Bank says Brexit worries are no longer holding back sales but virus could hit property marketHouse prices hit a fresh peak in February, according to Halifax, but the bank issued a warning about the potential impact of the coronavirus outbreak on the property market later in the year.The UK’s biggest mortgage lender said prices rose by 0.3% in February to a record of £240,677. The quarterly rate of house price inflation also rose to 2.9%. Continue reading...

The Guardian finds high expectations in the Northumberland town, of new jobs and better transport links

Markets have been up and down for weeks due to uncertainty over how much damage outbreak will do to global economyUS stock markets closed sharply lower again on Thursday as fears about fallout from the virus outbreak sent more shudders through the financial world.The Dow Jones sank 968 points, or 3.6%, wiping out most of its surge of 1,173 points a day earlier. Treasury yields sank to more record lows as investors plowed money into low-risk investments.Related: Wall Street will see more wild days over coronavirus fears, says famous trader Continue reading...

Emphasis on boosting minimum wage while cutting benefits seems to have left low-income families worse offThe poorest fifth of the British population have suffered a 7% fall in their disposable household incomes over the past two years, leaving them no better off than they were in 2004-05, according to official figures.The Office for National Statistics said this fall compared with an increase in median disposable household incomes of 0.4% a year over the last two years to £29,600. This weak growth rate follows relatively strong growth of 3% a year between 2012-13 and 2016-17. Continue reading...

Economists warn UK on cusp of recession as Bank governor talks with Treasury over ‘powerful and timely’ response

Cartel warn of deepest quota cuts since financial crisis but experts warn reduction may be ‘too little, too late’Opec is on the verge of making its deepest oil production cuts since the global financial crisis amid warnings that the coronavirus may wipe out the world’s oil demand growth this year.The world’s largest oil-producing nations plan to avert an oil market crash by cutting millions of barrels from their daily production, but traders fear the economic impact of Covid-19 could still drive global market prices to multi-year lows.Related: IMF: coronavirus means 2020 growth will be lower than 2019 Continue reading...

A university education is a public good and not a plaything for the exchequer, writes Prof Des FreedmanHot on the heels of a report by the rightwing thinktank Policy Exchange arguing that “universities have lost the trust of the nation” comes research by the Institute for Fiscal Studies that says “One in five students would be financially better off if they skipped higher education” (Report, 29 February).Putting aside the IFS’s focus – and that of your article – on the fact that one-fifth of students don’t benefit financially from earning a degree, rather than on the fact that four-fifths of students do benefit, the story taps into a narrow, instrumentalist view of the “value” of higher education that equates it not with personal development but solely with financial benefit. Quite why the research is described as “groundbreaking” is never made clear, but it will certainly have been warmly greeted by a government that is determined to further implant an overwhelmingly economistic logic in the higher education system in coming funding reforms. Continue reading...

Fund offers $50bn for affected countries as outbreak spreads to 70 of its 189 membersCoronavirus – all the latest developmentsThe International Monetary Fund is to offer $50bn (£39bn) in emergency funding for countries hit by the coronavirus, as it warned that the spread of the disease has already pushed global growth in 2020 to below last year’s levels.The fund’s managing director, Kristalina Georgieva, said an expected increase in global growth this year would now be more than wiped out by the epidemic which has reached 70 of the IMF’s 189 member countries. Continue reading...

Andrew Bailey says Bank has limited room to help economy by cutting interest ratesThe incoming governor of the Bank of England, Andrew Bailey, has called on the government to offer emergency financial support to help British companies through the worst of the coronavirus outbreak.Warning that the central bank had limited room to support the economy by cutting interest rates, he told MPs on the Treasury committee: “We are collectively now going to have to provide some form of supply chain finance in the not too distant future.” Continue reading...

