UK construction sector has turned a corner" after a difficult start to the year, as housing activity rises at quickest pace since September 2022We also have results from online clothing retailer ASOS this morning, but they don't report problems from the bad weather.ASOS told the City that its adjusted profits for the current financial year are expected to hit the top of analyst estimates.... but its sales will be slightly below guidance". Continue reading...

Former president offers blank cheque to coal and oil, and cosies up to billionaires such as Elon Musk and Peter ThielThe US presidential election in November is critical for many reasons. At stake is not only the survival of American democracy, but also sound stewardship of the economy, with far-reaching implications for the rest of the world.American voters face a choice not only between different policies, but between different policy objectives. While the vice-president, Kamala Harris, the Democratic nominee, has yet to detail her economic agenda fully, she probably would preserve the central tenets of Joe Biden's programme, which include strong policies to maintain competition, preserve the environment (including reducing greenhouse gas emissions), reduce the cost of living, maintain growth, enhance national economic sovereignty and resilience and mitigate inequality. Continue reading...

The 2017 Grenfell Tower fire in London was the result of decades of failure' by central government, the public inquiry into the catastrophe has found. The Guardian's John Harris looks at the findings of the report with the social affairs leader writer Susanna Rustin. And, as Labour continues to warn things will get worse before they get better', we are joined by the economists James Meadway and Ann Pettifor to discuss whether a painful period of austerity-lite is the only way through the storm Continue reading...

It's a sign of the times

New governments usually come into power offering hope and a break with the past. This one is squandering the opportunity for a fresh startAll is not well in Britain. Last week the Children's Society reported the results of a study of 15-year-olds' life satisfaction, which has steadily declined over the past decade. The findings showed that British 15-year-olds had the lowest life satisfaction levels of 27 European countries.In a 2023 report on global mental health, the UK ranked the second worst of 71 countries, with only Uzbekistan scoring lower. My own research also makes for grim reading: my co-author and I found a collapse in the mental health of the young, and especially young women, in the UK. Scotland looks especially bad. Meanwhile, there are millions of people of all ages on waiting lists for surgeries, GP services are in decline, dentists are scarce and social care is in disarray.David Blanchflower is a professor of economics at Dartmouth College. He was a member of the Bank of England monetary policy committee from 2006 to 2009 Continue reading...

The new government is under constant attack. It deserves more cheerleaders for policies such as green energy and for backing workersThe honeymoon for Labour is over, say the massed ranks of the rightwing media. What honeymoon was that? It seems to have been over since 5 July. Despite their own readers voting for that Labour victory in large numbers, the majority of media outlets paused not a moment to reconsider whether their rantings were out of kilter with the country, and their own subscribers.Polling before the election, Redfield and Wilton found, no surprise, huge Labour leads among Guardian, Observer and Mirror readers, but also large proportions backing Labour among readers of the Daily Express (41% to the Tories' 27%), the Daily Mail (37% to 24%), the Telegraph (34% to 21%) and the Times (42% to 23%), with the Sun, FT and Economist much the same. Yet their commentators seem quite unabashed. Telegraph columnists have been apocalyptic: It's over for Britain, crushed by Labour's cruel war on the middle classes". Continue reading...

Exclusive: Growth in sector in 2023 driven by concerts featuring big names such as Elton John and BeyonceSpending on the UK live music sector and associated businesses has hit a record 6.1bn as a wave of huge acts from Elton John to Beyonce cashed in on the pent-up demand to attend shows in person.Live, the federation representing Britain's live music industry, revealed that the sector's contribution to the UK economy topped 6bn for the first time last year, as fans denied live experiences in the Covid pandemic rushed to snap up tickets. Continue reading...

UK bonds 10 times oversubscribed in auction considered first big test of Labour's reputation with foreign investorsThe UK remains among the world's most attractive destinations for investors seeking a haven after an auction of government bonds was more than 10 times oversubscribed.Matching a previous record set in June and illustrating the stability of the government's finances, Britain attracted 110bn of bids on bonds worth 8bn. Continue reading...

