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...

Economic slowdown and spiralling cost of student loans will force government to break its deficit rule

S&P 100 climbs to new highs as US president suggests that ‘Phase One’ deal with China could be signed next month

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 priorities”, 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...

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.

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...

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

Guardian analysis shows no-deal fears have hit outlook for employment and growth

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

Mario Draghi warns that geopolitical risks are threatening the eurozone recovery, as he gives his final press conference as president of the European Central Bank

Mario Draghi blames slowing global economy, Brexit uncertainty and recession fears in GermanyMario Draghi, the outgoing president of the European Central Bank, has warned that slowing global growth and Brexit uncertainty pose a risk to growth in the eurozone economy amid concerns that Germany remains on the brink of recession.Speaking in Frankfurt after his final ECB policy meeting before stepping down, Draghi said the ECB was concerned that the economy of the 19-member currency bloc, which has slowed this year along with much of the global economy, faced “protracted weakness” going into 2020. Continue reading...

Readers respond to the latest select committee report on families’ struggles to get educational support for their childrenThis is the most damning select committee report I’ve ever read (Children with special needs plunged into ‘nightmare of bureaucracy’, 23 October). Line after line, it shows that the education system for disabled children is completely broken. Parents are forced to become protesters, lawyers and bureaucrats to stand any sort of chance of getting the support their child is legally entitled to. The government now has a golden opportunity to carry out a root and branch review of the system, and finally end the toxic culture and wanton law-breaking throughout the special educational needs system. They must now deliver for an entire generation of disabled children. It’s time to let parents be parents.

Descriptions of exchange-rate policies have become increasingly militaristicThe language of international monetary policy has turned militaristic. The phrase “currency war” has been popular for a decade and the US government’s more recent “weaponisation” of the dollar is generating controversy. But ironically, a martial approach could end up threatening the US currency’s global dominance.This is a good time to gauge the relative strengths of the dollar and rival international currencies (meaning currencies that are used outside their home countries). In September the Bank for International Settlements released its triennial survey of turnover in global foreign-exchange markets. The International Monetary Fund’s statistics on central-bank holdings of foreign-exchange reserves have become much more reliable since China began reporting its holdings. And the Swift payments system issues monthly data on the use of major currencies in international transactions.Related: Corporate tax avoidance: it's no longer enough to take half measuresThe US inherited the UK’s 'exorbitant privilege' Continue reading...

Activist and author Naomi Klein tells Anushka Asthana that combating the climate crisis must be at the heart of an urgent restructuring of politics and the economy. Plus: Daniel Trilling on the shocking discovery of 39 bodies inside a lorry in EssexThe Green New Deal was proposed earlier this year by Alexandria Ocasio-Cortez. It aims to address both the climate crisis and the crisis of growing inequality. It’s a political response that would mean a major restructuring of politics and the economy, and it is one that Naomi Klein believes is urgent and essential.Klein tells Anushka Asthana she came to understand the urgency of the climate crisis after years of activism on injustice and globalisation. Continue reading...

Online shopping and Brexit uncertainty blamed for closures including BonmarchéRetailers have axed 85,000 jobs in the past year as weak consumer demand, rising costs and the switch to online shopping, exacerbated by Brexit uncertainty, have put businesses under increasing pressure.The job losses in the UK’s biggest private employment sector – with particular importance for women – are the latest sign of a crisis on the high street that has seen the closure of thousands of shops and the collapse of some well-known retail names.What’s the problem? Continue reading...

Mistakes that led to the 2008 financial crisis are about to be repeated, fears Milan Bollecker, while David Reed is worried by the economic impact of soaring property pricesHistory never repeats itself but, according to the IMF, it might this time (Red alert as world ignores history lesson, 17 October). Despite countless publications and studies related to the 2008 financial crisis and its effect on the whole economic system, politicians, central banks and economic institutions seem to keep using the same logic that they used 10 years ago.The decrease in interest rates caused by central banks’ policies provoked the boom of private debt held by companies. Together with the constant diminution of companies’ abilities to repay their debts, this presents a clear underlying problem and a terrible outlook of a new global economic crisis. By favouring short-term decisions and policies in order to maintain growth at an acceptable rate as the recent IMF report proves, central banks keep committing the same errors. Will the world economic system be able to avoid another crisis if we continue to accumulate more and more risk factors?