The IMF has torn up its growth forecasts as the Covid-19 outbreak hits the world economy, as the Bank of England’s next governor faces MPs

In 1922, the Guardian unveiled a series discussing the economic problems and potential solutions for the fractured European continent. The supplements were published in five languages and contained new graphical forms of data journalismIn April 1922, the Guardian began publishing the Reconstruction in Europe, a series of 12 monthly supplements discussing the economic and financial problems of rebuilding the continent. Edited by John Maynard Keynes, contributors included leading continental economists, politicians and Nobel laureates (there were more foreign writers than British), as well as 13 pieces by Keynes himself.Related: The Guardian view on a comeback for Keynes: revolutionary road | EditorialRelated: Aristide Briand's plan for a United States of Europe - archive 1929 Continue reading...

Dan Price, co-founder of Gravity Payments, took a $1m salary cut to pay all his staff the same wage. Five years on, they are thriving

Shares struggled to gain traction as new data showed that China and Hong Kong came to a virtual economic standstill in February

Report claims Rishi Sunak has unique opportunity to invest in zero-carbon infrastructureThe author of a groundbreaking report on the economic impact of climate change has called on Rishi Sunak to spend more than £8bn in his first budget next week to kickstart a “massive and long-term” boost to “zero-carbon infrastructure, new skills and sustainable innovation”.Lord Stern said the new chancellor had a unique opportunity to address regional inequalities and invest to meet the government’s target for net-zero emissions with measures already highlighted in the Conservative party manifesto.Related: The Guardian view on Boris Johnson’s ‘levelling up’: there’s no quick fix | EditorialRelated: Nicholas Stern: cost of global warming ‘is worse than I feared’ Continue reading...

The Guardian visits the county to find out the scale of problems that the looming budget needs to addressIn next week’s Budget, new chancellor Rishi Sunak is expected to announce measures to kickstart the “levelling up” of Britain’s lop-sided economy. The Guardian visited three places which the government should be targeting – to discover the scale of the local problems, and what help is needed.Things are looking up for Penzance. Its wonderful seawater lido has been refurbished. Maintenance and repair for the sleeper trains to Paddington have been relocated due to work on HS2, creating 70 well-paid jobs. There are ambitious plans to revamp the main shopping street, which curves elegantly from the railway station to the statue of the town’s favourite son, Humphry Davy, at the top of the hill.Related: The Guardian view on Boris Johnson’s ‘levelling up’: there’s no quick fix | EditorialIt takes four and a quarter hours to get from Truro to London. It is quicker to get from London to Glasgow. I am more than 100 miles from the nearest motorway. Continue reading...

In an emergency move, the US central bank has cut borrowing costs by 50 basis points and warns that the coronavirus “poses evolving risks to economic activity”

The coronavirus seems to have spooked the US central bank and Wall Street doesn’t know which way to turnFinancial markets, having demanded a rate cut to fight a coronavirus-provoked economic downturn, didn’t know which way to turn when the US Federal Reserve obliged with a half-point reduction. Wall Street’s whoosh lasted an hour, and the next direction for stock markets is anybody’s guess.Confusion is understandable at two levels. First, one could say it’s legitimate for the Fed to jump into emergency mode if it perceives “evolving risks to economic activity”. Cutting borrowing costs, even by small amounts, allows businesses and consumers to save a few dollars that can be used to weather disruption. If that’s the tactic, you might as well move early.Related: US Federal Reserve’s interest rate cut leaves markets in a dither | Nils PratleyRelated: Sirius Minerals takeover at risk after investor rebellion Continue reading...

Central bank moves to protect economy from coronavirus outbreak

Figures reveal surprise jump in longevity which is biggest increase since start of decadeLife expectancy in England surged in 2019 for both men and women, in a surprise rebound after years of stagnation, according to official government figures. The Office for National Statistics (ONS) said life expectancy for women at birth increased to 83.6 years in 2019, up four months compared with 2018. For men the increase was three months, taking their life expectancy to 79.9 years.The rises represent the biggest jump since the start of the decade. Longevity improvements in England first faltered in 2011 and had plateaued since 2013, with critics blaming austerity and NHS cuts. Among women, life expectancy fell in both 2012 and 2015.Related: Discrimination link to health inequalities | LetterRelated: It’s official: Tory austerity has stifled the lives of young and poor Britons | Nick Cohen Continue reading...

