Consumers opt for retail parks or shop online, delivering hit to traditional shopping centresBritain’s crisis-hit retailers suffered a dramatic fall in shopper numbers in the last three months as consumers continued to opt to visit out of town retail parks, or to shop online.According to the latest footfall data, the scorching hot bank holiday weekend failed to halt the decline in people entering high street stores, leading to a 1.9% drop last month compared with a year ago.What’s the problem? Continue reading...
by Richard Partington Economics correspondent on (#4PXGE)
The UK ranks among the most unequal nations in Europe and many people feel they are not sharing in the country’s wealthIncome inequality has risen sharply since the 1970s in most advanced economies around the world, and has been blamed for increasingly polarised politics.Thomas Piketty: Capital in the 21st CenturyRichard Wilkinson and Kate Pickett: The Spirit Level: Why Greater Equality Makes Societies StrongerTony Atkinson: Inequality: What Can Be Done?Branko Milanovic: Global Inequality: A New Approach for the Age of GlobalizationSir Angus Deaton: The Great Escape: Health, Wealth and the Origins of Inequality Continue reading...
Accountancy giant forecasts GDP to shrink by 1.5% with business confidence badly dentedBritain will plunge into its first recession in a decade should the government quit the European Union without a deal, according to the latest in a string of gloomy forecasts about the UK’s fortunes outside the EU’s free trade area.Economists at the accountancy firm KPMG said that the knock-on effects to Britain’s trade and business confidence of a no-deal Brexit would lead to the economy shrinking by 1.5% next year.Related: Consumer spending at weakest since mid-90s amid Brexit chaos – BRCAt 11pm UK time on 31 October the UK would, by default, become a “third country†in terms of relations with the EU, with no overarching post-Brexit plan in place and no transition period. The UK would no longer be paying into the EU budget, nor would it hand over the £39bn divorce payment. Continue reading...
Rather than truly instigating a ‘new decade of renewal’ austerity, the spending review has only an election in mindThere were plenty of shaking heads on the opposition benches when Sajid Javid claimed that his review of Whitehall spending meant “we are turning the page on austerity and beginning a new decade of renewalâ€.The thinktanks that pore over the government’s finances were kind to the chancellor, agreeing that a £13.8bn, above-inflation increase in Whitehall budgets meant a page had been turned. But they emphasised that there was a long way to go before ministers would see the back of austerity.It is assumed the huge number of new police trainees is part of Boris Johnson’s voter-friendly policy playbook Continue reading...
Ted Heath’s 1974 election gamble offers a bad precedent for the PM. Heath lost, but the economy makes it Johnson’s to loseA flatlining economy. A political system gripped by inertia. A series of weak governments unable to get anything done. This used to be Italy. Now it is Britain.Last week, when Boris Johnson was stymied by his lack of a parliamentary majority and Amber Rudd was planning her resignation from the cabinet, Italy was putting together a new coalition designed to prevent the hard right from taking control. It speaks volumes when Italy is giving Britain lessons in stability.Related: Brexit chaos 'making business planning impossible' Continue reading...
‘Brussels’, Britain and Barnier have often been misrepresented – not least by our prime minister. Now the truth is coming outIt was characteristically shrewd of the European Union’s chief negotiator, Michel Barnier, to place an assessment of the real state of play in last weekend’s Sunday Telegraph.It was in the Sunday Telegraph over the years that Boris Johnson, when he was based in Brussels, devoted his so-called reporting to consistently misleading stories about what our membership of the EU was really about.When the deluded army of Brexiters goes on about the British people having spoken, I start counting the spoons Continue reading...
Prices are at record levels and demand is growing for fishermen north of the border after China imposed tariffs on live lobstersLong hours, rolling ocean swells, and the occasional spring snowstorm are all part of the job for Francis Morrissey.“It’s bred into you from the time you’re a child: you either like the ocean or you don’t,†said the fisherman and business owner from the Canadian province of Prince Edward Island. “Even when I’m in the office, I wish I was out there.â€Related: US and China agree to reopen trade talks in October Continue reading...