Germany was once an economic model to emulate but its reliance on industries past their sell-by date is costing it dearSir Keir Starmer is not the first Labour leader to hanker after a closer relationship between Britain and Germany. Jim Callaghan snuggled up close to the chancellor Helmut Schmidt in the 1970s, and ever since there has been a sense among the social democratic left in the UK that there is much to be learned from Europe's biggest economy.The Germans, it has been said repeatedly down the decades, have a superior model of capitalism: based on good design and skilled workmanship; stable, long-term funding arrangements between businesses and the banks; a more consensual system of industrial relations; a network of medium-sized companies, many of them family-owned; a top-notch system of vocational and technical training that ensures a steady supply of skilled, productive workers. Continue reading...

Since Labour's victory the new PM and chancellor have hardly stopped warning us that cuts are on the way. It's no way to turn a country aroundThe first shop I went into after a brief holiday was our local delicatessen. After the customary exchange of pleasantries the shopkeeper told me his week had started, and been ruined, with an alarm at about 7.30am the previous Monday, informing him that his shop had been broken into.The shopkeeper could see on a video link that the burglar was still there, and immediately telephoned the local police station in Islington, London. No one came, and the burglar got away with hundreds in cash and some goods. Continue reading...

There are tough decisions to be made, but living standards must improve if the economy is to be rescuedThings will get worse before they get better." That was the gloomy prognosis from Keir Starmer in his first set-piece speech as prime minister in the Downing Street garden last Tuesday. This was intended as a warning to voters that they can expect tough decisions in the budget this autumn.But he could also have been talking about the annual living standards outlook published by the Resolution Foundation on Thursday, which forecasts that the poorest tenth of working-age households will be 600 a year worse off on average in 2029 than they were in 2023, and that they will have seen no real income growth in more than a quarter of a century. For median working-age households, incomes are predicted to grow by just 0.8% a year on average over the parliament, far lower than the 2.1% a year experienced between 1997 and 2009. This is a grim outlook, particularly for less affluent families who are the most squeezed. It means Labour ministers are entirely justified in pointing out just how challenging is the economic situation that they inherited from the Conservatives: poor forecast growth, together with the unfunded spending commitments that chancellor Rachel Reeves has written about in the Observer today, mean she has very difficult choices to make. Continue reading...

Tory overspending and unfunded commitments have badly damaged the nation. Tough decisions are needed to rebuild it from the ground up Rachel Reeves under renewed fire from MPs and charities over cuts to winter fuel allowanceDuring the general election, I made a promise to the British people: to restore economic stability. I did so because I saw the damage taking risks with the public finances can cause. Liz Truss's mini-budget, less than two years ago, crashed markets and caused interest rates to soar.Stability is the essential ingredient to a successful economy. The stability that allows a family to buy their own home, for a business to thrive and for a government to invest in public services. Continue reading...

Public investment projects bring the short-term benefits of job creation, but their long-term effects are far more beneficialWe shouldn't judge a book by its cover. Nor judge a research paper by its title. Discussion paper No.5: Public investment and potential output", just published by the Office for Budget Responsibility, doesn't sound like a barrel of laughs. But unenticing is not the same as unimportant.This is the official forecaster telling us what economic impact it expects public investment - public spending that creates an asset, like a road or hospital - to have.Do you have an opinion on the issues raised in this article? If you would like to submit a letter of up to 250 words to be considered for publication, email it to us at observer.letters@observer.co.uk Continue reading...

The prime minister's beauty sleep is interrupted by an unwelcome visitor with designs on the government's spending plans You can order your own copy of this cartoon Continue reading...

Some in the party worry that constant reference to the financial black hole' left by the Tories could dent consumer and business confidenceWhile most of the nation were enjoying the late August sunshine and the news that Oasis are getting back together, it seemed an odd moment for Keir Starmer to bring everyone back down to earth with a bump.But his gloom-laden speech in the Downing Street garden on Tuesday did just that. I have to be honest with you: things are worse than we ever imagined," the prime minister told his hand-picked audience. Continue reading...

Drop to lowest level since 2021 may lead to cut in September though unemployment figures give cause for concernEurozone inflation fell this month to its lowest since June 2021, adding to the case for the European Central Bank (ECB) to cut interest rates in September.Inflation in the single currency bloc dropped to 2.2% in August, down from 2.6% in July, and barely above the ECB's 2% target. Continue reading...

When the bills hit the mat and taxes go up, Labour's talk of short-term pain' will feel intolerable to poor householdsWhen writing profiles on Rachel Reeves, eight out of 10 journalists like to record her past as a chess champion, largely as a pretext for chuckling through metaphors about gambits and defensive positions.

