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).

Rolling coverage of business, economics and markets as textiles, clothing and footwear sales drive stronger-than-expected 0.9% improvement

‘Boris bounce’ theory is disproved by industry, with CBI painting relatively downbeat pictureTills are ringing merrily in the high streets and it is all down to Boris Johnson. Thanks to the prime minister the dark clouds of uncertainty are scudding away and a grateful nation feels free to start spending again.Really? Sure, there was a chunky rise in retail sales in January but in the latest three months – a better guide to the underlying trend – they were up by only 0.8% on the same period a year earlier. This is the weakest annual growth since 2013. Continue reading...

Rise of 0.9% in January is likely to persuade Bank of England not to cut interest ratesRetail sales rebounded last month as consumers flocked to buy discounted clothing and footwear, giving the high street a welcome boost after a dire 2019.The Office for National Statistics said sales increased on average across the high street and online by 0.9%, reversing a 0.6% decline during December. Continue reading...

As climate, privacy, globalisation and demographic developments accelerate, adjustments are neededFirms and governments must increasingly internalise the possibility – indeed, I would argue, the overwhelming probability – of an acceleration of four secular developments that influence what business and political leaders do and how they do it. Decision-makers should think of these trends as waves, which, especially if they occur simultaneously, could feel like a tsunami for those who fail to adapt their thinking and practices in a timely manner.The first and most important trend is climate change, which has evolved from a relatively distant concern, on which there is ample time to take remedial action, to an imminent and increasingly urgent threat.Related: The white swan harbingers of global economic crisis are already here | Nouriel Roubini Continue reading...

Thinktank says nations need to focus on social prosperity in the fight against extremismThe G20 needs to move beyond economic growth and GDP as a measure of progress and factor in human wellbeing and social prosperity, one of its key advisors has said in a new report.In a hard-hitting report due to be submitted to the G20 group of leading developed and developing countries, experts said that issues including the climate emergency and mental health meant judging progress required a different yardstick of success. Continue reading...

TUC says jump to 1.8% would put squeeze on living standards at time of falling wage growthInflation jumped to a six-month high of 1.8% in January after a surge in petrol prices and an increase in the cost of gas and electricity over last year.Related: UK cash economy close to collapse, campaigners tell chancellor Continue reading...

Deaths in mainland China pass 2,000 and Foreign Office tells Britons to stay on the Diamond Princess cruise ship

Former Labour MP Kelvin Hopkins on hopes for a resurgence in the economic ideas of John Maynard KeynesI threw my metaphorical hat in the air and gasped “at last” when I read your editorial (Keynes’ ideas worked in the 1940s, and now they are due a comeback, 17 February). Between 1945 and the 1970s, working-class living standards rose at an unprecedented rate, with full employment, housing standards transformed for millions by the building of quality council housing, free healthcare and secondary education, the establishment of the wider welfare state and much more. The genius of Keynes was at the heart of this revolution. I grew up in that world and was taught Keynesian economics as a student in the 1960s.It was a tragedy that Keynesianism was later trashed and suppressed by the intellectual inferiors of monetarism, neoliberalism and globalisation. They were vengeful and profoundly wrong in all they propounded in their counter-revolution. JK Galbraith and others spelt this out, but were ignored in a rampant ideological drive to the right. Continue reading...

UK is not in early stages of wage-price spiral, with little sign of inflationary pressure in pipeline

In rebuke to ministers, ISC says Johnson’s goal of rebalancing UK economy is being put at riskBoris Johnson’s goal of rebalancing Britain’s lopsided economy is at risk of failure because of the government’s neglect of its industrial strategy, the watchdog established to monitor progress of the flagship policy has warned.In a critical report, the Industrial Strategy Council (ISC) said the policy to earmark government support for key sectors of the economy had made only limited progress since Theresa May first unveiled the plan three years ago. Continue reading...