Hiring slowed amid trade war as economists expected to add about 160,000 jobs while unemployment rate remained at 3.7%Hiring slowed in the US in August as employers added a lackluster 130,00 new jobs, strengthening arguments that Donald Trump’s trade wars are beginning to hit the US economy.Economists had expected the US to add about 160,000 new jobs over the month. While the labor department announced the unemployment rate remained at 3.7%, a near 50-year low, the pace of hiring slowed markedly, down from an average of 192,000 new jobs a month last year to 143,000 so far this year.Related: US and China agree to reopen trade talks in OctoberThe Economy is great. The only thing adding to “uncertainty†is the Fake News!I agree with @jimcramer, the Fed should lower rates. They were WAY too early to raise, and Way too late to cut - and big dose quantitative tightening didn’t exactly help either. Where did I find this guy Jerome? Oh well, you can’t win them all! Continue reading...
by Richard Partington Economics correspondent on (#4PRG2)
Shadow chancellor John McDonnell says crackdown on excessive payouts will be one of his first actsBankers’ bonuses could be banned in Britain in order to tackle high levels of inequality across the country, John McDonnell has said.The shadow chancellor warned the City of London that a culture of excessive bonus payouts remained a decade on from the financial crisis and said Labour would introduce rules to curtail such awards – including a potential ban – if banks did not take voluntary action first.Related: Labour's pay curbs may seem a joke but execs shouldn't laugh too long | Nils Pratley Continue reading...
Pub chain reduces price of UK-made beer and vows further cuts on lager, wine and cider … if import tariffs fallJD Wetherspoon’s boss, Tim Martin, has pledged to slash the price of lagers, spirits, wine and cider if the UK leaves the EU, after shaving 20p off a pint of ale to illustrate the Brexit benefits he expects for drinkers.Martin has been one of the most vociferously pro-Brexit figures in the world of business, repeatedly insisting that leaving the European Union, even without a deal, will mean cheaper prices for customers. Continue reading...
England and Wales GDP figures by ONS show West Midlands is second in growth leagueLondon’s economy has outstripped all other English regions with a 19% surge in growth since 2012, highlighting the divide between the capital and the rest of England.The Office for National Statistics underlined the city’s disproportionate economic heft in its first set of regional GDP figures for England and Wales, which showed the north-east with the slowest growth over the same period at 5.9%. Continue reading...
The goings-on in the White House and Westminster are having as much effect as economic indicatorsPolitical events have always had an impact on the world’s financial markets but rarely have they mattered quite so much as they do now.Take two current examples. The latest news from Germany on Thursday was dire, with a plunge in factory orders adding to the risk of a technical recession – two successive quarters of negative growth. Normally, this would be a reason to sell German shares but the Frankfurt stock market was up. Continue reading...
Sajid Javid’s pledge to ‘bring about a decade of renewal’ comes under scrutinySajid Javid said on Wednesday that the government could afford to “turn the page on austerity†as he set out Whitehall spending priorities. Publishing departmental budgets for next year, the chancellor claimed that a rise in spending of 4.1% over this year and next would “bring about a decade of renewalâ€. Critics warned that his claims were overblown and that nine years of spending cuts would continue to take their toll. Here we assess Javid’s claim that a line is being drawn under austerity. Continue reading...
The fiscal stimulus Boris Johnson promises might sugar the Brexit pill. But further spending cuts would inevitably followIf I have been ill and I say I am better, does that mean I am better than I was or that I am no longer ill? The same ambiguity applies to the phrase “the end of austerityâ€. If you took this to mean that the public sector had stopped shrinking, then in overall terms you would be correct. But you would be completely wrong to think the austerity that began in 2010 had been significantly reversed.The chancellor, Sajid Javid, plans for government spending as a share of GDP to rise from 38.1% in this financial year to 38.6% in 2020-21, while this ratio was planned to fall slightly under Philip Hammond. However, the same figure was 44.9% at the end of the Labour government. Nearly all areas of spending are still below 2010 levels in real terms. Overall public spending has stopped being squeezed, but it is still much smaller than it once was.Related: Brexit: Jo Johnson, brother of Boris Johnson, to stand down – live newsRelated: Javid’s giveaways don’t come close to reversing austerity’s bitter legacy | Polly Toynbee Continue reading...