Live coverage as US GDP figures show faster economic growth but Nvidia share price falls in after hours tradingSainsbury's has said it will create 1,000 new UK jobs after reaching a deal to buy 10 Homebase stores to convert them to supermarkets.The total investment, including buying the leases and spending on fitting them out, will be 130m, Sainsbury's said in a statement to the stock market.Sainsbury's food business continues to go from strength to strength as we push ahead with our Next Level Sainsbury's plan. We have the best combination of value and quality in the market and that's winning us customers from all our key competitors and driving consistent growth in volume market share.We want to build on this momentum which is why we are growing our supermarket footprint. Our ambition is to be customers' first choice for food and these new stores will showcase some of the best that Sainsbury's supermarkets have to offer to even more communities around the country.Hopper demand remains strong and the company noted the Blackwell ramp was a key topic of discussion with expectations of several billion in revenue starting in 4Q - on time despite fears of more significant delays. The delay was fairly well understood already but the company did note a change to the Blackwell GPU mask to improve production yield.Overall, AI spend levels won't be without a debate but the story is back on track with the Blackwell delay fears now in the rearview and several billion dollars of Blackwell layering onto continued growth in Hopper in the back half.Whilst there is no question that the appetite for the company's product range remains strong, ahead of the delayed shipments of the latest chip design in Q4, expectations will change little following this release, likely taking a little hot air out of the stock as a result. However, with earnings set to more than double in this fiscal year and the valuation not excessive in light of this growth, there is something for both the stock bulls and the bears to sink their teeth into. Continue reading...

An IFS report vindicates Labour concerns that it inherited a worse financial situation than previously thoughtThe Home Office has been accused of submitting woeful" budget figures under successive Conservative ministers - which officials knew understated the ballooning cost of asylum and illegal immigration spending.In a report partially vindicating Rachel Reeves's claim that the new Labour government inherited a far worse financial situation than initially thought, the Institute for Fiscal Studies (IFS) thinktank suggested the Home Office had repeatedly lowballed its budget estimates. Continue reading...

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Finding new trade arrangements to boost growth will be hard given party has ruled out rejoining single market and customs unionBefore a whistlestop European tour to Berlin and Paris, Keir Starmer promised to mend the broken relationships left behind by the previous government" and drive forward UK economic growth.Changing the tone with European leaders is the easy bit. Changing the substance - especially finding new arrangements to boost growth - is a much taller order. Continue reading...

Past Labour PMs - Blair, Wilson, Attlee - have tended to arrive in power accentuating the positiveSir Keir Starmer could perhaps have timed it better. On the day that Oasis, the band that symbolised the mood of sunny optimism that swept Tony Blair to power in 1997, announced their reunion, the prime minister's message to the nation was that things would get worse before they got better.Politically, it is quite a gamble. There haven't been all that many Labour governments in the past 125 years, but they have tended to arrive in power accentuating the positive. That was true of Blair in 1997 and true of Harold Wilson in 1964. Continue reading...

Live coverage of business, economics and financial markets as Federal Reserve rate cuts drive US dollar lowerMeta boss Mark Zuckerberg has said the US government under Joe Biden put pressure on the Facebook social network to censor certain Covid-19 content" during the coronavirus pandemic.Zuckerberg said that senior officials" from the White House repeatedly pressured our teams for months to censor certain Covid-19 content, including humour and satire", in a letter to the US House of Representatives' judiciary committee. He wrote:I believe the government pressure was wrong, and I regret that we were not more outspoken about it. I also think we made some choices that, with the benefit of hindsight and new information, we wouldn't make today. Continue reading...

The post-growth movement says GDP is the wrong way to measure progress and we need a radical economic rewiringIn the run-up to the UK general election, the Labour party's central offer to the public was a laser-like" focus on economic growth. Its leader, Keir Starmer, promised to take the brakes off Britain" and repeatedly said ensuring economic growth will be fundamental".In the weeks since the party was elected, it has regularly been grilled about whether the required growth is possible, or how it could be achieved. But to the dismay of ecological economists and climate experts, there has been almost no debate about what sort of growth it should be, who it would benefit - or even whether the aim of perpetual growth on a planet with finite resources is either possible or desirable in the midst of an escalating climate crisis. Continue reading...

