Economics | The Guardian

Whitehall source says plans would ‘double the practical challenge at the border’Boris Johnson intends to impose full customs checks on all goods coming into the UK from the EU in a break with previous government policy, according to reports.“We are planning full checks on all EU imports – export declarations, security declarations, animal health checks and all supermarket goods to pass through border inspection posts,” the Daily Telegraph reported a senior Whitehall source as saying. “This will double the practical challenge at the border in January 2021.” Continue reading...

Brexit could further damage bloc’s economy, which grew just 0.1% in final quarter of 2019

Rolling coverage of the latest economic and financial news, as France’s economy contracts by 0.1% in the last quarter

Growth rate since joining EEC in 1973 has been slower than in decades before entryA new era has begun for the UK. As the outgoing governor of the Bank of England, Mark Carney, noted this week, Britain has entered a decade of potentially profound structural change.Those who mourn Britain’s departure from the EU are sure this fundamental change is going to be painful and detrimental. But there are those who see Brexit as an opportunity not a threat.Related: Michael Gove hails Brexit day with 'relief and delight'Does 31 January change anything? Continue reading...

Hard though it is to accept, as patriots we must wish Brexit a (partial) successBritain has not left Europe; it has just stepped into another room. Its European role has always been complex and ambivalent. “The desire for isolation, the knowledge that it is impossible – these are the two poles between which the needle of the British compass continues to waver.” The words of the historian RW Seton-Watson in a history of Britain in Europe published in 1937. True then, even more true now.We ex-remainers have consistently argued that Brexit will leave the UK weaker, poorer, more divided, less influential, less attractive to the rest of the world. Some evidence is already in. According to Bloomberg Economics, by the end of this year Brexit will have cost Britain some £200bn in lost economic growth – nearly as much (adjusted for inflation) as the country has paid in to the EU budget over the entire period of its membership since 1973.Related: Is uncertainty lifting now Brexit is finally happening? Experts debate the dataRelated: Scottish government wins vote to keep EU flag flying over Holyrood Continue reading...

Labour can outflank the Tories by rethinking the firm and who controls its surplus rather than just nationalising itIn 1970 Milton Friedman published his seminal “greed is good” essay in the New York Times magazine. In it the rightwing academic tarred managers who thought there were corporate responsibilities beyond profits as “unwitting puppets of the intellectual forces that have been undermining the basis of a free society”. Friedman’s view of shareholder primacy became the conventional wisdom, boosted by Margaret Thatcher and Ronald Reagan. Since 1979 the idea that only company owners are the rightful claimants of the fruits of the economy gained traction. Nowadays shareholders are the central actor in economic life. This has been a damaging and unwise road to take.Putting shareholders first means less cash for workers and other stakeholders, hampering efforts to tackle in-work poverty and climate change. While the UK’s largest listed companies have doubled in a decade the amount paid out to shareholders (a record £110bn last year), the average wage in November 2019, measured as weekly real pay, was lower than in February 2008. If the £110bn was divided up between the 5 million people employed by the FTSE 100 companies, each worker would receive £22,000 each. Continue reading...

Long-term economic forecast cut, dealing a blow to Boris Johnson on eve of EU withdrawalThe Bank of England has warned Boris Johnson on the eve of leaving the EU that his Brexit plan stands to drag down Britain’s economic potential, after voting to keep its key interest rate unchanged.Dealing a blow to the prime minister as he prepares for Britain’s formal withdrawal on Friday night after nearly half a century of EU membership, the central bank cut its long-term growth forecasts, warning that Johnson’s push for a rapid Brexit would inflict lasting economic damage. Continue reading...

Profits halve in final quarter as fears over global growth drag down oil and gas prices

Excessive faith in markets and scepticism of government won’t tackle the global crises we faceThis year marked the 50th anniversary of the World Economic Forum’s flagship meeting of the world’s business and political elites in Davos, Switzerland. Much has changed since my first Davos in 1995. Back then, there was euphoria over globalisation, hope for ex-communist countries’ transition to the market, and confidence that new technologies would open up fresh vistas from which all would benefit. Businesses, working with government, would lead the way.Today, with the world facing climate, environmental, and inequality crises, the mood is very different. Facebook, willing to provide a platform for mis-/disinformation and political manipulation, regardless of the consequences for democracy, has shown the dangers of a privately controlled monopolistic surveillance economy. Corporate leaders, and not just in the financial sector, have displayed remarkable moral turpitude.Related: What did we learn from Davos 2020? Continue reading...