Between 2010 and 2020, Conservative cuts destroyed the fabric of society as we know it. Speaking to people on the frontline reveals the ways our lives have been changed for everWhat happened in the UK between 2010 and 2020 will scar us for the rest of our lives. David Cameron’s Conservatives, only just victorious in the 2010 election, sold austerity as a necessary response to the 2008 financial crash. The exact social consequences of these cuts were spelled out last week in Michael Marmot’s report for the Institute of Health Equity: for the first time in a century, life expectancy has stopped growing and for women in poor areas actually fallen.We should never stop reminding ourselves just what an astonishing decade we have lived through. In the aftermath of the crash, employment climbed and stayed remarkably high. But these new jobs paid badly and it took until two months ago for earnings to reach where they were before 2008. It is no surprise that debt is mountainous: each household owes on average £15,385, not counting their mortgages. The gap between rich and poor has widened; the young are now worse off than their parents at their age; home ownership has declined steeply – families are stuck in life-long and precarious private renting. Continue reading...

Investors’ money has been sloshing around, caused by low interest rates, creating a surge in billion-dollar companies. It can’t lastIn November 2013, venture capitalist Aileen Lee published an article coining the term “unicorn” to describe a startup that’s less than a decade old and worth at least $1bn (about £783m now). She chose the word carefully, to convey a mix of rarity and alchemy. What Lee seemingly didn’t anticipate was that just a few years later it would have become a flagrant misnomer: these days there’s nothing rare about unicorns.According to website Crunchbase, 142 new companies met the criteria in 2019, taking the herd size to over 500. They’ve got a combined worth of more than $2tn, which is bigger than the gross domestic product of countries such as Canada and Italy, and their heft is perhaps the most striking indicator of our global economy’s return to absolute and unmitigated exuberance.Related: Stampede of the unicorns: will a new breed of tech giants burst the bubble?Red flags are starting to appear and we should take them seriouslyRelated: The WeWork debacle should be an indictment of modern finance | Nesrine Malik Continue reading...

Global expert Warwick McKibbon, who modelled Sars and Mers epidemics, says all countries likely to experience sharp hit to growth

Warwick McKibbin, who has modelled previous pandemics, says GDP could fall in a worst-case scenario by nearly 8%

Rolling coverage of the latest economic and financial news, as the Dow Jones posts its strongest one-day points surge ever

Share prices did better today but it would be ridiculous to say the market’s mood has improvedAs dead cat bounces go, though, Monday was more of a twitch. The FTSE 100 index, having fallen 11% last week, regained just 1.1%, even as central bankers around the world lined up to echo the US Federal Reserve’s line about acting “as appropriate”. Share prices did better in the US during London hours, but it would be ridiculous to say the market’s mood has improved definitively.The problem for investors struggling to feel where “fair value” might lie in a post-coronavirus world is twofold. First, monetary measures are of limited use in tackling a economic shock caused by the spread of a virus. Continue reading...

Markets rally after governments, central banks, IMF and World Banks agree to do ‘whatever is needed’

Several countries at risk of recession as Covid-19 spreads around the world

Benefits of striking deal with Trump may be outstripped by losses from crashing out of EUIt was supposed to be one of the biggest Brexit dividends. According to Liz Truss, an “ambitious and comprehensive” trade agreement with Donald Trump would reflect Britain’s unique relationship with the US, cutting red tape and tariffs to help British businesses and the economy grow.The value to the nation: at most, an economy 0.16% bigger after 15 years. In the cold language of economic benefits, such a small number is almost a rounding error. The gains in cash terms are roughly £3.4bn under the best-case scenario, an amount worth less than the current annual contribution of Brentwood or Bury. Continue reading...

A widespread halt in economic activity could put the viability of banks in question and spread financial disruption furtherThe first cases of coronavirus were recorded in China’s landlocked Hubei province, which has a population of about 59 million. Despite the Covid-19 virus and the respiratory disease it causes starting out as a local healthcare problem, it has become a global and an economic one because of the ways in which humans are profoundly interconnected through the world’s economy.The first kind of interconnectedness is the one epidemiologists study: the human travel network. How a disease spreads depends on the number of physical encounters, and the probability of the virus jumping from carrier to new host. These encounters, caused mostly by global air and sea travel, are the ones policymakers have been trying to stop, albeit belatedly.Related: Bank of England ready to act as cost of coronavirus mountsThe World Health Organization is recommending that people take simple precautions to reduce exposure to and transmission of the Wuhan coronavirus, for which there is no specific cure or vaccine.Related: Coronavirus: global death toll passes 3,000 with more than 88,000 infected – live updates Continue reading...

