US president says reports from Beijing he had agreed to start phasing out tariffs were untrueHopes of an early end to the US-China trade war have received a setback after Donald Trump said he had yet to agree to start reducing tariffs on imports from America’s rival.The US president said that while he was keen on a deal with China, reports from Beijing that he had agreed to start phasing out tariffs were untrue. Continue reading...
Even capitalists agree our economic model is broken. Fundamental change on the scale of 1945 and 1979 is needed nowGeneral elections are rarely epoch-defining events. Though the parties pretend that their political differences are large, in economic terms they rarely are. But this one could be different.Of course, elections lead to change. Labour’s victory in 1997 marked a decisive break with the Thatcher-Major years in terms of public spending and welfare policy. Yet New Labour didn’t fundamentally challenge the dominant model of economic policy that it had inherited from the Tories: a globalised and declining manufacturing sector, and deregulated financial and labour markets. In 2010 the coalition brought in austerity. But Labour would have done so too, continuing the fiscal orthodoxy. Even at elections, economic policy is usually largely consensual.Related: The beauty of a Green New Deal is that it would pay for itself | Ann Pettifor Continue reading...
Like the big banks, big tech uses its lobbying muscle to avoid regulation, and thinks it should play by different rules. And like the banks, it could be about to wreak financial havoc on us all. By Rana Foroohar‘In every major economic downturn in US history, the ‘villains’ have been the ‘heroes’ during the preceding boom,†said the late, great management guru Peter Drucker. I cannot help but wonder if that might be the case over the next few years, as the United States (and possibly the world) heads toward its next big slowdown. Downturns historically come about once every decade, and it has been more than that since the 2008 financial crisis. Back then, banks were the “too-big-to-fail†institutions responsible for our falling stock portfolios, home prices and salaries. Technology companies, by contrast, have led the market upswing over the past decade. But this time around, it is the big tech firms that could play the spoiler role.You wouldn’t think it could be so when you look at the biggest and richest tech firms today. Take Apple. Warren Buffett says he wished he owned even more Apple stock. (His Berkshire Hathaway has a 5% stake in the company.) Goldman Sachs is launching a new credit card with the tech titan, which became the world’s first $1tn market-cap company in 2018. But hidden within these bullish headlines are a number of disturbing economic trends, of which Apple is already an exemplar. Study this one company and you begin to understand how big tech companies – the new too-big-to-fail institutions – could indeed sow the seeds of the next crisis.Related: Why Silicon Valley can’t fix itself Continue reading...
Mitsotakis government seeks foreign capital from new residents in prosperity driveNot so long ago, the idea of Greece announcing tax relief measures to entice the global rich would have been regarded as a joke. With the EU’s weakest economy and a leftist government that has been in power for just three months, the world’s wealthy were keen to keep their distance.But in a marked departure of policy, the centre-right administration led by Kyriakos Mitsotakis has offered an array of incentives to attract the rich.Related: Greek PM announces fast-track reforms and red tape cuts Continue reading...
Two outside experts on MPC say weakness of UK economy warrants immediate reductionThe chances of a cut in interest rates have increased after two members of the Bank of England’s key policy body responded to a growth downgrade – inspired by Brexit and a trade war – by voting for cheaper borrowing.In the first split vote on Threadneedle Street’s monetary policy committee (MPC) since June 2018, the Bank voted 7-2 to keep official interest rates on hold at 0.75%. But two of the outside experts appointed to the committee by the government, Jonathan Haskell and Michael Saunders, said the weakness of the economy warranted an immediate reduction.Related: Bank of England in surprise split over interest rates - business live Continue reading...
Treasury forecaster’s report was expected to show decline in UK public financesThe government’s top civil servant has blocked publication of a report by the Treasury’s economic forecaster that was expected to show the UK’s public finances have deteriorated over the last eight months.Mark Sedwill, the head of the Cabinet Office, pulled the plug only an hour before the Office for Budget Responsibility was due to send out documents that were also expected to chart how Brexit uncertainty has worsened the outlook for public finances.Related: Mark Sedwill: PM’s trusted adviser who led Gavin Williamson inquiry Continue reading...
