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

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

Rolling coverage of the latest economic and financial news

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

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

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

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

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

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

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

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

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

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

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

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

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

Rolling coverage of the latest economic and financial news

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

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

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

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

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

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

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

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

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

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

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

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

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

Rolling coverage of the latest economic and financial news

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