Central bank moves to protect economy from coronavirus outbreak

Figures reveal surprise jump in longevity which is biggest increase since start of decadeLife expectancy in England surged in 2019 for both men and women, in a surprise rebound after years of stagnation, according to official government figures. The Office for National Statistics (ONS) said life expectancy for women at birth increased to 83.6 years in 2019, up four months compared with 2018. For men the increase was three months, taking their life expectancy to 79.9 years.The rises represent the biggest jump since the start of the decade. Longevity improvements in England first faltered in 2011 and had plateaued since 2013, with critics blaming austerity and NHS cuts. Among women, life expectancy fell in both 2012 and 2015.Related: Discrimination link to health inequalities | LetterRelated: It’s official: Tory austerity has stifled the lives of young and poor Britons | Nick Cohen Continue reading...

Between 2010 and 2020, Conservative cuts destroyed the fabric of society as we know it. Speaking to people on the frontline reveals the ways our lives have been changed for everWhat happened in the UK between 2010 and 2020 will scar us for the rest of our lives. David Cameron’s Conservatives, only just victorious in the 2010 election, sold austerity as a necessary response to the 2008 financial crash. The exact social consequences of these cuts were spelled out last week in Michael Marmot’s report for the Institute of Health Equity: for the first time in a century, life expectancy has stopped growing and for women in poor areas actually fallen.We should never stop reminding ourselves just what an astonishing decade we have lived through. In the aftermath of the crash, employment climbed and stayed remarkably high. But these new jobs paid badly and it took until two months ago for earnings to reach where they were before 2008. It is no surprise that debt is mountainous: each household owes on average £15,385, not counting their mortgages. The gap between rich and poor has widened; the young are now worse off than their parents at their age; home ownership has declined steeply – families are stuck in life-long and precarious private renting. Continue reading...

Investors’ money has been sloshing around, caused by low interest rates, creating a surge in billion-dollar companies. It can’t lastIn November 2013, venture capitalist Aileen Lee published an article coining the term “unicorn” to describe a startup that’s less than a decade old and worth at least $1bn (about £783m now). She chose the word carefully, to convey a mix of rarity and alchemy. What Lee seemingly didn’t anticipate was that just a few years later it would have become a flagrant misnomer: these days there’s nothing rare about unicorns.According to website Crunchbase, 142 new companies met the criteria in 2019, taking the herd size to over 500. They’ve got a combined worth of more than $2tn, which is bigger than the gross domestic product of countries such as Canada and Italy, and their heft is perhaps the most striking indicator of our global economy’s return to absolute and unmitigated exuberance.Related: Stampede of the unicorns: will a new breed of tech giants burst the bubble?Red flags are starting to appear and we should take them seriouslyRelated: The WeWork debacle should be an indictment of modern finance | Nesrine Malik Continue reading...

Global expert Warwick McKibbon, who modelled Sars and Mers epidemics, says all countries likely to experience sharp hit to growth

Warwick McKibbin, who has modelled previous pandemics, says GDP could fall in a worst-case scenario by nearly 8%

Rolling coverage of the latest economic and financial news, as the Dow Jones posts its strongest one-day points surge ever

Share prices did better today but it would be ridiculous to say the market’s mood has improvedAs dead cat bounces go, though, Monday was more of a twitch. The FTSE 100 index, having fallen 11% last week, regained just 1.1%, even as central bankers around the world lined up to echo the US Federal Reserve’s line about acting “as appropriate”. Share prices did better in the US during London hours, but it would be ridiculous to say the market’s mood has improved definitively.The problem for investors struggling to feel where “fair value” might lie in a post-coronavirus world is twofold. First, monetary measures are of limited use in tackling a economic shock caused by the spread of a virus. Continue reading...

Markets rally after governments, central banks, IMF and World Banks agree to do ‘whatever is needed’

Several countries at risk of recession as Covid-19 spreads around the world

Benefits of striking deal with Trump may be outstripped by losses from crashing out of EUIt was supposed to be one of the biggest Brexit dividends. According to Liz Truss, an “ambitious and comprehensive” trade agreement with Donald Trump would reflect Britain’s unique relationship with the US, cutting red tape and tariffs to help British businesses and the economy grow.The value to the nation: at most, an economy 0.16% bigger after 15 years. In the cold language of economic benefits, such a small number is almost a rounding error. The gains in cash terms are roughly £3.4bn under the best-case scenario, an amount worth less than the current annual contribution of Brentwood or Bury. Continue reading...