As a member of the Patriotic Millionaires organization I’ve seen how our system perpetuates gross inequality but now I’m a proud ‘traitor to our class’If Donald Trump really wants to make America great again, he’d do what our country did when it was at the height of its economic stability and equality: increase the top income tax rate to 90%.Related: The IMF thinks carbon taxes will stop the climate crisis. That's a terrible idea | Kate AronoffPhilanthropy alone won’t cut it. Advocacy is in orderGeorge Zimmer is the founder and former CEO of Men’s Wearhouse, and the founder, CEO and chairman of Generation Tux Continue reading...
Car sales slump as reports claim firms are laying off staff as Brexit uncertainty deters consumers from major spendingBritain’s flagging economy suffered a further blow in October after companies in the key services sector reported a decline in new orders for the seventh month this year and car sales slumped again, taking the annual decline to 6.7%.Analysts blamed the weaker outlook on Brexit uncertainty, which continued to take its toll on business and consumer confidence at home and abroad. Continue reading...
Fabian Society sets out five-year plan to end in-work povertyTax and national insurance thresholds would be frozen for the next five years to help finance a £45bn assault on poverty under radical proposals from one of Britain’s leading leftwing thinktanks.The Fabian Society, which is affiliated to the Labour party, said a range of working-age and child benefits should be raised by £5 a week as an emergency measure in the first year of the next government.Related: The Tories can’t run away from the horrors of Food Bank Britain | Frances Ryan Continue reading...
After 40 years of neoliberalism, the verdict is in – the fruits of growth went to the few at the topAt the end of the cold war, the political scientist Francis Fukuyama wrote a celebrated essay called The End of History? Communism’s collapse, he argued, would clear the last obstacle separating the entire world from its destiny of liberal democracy and market economies. Many people agreed.Related: When recession comes, expect central banks to rewrite the rules | Nouriel Roubini Continue reading...
Median wages still languishing £20 a week below pre-financial crash levels, according to ONSHousehold debt soared by a third to record levels in the past decade as workers struggled to cope with the impact of a prolonged squeeze on wages, a new report has said.TUC analysis found that the average non-mortgage debt of a working family had hit £14,200 through an increased reliance on credit cards, bank loans, payday lending and other unsecured forms of borrowing. Continue reading...
The Damascene conversion to a spending splurge funded via borrowing may not wash with voters, let alone the IFSBy any standards, the UK’s economic performance in the 2010s has been poor. Workers are still earning less in inflation-adjusted terms than they were when the financial crisis erupted in 2008, productivity growth has collapsed, business investment has been weak, the trading performance wretched.Despite all that, Britain has had nine uninterrupted years of Conservative rule and, if the polls are right, is on course for another five. Has the state of the economy ceased to determine election results? Continue reading...
The UK now has more than 150 billionaires, and that ought to be an admission of failure, according to the opening shots of Labour’s election campaignShould anybody have nine zeroes to their name? In the opening stages of the election campaign, Jeremy Corbyn launched a salvo against billionaires. A Labour government would go after super-rich people who exploit a “rigged system†to benefit themselves at the expense of the many, he warned in a speech last week.Britain has more than 150 billionaires, who control assets worth £525bn. Yet with 14 million people in relative poverty, each one of these billionaires could be seen as a failure of government policy.Even if they didn’t pay tax or spend a penny of their earnings, it would take an average UK worker more than 40,000 years to become a billionaire Continue reading...
It is hard to credit Johnson’s appeal to ‘left-behind’ voters when it was his party that chose to leave them behindIn 1970 the prime minister, Harold Wilson, called a general election he expected to win and lost. In the 1974 “who governs Britain?†election, called by prime minister Edward Heath, opposition leader Wilson expected to lose – and won.Heath had successfully negotiated the UK’s entry to the European Economic Community in 1973, in which venture premiers Harold Macmillan (in 1963) and Wilson (in 1967) had failed. In 1974 Wilson was faced with a Labour party divided on the European question – plus ça change – and successfully went over the heads of his party to win a referendum in 1975, with a majority of two to one in favour of what we would now call Remain.The virtual freeze in average real incomes since the 2007-08 crash, and the austerity that followed it, have manifestly contributed to discontent Continue reading...
British factories suffer sixth consecutive month of falling new ordersBritain’s factories suffered a sixth consecutive month of falling new orders in October as ongoing Brexit uncertainty hit demand from domestic customers.Weak global demand for British manufactured goods also played a part in forcing firms to lay off workers for the seventh straight month, according to a survey of the industry. Continue reading...