Investors welcome news but remain cautious while Trump shows little sign of cedingThe US and China have agreed to reopen trade talks next month as concerns grow that the tariff war between the world’s two largest economies could tip the global economy into recession.Senior negotiators will meet in early October, after a call on Wednesday night between the Chinese vice-premier, Liu He, and the US trade representative, Robert Lighthizer, and treasury secretary, Steven Mnuchin. Continue reading...
With wealth inequality rising the case for raising revenue via a consumption tax is compellingIs it time for the US to consider switching from income tax to a progressive consumption tax as a way of addressing growing wealth inequality? Many economists have long favoured a consumption-based tax system for raising revenue on the grounds of efficiency and simplicity. However, despite occasional vocal adherents, it has never gained political traction. Is it time to think again?One of the main objections is that switching systems would require a potentially complex transition to avoid penalising existing wealth holders, who would be taxed when they try to spend accumulated savings on which they had already paid income taxes. Yet, in an environment where wealth inequality is rising inexorably, that drawback may be a virtue. Moreover, a great strength of a consumption tax system is that it does not tax saving and also gives firms more incentive to invest.Related: The moral case for a one-off wealth tax is compelling | Kenneth Rogoff Continue reading...
After a decade of savage cuts, the chancellor would need to spend £60bn just to restore services to the level of 2010The end of austerity is here, Sajid Javid tells us. The “page is turnedâ€. If only it really were that easy to erase the damage done during a decade of public services stripped bare. No department will suffer further cuts and all their budgets will keep pace with inflation. It’s good news that “the biggest increase in spending for a decade†means no new punishment will be inflicted on the public realm. An election is on the way and voters won’t take it any more.They need no focus groups to tell them people put the NHS, schools and police top of their priorities. The deep school cuts led to the firing of teachers and teaching assistants; stopped music, drama, art and school trips; closed breakfast clubs for hungry children; and left headteachers begging parents for pencils and glue. The damage emerged into the light of day to Theresa May’s political discomfort in the 2017 election. Now the annual funding is restored, but 10 years of spending are lost for ever.The missing police officers, GPs, nurses, firefighters and all the rest can’t be magicked out of the airRelated: Javid fails to disguise cynical electioneering behind spending review Continue reading...
More money for schools, hospitals and police is welcome – but don’t be fooled by promises of the end of austerityThe roots of Wednesday’s extraordinary performance by the chancellor, Sajid Javid, stretch back at least two and a half years. In the 2017 general election, a nurse on Question Time asked Theresa May why her pay hadn’t gone up once in real terms since 2009. The then prime minister’s response? “There isn’t a magic money tree that we can shake that suddenly provides for everything that people want.†One of the most infamous remarks of a car-crash campaign by the Conservatives, it helped teach the party something: it could not win another election by promising further austerity. Scroll forward to autumn 2019 and another prime minister evidently revving up to go to the country. Boris Johnson has learned his lesson: his government needs to be seen to be caring, compassionate, responsive to the country’s problems. It needs to be seen to be spending.Which brings us to Wednesday afternoon and a spending round unlike any other. It took place a year after it was scheduled and only covers one year, rather than the traditional three. Even by the standards of this most nakedly political of major Treasury announcements, Mr Javid acted like he was giving a stump speech. Or at least he tried to, until he was repeatedly pulled up by the Speaker, John Bercow. The result was a messy, rambling performance taking in vignettes from Mr Javid’s childhood, paeans to a “global Britain†and choruses that “we are turning the page on austerityâ€. Continue reading...
by Richard Partington Economics correspondent on (#4PJJ3)
Concern over a no-deal Brexit hits growth and damages business confidenceBritain’s dominant service sector failed to grow as quickly as expected in August, as the economy took a step closer to suffering its first recession since the financial crisis.According to a survey from IHS Markit and the Chartered Institute of Procurement and Supply (Cips), which is monitored by the government and the Bank of England for early warning signs from the economy, meagre growth in the service sector failed to offset sharp declines in manufacturing output and construction activity last month. Continue reading...