Rolling coverage of business, economics and markets as British prices rise faster than expected

The celebrated French economist is back with an ambitious and optimistic work of social science, which argues that inequality always relies on ideologyIt is a journalistic convention that any author who writes a doorstopper of a book with the word “capital” in the title must be the heir to Karl Marx, while any economist whose books sell in the hundreds of thousands is a “rock star”. Thomas Piketty’s 600-page, multi-million selling Capital in the Twenty-First Century won him both accolades, but both were wide of the mark. There is nothing Marxist about Piketty’s politics, which are those of a liberal reformer, while his concept of capital is closer to an accounting category (a proxy for “wealth”) than the exploitative force that Marx saw it as.And despite his unexpected celebrity, Piketty makes for an implausible rock star. In contrast to the suave rebellion of Yanis Varoufakis or the frat-boy know-alls of the Freakonomics franchise, Piketty comes across both on stage and in print as cautious and nerdish. He is fixated on statistics, in particular on percentiles. Not only does he mine them from unlikely sources, such as 18th-century tax records and Burke’s Peerage, he is clearly fascinated by the mechanics of how data came to be collected in the first place. Piketty is a brilliant and relentless anorak.He might be right: given the climate crisis and other factors, current levels of inequality cannot long be maintained Continue reading...

Seismic risks for the global system are growing, not least worsening US geopolitical rivalries, climate change and now the coronavirus outbreakIn my 2010 book, Crisis Economics, I defined financial crises not as the “black swan” events that Nassim Nicholas Taleb described in his eponymous bestseller but as “white swans”. According to Taleb, black swans are events that emerge unpredictably, like a tornado, from a fat-tailed statistical distribution. But I argued that financial crises, at least, are more like hurricanes: they are the predictable result of builtup economic and financial vulnerabilities and policy mistakes.There are times when we should expect the system to reach a tipping point – the “Minsky Moment” – when a boom and a bubble turn into a crash and a bust. Such events are not about the “unknown unknowns” but rather the “known unknowns”.Related: Trump's 'America first' policy offers Beijing and Brussels a chance to lead | Barry Eichengreen Continue reading...

Rishi Sunak urged to enshrine right to access cash in budget with 8m people at risk of exclusionThe new chancellor, Rishi Sunak, is being urged to include measures to protect access to physical money as part of the March budget, as experts warn the UK’s cash system has edged closer to collapse.Authors of the Access to Cash Review are calling for extra safeguards to support the UK’s cash infrastructure, which has come under severe strain in the 12 months since the original report was published last March.Related: New chancellor Rishi Sunak challenged over hedge fund past Continue reading...

Points-based plan makes it hard for low-skilled migrants to work – it pulls up the drawbridge rather than takes back controlThe self-employed Polish plumber will be a thing of the past. Uber taxis in Britain’s big cities could be harder to come by. Anybody who wants to hire a Lithuanian nanny will have to pay them £500 a week – and make sure the taxman knows about it.Welcome to the government’s new points-based immigration system, which will administer the biggest structural change to the UK labour market in decades when it comes into force next year.Related: UK productivity slowdown worst since Industrial Revolution – study Continue reading...

The country followed a rabbit down the austerity hole, but there’s no Brexit wonderland for Britain’s workersHas Britain turned a corner? If you believe the headlines it would certainly seem so. Wages are up, and unemployment appears the lowest for decades. If you believe the hype then the last decade has been a journey where the country followed a rabbit into the austerity hole and emerged into a Brexit wonderland. This is a fiction and the facts are more troubling. If Britain had full employment there ought to be a sharp rise in wage growth as businesses see the pool of labour – Marx’s reserve army of the unemployed – dry up. Yet wage growth has dropped from 4.1% in April last year to 2.8%. Pay packets are still smaller than they were a decade ago. Total pay is £503 a week, well below the £522 a week workers took home before the crisis began in 2008.The “employment miracle” hailed by ministers is in fact a symptom of a British disease of economic insecurity. Unstable, precarious, low-paying and temporary jobs have become the norm for too many. The number of part-timers who can’t find full-time jobs is rising by 18,000 a month. In the middle of 2018, there were 781,000 people on zero-hours contracts. There are now 974,000. Then there is the growth in self-employment. In 2000 around 11.7% of those employed set up businesses on their own, where they earn considerably less than those with full-time jobs. That number is now 15.2%, the highest on record. Continue reading...