Labor department figures beat analysts’ expectations but show steep drops in manufacturing sector and slower hiring this yearUS employers added a solid 128,000 jobs in October, a figure that was held down by a now-settled strike against General Motors that caused several thousand workers to be temporarily counted as unemployed.Related: Pelosi bangs the gavel: House votes to endorse Trump impeachment inquiry Continue reading...
Beijing sees US president as impulsive and fears he could pull out of any deal, reports sayA trade deal between the US and China is imminent and only delayed by the need to find a venue for a signing ceremony, according to Donald Trump.After almost two years of wrangling over US import tariffs on Chinese goods, which sparked a tit-for-tat row between the world’s largest trading nations, the two sides were close to a comprehensive long-term trade agreement, the president said. Continue reading...
A decade of disastrous policy has left the Treasury far worse off than expected. The next government must invest to rebuildWhile much of the talk this week has been about the election, far less reported was the news that government coffers will probably be a massive £43bn worse off than expected. This would wipe out the often-quoted £27bn “headroom†built up by the former chancellor Philip Hammond to cope with the costs of Brexit, and overshoot the government’s deficit target by £16bn.Related: UK Treasury on course to exceed this year's deficit target by £16bn Continue reading...
3.2% quarterly fall rivals the worst three-month slide during the 2008 financial crisisHong Kong has plunged into deep recession after its economy was hit by a double whammy of violent street protests and the US-China trade war.Activity contracted by 3.2% in the three months to September as a loss of exports was compounded by a collapse in consumer spending and a loss of revenue from tourists. Continue reading...
Annual growth rate for 19-nation bloc continues steady slowdownFresh evidence of the impact of global trade wars on the eurozone has emerged with official figures revealing growth in the 19-nation single currency bloc was 0.2% in the three months to September.Data from the EU’s statistical agency, Eurostat, showed activity expanded by 0.2% in the latest quarter – unchanged on the three months to June.Gross domestic product (GDP) measures the total value of activity in the economy over a given period of time. Continue reading...
But central bank’s reluctance to further reduce borrowing costs could rile Donald TrumpThe US central bank has cut interest rates for the third time this year in an attempt to keep the longest running period of growth in the country’s history continuing into the crucial election year of 2020.But the Federal Reserve put itself on a potential collision course with Donald Trump when it signalled to the financial markets that it had no immediate intention of cutting the cost of borrowing further. Continue reading...
Labour needs to exude optimism in this election campaign, rather than focus on the misery of Tory austerityFor two and a half years, British politics has been a pantomime played out in the corridors and boardrooms of Westminster and Brussels. The electorate has barely managed to press their noses against the glass and peer in: much of the Brexit debacle has unfolded out of sight and scrutiny. Instead, ever since Boris Johnson’s ascent to the premiership, the country has effectively been treated to a one-sided general election campaign; the opposition has been all but squeezed out of media coverage. All of this now changes: the spectators can storm the stage.In the 00s, it was often claimed that political apathy had replaced political participation. Membership of political parties and electoral turnout were both said to be in irreversible decline. Who can bemoan the lack of political participation now? This is our age of mass politics: the Scottish independence movement, Farageism and Brexitism, a youth-led climate emergency movement, and Jeremy Corbyn’s Labour, which began as a husk and flowered into western Europe’s biggest political party. And it is this, in large part, that makes the election so unpredictable, so volatile. There is a politicised populace united around a single but fundamental point – desire for rupture with a status quo that never enjoyed enthusiastic support and now has lost popular acquiescence. If Johnson triumphs, his government will wrench Britain out of the EU with a deal that threatens to punch a hole the size of Wales in the economy, and use Brexit to remake British society in a hyper-Thatcherite mould. Labour’s mission, on the other hand, is to up-end a generation-long experiment in market fundamentalism and redistribute wealth and power away from its principal beneficiaries. Each represents an abandonment of the old order, even though the Tories’ version will benefit the vested interests who bankroll them.Related: The only reason we’re having an election is because of MPs’ cynicism | Simon JenkinsRelated: Political highlight of the week? Actually, it was Labour's carbon game-changer | Ellie Mae O’Hagan Continue reading...
by Richard Partington Economics correspondent on (#4TCQ8)
Plan would shave up to 4% from size of economy by the end of 2020s, says thinktankBoris Johnson’s Brexit deal is expected to cost the UK economy as much as £70bn over the next decade compared with remaining in the EU, according to one of the country’s leading economic thinktanks.In a warning in the run-up to a snap election, the National Institute of Economic and Social Research (NIESR) said the prime minister’s plan would shave up to 4% from the size of the economy by the end of the 2020s, equivalent to about £1,100 per person per year, compared with a situation where Britain remained in the EU.Related: OBR to publish borrowing forecasts despite scrapping of budget Continue reading...
