Economics | The Guardian

The UK is a rich country, but food poverty is now a daily reality for many families. This is not inevitable

Huawei dispute shows how Washington is seeking to counter Beijing’s use of technology to gain geopolitical supremacyThe decision by Google, Intel and Qualcomm to freeze cooperation with Huawei could mark the point where the rumbling trade war between the US and China becomes a full-blown tech cold war.By excluding China from western know-how, the Trump administration has made it clear that the real battle is about which of the two economic superpowers has the technological edge for the next two decades.Related: 'There will be conflict': Huawei founder says US underestimates company's strengthRelated: The Guardian view on Google versus Huawei: no winners | Editorial Continue reading...

Ren Zhengfei says firm is fully prepared to face US bans and that 5G plans will be unaffectedThe founder of Huawei has said the US “underestimates” the Chinese telecom makers’s strength and that conflict with the US is inevitable in the quest to “stand on top of the world”.Ren Zhengfei said his company was fully prepared to face US bans on key components following new trade restrictions caused by Donald Trump’s declaration of a national economic emergency last weekRelated: US ban on Huawei a ‘cynically timed’ blow in escalating trade war, says firm Continue reading...

Ben Broadbent says projects postponed amid political uncertainty will be cancelledBusinesses would be likely to cancel their investment projects in Britain under a no-deal Brexit, paving the way for weaker economic growth in future, a deputy governor of the Bank of England has warned.Ben Broadbent, a senior policymaker at Threadneedle Street as the deputy governor for monetary policy, said that business investment plans that had been put on ice amid the political uncertainty over Brexit would probably be torn up altogether should the UK leave without a deal. Continue reading...

Chinese phonemaker shut out from Android software after Trump ban

If Donald Trump and Xi Jinping slide into ongoing animosity, the world will pay the priceA few years ago, as part of a western delegation to China, I met Xi Jinping in Beijing’s Great Hall of the People. When addressing us, Xi argued that China’s rise would be peaceful, and that other countries – namely, the US – need not worry about the “Thucydides trap”, so named for the Greek historian who chronicled how Sparta’s fear of a rising Athens made war between the two inevitable. In his 2017 book Destined for War: Can America and China Escape Thucydides’s Trap?, Harvard University’s Graham Allison examines 16 earlier rivalries between an emerging and an established power, and finds that 12 of them led to war. No doubt, Xi wanted us to focus on the remaining four.Despite the mutual awareness of the Thucydides trap – and the recognition that history is not deterministic – China and the US seem to be falling into it anyway. Though a hot war between the world’s two major powers still seems far-fetched, a cold war is becoming more likely.Related: US warship sails in disputed South China Sea amid trade tensionsRelated: Google’s Huawei ban is good news: tech giants shouldn’t always get their way | Simon Jenkins Continue reading...

Remove London from the UK’s economy and the nation would fold. Decentralisation would benefit everyoneLondon could be justified in feeling a little unappreciated right now. Britons outside the capital think of its residents as “arrogant” and “insular”, an investigation by the Centre for London has found; London itself is seen as expensive and crowded. Pride in the capital decreases with distance from it, and appears to be declining over time. And while over three-quarters of Brits agree that London contributes to the national economy, just 16% feel it contributes to the economy where they live.There is a long-held and persistent sense that London is too dominant in national life. Some also perceive its success as coming at the expense of the rest of the country – an idea that has re-emerged periodically throughout history, most famously in the 1820s when parliamentarian William Cobbett described the capital as a “Great Wen”, a gigantic cyst draining the life out of the rest of the nation.Related: The Guardian view on London and England: a deep divide | EditorialRelated: London v England: where does your area fit in the great divide? Continue reading...

But as Keynes has shown, loose monetary policy is not the only way to respond to stagnationAlvin Hansen’s timing could hardly have been worse. In early 1939, almost a decade after the Wall Street crash and six months before Hitler invaded Poland, he said America’s best years were behind it. An ageing population, fewer migrants and the exhaustion of existing technologies meant there would never be complete recovery from the Great Depression. Instead, the US was stuck in what Hansen called secular stagnation, in which secular means persistent or long term.The second world war meant the idea of secular stagnation was a five-minute wonder. Demand soared as the US government geared up to fight on two fronts, and strong growth persisted for a quarter of a century after the war ended. Many of the technological innovations of the late 19th and early 20th century – the car, for example – only came into their own in the US post-1945 when family incomes rose and the interstate highway network was built. Continue reading...