Failure to find a way forward could result in a delayed budget, weaker pound and lower growth forecastBrexit uncertainty has been a drag on the economy. The International Monetary Fund thinks most of the damage it estimates will occur as a result of Britain’s decision to leave the EU has already happened. For obvious reasons, investment has been particularly weak with businesses reluctant to commit to new capital projects until they have a better idea what the future holds.As a matter of logic, therefore, the fresh delay to the Brexit process – unless it is short-lived – means more uncertainty and weaker activity. Investment plans will remain mothballed. Construction sites will go into hibernation for the winter. Retailers, with their busiest time of the year coming up, will have every reason to be worried about how sales will hold up. Continue reading...

Manny Fontenla-Novoa and Harriet Green are appearing before the BEIS committee

Rolling coverage of the latest business and financial news, as home delivery firm Just Eat receives a rival takeover offer

Survey finds majority of factory owners have cut investment, as insolvencies hit six-year highA wave of corporate insolvencies, company profit warnings and a gloomy forecast of manufacturing investment over the next year has sparked concerns that Brexit uncertainty will weigh on the UK economy more than previously estimated.A survey by the business lobby group the Confederation of British Industry (CBI) found that the prospect of leaving the EU’s customs union and single market without a deal had led a majority of factory owners to cut back investment for the coming year. Continue reading...

Chancellor hit by spending squeeze as borrowing climbs by a fifth in run-up to Brexit

Rolling coverage of the latest economic and financial news, as sterling is buffeted by political drama

Chancellor accused of believing ‘evidence is superfluous to good policy making’

Credit Suisse survey shows Brexit effect has reduced number of UK millionaires by 27,000The number of wealthy Chinese people has overtaken the number of rich Americans for the first time, according to a report by Credit Suisse.The bank’s annual wealth survey found there were 100 million Chinese people among the world’s top 10% of richest people, compared with 99 million in the US.Related: Don't believe the hype about millennials and money, data suggests Continue reading...

‘Brexit fatigue’ is no reason to back a vision of Britain which fulfils the ambitions of the radical rightIn the lead-up to parliament’s historic Saturday sitting, the airwaves resounded to Conservative cries of “get this done”, “let’s move on” and “lift this cloud”. The Tory hope was that understandable Brexit fatigue could become a trump card for Boris Johnson, as he sought to rush through a surprise deal that MPs were given 48 hours to consider. Sir Oliver Letwin’s successful amendment, which withholds approval for it until all necessary legislation is passed, rightly put the brakes on – to the acclaim of up to a million People’s Vote marchers. It also required Mr Johnson to write to the EU asking for an extension under the terms of the Benn act. This he has done, albeit dissociating himself from the request in a second letter (a Scottish court will examine the legality of that move).MPs on all sides of the house must now hold their nerve to subject Mr Johnson’s deal to forensic scrutiny, undistracted by his totemic Brexit deadline of 31 October. While the EU may not respond immediately to Britain’s request for an extension, it must not conspire with Mr Johnson to allow a no-deal Brexit to take place at the end of the month. The prime minister may wish to dash for the line. It is absolutely not necessary or advisable for the rest of parliament to do the same. Three and a half years of deadlock, almost entirely caused by arguments between Tory leavers, does not mean that, suddenly, anything goes. Continue reading...

Size of British contribution also hinges on better gender equality and an anti-poverty approachUK backing for a World Bank fund to help poor countries will hinge on reforms at the global institution to channel more money into tackling the climate crisis, improving gender equality and ensuring vulnerable countries can pay their debts.Speaking in Washington, the international development secretary, Alok Sharma, said the size of the UK’s contribution to the Bank’s concessional loan facility for the world’s least-developed countries would depend on a more focused anti-poverty approach.Increase the Bank’s financial support to tackle the climate crisis, including helping the most vulnerable communities to become more resilient and preparing for potential natural disastersPreserve biodiversity and invest in innovative nature-based solutions such as reforestationFocus on mobilising private-sector investment for the poorest countries – and making a priority of green, quality infrastructure projects that form the backbone of economic growthBring about improved debt transparency and sustainability, through balancing the need for finance with limits on how much governments are borrowing from different sources before the International Development Association agrees more loansProvide extra money and an increase in World Bank staff based in fragile and conflict-stricken countriesImprove rights of women and girls through increasing access to safe family planning services, ensuring girls can go to school and stronger laws against gender-based violence.Related: Almost all 10-year-olds in world's poorest countries struggle to read Continue reading...