Trump and Harris have vowed to ban taxes on tips. Critics say it's not a solution for service workers' unlivable wages

Billions risk being lost without joined-up policy on tech, robotics, renewables and training, says manufacturing bodyUK manufacturers have renewed calls on the government to urgently draft an industrial strategy that will bring in investment and fix the terrible" damage caused by the Brexit deal.The trade body Make UK is reiterating its demands for Labour to come up with a joined-up industrial vision, or else risk losing billions of pounds in investment abroad. Continue reading...

Exclusive: Levels of education and sanitation predicted to massively improve if creditors reduced paymentsReducing the debt payments made by poor countries to more sustainable levels could help 5 million more children attend school and provide access to clean drinking water to 17 million people, according to research.A study by academics at the universities of St Andrews and Leicester said there would be huge benefits" - including saving the lives of 60,000 children and mothers - from slashing the size of repayments. Continue reading...

The Federal Reserve is widely expected to start cutting rates in September after 11 rises in 16 monthsInflation is declining, the jobs market is cooling and it looks pretty certain that the Federal Reserve will cut interest rates come September. But will lowering the federal funds rate - the interest rate the Fed charges to its member banks and an important tool for controlling money supply and inflation - have a significant effect on small businesses? Sorry to be the bearer of bad news but not really.The Fed raised this rate 11 times over 16 months - an unprecedented run - and the subsequent impact has been significant. By combining this rate increase with a reduction in bond purchases, the central bank has managed to decrease its balance sheet by 20% over this period of time and also rein in the nation's money supply after significant increases. There's still some ways to go (the Fed's balance sheet is still significantly higher than pre-pandemic levels) but no one can deny the results of the central bank's actions. Continue reading...

Business secretary Jonathan Reynolds says joining Asia-Pacific CPTPP bloc is a real win' for exporters, even though it will preclude the UK from EU membershipThe business and trade secretary, Jonathan Reynolds, has signalled a new twin-track approach to UK trade policy, in which the Labour government will pursue closer ties with the European Union while at the same time seeking new global partnerships further afield.Writing for the Observer online, Reynolds welcomes the UK's imminent entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as a real win" for British exporters. Continue reading...

The UK has the research base, the startups, the venture capitalists, but its presence in the global market is pitiful. The chancellor must step inJust how bad is the economy? The chancellor, Rachel Reeves, warns that hard choices on tax, spending and borrowing need to be made on 30 October when she delivers the first Labour budget since 2010, so poor is the economic legacy. Phooey, respond those still standing in the shredded Tory party. The economy, clipping along at a growth rate north of 2% this year, is in good shape; it is her giving in to her union paymasters" that is the problem. She responds that the crisis in public sector pay had to be confronted.Yet widen the economic lens to the condition of corporate Britain and the scale of its presence in new technologies and the Tory bequest is unambiguously bad. Britain simply does not possess a critical mass of ambitious, sizeable-growth companies at the frontiers of technology capable of leading any private sector investment or growth boom. Continue reading...

There are many parallels between the situation facing Labour's 1960s chancellor and today's. But will Reeves grasp the higher borrowing nettle?Rachel Reeves is wrestling with a dilemma many of her predecessors have tried and failed to resolve. It defeated James Callaghan during his tenure as chancellor in the 1960s, and Denis Healey in the 1970s. Alistair Darling was another victim when, in 2010, he tried to juggle the need to show Labour could handle money (without spilling it down the proverbial plughole) with persuading his own troops that a more austere state could marry a generous welfare safety net with the requirement for long-term public investment.Callaghan's experience is probably the closest to what Reeves faces. Looking back, it's possible to see how his mistakes could easily become Reeves's. Continue reading...

A report by the Autonomy Institute says Labour proposals contain too many ambiguities and stresses that pledges must be delivered in fullThe Labour government's highly publicised plans to improve workers' rights and end years of stagnating wages, insecure jobs and in-work poverty are full of ambiguities and lack crucial detail, a leading thinktank on the future of work has concluded.A report by the Autonomy Institute, which promotes a fairer and more democratic economy, says the new deal for working people has the potential to move the UK's labour market on from a lost decade" of increasing exploitation, while at the same time playing a key role in Keir Starmer's mission to drive up economic growth. Continue reading...