A widespread halt in economic activity could put the viability of banks in question and spread financial disruption furtherThe first cases of coronavirus were recorded in China’s landlocked Hubei province, which has a population of about 59 million. Despite the Covid-19 virus and the respiratory disease it causes starting out as a local healthcare problem, it has become a global and an economic one because of the ways in which humans are profoundly interconnected through the world’s economy.The first kind of interconnectedness is the one epidemiologists study: the human travel network. How a disease spreads depends on the number of physical encounters, and the probability of the virus jumping from carrier to new host. These encounters, caused mostly by global air and sea travel, are the ones policymakers have been trying to stop, albeit belatedly.Related: Bank of England ready to act as cost of coronavirus mountsThe World Health Organization is recommending that people take simple precautions to reduce exposure to and transmission of the Wuhan coronavirus, for which there is no specific cure or vaccine.Related: Coronavirus: global death toll passes 3,000 with more than 88,000 infected – live updates Continue reading...

Chancellor seeks spending room by axing relief on capital gains when a business is soldThe chancellor is planning to scrap a £3bn tax relief that mainly benefits the wealthy in a bid to raise cash for an expected increase in public spending in the budget on 11 March.Rishi Sunak is expected to target entrepreneurs’ relief, a tax break which halves the capital gains tax paid when people sell their businesses. Under current rules, sellers pay only 10% on lifetime gains of up to £10m, comparedwith the 20% capital gains tax paid by higher-rate taxpayers. Continue reading...

Not since the financial crisis of 2008 has the world been more in need of concerted actionNot since the depths of the financial crisis has panic set in on the scale experienced over the past week. Conversations on the bus, at work and in the pub arefocused on the prospect of a deadly disease spreading uncontrollably. Stock markets are falling as fear about the coronavirus heightens and the potential cost for the world economy becomes increasingly apparent.Wall Street has suffered the fastest reversal since 1933 during the depths of the Great Depression. The Dow lost more than 10% of its value in a week from record-breaking highs to the lowest point since 2016. More than $5tn (£3.9tn) has been wiped off the value of global markets. The FTSE 100 is not immune, plunging the most in a week since the 2008 crash. Markets are expected to fall further this week. Continue reading...

Instead of ‘levelling up’ the economy, they would entrench the power of corporations and deepen market competitionIn 2016, a little-known Conservative MP authored a paper for the Centre for Policy Studies, the free-market thinktank founded by Keith Joseph and Margaret Thatcher. Looking ahead to Britain’s post-Brexit future, the report argued, the government should seize the opportunity to create a string of free ports across the country to revive manufacturing. These engines of economic growth would reconnect Britain with its “proud maritime history” and act as a “beacon of British values”. The MP in question was Rishi Sunak.Four years later, Britain has left the EU, Sunak has been promoted to chancellor of the exchequer, and Boris Johnson is shaping the direction of Britain’s economy. If Johnsonism, as Ferdinand Mount writes, “is not a continuation of Thatcherism at all”, Sunak’s 2016 proposal should make us wonder. His recent plan for free ports, based on the 2016 report, reheats an idea that first gained prominence under Thatcher’s government, and reeks of precisely the free-market ideas from which the new government is supposedly distancing itself.Related: UK launches freeports consultation with aim to open first next year Continue reading...

Shares suffered spectacular falls last week, but the worst is probably yet to comeA sense of panic was palpable in all corners of the international financial system on Friday as coronavirus cases spread relentlessly across Europe, the Americas and reached sub-Saharan Africa for the first time.Determined efforts of the Chinese authorities to contain the outbreak failed to settle frayed nerves after the World Health Organization, reacting to the news that four continents had at least six affected countries, raised its impact risk alert from “high” to “very high”. Continue reading...