Experts blame insecure employment, universal credit delays and Brexit uncertaintyThe number of people becoming financially insolvent in England and Wales jumped to a nine-year high in 2019 as the burden of increasing debt levels took its toll on low- and middle-income households.There were 122,181 personal insolvencies last year, an increase of 6% on 2018, and the highest annual total since 2010, according to figures from the government’s Insolvency Service. Continue reading...

Gulf widening between Bank and chancellor over UK’s post-Brexit prospects. Only time will tell who is wrongIn the run-up to the EU referendum in 2016 the Bank of England and the Treasury were as one in their belief that Brexit would be bad for the economy. Mark Carney, the Bank’s governor and George Osborne, the then chancellor, were seen by the leave camp as two principal architects of ”project fear”.Now that Britain is finally on the point of departure a gulf has opened up between the two institutions. The current chancellor, Sajid Javid, thinks it is possible for the economy to return to annual growth rates of a little under 3%, similar to those seen in the decade leading up to the financial crisis. The Bank is unconvinced and remains as downbeat about the impact of Brexit as it was three and a half years ago.Related: Bank of England leaves UK interest rates on hold and cuts growth forecasts – business live Continue reading...

Each month we look at key indicators to see what effect the Brexit process has had on growth, prosperity and trade

Confidence rising three and a half years after Brexit vote but tight timescale for trade deal could harm recovery

Two former members of Bank of England’s rate-setting committee on Britain’s economic prospects

Rolling coverage of the latest economic and financial news

A post-election bounce fuelled by the housing market means rate setters will seriously consider a rise

We get minimal support, writes Janet Kay, while Lucy Peake says that if kinship carers can’t continue, that risks a lot of children entering the care systemWhy is it that none of the recent articles about the potential crisis in numbers of children in care mention the many children who have narrowly avoided the care system because they have been diverted from one “broken system” to another (Looked-after children are falling through the cracks of a broken system, 24 January)? There are very many children in kinship care who would be boosting those alarming statistics if relatives and friends had not taken on their care.And yet kinship carers get no preparation or training, the assessment is brief and shallow in comparison to adoption assessments, and we are usually very unprepared for our role. We get minimal support (and sometimes none) throughout the often hasty placement process, and post-placement support is like hens’ teeth. Continue reading...

My aunt, Margaret Wolfson, who has died aged 98, was a pioneering female figure in development economics and a smasher of glass ceilings.Peggy, as she was known to her family, began her career as a civil servant at the Treasury in the late 1950s and was soon put forward to be the first British woman to join the World Bank in Washington. She was quickly promoted and sent to Guatemala, ensuring that loans for infrastructure projects were being used in the way that they should be. Continue reading...

Fears grow over global economic fallout with airline shares hit and commodity prices tumbling

Rolling coverage of the latest economic and financial news, as some Asia-Pacific markets continue to slide

MPs and academics lend their support to ambitious targets for moving away from conventional plastics towards compostable alternativesBinding targets to reduce plastic pollution outlined in the anticipated environment bill are a critical first step in making Britain a global leader. However, there remains an area that must be addressed urgently if we are to move to a truly circular economy.Film and flexible packaging amount to around 400,000 tonnes of plastic used in the UK per year, comprising 25% of all plastic packaging. However, just 4% is currently recycled and the new recycling strategy does not adequately address this challenge. These materials are extremely difficult to collect and process. Moreover, they often contain food, which makes them impossible to recycle in the plastic waste stream. Continue reading...

Jeremy Hillman responds to a report which said that David Malpass’s Davos snub has dashed hopes of a climate consensusIs the Guardian really arguing that leaders who don’t jet into Davos aren’t committed to poverty reduction and climate action (World Bank chief’s Davos snub dashes hopes of climate consensus, 23 January)?The World Bank Group (WBG) is taking concerted action to tackle global poverty and boost shared prosperity by delivering concrete results for the world’s poorest and most marginalised people, including broad-based and sustainable growth, jobs, debt transparency, rule of law, good governance, human capital and green financing. Continue reading...