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Chancellor rebuts Tory accusation she will be a soft touch and hints at tweak to debt rule to allow more borrowingRachel Reeves has insisted there will be no blank cheques" for public sector unions amid Conservative claims that the government's attempt to end long-running strikes has made it a soft touch.The chancellor said there had been no caving in to train drivers and junior doctors, and defended her decision to accept recommendations of pay review bodies for real-terms increases for the police, teachers and the armed forces on the grounds that they were needed to recruit and retain staff. Continue reading...

Olympic Games has delivered France's best month of growth since March 2023, while UK economy is also strengthening in August

French service sector drives growth but experts warn strong figures mask disappointing performance elsewhereThe Paris Olympics have provided a boost to the eurozone economy after a sharp rise in spending as athletes and spectators descended on the French capital for the summer sporting event.Figures from a closely watched survey of businesses showed monthly French private sector output rose to its highest level in 17 months in August. Continue reading...

Report that EU proposal on work and study for under-30s could be revisited is denied by government

Inquiry into eight EU countries is latest chapter in hostility between Beijing and EU over tradeChinese authorities have launched an anti-subsidy investigation into European dairy imports, in the latest sign of escalating trade tensions between Brussels and Beijing.The announcement from China's commerce ministry on Wednesday came a day after the European Commission revealed revised duties on Chinese electric vehicles as part of its examination into what it viewed as artificially cheap cars that posed a threat to jobs in Europe's motor industry. Continue reading...

The US created 818,000 fewer jobs than first calculated as the Federal Reserve hints at a rate cutThe US job market appears weaker than first thought, according to official figures released on Wednesday.The US created 818,000 fewer jobs than first calculated in the 12 months to the end of March, a 0.5% decrease, according to the Bureau of Labor Statistics' quarterly census of employment and wages. Continue reading...

Tough budget looms after UK deficit hits 3.1bn in July - ahead of City forecasts of 1.5bn, and soaring over OBR forecast of 100m

We look at likely changes, as chancellor plans measures to plug 22bn public finances shortfall

October review is expected to be eye-wateringly severe, but chancellor will draw on official data to make her case

Figures come amid row between Labour and Conservatives over true state of public finances

Pleasance Dome, Edinburgh

Chancellor insists she still has large black hole to fill despite stronger-than-expected growth in first half of 2024Rachel Reeves is planning to raise taxes, cut spending and get tough on benefits in October's budget amid Treasury alarm that the pickup in the economy has failed to improve the poor state of the public finances.The chancellor is insisting she will still have a substantial black hole to fill despite stronger than expected growth in the first half of 2024.Raising more money from inheritance tax and capital gains tax.Sticking to plans for a 1% increase in public spending even though it would involve cuts for some Whitehall departments.Rejecting pressure to scrap the two-child benefit cap.Changing the way debt is measured to exclude the Bank of England. Continue reading...

Company failures dip in July, but over the last 12 months are higher than in 2008-09

Spot price increases to $2,531.60, with record run meaning standard gold bar is worth more than $1m

Bank officials signal readiness to start interest rate-cutting cycle to ease pressure on households and businessesKamala Harris's hopes of victory in the looming US presidential election have been given a boost by mounting expectations that the US Federal Reserve will cut interest rates from as early as September.As Democrats gather for the party's national convention in Chicago starting on Monday, economists on Wall Street said the world's most powerful central bank was poised to begin a cycle of interest rate cuts before the end of the year. Continue reading...

Rolling coverage of the latest economic and financial newsGold has rallied by over 20% so far this year, as investors have piled into bullion.Back at the start of January, it traded at around $2,060 per ounce, before climbing to its alltime high over $2,500.The situation in the Israel-Iran-Hamas conflict remains fluid with Iran still expected to make a show of force in response to the recent assassination of Hamas' political leader. Negotiations for a ceasefire have come to a standstill once again as the US Secretary of State Antony Blinken is visiting the region.In the meantime, Ukraine's attempt to reverse the fate of the Russian-Ukraine conflict by mounting an offensive in Russian territories is gathering momentum. However, the possible direct involvement of Belarus and the increased chances of an asymmetric response from the Russian side could potentially scare investors going forward. Continue reading...

Economy held back by ailing transport network, with poor roads adding to logistics costs, say manufacturersRachel Reeves has been warned by Britain's biggest manufacturers that her autumn budget must address a decade of decline in national infrastructure that is damaging economic growth.More than half of manufacturers surveyed by the industry group Make UK said that the country's national road infrastructure had deteriorated in the last 10 years, making it slower and more expensive to build and export British products. Continue reading...