As the anniversaries of D-Day and Monte Cassino approach, we should remember how and why the ‘European project’ startedShortly after Thursday’s elections for the European parliament, we shall be witnessing the 75th anniversaries of D-Day and of the terrible carnage of the battle of Monte Cassino. One hopes that memories of these events – or, in many cases, learning about them for the first time – may concentrate minds on all sides in the debate about our future relationship with the rest of Europe.It was the horror of the second world war that led European leaders to bring individual countries together in the hope that future conflict could be avoided. Despite the fantasies of Nigel Farage and his ilk, winning that war was hardly a solo effort on the part of Great Britain. The Americans were an indispensable force in the D-Day landings; Polish forces lost many troops fighting at Monte Cassino. And, of course, the war was won by the allies as a whole, who included the US, Commonwealth countries and, not least, the Soviet Union.What the Remain cause really requires is for Corbyn to acknowledge that 'Europe' is not the enemy of social progress Continue reading...

Official figures mask the growing income disparities dividing BritainBritain needs to wean itself off measures of inequality that disguise more than they reveal about the gap between rich and poor.So says the Institute for Fiscal Studies, which last week used the occasion of its 50th anniversary to launch a five-year quest for better measures of inequality.One factor making it harder to determine wealth inequality is the lack of information about the top 1% Continue reading...

‘Another day of failed politics, another dispiriting day for British business’, says CBIThe pound is on course for its worst week in 2019 after dropping to the lowest level in four months following the collapse of the Brexit talks, as business leaders warn that failure to break the deadlock is damaging the economy.Sterling lost about half a cent against the US dollar on Friday to slide below $1.28 on the international money markets, compounding the steepest weekly decline for the currency since October as the talks between Theresa May and Jeremy Corbyn ended in acrimony. Continue reading...

Carolyn Fairbairn urges MPs to resolve the gridlock as investor confidence plummetsThe continuing political mess over Brexit is a “crushing disaster” for business in Britain with investor confidence at the lowest since the financial crash a decade ago, the Confederation of British Industry’s director general has said.Carolyn Fairbairn told business leaders in London that “the paralysis” in Westminster continuing “every day without a deal is corrosive” in its effect on Britain’s economy.Related: At last, Tories can begin to talk about Theresa May in the past tense | Rafael Behr Continue reading...

In a visit to a jobcentre, staff told me all was fine. Off the record, others talk of brutal cuts causing starvation and despairCome with me on an eerie visit, where we step through the looking glass into an alternative universe where everything is as good as can be. You will like it here. Everyone smiles: they only want to help their clients fulfil themselves, nothing bad ever happens here. They love their work. This little utopia is the Middlesbrough jobcentre. As everywhere, they are rolling out universal credit to new claimants or existing “clients” with any change of circumstance. Here they prompt unemployed or underemployed people into work or more work, telling them how many jobs to apply for, what appointments and courses to take, and (whisper it) with what penalties if they fail (“But that’s very, very rare”).It has taken me all of seven months’ applying to the Department for Work and Pensions to get here – my requests ignored, forgotten or parked, despite regular prodding. Pre-2010 I often sat in with jobcentre staff: but since then, in department after department, visiting any frontline is tortuous. With HMRC, eight years of requests to visit minimum-wage inspectors has yielded nothing – though they have never been outright refused.Related: Coming soon: the great universal credit deception | Aditya Chakrabortty Continue reading...

Rolling coverage of the latest economic and financial news, as America hits Huawei with a double-whammy

CEO Gerald Reichmann urges workforce not to be ‘distracted’ by talks over firm’s futureBritish Steel has told its 4,500 employees that “at present” it plans to pay them at the end of the month, as talks between its owners, lenders and the government continue over a £75m bailout package.The company, which has been charged £20m in loan interest and fees by its private equity owner, Greybull Capital, says it needs the government to contribute to a rescue deal to prop up its finances, blaming Brexit-related issues. Continue reading...