Companies begin pulling staff from epicentre of outbreak or impose travel restrictionsFinancial markets around the world have been rocked as an exodus of foreign workers from China intensified fears over the impact of the coronavirus on the world’s second largest economy.Major global companies have begun pulling staff from the province of Hubei at the hear of the outbreak or imposed travel restrictions on staff across Asia, telling any workers who visited the region to stay at home.What is the virus causing illness in Wuhan? Continue reading...

What Davos didn’t face up to is that we can’t expect poor people to make all the sacrificesFor those perched at the top of the mountain, the view is perfectly clear. Climate change is the issue of the moment and has to be tackled without delay. Governments, companies and individuals are all going to have to adjust to the new reality.Anybody who is not with the agenda – for example, Donald Trump – is either mad or bad. There was a big US delegation to Davos last week but it found itself isolated – in public, at least – on the climate emergency. The annual meeting of the World Economic Forum found Greta Thunberg’s call to arms much more compelling. Continue reading...

The UK faces economic upheaval on a vast scale if it is not, after all, to pursue ‘Brexit in name only’One of the privileges of my trade is that the best seminars often take place in the best places. I no longer attend the Davos World Economic Forum but last weekend marked the 25th annual seminar for British and Italian journalists hosted by the Italian government in – well, Venice.Before I left, several people asked why I was going, because pictures of Venice under water had been flashed around the world. “Climate change, global warming” seemed to be the general verdict.The government’s own internal studies and analysis point to a severe threat from abandoning the single market Continue reading...

Trump is threatening retaliation if the UK plan becomes law. But taking a tough line may be the key to a global dealWhen US treasury secretary Steven Mnuchin threatens to impose tariffs on a country’s car industry if it taxes American tech giants, you are inclined to believe that he means it. “If people want to just arbitrarily put taxes on our digital companies,” he said, “we will consider arbitrarily putting taxes on car companies.”A trigger-happy White House, steeped in trade disputes with various economic competitors, needs little excuse for retaliation. So the British government’s plan to impose a 2% sales tax on the largest digital companies – ensnaring the likes of Google, Amazon, Facebook and Apple – provides all the excuse President Donald Trump needs. Continue reading...

Climate activists protest at the World Economic Forum, as Lagarde, Georgieva and Mnuchin discuss the economic outlook

The 2008 crash stripped the sheen off global capitalism. We’re still living with the effects

January’s stronger PMI data means Bank of England is more likely to hold rates next week

Rolling coverage of the third day of the World Economic Forum in Davos

Oil and travel shares slide amid fears outbreak could hit growth in second largest economy

Automation is a red herring. The wider environment of slowing growth explains low labor demand largely by itselfAn army of robots now scrub floors, grow microgreens and flip burgers. Due to advances in artificial intelligence, computers will supposedly take over much more of the service sector in the coming decade, including jobs in law, finance and medicine that require years of education and training.Related: Republicans have turned the impeachment trial into a dangerous sham | Andrew GawthorpeCountries with high levels of robotization are not necessarily the ones that have lost the most industrial jobsRelated: The Jeff Bezos hacking allegations destroy the myth of a new Saudi Arabia | David WearingAaron Benanav is a researcher in the social sciences at the University of Chicago. He is writing a book about the global history of unemployment. This is an abridged version of his New Left Review article on automation Continue reading...

David Malpass spurning event hits efforts to tackle issues of poverty and climate crisis

JLR’s night shift cuts come amid £2.5bn cost saving drive to invest in electric vehiclesJaguar Land Rover, Britain’s largest carmaker, has revealed that as many as 500 jobs are at risk as it ends the night shift at its Halewood factory in the latest blow to workers in the embattled UK auto industry.About 10% of the jobs at the factory could be affected, JLR said on Wednesday. The plant near Liverpool employs just under 4,000 people, as well as about 500 agency workers. Across the UK, JLR employs about 33,000 workers. Continue reading...

BoE one of central banks weighing potential benefits amid decline of cash and emergence of Facebook’s libraThe Bank of England will examine how Britain could adopt a bitcoin-style digital currency as part of a global group of central banks that have joined together to examine the possible pitfalls of relying on electronic money.Bank officials will meet with the Bank of Japan, the European Central Bank (ECB), the Sveriges Riksbank, the Bank of Canada, the Swiss National Bank and the Bank for International Settlements (BIS) to pool research and experiences of the potential for a central bank digital currency (CBDC). Continue reading...

