rebound possible in 2021The global growth of renewable energy will slow for the first time in 20 years due to the impact of the coronavirus pandemic, which will “hurt but not halt” the rise of clean energy.The world’s energy watchdog has warned that developers will build fewer wind farms and solar energy projects this year compared with a record roll out of renewables in 2019. Continue reading...

Exclusive: Frances O’Grady says working people ‘can’t pay the price again

State lending should promote corporate survival, not underwrite executive pay packetsAbout time too: the Treasury has finally flexed its muscles and said large companies using government and Bank of England-backed loan schemes cannot also pay cash bonuses to directors or dividends to shareholders.The restrictions are really just an act of common sense: state loans should promote corporate survival, not underwrite executives’ pay packets or investors’ distributions. Most boards probably grasped the point, but the job of the Treasury is to ensure the door is bolted firmly against the devious and the greedy. It’s astonishing it has taken this long for a bonus ban to be adopted. Continue reading...

Rishi Sunak warns UK facing recession ‘the likes of which we haven’t seen’ due to Covid-19 crisisThe chancellor, Rishi Sunak, has warned that Britain is facing a “severe recession, the likes of which we haven’t seen” and lasting economic damage from the coronavirus pandemic.In a downbeat assessment of the country’s economic prospects after a sharp rise in unemployment benefit claims, the chancellor warned a Lords committee it was “not obvious there will be an immediate bounceback” from recession. Continue reading...

Companies that use extended scheme to be banned from paying dividends to investors

Government sets out plan to cut tariffs, with farming and car industry to be protectedBusiness has warned Boris Johnson that he must clinch a free trade deal with the EU after the government released details of the tariffs Britain will impose from the start of next year.With talks between London and Brussels stalled, employers organisations said they welcomed arrangements that will provide protection for farmers and carmakers but stressed the need for progress in talks with the UK’s biggest trading partner.Dishwashers (2.7%).Freezers (2.5%).Tampons (6.3%).Paints (6.5%).Screwdrivers (2.7%).Mirrors (4%).Scissors (4.7%).Padlocks (2.7%).Baking powder (6.1%).Yeast (12%).Bay leaves (7%).Ground thyme (8.5%).Cocoa powder (8%).Christmas trees (2.5%). Continue reading...

Rolling coverage of the latest economic and financial news, as new data shows the UK claimant count jumped over 2m in April

Official figures have not yet caught up with the bleak jobs market – and the crunch point is still to come

Number claiming unemployment benefits reaches almost 2.1 million

Resolution Foundation report confirms under-25s hardest hit by the economic fallout

In one of the best performances since the crisis began, global stock markets rise sharply

Biotech firm Moderna reports positive early results from coronavirus vaccine trial, as US central bank insists it can do more to protect economy

Coronavirus policies to help the vulnerable are already being jettisoned. Those who want change need to be up for the battleIt is now certain. We will emerge from lockdown grieving for those lost and yearning for our previous lives, only to crash into a recession. As much as we dream of visiting our favourite cafe or pub, it’s not clear they will remain after the virus has run its course.Already reality heaves into view. The hospitality industry is being battered. One in four restaurants in the US is expected never to reopen. Amazon is finishing off the retail sector. Small businesses, cafes, online retailers and clothes designers are struggling. Loved and carefully nurtured ventures, operating on the thinnest of margins, are dying out. Every few days another one of them posts its goodbyes. We think of the world as how we left it. But that world is gone.The working classes, the cleaners, the construction workers, have become the canaries sent back down the coal mineRelated: We're all keen to show we care, but we've shaped a society that doesn’t care at all | Sam Byers Continue reading...

Survey finds 60% of workers are at most three months away from rent or mortgage default

UK must reabsorb those out of work due to Covid, says Bank of England’s chief economist

Local economies across country have been adversely affected by loss of students and tourists

Conservatives must understand that the country they rule is not exceptional

Some in the Treasury are panicking about a debt pile set to hit 115% of GDP, but the chancellor – and most economists – agree that austerity is not the answerBritain is on course for a £300bn increase in government debt this year as the bills for keeping much of the economy mothballed during the coronavirus outbreak continue to mount.Money to support businesses that have closed down make up the lion’s share, and the rest can be accounted for by increased welfare costs and the loss of billions of pounds to the exchequer in taxes that will never be paid.Even the architects of austerity agree almost-zero borrowing costs and low inflation give the Treasury an opportunity Continue reading...