40 researchers, educators and campaigners on inequality criticise the makeup of the IFS Deaton review’s expert panel. Plus letters from David Sang and Ian MitchellWe welcome the idea of a major review of inequality (Britain ‘risks heading to US levels of inequality’, 14 May). With Brexit looming and recent analyses linking income inequality to voting for rightwing populists, mass shootings, mental ill health, status consumerism and domestic violence, this is indeed a critical issue for our times.However, there is widespread concern about the composition of this review’s “expert panel”, which has a majority of white economists. Although the panel includes an expert on health inequalities, none of the world’s leading experts on the health and psychosocial effects of income inequality itself are included, nor is there expertise in the spatial aspects of inequality. And there is a conspicuous absence of world-leading economists for whom income inequality is their primary focus – no Piketty, no Stiglitz, no Galbraith, no Frank, no Fitoussi, no Palma, no Chang, no Milanovic. Sir Angus Deaton, leading the review, stated in the journal Science in 2014 that he “get[s] angry” about the theory that inequality has psychological and social effects on health – perhaps he has changed his mind now that his own research has uncovered rising deaths from addiction and suicide in the US, but there are many researchers with much greater depth in this area. Even more troubling, there is no ethnic minority representation on the “expert panel”, no people with lived experience of inequality, no representatives of charities, trade unions or other NGOs. The number of disciplines represented is also small, although the impact of inequality goes far beyond economics. Continue reading...

The last Ebola outbreak, in Sierra Leone, left that country with a huge debt to the IMF, for loans taken on to fight the disease, writes Frances MiddletonAs a veteran door knocker with Christian Aid’s red envelopes, I was horrified to read about the worsening Ebola crisis in the Democratic Republic of the Congo (Report, 15 May). The last Ebola outbreak, in Sierra Leone, left that country with a huge debt to the IMF, for loans taken on to fight the disease. That money is still being repaid, leaving Sierra Leone’s healthcare programmes, such as they are, even worse off. In a country of 7 million people there are 130 doctors.Sierra Leone is the focus of this year’s Christian Aid Week, aiming to fund more health clinics to reduce the number of women who die in childbirth – currently 10 a day. Part of the campaign is a petition asking the government to lobby the IMF to cancel this debt. Please sign it on the Christian Aid Week website. Continue reading...

Germany’s economy has returned to growth, but retail spending has fallen in China and the US

A damning new study on social injustice should mirror the postwar Beveridge report, and call for wholesale changes to the economyReports by the great and the good are ten a penny. All too often they are an excuse for kicking a tricky political issue deep into the long grass. Only rarely do they count for much. Maybe, just perhaps, the review into inequality launched by the Institute for Fiscal Studies and headed by the Nobel prize-winning economist Sir Angus Deaton will be one that makes a difference. It has the potential to be a very big deal indeed, as important in shaping the Britain of the 21st century as the Beveridge report was in the mid-20th century.Related: Tackling inequality means addressing divisions that go way beyond income | Gaby HinsliffRelated: Britain risks heading to US levels of inequality, warns top economist Continue reading...

Rolling coverage of the latest economic and financial news, including the latest developments in the US-China trade row

MPs should take inspiration from President Kennedy’s call in 1961 to put a man on the moon within a decade, says Colin Hines. Plus letters from John Stone and Paul AtkinYour editorial (13 May) correctly states that Britain needs a Green New Deal now, and indeed in your letters page last autumn (10 September) our report detailing what form such a “jobs in every constituency” Green New Deal could take, and how to pay for it, was supported by a cross-party group of MPs, NGO leaders and academics. Since then the idea has gained international traction thanks to the likes of Alexandria Ocasio-Cortez and the support of grassroots movements. The US approach also includes the need to improve economic security for the majority, which has widened its support base. Finally, the scientific data underscoring the need to act in the next 10 years to tackle climate change and biodiversity loss has resulted in unprecedented activist pressure on politicians to respond.As a result, all opposition parties are calling for the declaration of a climate emergency, but the government’s actual policies – from fracking to the rollback of support for renewables and energy efficiency – are making things worse. Yet all is not lost. At the end of last year more than 60 Tory MPs signed an all-party letter calling on the prime minister to back a net zero-emissions target ahead of 2050. Clearly the disconnect here is the lack of necessary political will. MPs should take inspiration from President Kennedy’s call in 1961 to put a man on the moon within a decade, but this time the priority must be to save the planet, rather than leave it.