Firms that take a lead on world’s biggest problems will be most successful, says Paul PolmanA former boss of Unilever has said capitalism is a “damaged ideology†that must reinvent itself to survive by doing more to combat inequality and the climate emergency.Paul Polman said companies that took a lead on the world’s biggest problems would be the most successful of the 21st century. Companies that put short-term profit ahead of long-term sustainability would not survive, he said. Continue reading...
Jair Bolsonaro, Jared Kushner and David Cameron among attendees at Saudi summitPresidents, prime ministers and business leaders have been arriving in Saudi Arabia for “Davos in the desertâ€, a year after the global elite boycotted the kingdom’s investment summit following the murder of the journalist Jamal Khashoggi.Brazil’s Jair Bolsonaro, India’s Narendra Modi, King Abdullah II of Jordan and four African leaders are among 6,000 people from 30 countries attending the three-day summit in Riyadh hosted by the Saudi crown prince, Mohammed bin Salman. Continue reading...
Move follows fears government would unveil pre-election tax cuts without scrutinyFresh predictions for borrowing taking account of the sharp deterioration in the public finances since the spring will be published by the government’s independent forecasting body early next month it has been announced.Robert Chote, the chairman of the Office for Budget Responsibility, said that despite Sajid Javid’s announcement last week that he was scrapping plans for a budget on 6 November, the OBR would publish new forecasts for the public finances anyway. Continue reading...
Any new downturn will spawn unconventional responses, from helicopter money to ‘bail-ins’ and huge deficitsA cloud of gloom hovered over the International Monetary Fund’s annual meeting this month. With the global economy experiencing a synchronised slowdown, any number of tail risks could bring on an outright recession. Among other things, investors and economic policymakers must worry about a renewed escalation in the Sino-American trade and technology war. A military conflict between the US and Iran would be felt globally. The same could be true of “hard†Brexit by the UK or a collision between the IMF and Argentina’s incoming Peronist government.Still, some of these risks could become less likely over time. The US and China have reached a tentative agreement on a “phase one†partial trade deal, and the US has suspended tariffs that were due to come into effect on 15 October. If the negotiations continue, damaging tariffs on Chinese consumer goods scheduled for 15 December could also be postponed or suspended. The US has also so far refrained from responding directly to Iran’s alleged downing of a US drone and attack on Saudi oil facilities in recent months. The US president, Donald Trump, doubtless is aware that a spike in oil prices stemming from a military conflict would seriously damage his re-election prospects next November.Related: With growth this tepid, is it time to give 'helicopter money' a whirl? | Larry ElliottRelated: Easy money won’t solve Christine Lagarde’s economic problems | Phillip Inman Continue reading...
by Richard Partington Economics correspondent on (#4T9NX)
Chancellor must make OBR analysis public so voters are informed, says John McDonnellLabour has demanded Sajid Javid immediately publish economic forecasts prepared for the budget to ensure the government does not avoid public scrutiny before a potential election.In a letter to the chancellor seen by the Guardian, John McDonnell called for the urgent release of forecasts compiled by the Office for Budget Responsibility (OBR), the independent Treasury watchdog.The Office for Budget Responsibility is the government’s independent forecaster, which gives its verdict on the outlook for growth and the public finances twice a year. Continue reading...
When economy needs leadership, No 11 occupant cements reputation as ‘chancellor only in name’ insteadIt was supposed to be the event to end austerity. A budget to turn the page; to enact the “people’s prioritiesâ€, with everything to like and nothing to hate. But what should have been a pivotal moment for a country tired of austerity, Brexit and political chaos became another moment of shambles for Sajid Javid instead.In yet another example of Brexit derailing the usual functioning of government, the chancellor confirmed he would scrap his set-piece tax and spending event on 6 November. The launch of a hypothetical election trumped a hypothetical budget, to denude the country of vital clarity, spending detail and the commitments required to steady a rapidly weakening economy. Continue reading...
