Economics | The Guardian

Brexit chaos also behind slow sales in March, traditionally a strong month in the industrySales of new cars fell last month as UK consumers shunned diesel vehicles and Brexit chaos deterred buyers in what is traditionally a strong month for the industry.The number of new car registrations fell by 3.4% to 458,054 in a crucial plate change month that usually encourages buyers into showrooms. It was the lowest number for March in six years.Related: Self-driving cars could provide £62bn boost to UK economy by 2030 Continue reading...

But such potential may be threatened by a no-deal Brexit, says SMMTBritain’s leading position in developing self-driving cars could produce a £62bn economic boost by 2030, the car industry claimed – but warned that such potential could be jeopardised by a no-deal Brexit.A report published by the Society of Motor Manufacturers and Traders said the UK has significant advantages over other countries in pushing connected and autonomous vehicles, including forward-looking legislation allowing autonomous cars to be insured and driven on a greater proportion of roads than elsewhere. Continue reading...

It’s seen as a key part of a soft Brexit, but in reality the union has not provided much of a boost to trade of goods with the EUThe Corn Laws. The tariff reform debate of the early 20th century. Imperial preference in the 1930s. There have been times in Britain’s modern history when trade policy has really mattered, breaking parties and swinging elections. To that list can now be added the question of whether Britain should be in a customs union with the European Union.Business certainly thinks so. Leaving the customs union would give Britain freedom to negotiate its own trade deals but this, according to the country’s most powerful employers’ organisation, the CBI, is not why people voted for Brexit. That was primarily about money and immigration rather than a desire for the local supermarket to be able to stock hormone-treated US beef.Customs unions or trade liberalisation deals matter a whole lot less than the underlying shape of an economyRelated: Is May’s offer to Labour sincere? Here’s why the answer is probably not | Tom Kibasi Continue reading...

Creation of body to protect UK firms from unfair global trade practices is behind scheduleLiam Fox’s international trade department has faced further criticism for its lack of Brexit readiness after it emerged that the creation of the watchdog tasked with protecting UK companies from unfair global trading practices was behind schedule.The government said on Wednesday that the Trade Remedies Authority (TRA) would not be established in time for a no-deal Brexit. Continue reading...

Overall business activity stalled in March, according to latest IHS Markit/Cips surveyThe British economy is at risk of sliding into a deepening downturn after stalling in the first quarter, after the weakest performance in the private sector in almost seven years as Brexit approaches.In the latest sign the gridlock over leaving the EU is extracting a high price from the economy, the survey from IHS Markit and the Chartered Institute of Procurement and Supply showed overall business activity stalled in March.Related: Blow to UK global trade as new watchdog chief quits before launch(April 10, 2019) Plan or extension agreed by EU27? Continue reading...

Threat to innovation could spark action against giants such as Facebook and Google

UK services sector suffers contraction in March as “intense political uncertainty” hurts business

Fund report calls for profits to be targeted by a tougher international tax regimeThe International Monetary Fund has warned that the market power exercised by a small number of global companies threatens to stifle innovation and make it harder for central banks to deal with recessions.Adding its contribution to the growing public debate about the corporate power exercised by the US tech giants such as Google, Amazon, Apple and Facebook, the IMF said it would be concerned if there was any further increase in the clout of already dominant firms.Related: Big tech has too much monopoly power – it's right to take it on | Kenneth RogoffRelated: IMF chief joins calls for big tech firms to pay more tax Continue reading...

Campaigners say repayments have doubled since 2010, leading to public spending cutsDebt repayments by the world’s poorest countries have doubled since 2010 to reach their highest level since just before the internationally organised write-off in 2005, campaigners have warned.The Jubilee Debt Campaign (JDC) said a borrowing spree when global interest rates were low had left many developing nations facing repayments bills that were forcing them into public spending cuts.Related: The west is exporting austerity to Africa. It’s a disaster Continue reading...

Christine Lagarde says world economy ‘unsettled’ as fund poised to downgrade forecastThe head of the International Monetary Fund has warned that the majority of countries around the world can expect slower growth in 2019 as the global economy loses momentum.Christine Lagarde said rising trade tensions, concerns over Brexit and tougher financial conditions as central banks raised interest rates had “increasingly unsettled” the world economy over recent months.Related: IMF: no-deal Brexit and Chinese slump are biggest economic risks Continue reading...