Rising vacancies and falling unemployment fail to push firms into raising wagesWage growth has slowed in the UK to put a squeeze on living standards despite the unemployment rate falling to its lowest level for more than 40 years.The fall in pay growth to 3.3% on the year in the three months to March, from 3.5% in the three months to February, also came as the buoyant labour market recorded a rise in employment to a new high of 32.7 million.Related: 'You can’t really win': 4m Britons in poverty despite having jobsWholesale and retail trade, repair of motor vehicles and motor cycles (139,000).Human health and social work activities (134,000).Accommodation and food ( 92,000).Professional, scientific and technical activities (80,000).Manufacturing (61,000). Continue reading...

World markets hit by further losses on Tuesday in wake of Beijing’s retaliatory tariffs on US imports worth $60bnWorld markets plunged further on Tuesday following heavy losses on Wall Street after China delivered a swift rebuff to Donald Trump by imposing retaliatory tariffs on $60bn of US imports.Beijing ignored warnings from Trump about the dangers of escalating the trade conflict and sent tremors through global markets by announcing a new 25% import duty on a range of US products.Related: US-China trade deal: Donald Trump insists there's no rush to secure deal Continue reading...

Beijing retaliates to America’s new tariffs with fresh taxes on US food, machinery and consumer goods, despite president Trump warning them not to

Deputy governor of Bank of England says UK faces longest fall in business investment since second world warA senior Bank of England policymaker has warned more delay to Brexit could further depress business investment and damage the long-term economic outlook.The Bank’s deputy governor, Ben Broadbent, said a delay beyond the new deadline of 31 October would harm Britain’s prospects as it faced the longest run of falling business investment since the second world war.(May 23, 2019)Related: Interest rates: welcome to UK plc, an economy in limbo | Larry Elliott Continue reading...

Despite all the talk of supporters being gouged over travel costs, this is the way markets workFor supporters of Liverpool, Spurs, Arsenal and Chelsea it has been quite a week. First they had the joy of seeing their teams get through to the finals of Europe’s two cup competitions: the only time there has been a clean sweep by English clubs. After the euphoria, though, came a hard lesson in basic economics.As the final whistle blew at Anfield, following Liverpool’s amazing comeback against Barcelona, anyone logging on to airline websites found the price of a ticket to Madrid – where the final of the Champions League will be held – had rocketed to more than £700 on the weekend of the match. When Spurs scored a last-minute winner against Ajax to join Liverpool in the final, prices rose again and not just for direct flights to Madrid but for alternative routes as well. Continue reading...

Ambivalence over Brexit may be the only thing stopping it from being the party of progressive reformOur landscape is changing and this spring the pace is accelerating. It’s there in the mounting public recognition that the challenges society confronts are common to us all – from climate change to the growth of food banks – and so must require a common response marshalling common resources.It feels as if we’re at an inflection point, whether in the degree of support for Extinction Rebellion, the cross-party concern to promote social mobility or the growing acceptance that gender should be non-binary.The derided state is emerging as an essential partner in co-creating a value-creating capitalismA smarter capitalism needs new forms of ownership to complement the private limited company Continue reading...

Demonstrators say Brexit and austerity have increased support for leaving the UKThousands have demonstrated in Cardiff to call for an independent Wales in what organisers said was the first such march in Welsh history.Some protesters said they had been lifelong supporters of independence, while others said they were converted by Brexit and austerity. A recent poll for ITV Wales showed that 12% of people support self-government.Related: How an act of anti-Welsh vandalism is fuelling the push for independence | Michelle Thomas Continue reading...

Rising pensioner wealth has muddied statistical measures of inequality and family poverty. It is time for fundamental changeOlder people are a nervous, anxious bunch. We know this from the way they vote. By quite a large margin, the over-65s vote for the Conservative party.Shoring up their wealth has become a priority during a period when Britain’s economic outlook has become more uncertain and their own finances may need to cope with years, possibly decades, of failing health. A more enlightened viewpoint might have led them to vote for governments that proposed pooling a greater share of wealth to ease these fears. But they haven’t.Labour wants to prise pensioners away from the Tories with promises to match their generosity. That’s a costly business Continue reading...