Chancellor seeks spending room by axing relief on capital gains when a business is soldThe chancellor is planning to scrap a £3bn tax relief that mainly benefits the wealthy in a bid to raise cash for an expected increase in public spending in the budget on 11 March.Rishi Sunak is expected to target entrepreneurs’ relief, a tax break which halves the capital gains tax paid when people sell their businesses. Under current rules, sellers pay only 10% on lifetime gains of up to £10m, comparedwith the 20% capital gains tax paid by higher-rate taxpayers. Continue reading...

Not since the financial crisis of 2008 has the world been more in need of concerted actionNot since the depths of the financial crisis has panic set in on the scale experienced over the past week. Conversations on the bus, at work and in the pub arefocused on the prospect of a deadly disease spreading uncontrollably. Stock markets are falling as fear about the coronavirus heightens and the potential cost for the world economy becomes increasingly apparent.Wall Street has suffered the fastest reversal since 1933 during the depths of the Great Depression. The Dow lost more than 10% of its value in a week from record-breaking highs to the lowest point since 2016. More than $5tn (£3.9tn) has been wiped off the value of global markets. The FTSE 100 is not immune, plunging the most in a week since the 2008 crash. Markets are expected to fall further this week. Continue reading...

Instead of ‘levelling up’ the economy, they would entrench the power of corporations and deepen market competitionIn 2016, a little-known Conservative MP authored a paper for the Centre for Policy Studies, the free-market thinktank founded by Keith Joseph and Margaret Thatcher. Looking ahead to Britain’s post-Brexit future, the report argued, the government should seize the opportunity to create a string of free ports across the country to revive manufacturing. These engines of economic growth would reconnect Britain with its “proud maritime history” and act as a “beacon of British values”. The MP in question was Rishi Sunak.Four years later, Britain has left the EU, Sunak has been promoted to chancellor of the exchequer, and Boris Johnson is shaping the direction of Britain’s economy. If Johnsonism, as Ferdinand Mount writes, “is not a continuation of Thatcherism at all”, Sunak’s 2016 proposal should make us wonder. His recent plan for free ports, based on the 2016 report, reheats an idea that first gained prominence under Thatcher’s government, and reeks of precisely the free-market ideas from which the new government is supposedly distancing itself.Related: UK launches freeports consultation with aim to open first next year Continue reading...

Shares suffered spectacular falls last week, but the worst is probably yet to comeA sense of panic was palpable in all corners of the international financial system on Friday as coronavirus cases spread relentlessly across Europe, the Americas and reached sub-Saharan Africa for the first time.Determined efforts of the Chinese authorities to contain the outbreak failed to settle frayed nerves after the World Health Organization, reacting to the news that four continents had at least six affected countries, raised its impact risk alert from “high” to “very high”. Continue reading...

The prime minister’s starting point for trade negotiations with the EU is a nonsense that could lead us into the hardest of exitsBritain’s most pressing problem is the government’s determination to fashion a hard Brexit. And if not that, then a no-deal Brexit. Of course, there is also the potential for a colossal economic sideswipe to the economy from the coronavirus epidemic, while flooding is causing huge harm to towns and villages in the west of England and Wales, and the Treasury is preparing a budget that will probably disguise a limited, piecemeal increase in spending, with exaggerated talk of government action to level up the regions.These threats are not yet structural problems to match Boris Johnson’s demand that the EU offer a Canada-style agreement, one that gives easy entry to EU markets without strings attached, a proposal that cannot fly in Brussels and could mean the UK ends up with no deal.Sadly for the Brexiter, the Swiss trade deals with the EU have always made for a poor analogy Continue reading...