Presidential candidate Elizabeth Warren has accused technology giants of competing unfairlyDisplaying a degree of courage and clarity that is difficult to overstate, US senator and presidential candidate Elizabeth Warren has taken on big tech, including Facebook, Google, Amazon and Apple. Warren’s proposals amount to a total rethink of the United States’ exceptionally permissive merger and acquisition policy over the past four decades. Indeed, big tech is only the poster child for a significant increase in monopoly and oligopoly power across a broad swath of the American economy. Although the best approach is still far from clear, I could not agree more that something needs to done, especially when it comes to big tech’s ability to buy out potential competitors and use their platform dominance to move into other lines of business.Warren is courageous because big tech is big money for most leading Democratic candidates, particularly progressives, for whom California is a veritable campaign-financing ATM. And although one can certainly object, Warren is not alone in thinking that the tech giants have gained excessive market dominance; in fact, it is one of the few issues in Washington on which there is some semblance of agreement. Other candidates, most notably Senator Amy Klobuchar of Minnesota, have also taken principled stands.Our treatment of ‘the railroad problem’ will show the quality and caliber of our political sense. It will go far in foreshadowing the future lines of our social and political growth. It may indicate whether the American democracy, like all the democratic experiments which have preceded it, is to become extinct because the people had not wit enough or virtue enough to make the common good supreme. Continue reading...

Major shifts in the economy should be foreseeable, but no one forecast such massive risesShould we have known in March 2009 that the US S&P 500 stock index would quadruple in value in the next 10 years, or that Japan’s Nikkei 225 would triple, followed closely by Hong Kong’s Hang Seng index? The conventional wisdom is that it is never possible to “time the market”. But moves as big as these, it might seem, must have been at least partly foreseeable.The problem is that no one can prove why a boom happened, even after the fact, let alone show how it could have been predicted. The US boom since 2009 is a case in point. Continue reading...

If forecasts are wrong, developed countries will need to rethink immigration, healthcare and pensionsIt was Europe’s deadliest ever import. A particularly virulent form of the bubonic plague travelled westwards from China across the steppes of Asia and ended up at Black Sea ports. As far as can be established, rats carrying diseased fleas were on ships that set sail from the Crimea to Mediterranean ports. Between 1348 and 1350, the Black Death killed at least a third of Europe’s population, with mortality rates as high as 60% in some parts of the continent.Europe has not since witnessed anything remotely like the depopulation of the mid-14th century. It took hundreds of years in some regions for the population to regain its pre-Black Death level and the economic effects were profound. A shortage of labour meant wages went up. Land was left untilled and fell in price. The gap between landowners and workers narrowed. Incentives to develop labour-saving devices meant productivity rose. Continue reading...

The prospect of trade war with China has receded, but so have hopes of the US economy continuing its 2018 growth ratesThere was a sense of relief across global financial markets this weekend after the hardliners among Donald Trump’s trade negotiators appeared to soften their line on import tariffs against Chinese goods.Treasury secretary Steve Mnuchin and trade representative Robert Lighthizer let it be known that talks last week had been “constructive”, which was taken as code for Beijing virtually capitulating to Trump’s demands. Continue reading...

Now that the whole world feels poor and debt relief is out of fashion, some countries are left with big debts at high ratesAusterity is more than just a European response to the 2008 financial crash. It is the common response of indebted countries wherever they may be. And no more so than in Africa.Trapped in binding agreements for loans they can ill afford with international investors, most African countries have kept their heads down and trimmed their spending.Namibia pays 10% on its debt: the UK pays 1.8%. The multiplier effect pushes the former into dangerous territory. Continue reading...

Records obtained by Guardian show Stephen Moore reprimanded by judge for not paying alimony, child support and other debts

Lyft, which went public on Friday, will soon be joined by Uber, Airbnb and other companies valued over $1bn – and they may be just the animal to burst a bubbleFive years ago Aileen Lee, founder of Silicon Valley investor Cowboy Ventures, coined the term “unicorn” for a private company valued at more than $1bn. Back then unicorns were almost as rare as their mythical namesakes – just 39 existed, according to Lee. Now there are 334 around the world, worth more than $1tn. And this week some of the very biggest beasts started stampeding towards the public markets.Related: Lyft share price soars 20% in minutes on taxi app's stock market debutRelated: IPO mania: San Francisco braces for 'earthquake' of new tech millionairesRelated: ‘I made $3.75 an hour’: Lyft and Uber drivers push to unionize for better payI think there is a lot of worry that this is the top of the market. If a bear market happens, these companies are not going to be very popular Continue reading...