The president’s bullish advisers may be taking a hard line, but the chances of a deal are better than they lookDuring Donald Trump’s campaign to be president, he regularly cited China’s export subsidies as “evil”, and in his manifesto he pledged to “cut a better deal with China that helps American businesses and workers compete”.The president turned decades of musings into a policy mission after his son-in-law, Jared Kushner, handed him a book by the academics Peter Navarro and Greg Autry – Death by China – which set out to explain how China manipulated the global trade system for its own ends.The conciliatory language and the measured response from Beijing is reassuring Continue reading...

US has hiked the tariffs on $200bn of Chinese goods to 25% overnight, from 10%, escalating the battle between the two economic powers

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The time has come to rewrite the rules so that the world’s largest economies are able to trade peacefullyDonald Trump has been an opponent of free trade deals all his public life. A protectionist message was central to his run for the White House. On the campaign trail he promised “reversing two of the worst legacies of the Clinton years”: railing first against the North American Free Trade Agreement, Nafta, and second against China’s entry into the World Trade Organization. His bluster led to a new trade agreement brokered with Canada and Mexico, although it is unclear whether the changes achieved were little more than cosmetic. Unburdened by modesty or honesty, Mr Trump hailed his “new Nafta” agreement as “truly historic”.Having decided “trade wars are good, and easy to win”, the US president has for months been on course for a battle with Beijing. The trouble is that China is not a Mexico or a Canada, which appear prepared to feign a defeat for a quiet life with a bigger bully. China is a pugilistic power, led by its most powerful leader in decades, intent on recovering global respect. That might explain why, on the cusp of a deal between Washington and Beijing, China tore up the negotiating text that both countries had been using as a blueprint for a sweeping trade pact. In retaliation, the US imposed higher tariffs on $200bn worth of Chinese goods, sparking fears for a full-blown trade war. Global trade could decline by 2%, with GDP slowing by 0.8%. Continue reading...

Dispute between economic powerhouses is reminiscent of cold war standoff in CubaThe economic conflict that has been simmering between the US and China has entered a new and dangerous phase. Without question, the world is closer to a full-blown trade war than it has been since the 1930s.The issue now is whether the two sides can step back from the brink. So far, financial markets think the standoff is akin to the Cuban missile crisis of October 1962, the closest the US and the Soviet Union came to nuclear conflict during the cold war. Continue reading...

Damaging trade war could destabilise the already slowing global economy

If we want to head off mass extinction, we should grasp this once-in-a-species chance to throw out the old rules completelyWe seem to be caught between parallel universes. You may have caught a glimpse of the first last week, when GDP was announced to have grown by 3.2% in the first quarter of 2019, a “blockbuster” result that the White House economic adviser Kevin Hassert told CNBC is “absolutely” sustainable in the coming months and years. With unemployment at its lowest levels since 1969, Democrats eyeing the 2020 elections are starting to worry the economy might even be too good, making it more difficult to beat Trump next year.Related: How to fix capitalism: nine expert solutions for America's broken systemPreventing runaway catastrophe means throwing the logic of endless accumulation out the windowRelated: Fiscally-conservative Democrats have declared war on the Green New Deal | Kate Aronoff Continue reading...

Trade tariffs have been a recurrent theme of US history ever since the late 18th centuryFor years the rivals had been shaping up for a fight. Eventually, the talking and the insults stopped and there was a duel, and it was America’s leading proponent of trade tariffs who came off worse.Donald Trump and his stand-off with China’s Xi Jinping? No, this was how Alexander Hamilton – the first US treasury secretary and the originator of the protectionist ideas enthusiastically embraced by the current occupant of the White House – met his end. Continue reading...