The pandemic and its economic impact should persuade even this cabinet of the value of a two-year delay to departure‘There are,” said a former top Treasury official last week, “some strange people in this cabinet with strange ideas.” The speaker was Lord Macpherson, the former Treasury permanent secretary, who during his time at the department now run by Chancellor Sunak had the unrivalled experience of serving Ken Clarke, Gordon Brown, Alistair Darling and George Osborne. Both Macpherson and Osborne were on a “webinar” – yes, a word that is new to me too – hosted by the Strand Group of King’s College London to discuss a report co-authored by a former shadow chancellor, Ed Balls.Balls is still actively involved in the economic debate, and it was in his capacity as a visiting fellow at Harvard that he was presenting a report on the prospects for a US/UK trade deal. Well, to put it mildly, the Harvard team found precious little for the UK to gain from such a deal. Even if something can, as it were, be trumped up, it would hardly be worth the cellphone from which it would no doubt be tweeted.Starmer has been saying that Brexit cannot be reversed. I comfort myself with the hope that he is being cautious and playing politics Continue reading...

Free-market bodies support the government’s ramping up of debts to confront the Covid-19 outbreak

The return of viewings is welcome news for estate agents, but many buyers are now much less certain of their positionBritain’s property market has proved to be a cornerstone of economic activity for decades. Without buyers and sellers alike booking removal lorries and moving home, large parts of the economy can lose momentum and drag on growth.The decision to allow property viewings as part of an easing of the lockdown was seen by ministers as a much-needed boost to commercial life. Over the coming months retailers and wholesalers that supply kitchens, carpets and light fittings will join the army of previously furloughed estate agents in getting a boost. Continue reading...

State intervention may be back on the government’s agenda, but its real intention is to return to ‘normal’ as soon as possible

One in three of lowest-paid have either lost their jobs or been furloughed, Resolution Foundation findsAlmost a third of Britain’s lowest-paid workers have lost their job or been furloughed in the past two months as those earning least bore the brunt of Britain’s Covid-19 economic shutdown, a thinktank has said.The Resolution Foundation said 30% of those in the lowest income bracket had been affected by the damage caused to the labour market by the pandemic, compared with only 10% of those in the top fifth of earners.Related: P&O Ferries to cut 1,100 jobs – but owner to pay out £270m in dividends Continue reading...

Rolling live coverage of business, economics and financial markets as data show the economic toll from the pandemic

France and Italy also slide into recession as lockdown measures cut consumer spending and investmentGermany has fallen into recession following the sharpest economic slump since the 2008 financial crisis, as the coronavirus pandemic causes severe damage for growth and jobs across the eurozone.Europe’s largest economy shrank by 2.2% in the three months to the end of March, the country’s second-largest decrease since reunification.One of the two main definitions of recession in the UK is at least two quarters of negative economic growth. Judged by this yardstick, the UK was last in recession in 2008-09, when there were six consecutive quarters of negative growth. Continue reading...

Ministers have learned the wrong lessons from the coronavirus crisis – their ignorance of local needs will doom the economy

The response to the pandemic must not lead to a renewal of austerity. Shrinking the state has contributed to this crisis

Optimism fizzles out following sombre prognosis and soaring US unemployment figures

Shares have fallen across Europe, Asia and the US, as another 2.9m Americans file initial jobless claims

Despite the deficit heading for a peacetime record, today’s Tory party has little appetite to repeat austerity

Bill rises by £20bn in a fortnight as tax revenue dwindles and state spending soars to head off economic meltdownThe mounting cost of government schemes to help Britain through its worst recession in more than three centuries has risen by £20bn in the past two weeks and will result in a budget deficit of nearly £300bn in the current financial year, a report has forecast.Fresh figures from the Office for Budget Responsibility, the independent body responsible for forecasting the public finances, showed that measures such as the Treasury’s furlough scheme will total £123bn, up from £103bn in late April. Continue reading...

ONS survey shows 44% of respondents’ reserves will not last until end of year

The New York governor is replacing elected representatives with private, unaccountable monopolists, and lawmakers across the US are doing the same thing