Rolling coverage of the latest economic and financial news

UK prepares evacuation flight for cruise ship passengers. Follow the latest news

Outbreak is supply and demand shock for tech giant and markets must wake up to the global risksThere are plenty of signs of the strains China’s economy is coming under as a result of the coronavirus. The sharp fall in German business confidence is one because Europe’s biggest economy suffers when demand for its exports falls. The decision by Cathay Pacific, Hong Kong’s flag carrier airline, to cancel 40% of its flights in February and March is another.But the best bellwether of what has been happening in China is Apple, which has warned that it is on course to miss its revenue forecasts in the first three months of 2020. China is a big market for Apple – accounting for about one-sixth of its global revenues – and is the source of most of its products. The coronavirus represents a demand and a supply shock to the company.Related: Businesses worldwide count cost of coronavirus outbreakRelated: Average UK wages rise above pre-financial crisis levels Continue reading...

Wages finally end 12-year squeeze but zero-hour contracts at new highAverage real wages – which take account of the impact of inflation – have risen above their pre-financial crisis level for the first time as workers begin to repair the damage to their finances after a 12-year squeeze on living standards.In a significant moment after a lost decade for British workers, the Office for National Statistics said average weekly earnings, excluding bonuses, have reached a fresh peak in real terms. This means pay packets adjusted for inflation are worth more than they were before the 2008 crisis – although only just. Continue reading...

International trade slump and coronavirus outbreak combine to weaken consumer demandJapan’s economy is heading for a recession this year after figures showed the world’s third largest economy slumped by an annual rate of 6.3% during the last quarter of 2019.Germany, the world’s fourth largest economy, is also expected to stumble as the coronavirus epidemic and a slump in trade with China combine with weak consumer demand to drag growth lower. Continue reading...

Moderate leftists need an argument and an inspiring leader, writes John Pawsey, while Dariel Francis says the threat of populism is best countered with a dose of Keynesian economics

Rolling coverage of the latest economic and financial news, as Japanese GDP falls at the fastest pace in five yeas

Households’ optimism over finances and job security rise in February, survey showsConsumer confidence in Britain has risen to the highest level in more than a decade after Boris Johnson’s decisive election victory, according to a survey.In the latest signal of a bounce for the economy since the start of the year, a poll by IHS Markit showed households’ optimism over their finances and the economy increased in February to the highest point since the survey records began 11 years ago. Continue reading...

‘Boris bounce’ invigorates buyers and sellers, leading to 12% surge in salesBritain’s property market is in the grip of fresh boom, according to Rightmove, with asking prices jumping by more than £2,500 over the past month alone.The average asking price for a home rose to £309,399 in February, £40 shy of its all-time record, said Rightmove. Buyers and sellers have been invigorated by renewed economic confidence, described as the “Boris bounce”, it added. Continue reading...

The British economist’s ideas remain as important today as they ever wereThis month, 83 years ago, perhaps the greatest-ever economist published his greatest work. John Maynard Keynes’ The General Theory of Employment, Interest and Money did not invent monetary analysis. But it changed the way that money, finance, demand and unemployment in a modern economy were understood. Such is its enduring power that, three years ago, it was voted the most significant British academic book of the modern age. Keynes knew what he was on to when he wrote The General Theory. In a letter to the playwright and activist George Bernard Shaw, he wrote: “I believe myself to be writing a book on economic theory, which will largely revolutionise … the way the world thinks about economic problems.”Keynes put his theory into practice. Entering the Treasury in 1940, he was central to the creation of the British government’s plans for the reconstruction of the economy after the second world war. He was not the only person involved, but his blueprint of a state-guided investment policy accompanied by a generous social welfare system, progressive taxes, a low interest rate, monetary policy run by a nationalised Bank of England, strict capital controls, managed trade, and non-casino financial markets built the postwar state. It proved remarkably successful: GDP per head growth averaged 2.44% a year in the period from 1950 to 1973. Keynes’s economic revolution was not some utopian dream but a politically feasible project. Continue reading...