The prime minister’s starting point for trade negotiations with the EU is a nonsense that could lead us into the hardest of exitsBritain’s most pressing problem is the government’s determination to fashion a hard Brexit. And if not that, then a no-deal Brexit. Of course, there is also the potential for a colossal economic sideswipe to the economy from the coronavirus epidemic, while flooding is causing huge harm to towns and villages in the west of England and Wales, and the Treasury is preparing a budget that will probably disguise a limited, piecemeal increase in spending, with exaggerated talk of government action to level up the regions.These threats are not yet structural problems to match Boris Johnson’s demand that the EU offer a Canada-style agreement, one that gives easy entry to EU markets without strings attached, a proposal that cannot fly in Brussels and could mean the UK ends up with no deal.Sadly for the Brexiter, the Swiss trade deals with the EU have always made for a poor analogy Continue reading...

Manufacturing production levels in world’s second largest economy dropped to record lows in February

World stock markets endure their worst week since the financial crisis, amid growing fears of a global recession and coronavirus pandemic

Financial measures look like the wrong weapons to combat a healthcare crisis“Make this stop.” The headline on Bank of America’s rejig of its economic forecasts for Europe summed up the mood in financial markets.City analysts and investors have lost their bearings. How do you make sensible estimates about the financial fallout from a virus with the potential, as in parts of China, to bring economic activity to a standstill? Continue reading...

More than $5tn wiped off global stocks with travel, retail and manufacturing all hit

Wall Street and London markets have both suffered their worst week since 2008

Becoming better at explaining and justifying their decisions to the public should be on the agendaThe US president Donald Trump’s decision to nominate the economist Judy Shelton for one of the vacant positions on the Federal Reserve Board has put the future of central bank independence back on the agenda. Shelton has cast doubt on the desirability of, and legal basis for, Fed independence, saying last year, “I don’t see any reference to independence in the legislation that has defined the role of the Federal Reserve.” And she has argued for “a more coordinated relationship with both Congress and the president”. If Fed policy were “coordinated” with Trump, then it is fairly clear who would be calling the shots.Of course, one new Fed governor could not upturn decades of practice. But there are suggestions that if appointed, Shelton could replace Jay Powell when his term comes up for renewal in 2022, leaving a fox in charge of the chicken coop.Related: Will coronavirus trigger a global recession? | Jeffrey Frankel Continue reading...

Markets around the world are being spooked by the coronavirus crisis

Dow plunges 1,190 points as analysts say virus could inflict as much damage as 2008 crisis

Australian share prices have fallen for the fourth day running after overseas markets were gripped by virus panicAirlines, carmakers and beer companies are among the businesses warning of tough times ahead as the financial impact of the coronavirus outbreak spreads through the economy.Australia’s benchmark stock exchange index, the ASX200, fell on Thursday for the fourth day running, slipping 0.75% after overseas markets that had been set to rally were gripped by virus panic on Wednesday afternoon.Related: Australia declares coronavirus will become a pandemic as it extends China travel banRelated: Australian Grand Prix to go ahead despite coronavirus concern, minister says Continue reading...

Campaigners say move is ‘blatant contradiction’ of lender’s climate commitmentsThe World Bank has been criticised for providing $55m (£43m) to aid fossil fuel extraction in Guyana, at the same time that it has pledged to stop direct funding of oil and gas production.The Washington-based institution, which provides loans and grants to aid the development of poorer countries, will provide $20m to pay for the training of Guyanese oil and gas officials, including those involved in the marketing of oil. Continue reading...

Rolling coverage of the latest economic and financial news, as Britain’s FTSE 100 recovers after hitting its lowest level in a year

World economy’s prospects look bleak owing to Covid-19 outbreak and Donald Trump’s trade policyAt the start of this year, things seemed to be looking up for the global economy. True, growth had slowed a bit in 2019: from 2.9% to 2.3% in the US and from 3.6% to 2.9% globally. Still, there had been no recession and as recently as January, the International Monetary Fund projected a global growth rebound in 2020. The new coronavirus, Covid-19, has changed all of that.Early predictions about Covid-19’s economic impact were reassuring. Similar epidemics – such as the 2003 outbreak of severe acute respiratory syndrome (Sars), another China-born coronavirus – did little damage globally. At the country level, GDP growth took a hit but quickly bounced back, as consumers released pent-up demand and firms rushed to fill back orders and restock inventories.Related: Donald Trump isn't safe yet, but the economy is working well for him | Michael Boskin Continue reading...