This tokenistic plan undermines the government’s claim that it wants to tackle regional inequalityA new House of Lords will not be built in York for a simple reason: such an endeavour is replete with political risk for the governing party while unlikely to sway many votes at the next election. Building a fully functioning modern legislature would cost hundreds of millions while paying the expenses of peers between London and York would invite the same ridicule as the European parliament’s daft journeys between Brussels and Strasbourg. Poring over the details of construction costs would be a boon for tabloid journalists but a millstone for the Tories at the next election. And even if it were to happen, it would be a mere token. So what would a real plan to address regional inequality entail?The scale of the challenge cannot be overstated. The gap between the richest and poorest regions in the UK in 2020 is wider than that between east and west Germany at the time of the fall of the Berlin wall. London is the wealthiest region in northern Europe, while six of the 10 poorest regions are found elsewhere in the UK. Productivity (what each worker produces in an hour) in London and the south-east is 30% higher than every other region of England as well as Wales and Northern Ireland. Scotland does somewhat better – but productivity there is still 20% lower. There are no quick fixes.Related: What has the ‘northern powerhouse’ actually done for the people of the north? | Chi Onwurah Continue reading...

Comment came as Greta Thunberg demanded immediate action in Davos

Number in employment hits joint record high of 32.9 million in three months to NovemberBritain’s jobs market staged a stronger than expected recovery in the three months to November, according to official figures, easing pressure on Bank of England policymakers to cut interest rates at their meeting next week.The number of people in employment jumped by 208,000 over the period to a joint record high of 32.9 million, nearly double the 110,000 increase forecast by economists. Continue reading...

Study also shows global unemployment due to rise for the first time in a decadeNearly half a billion people around the world are struggling to find adequate paid work, trapping individuals in poverty and fuelling heightened levels of inequality, according to a UN report.In a study published as world leaders fly into the Swiss ski resort of Davos to voice concerns over inequality and the climate crisis, the UN’s International Labour Organization (ILO) said more than 473 million people around the world lacked the employment opportunities to meet their needs. Continue reading...

Lender estimates 3.3% growth in 2020, down from a previous forecast of 3.4%The International Monetary Fund has warned that the world economy is increasingly vulnerable to the impact of the climate emergency as the Washington-based organisation downgraded its forecasts for 2020 and 2021.Urging governments to make greater strides to reduce carbon emissions and build green infrastructure, the IMF said one of the main risks to its forecasts came from the growing costs of the climate crisis and the harm caused by protectionist trade policies. Continue reading...

PwC poll shows Britain’s stability makes it increasingly attractive place to invest

Annual CEO survey found 65% of bosses were worried about climate, even before the bushfire crisis peakedAustralian company bosses are becoming increasingly concerned about the climate crisis and are expecting tough economic times in the year ahead, a new survey shows.Global accounting firm PwC’s annual survey of CEOs shows bosses are preparing to cut jobs and don’t think Australian business and government is doing enough to deal with global heating – a dismal picture that is set to get worse once the effects of the past month’s deadly bushfires take hold.Related: David Attenborough calls Australia's bushfires 'the moment of crisis' to address climate changeRelated: Australia's bushfires could affect cost and availability of fresh local produce Continue reading...

Political measures and technology have a part to play, but a carbon tax or similar would be most effectiveAlthough many supporters of Donald Trump seemingly believe that global warming is a hoax, almost everyone else agrees that the climate emergency should be at the top of the list of important policy issues. Identifying the problem, however, is not much use unless we also identify the appropriate tools to address it.In my own field of specialisation, central bankers have caught climate-change fever. Under the leadership of Christine Lagarde, for example, both the International Monetary Fund and now the European Central Bank have declared the planet’s climate health to be “mission critical.” Continue reading...