Australian data shows the economy growing at its slowest rate since 2009, but the treasurer says Australia is ‘resilient’7.40am BSTMarkets are closing all over Asia Pacific so it’s time for me to step down. My colleagues in London will soon be starting a business blog from the northern hemisphere so check in with them to find out how the markets react to the latest Brexit shenanigans and all the potentially very good news about Hong Kong pulling its extradition bill.These were the highlights today:7.26am BSTThe Hong Kong market has jumped 3% after the South China Morning Post reported that the government is withdrawing the controversial China extradition bill that sparked weeks of protest.Hang Seng futures up over 3.5% pic.twitter.com/kRISBUVsbm7.24am BSTBig turnaround for the ASX200 which has closed up 24 points or 0.31% at 6553 points.The Nikkei is done for the day and has finished up 24 points, or 0.12%, at 20,649 points.
by Richard Partington Economics correspondent on (#4PEY8)
Sterling tumbles by almost a cent against the US dollar and falls by about 0.7% on the euroThe pound fell to the lowest level in three weeks amid mounting speculation that a general election is imminent.Boris Johnson said on Monday he did not want to go to the country but the reaction of investors pointed to an expectation that a national poll will be the only way out of the Brexit standoff. Continue reading...
Thinktank says Wednesday’s spending review will amount to boost of £9bn, with £4.5bn already accounted forThe Treasury will need to find an extra £5bn from next year to fund the government’s spending promises, according to the Institute for Fiscal Studies (IFS), which said the increase could undermine the Treasury’s commitment to reduce borrowing.Boris Johnson said on Monday that Wednesday’s Whitehall spending review, which will set out department funding for 2020/21, would be the “most ambitious spending round for more than a decadeâ€.Related: New teachers' salary in England could reach £30,000, says DfE Continue reading...
by Richard Partington Economics correspondent on (#4PE4F)
Survey finds EU-based firms shunning UK manufacturers as risk of no deal mountsUK manufacturers have recorded the sharpest drop in factory output for seven years as mounting concerns over a no-deal Brexit and the slowing global economy hit orders across the country.The monthly snapshot from IHS Markit and the Chartered Institute of Procurement and Supply, which is closely watched by the Treasury for early warning signals from the UK economy, showed that activity fell in August to the lowest levels since July 2012.Related: End to Brexit chaos cannot come too soon for factories | Larry Elliott Continue reading...
The US-China trade war is also having an impact on manufacturing worldwideThe shockingly bad snapshot of industry from IHS Markit and the Chartered Institute of Procurement and Supply puts Britain on recession alert. It doesn’t mean a recession will inevitably materialise.For that to happen, the poor performance of manufacturing would have to be matched by that of the service sector – and, so far at least, it hasn’t been.Related: UK factory output dives to seven-year low as Brexit fears rise Continue reading...
Life for the postwar baby boomers has been full of opportunity and change. But the fight for freedom and a better world continuesIn 1942, aged 18, my mother was running for her life with her father, mother and siblings, heading for an air-raid shelter as bombs pulverised Portsmouth, turning the city into “a tomb of darkness†as one diarist recorded. During the war the family were to lose their home twice as the city and its docks became a prime target. My mother was wearing a new coat so when her father ordered everyone to hit the ground, she refused. A bomb splinter gouged one side of her back. A female ambulance driver risked her life to drive my mother to hospital through the raid.I was born in 1948. My mother and father lived in a bedsit and saved a few shillings a week for her confinement. And then, like millions who had endured six years of war, they had their just rewards. “The destruction is so awful and the people so wonderful, they deserve a better world,†wrote the future Queen Elizabeth to her grandmother, Mary. On 5 July, the NHS was born. It no longer cost a couple dearly to have a baby. I came along a few weeks later, a citizen of the new “cradle to the grave†welfare state. As historian Asa Briggs said: “War has necessitated welfare.â€At 18 I was part of the so-called swinging 60s, miniskirts, women's lib and the counter culture Continue reading...