Manufacturing production levels in world’s second largest economy dropped to record lows in February

World stock markets endure their worst week since the financial crisis, amid growing fears of a global recession and coronavirus pandemic

Financial measures look like the wrong weapons to combat a healthcare crisis“Make this stop.” The headline on Bank of America’s rejig of its economic forecasts for Europe summed up the mood in financial markets.City analysts and investors have lost their bearings. How do you make sensible estimates about the financial fallout from a virus with the potential, as in parts of China, to bring economic activity to a standstill? Continue reading...

More than $5tn wiped off global stocks with travel, retail and manufacturing all hit

Wall Street and London markets have both suffered their worst week since 2008

Becoming better at explaining and justifying their decisions to the public should be on the agendaThe US president Donald Trump’s decision to nominate the economist Judy Shelton for one of the vacant positions on the Federal Reserve Board has put the future of central bank independence back on the agenda. Shelton has cast doubt on the desirability of, and legal basis for, Fed independence, saying last year, “I don’t see any reference to independence in the legislation that has defined the role of the Federal Reserve.” And she has argued for “a more coordinated relationship with both Congress and the president”. If Fed policy were “coordinated” with Trump, then it is fairly clear who would be calling the shots.Of course, one new Fed governor could not upturn decades of practice. But there are suggestions that if appointed, Shelton could replace Jay Powell when his term comes up for renewal in 2022, leaving a fox in charge of the chicken coop.Related: Will coronavirus trigger a global recession? | Jeffrey Frankel Continue reading...

Markets around the world are being spooked by the coronavirus crisis

Dow plunges 1,190 points as analysts say virus could inflict as much damage as 2008 crisis

Australian share prices have fallen for the fourth day running after overseas markets were gripped by virus panicAirlines, carmakers and beer companies are among the businesses warning of tough times ahead as the financial impact of the coronavirus outbreak spreads through the economy.Australia’s benchmark stock exchange index, the ASX200, fell on Thursday for the fourth day running, slipping 0.75% after overseas markets that had been set to rally were gripped by virus panic on Wednesday afternoon.Related: Australia declares coronavirus will become a pandemic as it extends China travel banRelated: Australian Grand Prix to go ahead despite coronavirus concern, minister says Continue reading...

Campaigners say move is ‘blatant contradiction’ of lender’s climate commitmentsThe World Bank has been criticised for providing $55m (£43m) to aid fossil fuel extraction in Guyana, at the same time that it has pledged to stop direct funding of oil and gas production.The Washington-based institution, which provides loans and grants to aid the development of poorer countries, will provide $20m to pay for the training of Guyanese oil and gas officials, including those involved in the marketing of oil. Continue reading...

Rolling coverage of the latest economic and financial news, as Britain’s FTSE 100 recovers after hitting its lowest level in a year

World economy’s prospects look bleak owing to Covid-19 outbreak and Donald Trump’s trade policyAt the start of this year, things seemed to be looking up for the global economy. True, growth had slowed a bit in 2019: from 2.9% to 2.3% in the US and from 3.6% to 2.9% globally. Still, there had been no recession and as recently as January, the International Monetary Fund projected a global growth rebound in 2020. The new coronavirus, Covid-19, has changed all of that.Early predictions about Covid-19’s economic impact were reassuring. Similar epidemics – such as the 2003 outbreak of severe acute respiratory syndrome (Sars), another China-born coronavirus – did little damage globally. At the country level, GDP growth took a hit but quickly bounced back, as consumers released pent-up demand and firms rushed to fill back orders and restock inventories.Related: Donald Trump isn't safe yet, but the economy is working well for him | Michael Boskin Continue reading...

Thinktank says taxes hike in budget needed or chancellor risks breaking borrowing rulesThe chancellor, Rishi Sunak, faces a tough choice at next month’s budget between raising taxes, entrenching austerity or abandoning Tory manifesto promises on government borrowing, according to the Institute for Fiscal Studies.The tax and spending thinktank said the government was on-track to ramp up borrowing to about £63bn next year – £23bn more than the most recent official forecasts – amid a rapid increase in spending under Boris Johnson. Continue reading...

Switzerland, Austria and Croatia report first cases as outbreak worsens across Europe

European markets have suffered a second day of heavy losses as new coronavirus cases are reported