On all economic measures, from jobs to health to GDP to disposable income, the president has failed AmericaAs the world’s business elites trek to Davos for their annual gathering, people should be asking a simple question: have they overcome their infatuation with the US president?Two years ago, a few rare corporate leaders were concerned about climate change, or upset at Donald Trump’s misogyny and bigotry. Most, however, were celebrating the president’s tax cuts for billionaires and corporations and looking forward to his efforts to deregulate the economy. That would allow businesses to pollute the air more, get more Americans hooked on opioids, entice more children to eat their diabetes-inducing foods and engage in the sort of financial shenanigans that brought on the 2008 crisis.Related: Is Donald Trump's Iran strategy working? Continue reading...

Only US and Italy have weaker performance than UK among G7 industrialised nationsThe organisation that runs the annual Davos event attended by some of the world’s richest people has said greater social mobility would help narrow the gap between rich and poor and boost global growth by almost 5% in the next decade.A report from the World Economic Forum found that only a handful of 82 countries surveyed had put in place policies that would foster social mobility but that a concerted effort to increase opportunities for people to achieve their full potential would have a marked impact on economic performance.Related: Warm words in the alps … Davos prepares for 50th economics shindig Continue reading...

Readers respond to our report into the increased use of booths to discipline schoolchildrenThere would be an argument in favour of the use of isolation rooms or cubicles for troublesome young people in school if there was any evidence that they worked (Alarm as more schools use ‘degrading’ isolation booths, 18 January). In fact there appears to be no such evidence. The evidence that we do have is that teachers who use praised-based strategies to improve pupils’ behaviour in class experience far fewer disruptive incidents and hence less need to be punitive. Yes, it is important and indeed necessary for any disruptive pupil to face a consequence as a result of their behaviour, but evidence suggests that effective punishments tend to be mild and irksome in nature, such as being kept back at the end of lessons, short detentions at end of the day and having their parents informed of their misbehaviour.If strategies used by teachers and schools were evidence-based we would have much happier schools, teachers, pupils and parents. Isolation units do not work.

Subject was not an issue at forum’s first meeting in 1971 but should now be at forefront for US presidentRichard Nixon was in the White House, Mao Zedong was running China and Ted Heath was the prime minister of the UK when hand-picked members of the global business, academic and policymaking elite were first invited to a get-together in the Swiss resort of Davos in 1971.This year marks the 50th Davos but there is not exactly a party mood. The World Economic Forum, the body that organises the annual talkfest in the snow, is “committed to improving the state of the world” but in key respects things look worse today than they did at the start of the 70s.Related: Warm words in the alps … Davos prepares for 50th economics shindig Continue reading...

While the Senate mulls his fate, the president plans to speak to world economic leaders every bit as impeachable as himAs the Senate debates Donald Trump’s future, chief executives, financiers and politicians will descend on Davos in the Swiss Alps for their annual self-congratulatory defense of global capitalism.Related: A Very Stable Genius review: dysfunction and disaster at the court of King DonaldPopular anger is boiling over against elites seen as irredeemably greedy, corrupt and indifferentRelated: The Age of Illusions review: anti-anti-Trump but for … what, exactly?Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His next book, The System: Who Rigged It, How We Fix It, will be out in March. He is a columnist for Guardian US Continue reading...

Brexit was the latest blow to the sector. Its future must not be left to the market – investment in electric vehicles is neededBritain’s economy is on course to grow by less than 1% in 2019. Last week’s retail sales figures for December, which showed the longest period of zero growth for more than 20 years, are likely to drag down GDP growth in the last quarter, limiting the annual growth rate to 0.8% or 0.9% at best.In 2020, the economy’s expansion may not be much better given all the uncertainty surrounding the government’s negotiating stance with the EU following Brexit. Few people inside Whitehall or even the cabinet know which industries will be sacrificed to achieve a quick and dirty trade deal. And while that situation persists business investment will remain low and the manufacturing sector will stumble along, possibly in recession as it is now.Brexit and the threat of tariffs on cars and car parts put a layer of uncertainty on an already difficult situation Continue reading...

Labour MP Zarah Sultana’s comments linking the two provoked wrath. But why were they even controversial?In her maiden speech to the House of Commons, the new Labour MP for Coventry South, Zarah Sultana, said, “In 10 years’ time, at the start of the next decade, I want to look teenagers in the eye and say with pride: my generation faced 40 years of Thatcherism, and we ended it.”Related: Stuart Hall: New Labour has picked up where Thatcherism left offThe energised, aspirational, entrepreneurial economy was Thatcher’s gift to Blair Continue reading...