In an economic downturn Americans will reassess their president’s unreal narrative and random management styleDonald Trump concluded his remarks at the recent G7 summit by inviting the assembled leaders to hold next year’s meeting at his Doral country club near Miami, describing a fantasy-like world of “magnificent buildings†whose “ballrooms are among the biggest in Florida and the bestâ€. It was yet another instance of the US president’s public narrative, which has been on a rising growth path for nearly 50 years.One can observe this by searching Trump’s name in digital news sources such as Google Ngrams. His narrative has been slow to grow by contagion, but it has been growing for a long time, such that his domination of public discourse in the United States almost seems implausible.In your private life, be resolved to do anything and everything, to dice, to drink deep, to live high and keep mistresses, or at all events to boast of it even if you do not do it, telling everyone about it and showing notes that purport to be written by women. You must aim to be elegant, you know, and take pains to create the impression that women are devoted to you. This also will be set down to the credit of your rhetoric by the public, who will infer from it that your fame extends even to the women’s quarters.â€Bring with you, then, as the principal thing, ignorance; secondly recklessness, and thereto effrontery and shamelessness. Modesty, respectability, self-restraint, and blushes may be left at home, for they are useless and somewhat of a hindrance to the matter in hand … If you commit a solecism or a barbarism, let shamelessness be your only remedy.†Continue reading...
An end to austerity beckons, but the threat of recession resulting from a no-deal Brexit makes the chancellor’s strategy riskyAs Sajid Javid prepares to deliver his spending round statement this week, Britain is yet again on the brink of another week of Brexit chaos. But in his debut Commons set piece, the chancellor will be looking to make another point to distract from the turmoil to mark a potentially pivotal turning point: the end of austerity.Thanks to the hard work of people in Britain, he will undoubtedly say, the decade of fiscal restraint has now run its course. This is a big moment for the country: public services will get the money they badly need, and Britain will live within its means. Continue reading...
Chinese exports worth $125bn will face new taxes from 1 September, while China places levy on oil as agreement becomes more distantChina and the United States have begun imposing additional tariffs on each other’s goods in the latest escalation of their bruising trade war that has sent shockwaves through the global economy.A new round of tariffs took effect from 0401 GMT on Sunday, with Beijing’s levy of 5% on US crude oil marking the first time the fuel has been targeted since the world’s two largest economies started their trade war more than a year ago.Related: China's yuan hits 11-year low as trade tensions grip marketsRelated: White House insists Trump not having second thoughts on China trade war Continue reading...
As countries turn inwards, ideas such as a cryptocurrency to reduce global dependence on the dollar are being lostUnless Britain leaves the European Union’s single market and customs union, the Brexit party will cry foul. As long as the Brexit party exists, the Tory vote will be forever divided. That is the driving force behind the Conservative party’s policymaking. Even the gift of a peerage is unlikely to deter Nigel Farage from his mission to push the UK out of all the EU’s major institutions, leaving the Tories on a single track to no deal.Given that parliament will not vote for a form of Brexit that would involve a border between the north and south in the island of Ireland, we have come to see that there cannot be a deal.Rather than discuss rational solutions to global problems, the UK is hurtling towards complete separation Continue reading...
This week’s spending review may break Tory fiscal rules – and offer clues to the PM’s election intentionsSajid Javid is preparing to use his first major set-piece as chancellor to confirm large increases in public spending, against a backdrop of spiralling political chaos over Brexit.As the risks to the economy from leaving without a deal mount, the chancellor will take to the dispatch box to make funding announcements for the NHS, schools and the police when he unveils his spending review on Wednesday afternoon. Here’s what to expect.The economy has slumped to the brink of recession and public borrowing has risen over recent months Continue reading...