The PM continues to spurn convention, as the departure of Sajid Javid showsBoris Johnson has broken one of the three iron rules of politics and his defenestration of Sajid Javid shows he thinks he can break the other two as well.Rule number one is that oppositions don’t win elections; governments lose them by failing to get the economy in fine fettle as election day approaches. Administrations that preside over periods of falling living standards lose seats, as was the case with Jim Callaghan in 1979 and Theresa May in 2017. Continue reading...

Sanders makes the same assumptions in the US as Labour did in Britain – but in both countries the electorate is complexBernie Sanders is on his way to victory in the race for the Democratic party nomination. There are plenty of trip hazards along the route to challenging Donald Trump in November, and Sanders will need to joust with the billionaire Michael Bloomberg after he finally shows up in the Super Tuesday primary on 3 March, when about a third of all delegates will be allocated from the votes of 14 states.Yet Sanders’s radical programme looks like it will excite enough party members to secure the Democrat nomination in a field of candidates where the more moderate wing, while larger in vote share, is badly split between Pete Buttigieg, Amy Klobuchar, Joe Biden and Bloomberg, and where his leftist challengers – among them Elizabeth Warren – have fallen away.Averages disguise how unevenly wealth is distributed across the age groups as much as they show class divides Continue reading...

Airlines have grounded flights, banks have sent staff home. In China and worldwide, the virus has taken its tollWith the coronavirus outbreak spreading far beyond its source in China, companies are braced for a hit on profits as demand slumps and production is disrupted in the world’s second largest economy and beyond.Executives face weeks of uncertainty over how many people will catch the virus worldwide and what the full impact will be. Daniel Zhang, the boss of China’s biggest listed company, Alibaba, described the coronavirus outbreak as a potential “black swan” event that could derail the global economy. Continue reading...

GDP growth at 0% for final quarter of 2019 with no upturn forecast in the short termGermany’s economy flatlined in the last three months of 2019 after a slowdown in spending and exports wiped out growth in Europe’s largest economy.GDP growth stagnated at 0% in the fourth quarter of 2019 after its struggling export-oriented industry came under pressure from trade tensions, changes in the auto industry and a slowing European economy. Continue reading...

Dariel Francis and Glen Reid challenge a letter from Tim Worstall of the Adam Smith Institute about inequality and wealth redistributionTim Worstall of the Adam Smith Institute (Letters, 12 February) says: “Reality is telling us that the economy is not a zero-sum game”, as if that implies it is actually possible to “level up the needy” without redistribution of wealth. But GDP per capita tells us precisely nothing about wealth inequality within a country, and results in such a distorted picture in tax havens like Ireland that its central bank introduced another measure, modified gross national income, in 2017 to assess the country’s economy and indebtedness more accurately.If 1% of the UK population in 1751 enjoyed most of its wealth, and 99% next to none, and those proportions are the same today, there remains a cogent argument for wealth redistribution as an engine of economic growth and wellbeing – as demonstrated by Piketty et al.

Ex-Labour government aides say No 10 too small to battle all-powerful ministry for long•Analysis: Treasury will bide its timeThe attempt by Boris Johnson to emasculate the Treasury and seize control of economic policy is doomed to failure, people close to the former prime minister Gordon Brown have said.Brown, who served as chancellor for a decade between 1997 and 2007 before a three-year stint at 10 Downing Street, is convinced the size and range of the Treasury will stifle the turf-war plans of Johnson and his chief adviser, Dominic Cummings.Related: Treasury will bide its time over Johnson's radical changes | Larry Elliott Continue reading...

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

From JCB in Britain to airlines in Middle East, virus fallout disrupts global supply chains

The new Tory MPs appear to wish to continue with the austerity project, says former MP Liz McInnes, and Ken Veitch sees the damage being done by cuts in children’s services

Rishi Sunak must add finishing touches to ambitious package billed as new dawn of spending