Past crashes spawned new thinking and reform but nothing has changed since 2008 banking meltdown, says former Bank of England boss

Mervyn King’s IMF speech turned heads – dangerously little has changed since the 2008 financial crisis

Boris Johnson and his cronies want nothing more than to turn Britain into a deregulated tax haven – whatever the costIt takes a long time for economies to recover from a financial crisis, as was demonstrated after the Wall Street crash of 1929 and the world recession that followed.Similarly, it has taken a decade for the British economy to recover from the banking crisis of 2007-09 – and, indeed, it is begging the question to assume that the recovery is complete. Far from it. As is being increasingly recognised, recovery was stifled by an ill-conceived austerity programme whose deleterious effects played no small role in the outcome of the 2016 referendum.Brexit would be a damaging process that could go on for years and make our economy a lot poorer Continue reading...

Matt Stoller’s look at ‘the 100-year war between monopoly and democracy’ is highly relevant to the primary raceWall Street is scared. Elizabeth Warren has surged to the front of the Democratic pack and some of the party’s biggest donors are threatening to close their wallets or worse: donate to Donald Trump.Related: Envy in Politics review: why keeping up with the Joneses is a political trump cardStoller strafes targets across political and ideological spectrumsUnfortunately, Goliath comes up short in addressing the intersection between culture and economicsRelated: Donald Trump’s sanity is not the question. The real issue is how he got into office | Gary Younge Continue reading...

Rolling coverage of the latest business and economic news, as fresh data shows Chinese GDP grew at its weakest rate since the early 1990s

Chancellor predicts interest rates will remain at rock bottom levels and says it makes sense to borrow to boost the economySajid Javid has fuelled speculation that he is planning a voter-friendly budget next month after predicting that interest rates will remain at rock bottom levels and give him the scope to increase government borrowing.The chancellor said he was convinced that low interest rates were here to stay and that it was his job to see how he could exploit the changed circumstances to boost the economy. Continue reading...

At 75, the Bretton Woods institutions face an identity crisis. It’s time for them to chart a fresh courseThe International Monetary Fund and the World Bank have their 75th birthday this year, but the organisations that emerged from the Bretton Woods conference in 1944 are in no real mood to celebrate at their annual meetings this week. In Washington the mood is decidedly downbeat. Global growth is slowing; the conviction that low interest rates are here to stay is encouraging reckless behaviour and a dangerous build-up of debt; the climate-change clock is ticking louder. The threat of a new financial crisis is growing. The prospect of it being triggered by a climate emergency is real.Yet the problems of the two Bretton Woods institutions run deeper than that. They are bodies created to foster international cooperation at a time when international cooperation is marked by its absence. Born out of the economic chaos of the 1930s, the IMF and the World Bank had a well-defined mission three quarters of a century ago: to rebuild war-shattered economies; to provide support to countries that ran into balance-of-payments difficulties; to limit currency turbulence; and to encourage the opening up of markets. Continue reading...

Kristalina Georgieva hopes MPs back deal she feels will spare UK significant economic damageThe head of the International Monetary Fund confessed she jumped for joy after hearing news of a Brexit breakthrough that she said would spare the UK significant economic damage.Kristalina Georgieva, the IMF’s new managing director, said there would still be some impact from leaving the EU with an agreement but said much of that had already been felt in the period since the 2016 referendum.Related: British businesses say new Brexit deal worse than May's deal Continue reading...

Industry groups and firms say PM’s deal will make exporting to their biggest market harderBritish companies have expressed concerns that Boris Johnson’s Brexit deal could leave industry worse off than under the previous agreement with the EU.Businesses, investors and economists have been almost unanimously in favour of the UK securing a withdrawal deal with the EU to avoid a no-deal Brexit, and markets appeared to welcome a diminished risk of a chaotic break on 31 October, after the UK and the EU unveiled a revised deal on Thursday.Related: New IMF boss 'jumped for joy' over Brexit breakthrough Continue reading...