The US central bank spent $29tn to stop the last financial crash. Donald Trump now wants it to bail out his presidencyEarlier this month Donald Trump accused the man he had appointed to run the United States Federal Reserve, Jerome Powell, of being an “enemyâ€. His public dressing down of the central bank chair, who is supposed to be independent, was accompanied by further escalations of the US–China trade war. Mr Trump wants Mr Powell to lower rates to spur growth in the sputtering US economy and give him the upper hand with Beijing. This incompetence and bluster is hardly inspiring global confidence. It was a coincidence, however, that on the same day the Bank of England’s governor, Mark Carney, warned the annual gathering of the world’s central bankers that the global economy was becoming over-reliant on the dollar. That may have been fine when the US was viewed as a responsible leader of the world economy. Mr Carney plainly thinks that is not the case today.There are reasons to worry. Almost every nation is tied to the monetary policy of the US. More than half of all trade invoices are in dollars, as are nine-tenths of all foreign exchange transactions. Since the 2008 global crash, corporate and government levels of dollar debt in the emerging world have rocketed, leading to financial instability. Despite the Trump administration’s volatility and belligerence, the dollar keeps rising in value. It matters not that the US Fed cut rates in July: investors want to put their money into greenbacks. This is no new phenomenon: the US’s “exorbitant privilege†was noted decades ago. Continue reading...
British economy contracted by 0.2% as Brexit uncertainty caused erratic activityThe UK has fallen to the bottom of the G7 growth league table after Brexit uncertainty held the economy back in the spring.Every other advanced economy performed better than Britain in the second quarter of 2019, a ranking confirmed on Friday when Canada was the last of the seven to report GDP figures for the period between April and June. Continue reading...
The playbook for taming industrial capitalism already exists. It’s the essential starting point for reform todayIn Democracy in America, Alexis de Tocqueville offered a prescient warning for “the friends of democracyâ€. In a chapter called “How Aristocracy Could Issue from Industry†he observed that industrial capitalism would create economic inequality between owners and wage-workers and divide them culturally, morally, and socially.Related: Yes, contemporary capitalism can be compatible with liberal democracy | William Arthur Galston Continue reading...
Micro Focus and Hays among companies warning of slower trading as confidence fallsClear signs that Brexit concerns are starting to bite emerged as businesses flagged a freeze on spending and delays in hiring workers as confidence plunges over the prospect of leaving the EU without a deal.Two major UK companies said economic uncertainty was prompting business customers to sit on their cash instead of making investments to support growth and jobs. Continue reading...
Concerns about the state of the nation may start to outweigh the public’s personal feelgood factorBritain’s consumers have largely been deaf to the warnings of impending economic disaster that have rained down thick and fast ever since the EU referendum in June 2016. The public’s appetite to spend has remained strong but one thing it won’t buy is doom and gloom.It would be surprising, though, if consumers were completely impervious to what is happening over Brexit. Surveys have suggested that consumer confidence is getting weaker even though spending in the shops and online has held up well. Continue reading...
Despite all the talk about recession it might not be time for business owners to start battening down the hatches – thanks to these six indicatorsWith all of the recent talk about recession, is it time now for a business owner to start battening down the hatches, cutting overhead, delaying expansion plans and trimming investments? As in any economy, there are always conflicting signs. But according to these six indicators, my answer is: no?Related: Five things Congress may do that will affect your business this year Continue reading...
An apparent move by big business to maximise stakeholder value sounds too good to be trueFor four decades, the prevailing doctrine in the US has been that corporations should maximise shareholder value – meaning profits and share prices – here and now, come what may, regardless of the consequences to workers, customers, suppliers and communities. So the statement endorsing stakeholder capitalism, signed earlier this month by virtually all the members of the US Business Roundtable, has caused quite a stir. After all, these are the CEOs of the US’s most powerful corporations, telling Americans and the world that business is about more than the bottom line. That is quite an about-face. Or is it?The free-market ideologue and Nobel laureate economist Milton Friedman was influential not only in spreading the doctrine of shareholder primacy, but also in getting it written into US legislation. He went so far as to say: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.â€Related: Why central bankers' conventional tools are no longer working Continue reading...
Economics | The Guardian