The battle between the world’s two largest economies is hotting up – here’s the lowdown

Factory output up 2.2% – the strongest quarterly performance since 1988Britain’s economy strengthened in the first three months of the year, with growth of 0.5% helped by unprecedented stockpiling by manufacturers fearful of the impact from a no-deal Brexit.It was an improvement on 0.2% growth in the previous three months and was bolstered by the strongest quarterly performance for manufacturers since 1988, with factory output up 2.2%, according to the figures from the Office for National Statistics. Continue reading...

The Greek economist is back battling the EU establishment, this time at the helm of a new movement, DiEM25. Backed by Pamela Anderson and the world’s most famous cyborg, he is fighting ultra-right populism with a radical agenda he thinks can restore people's lost faith in democracy. As the European parliamentary elections approach, is anyone listening? Phoebe Greenwood finds out

Higher tariffs have been imposed on a broader range of imports as talks continue

US is poised to hike tariffs on Chinese goods, as vice-premier Liu He travels to Washington for crunch talks. This live blog has closed. Follow the link below for the latest updates.

Negotiators working to avoid escalation in tariffs that could result in full-scale trade warInvestors were hopeful of a breakthrough in talks between the US and China as negotiators worked to prevent an escalation in tit-for-tat tariffs that threaten a full-scale trade war between the world’s two largest economies.Amid rising concerns that President Donald Trump would unilaterally raise tariffs from 10% to 25% on $200bn (£153bn) of Chinese goods on Friday, Beijing scrambled to assure Washington that it was sincere in wanting to reach a deal.The roots of the dispute come from US president Donald Trump’s “America first” project to protect the US’ position as the world’s leading economy, while encouraging businesses to hire more workers in the US and to manufacture their products there. Continue reading...

A regional revolution in England is long overdue. Here’s how to deliver itGet off the train in Wigan and the first thing you see is a branch of Cash Converters. Turn right, up Wallgate, and you are in a landscape familiar in post-industrial Britain, with many outlets selling either saturated fat, nicotine or alcohol. Life expectancy for men is 12 years lower than in Britain’s most prosperous areas.Related: Most depressed English communities 'in north and Midlands'Related: North of England continues to see bigger cuts in public spending, report finds Continue reading...

US president tells rally China ‘broke the deal’ and publishes list of imported products that will face higher tariffs from FridayDonald Trump has accused China of “breaking” a deal it had reached in trade talks with the US, as the two countries moved to within 36 hours of a full-scale trade war and the US trade representative’s office filed the formal paperwork needed to increase duties on $200bn (£153bn) of Chinese goods.Speaking at a rally in Florida on Wednesday night, the US president said: “By the way, you see the tariffs we’re doing? … Because they broke the deal. They broke the deal. So they’re flying in, the vice premier tomorrow’s flying in – good man – but they broke the deal. They can’t do that, so they’ll be paying.”

The UK’s General Electric Company was a global tech titan in the 1980s. Then it was swept away in the riptide of ThatcherismChances are that you have learned rather a lot about Huawei. That the Chinese giant is one of the world’s most controversial companies. That security experts, those people we pay to be paranoid on our behalf, warn its telecoms kit could be used by Beijing to spy on us. That Theresa May was begged by cabinet colleagues to keep the firm well away from our 5G network – yet ignored them. And that one or more senior ministers were so eager to prove their concern for national security that they leaked details of their meeting, thus breaching national security.So you can already guess what will happen when Donald Trump’s secretary of state, Mike Pompeo, meets May and her foreign secretary, Jeremy Hunt, on Wednesday. Once the pleasantries about Harry and Meghan’s baby are over, top of America’s agenda will be to warn No 10 of the threat Huawei poses to British privacy – and to restate that Washington may retaliate by freezing London out of its intelligence network.Related: The Huawei incident points to a deeper lesson for Great Britain | Larry Elliott Continue reading...

Trade war fears send the Dow Jones down by over 500 points, as London stock market hits one-month low

European commission warns of ‘major shock’ and slashes growth forecast for the unionThe threat of a full-blown trade war between the US and China and Brexit uncertainty are posing mounting risks to the EU economy, the European commission has warned, after downgrading its growth outlook for 2019.Brussels’ executive arm said a recent slowdown in global trade volumes had taken its toll across the continent, as it cut its GDP growth forecast for the 28-nation bloc for 2019 to 1.4%, down from a forecast of 1.9% in the autumn. Continue reading...