Boris Johnson’s agreement estimated to cost 6.7% of expected GDP rise over 15 years

The CBI’s flawed analysis ignored all the benefits of the party’s flagship policyIt’s hard to unite nationalisation advocates and sceptics. But the Confederation of British Industry has managed to do just that, getting into hot water this week with an unsubstantiated claim that the Labour party’s plans to renationalise utilities would cost £196bn. These kinds of big numbers get media attention and help drive a narrative, particularly when they come from an establishment organisation such as the CBI. But by presenting an unbalanced view it has lost out on an opportunity for genuinely useful public debate.Related: Northern rail could be renationalised, says transport secretary Continue reading...

Department store sales slump further and online shoppers also rein in spending, says ONSRetail sales failed to bounce back last month from a drop in August as Brexit uncertainty deterred shoppers from splashing out on big ticket items.The volume of sales was flat and the value down by 0.2% in September with a further slump in department store sales offsetting a modest rise in clothing and supermarket food purchases, according to the Office for National Statistics.What’s the problem? Continue reading...

The work of Esther Duflo, Abhijit Banerjee and Michael Kremer on poverty deserved this accolade, but both the prize and the discipline need reformReaders of this paper on 6 June 2011 may have spotted an editorial titled “In praise of... Esther Duflo and Abhijit Banerjee”. It was indeed a paean to the two Massachusetts Institute of Technology economists and their work to lift people out of poverty. “They make a subtle case for one big argument,” we wrote. “Aid really can help poor people, provided the money follows the evidence.” Scroll forward almost a decade to this week, and the judging committee behind the “Prize in Economic Sciences in Memory of Alfred Nobel” announced that the pair would win this year’s award, alongside their colleague Michael Kremer. To the lucky trio sharing a prize of 9 million Swedish kronor (currently £716,000, although sterling’s value in these Brexit-addled times can go down as well as down), we extend our congratulations. To the judges, we say: what took you so long?A number of precedents are being broken or tested by this welcome decision. At 46, Prof Duflo is the youngest-ever winner of this prize. She is also only the second woman to win it. Handed out since 1969, it was never given to one of the major economists of the 20th century, Joan Robinson. Prof Banerjee is only the second Indian to win it, and one of very few winners to come from outside the west. Most of the world economy is not in the west, and many of the most interesting thinkers do not come from there, as is now reflected in the senior echelons of the World Bank, the International Monetary Fund and the Bank for International Settlements. Alas, the prize givers at the Sveriges Riksbank have yet to catch up. Instead, the prize has gone to some odd choices such Milton Friedman. In 1997, Myron Scholes and Robert Merton won the prize for their work on derivatives. The very next year, the hedge fund they ran according to their model lost $4bn in just six weeks and required a state-organised bailout. Continue reading...

Freeze imposed in 2015 was planned to last until end of 2019-20 financial yearThe government has refused to commit to ending its freeze on benefits despite a promise to turn the page on a decade of austerity.The work and pensions secretary, Thérèse Coffey, said she could not give a definitive answer about whether the freeze on most working-age benefits and tax credits would continue beyond its initial four-year term. Continue reading...

With corporations loading up on debt, any recession would have dire consequences

Rolling coverage of the latest economic and financial news, including the latest UK and eurozone inflation figures

Update on markets lists eight leading countries, including US, China and UK, as vulnerableLow interest rates are encouraging companies to take on a level of debt that risks becoming a $19tn (£15tn) timebomb in the event of another global recession, the International Monetary Fund has said.In its half-yearly update on the state of the world’s financial markets, the IMF said that almost 40% of the corporate debt in eight leading countries – the US, China, Japan, Germany, Britain, France, Italy and Spain – would be impossible to service if there was a downturn half as serious as that of a decade ago.Related: IMF haunted by fears that history might be about to repeat itself | Larry Elliott Continue reading...

The long history of bias, discrimination and underestimation of women in the field of economics is why Duflo’s prize is a such a great step forwardThis week, MIT’s Esther Duflo became the second female economist to win a Nobel prize. She and her husband, Abhijit Banerjee, also of MIT, and Michael Kremer of Harvard University, shared the award “for their experimental approach to alleviating global poverty”.In Poor Economics: A Radical Rethinking of the Way To Fight Global Poverty, Duflo and Banerjee studied the poor not as “cartoon characters” but as human beings “in all their complexity and richness”. In 2003, they founded the Abdul Latif Jameel Poverty Action Lab at MIT to study poverty.Related: Economics Nobel prize won by academics for tackling povertyJill Priluck’s reporting and analysis has appeared in the New Yorker, Slate, Reuters and elsewhere Continue reading...