Thinktank says taxes hike in budget needed or chancellor risks breaking borrowing rulesThe chancellor, Rishi Sunak, faces a tough choice at next month’s budget between raising taxes, entrenching austerity or abandoning Tory manifesto promises on government borrowing, according to the Institute for Fiscal Studies.The tax and spending thinktank said the government was on-track to ramp up borrowing to about £63bn next year – £23bn more than the most recent official forecasts – amid a rapid increase in spending under Boris Johnson. Continue reading...

Switzerland, Austria and Croatia report first cases as outbreak worsens across Europe

European markets have suffered a second day of heavy losses as new coronavirus cases are reported

Dow Jones lost 877 or 3.1%, the tech-heavy Nasdaq dropped 2.7% and the S&P 500 fell 3% following similar losses across the Atlantic

Travel companies hit hard as mounting fears over spread of disease lead to global sell-off

Canadian billionaire’s rescue plan suddenly doesn’t look so rosy given the epidemic’s economic falloutAt what point does the coronavirus crisis qualify as a “material adverse change” for City deal-making purposes? Lawrence Stroll, would-be rescuer of Aston Martin, may be asking the question right now. As things stand, he is set to pay 400p-a-pop for a 16.7% slice of the luxury carmaker, versus a market price that fell as low as 360p on Tuesday.Related: Coronavirus: Europe on alert as four more deaths reported in Italy – updates Continue reading...

Biggest English cities expected to benefit as EY urges policies to address regional imbalancesThe economic fortunes of Britain’s smaller towns are set to fall further behind those of the biggest cities over the next three years, according to a report urging radical steps to tackle regional divisions.Economic imbalances between the north and south of England are expected to widen until 2023 unless greater action is taken, forecasts from the accountancy firm EY show. Small towns across the north-east, Yorkshire and the West Midlands are expected to be worst hit by the widening gap. Continue reading...

Shares on Wall Street tumble after surge in cases of virus in Italy

US, European and Asian stock markets gripped by pandemic fears

Ex-justice secretary speaks out as Rishi Sunak faces pressure to raise government borrowingA former Conservative cabinet minister has said the chancellor, Rishi Sunak, will want to avoid becoming a “creature of No 10” amid pressure on the new appointee to raise government borrowing sharply.David Gauke, the former justice secretary who was expelled from the Conservatives for defying Boris Johnson over Brexit, said that Sunak risked putting the public finances on an unsustainable path, given the headwinds facing the British economy. Continue reading...

Resolution Foundation says government borrowing will rise to 40% of GDP, eclipsing the Tony Blair yearsBoris Johnson is planning to ramp up government borrowing to spend more than £1tn a year, increasing the size of the British state to make it bigger than at any point under the 10-year premiership of Labour’s Tony Blair.Analysis from The Resolution Foundation predicts government spending will rise above the £1tn mark for the first time in history by 2023-24. The report, published on Monday, comes as the chancellor, Rishi Sunak, prepares to deliver what is widely expected to be one of the most expansionary Conservative budgets in a generation.Related: Government spending 'set to return to levels last seen in the 1970s'Gross domestic product (GDP) measures the total value of activity in the economy over a given period of time. Continue reading...

New data to show steep fall in Chinese factory output as outbreak in Italy ramps up eurozone fears

Group’s first ever reference to global heating signals growing economic concerns over climate changeThe G20 group of the world’s wealthiest nations have agreed for the first time to collectively sound the alarm over the threat to the financial system posed by the climate emergency.Overcoming objections from Donald Trump’s US administration, G20 finance ministers and central bank governors meeting in Saudi Arabia over the weekend agreed to issue their first ever communique with references to climate change, according to reports from Reuters.China produces the most heat-trapping pollution, followed by the US. But historically, the US has contributed more carbon dioxide to the atmosphere than any other nation. The US also has high emissions per capita, compared to other developed countries. And Americans buy products made in China, therefore supporting China's carbon footprint. Continue reading...

Chancellor Rishi Sunak needs to satisfy competing audiences, but there is a way he can do itEvery budget is billed in advance as the most crucial in recent times, but then most are instantly forgotten. The one Rishi Sunak will deliver in just over two weeks’ time may be one of the few that justifies the hype.The reason so much is resting on the shoulders of the tyro chancellor is that the budget needs to satisfy a number of different audiences: the voters in the Midlands and the north of England who gave Boris Johnson his 80-seat majority; traditional Conservative voters; the financial markets; and foreign governments looking to see whether the UK will take a lead before the Cop26 climate change conference in Glasgow in November. Continue reading...