Forced labour in China’s internment camps taints the supply chains of many western companies. We need to take actionAny western company doing business in Xinjiang should consider their supply chains tainted by forced labour drawn from internment camps. Hardly a drop in the ocean of the vast global economy, this involves companies such as Ikea, H&M, Volkswagen and Siemens.This month, the United States banned the import of products made by a firm in Xinjiang over its use of forced labour. It also blacklisted 28 Chinese entities for their role in the repression of Uighurs and issued visa restrictions on key Chinese officials. Following suit, two major Australian companies have now also announced they are ending partnership with their cotton supplier in Xinjiang.Michael Caster is a human rights advocate and researcher, author of The People’s Republic of the Disappeared, and co-founder of the human rights organisation Safeguard Defenders. Continue reading...
Britain could have great healthcare, fair welfare and environmentally friendly transport networks if excessive rents weren’t starving the economyA 21st-century life costs too much. At least, the glistening modernity we seek in all aspects of our lives costs too much. There is widespread agreement that Britons deserve the best healthcare modern methods, equipment and trained staff can provide.There are transport networks desperately in need of funding for upgrades and much-needed maintenance, and for new railway lines to take polluting and carbon-generating cars off the road. The costs run into billions of pounds.It’s easy to see why the left dodges the rent issue when so many voters are landlords. Continue reading...
by Richard Partington Economics correspondent on (#4T6KC)
Chancellor Sajid Javid accused of trying to hide worsening growth outlook and neglecting duty to publish OBR reportsThe UK government is coming under mounting pressure to publish economic forecasts after scrapping its plan to hold an early November budget, as Boris Johnson pushes for a snap election before Christmas.In a development that effectively blocks the release of the forecasts, the chancellor, Sajid Javid, confirmed on Friday he would not deliver his set piece tax and spending event on 6 November as planned. It comes as the government refuses to carry out a detailed impact assessment of its Brexit deal.The Office for Budget Responsibility is the government’s independent forecaster, which gives its verdict on the outlook for growth and the public finances twice a year. Continue reading...
Foster carers and professionals respond to Jimmy Johnstone’s moving article about the importance of foster care workJimmy Johnstone touches on the wider issue of the need to professionalise foster care (Foster care saves lives. Our work deserves employment rights, theguardian.com, 23 October). At a time when CAMHS waiting lists stretch to months even for priority cases (I know this, I’m a GP) foster carers provide what is often the only therapeutic input to the most vulnerable children with the greatest needs in our society.Basic “skills to foster†training is now typically delivered over two weekends and augmented in an ad hoc way with whatever other continuing development training is available locally. Like Mr Johnstone, my wife and I are carers on the specialist scheme, designed to provide home-based care for looked-after children with the most complex and enduring difficulties. These are the children we try to nurture in a permanent family. To qualify for the specialist scheme one of us (my wife) must have no other employment. We are paid at the highest rate of any foster carers and we get two weeks’ paid leave annually. Calculated on an hourly rate, this remuneration package is around a third of the current minimum wage. To properly train and pay foster carers would be expensive for the state, though these costs would be offset by better lives for the cohort of young people who currently leave care destined to make up around half of the prison population. These children, and the foster families who care for them, should be valued much more.
by Kalyeena Makortoff Banking correspondent on (#4T5W1)
Chief executive says there is ‘a level of caution’ among banking customersBarclays has reported a fall in profits of more than 80% in the third quarter as its chief executive, Jes Staley, warned of the impact of the UK economic uncertainty on the year ahead.“We acknowledge that the outlook for next year is unquestionably more challenging now than it appeared a year ago, in particular given the uncertainty around the UK economy and the interest rate environment,†Staley said.Related: Barclays U-turns over ban on Post Office cash withdrawals Continue reading...
Be it donald Trump or Elizabeth Warren, America urgently needs to start talking about candidates’ sharply diverging economic policiesA year from now, the US will elect its next president. The stakes are high and the outcome will reverberate across the world in a number of spheres, not least the economy. Yet, thus far, most discussions of candidates’ economic policy proposals have been based more on feelings or ideology than rigorous analysis.Barring a major unforeseen catastrophe, US economic performance will play a decisive role in the election. If the economy remains strong – unemployment is at a 50-year low for all workers, and its lowest-ever level for African-Americans and Hispanics – President Donald Trump stands a good chance of a second term.Related: Trump's weaponisation of the dollar could threaten its dominance | Jeffrey Frankel Continue reading...