The OECD is alarmed at how much states and firms owe. UK chancellor Rishi Sunak would be wise not to be reckless in the budgetIn 2010, in the wake of the global banking crisis, 34 of the world’s richest nations – those that belong to the Organisation for Economic Cooperation & Development (OECD) – ramped up their borrowing to $10.9 trillion. In 2019, the OECD revealed last week, those same governments took their borrowing to a fresh high of $11.4tn.The Paris-based thinktank says the new figure is a cause for worry, especially when those same governments have only managed to grow their national economies at a snail’s pace over the past 10 years. Without strong growth, debts become a bigger burden on government finances when things turn nasty, as they did 10 years ago.Greece, once the pariah of the bond markets and forced to borrow at 40%, can now borrow at 1% less than the US government Continue reading...

Promoting his new book, the Frenchman is happy to talk Marx and money, but less forthcoming about a domestic violence claim that has resurfacedSeven years ago a French economist named Thomas Piketty published a book entitled Capital in the Twenty-First Century. It was 700 pages long and featured in-depth empirical analysis of various historical tax systems, amounting to a forensic argument against widening inequality. You wouldn’t say that it spelled international bestseller, and yet it has sold 2.5 million copies to date.Hailed as a modern successor to Karl Marx’s monumental Capital, it rejuvenated radical leftwing critiques of capitalism and earned Piketty (it rhymes with spaghetti) the epithet of “rock star” economist. Seldom has a media cliche been more misleading. Continue reading...

If Javid’s departure means austerity is over, then thank heavens. But Tories also have a history of overheating the economyI have found over the years that the general public shows little interest in the chancellor of the exchequer except on budget day. Often people have no idea who he is (so far there has never been a she). In the past week or so, however, I have been struck by the number of casual acquaintances who have commented on the farce of the recent sacking of chancellor Sajid Javid before he even had the chance to present a budget.What this bizarre episode has achieved is to focus people’s attention on no fewer than three revealing aspects of the character and behaviour of the man we have for the time being to call our prime minister. The first is his rampantly duplicitous nature: Javid had been assured repeatedly that his position was safe.Once again we have a prime minister who wishes to override Treasury caution and 'go for growth' Continue reading...

Hospitality and travel have already been hard hit, while there are concerns of looming shortages of products such as iPhones and batteriesWith the coronavirus outbreak in China affecting the import and export trade, Australian retailers and suppliers are concerned that consumers will soon start experiencing shortages of products ranging from iPhones to batteries. There are widespread factory shutdowns in China as millions of people remain in lockdown and subject to strict travel restrictions and quarantine measures.While some retailers say it is too soon to see a noticeable impact on stock, with many shipyard and factory workers taking time off for lunar new year anyway, they are preparing for shortages in coming weeks.Related: Coronavirus: two Australians evacuated from Diamond Princess test positive in DarwinRelated: Coronavirus fallout could leave Australian tourism and retail sectors in the doldrumsAnaconda, camping etc gear store. Staff told me it was because of the China lockdown.Just had a quote today for plantation shutters by Accent who told me of delays b/c corona in ChinaRelated: Apple warns of coronavirus causing iPhone shortagesYep. Empty/low sock on shelves in Bunnings Aundel QldRelated: Explainer: how worried should I be about coronavirus in Australia? Continue reading...

Stronger public finances come as Rishi Sunak prepares to unveil budget next monthThe chancellor, Rishi Sunak, has been handed a modest boost before next month’s budget from public borrowing rising by less than previously expected, despite the government failing to hit targets set four years ago.The Institute for Fiscal Studies, Britain’s foremost thinktank for the government finances, said the country was on track to record a budget deficit for the 2019-20 financial year around £3.5bn smaller than forecast in December. Continue reading...

Wages | Alien life | Northern accents | Marmalade | school | YellowbelliesIt’s welcome news that the average weekly pay is now £474, but this highlights the danger of using averages to help paint a picture. I bet the majority of the 974,000 people on zero-hours contracts would be delighted to earn that amount (Lost decade limps to an end as wages creep above pre-crisis levels, 19 February).