New GDP report shows that British bosses have cut back on buying new machinery and computers, as Brexit crisis hits confidence

Mervyn King says Britain could ease ‘dislocation costs’ with six months of planningThe former governor of the Bank of England, Mervyn King, has attacked MPs over their handling of Brexit and called for Britain to leave the EU without a deal after six months of preparation.In an extraordinary intervention, Lord King said it appeared Britain’s political class had “suffered a collective nervous breakdown” and accused MPs of exaggerating the economic risks of no-deal Brexit. Continue reading...

Average families have been net borrowers since just after Brexit referendum, says ONSBritish households have spent more than they received for an unprecedented nine consecutive quarters amid a longer squeeze on real incomes, according to official figures.Households across the country have been net borrowers in every quarter between October 2016 – when living costs started to rise after the Brexit vote – and December 2018. The Office for National Statistics said the run of nine quarters was unprecedented on comparable records dating back to 1987.Related: UK business investment suffers longest decline since financial crisis - business live Continue reading...

Istanbul stock market plunges as President Erdoğan tries to stop lira being lent abroadFinancial markets in Turkey have experienced a fresh period of turmoil, putting the country’s recovery from recession at risk and raising questions over the health of emerging markets as the world economy slows.President Recep Tayyip Erdoğan’s government heaped pressure on Turkey’s banks on Wednesday to stop them lending the lira to overseas financial institutions, in a move that triggered the cost of offshore borrowing in the Turkish currency to surge by more than 1,000% overnight.Related: Turkey may be the spark that lights a fire in the world economy | Larry Elliott Continue reading...

Industry warns of ‘fever pitch’ of anxiety over fears of damage caused by BrexitCar manufacturers have said their anxiety over Brexit is now “at fever pitch” after latest monthly production figures showed another major decline, with a 15% year-on-year drop in output in February.The double-digit drop was the ninth consecutive month in which British car manufacturing output has fallen. Continue reading...

Cost of borrowing lira overnight surges to 1,000% as Ankara tries to shore up the currency

Erdoğan’s costly move against currency speculators could prove to have major ripple effectsThe battle waged by Turkey’s Recep Tayyip Erdoğan against currency speculators is a classic pyrrhic victory. The show of resolve by the self-styled strongman on Wednesday stopped investors from dumping the lira but at enormous cost in both the short and long term. That Turkey will be damaged is beyond question. All that’s in doubt is how severe that damage will be and whether the fallout will be felt elsewhere. Looking at the fragile state of the global economy, there’s every chance it will be.The backdrop to the latest instalment of a long-running crisis is that Erdoğan is this week facing important local elections at a time when the Turkish economy is in recession. In an attempt to drum up support, Turkey’s president last week condemned Donald Trump’s decision to recognise Israeli control over the Golan heights, but this proved a spectacular own goal by convincing foreign investors that Ankara was on a collision course with Washington. The lira plunged. Continue reading...

Stephen Moore disputes the IRS claim and says he is ‘eager to reach an agreement’ but has been frustrated by bureaucracy

Latest CBI figures show sales slid in March by the most since October 2017UK retail sales fell in March at the fastest rate for more than a year, as Britain’s mounting political crisis over Brexit weighed on consumers’ willingness to spend, according to a survey of major retailers.The latest figures from the Confederation of British Industry, covering high street firms responsible for a third of employment in retailing, showed that retail sales slid in March by the most since October 2017.Related: UK manufacturers in despair at Brexit impasse, says CBI Continue reading...

Business as usual is causing environmental destruction and spiralling inequality. Our bill is a radical plan to address bothFaced with unprecedented challenges, politicians appear more divided than ever – that’s why Labour’s Clive Lewis and I are doing something bold. We are jointly tabling a bill in parliament designed to address two of the greatest threats we face – climate breakdown and spiralling inequality. Our bill would introduce a “green new deal” – an unprecedented mobilisation of resources invested to prevent climate breakdown, reverse inequality, and heal our communities. It demands major structural changes in our approach to the ecosystem, coupled with a radical transformation of the finance sector and the economy, to deliver both social justice and a livable planet.It’s an idea congresswoman Alexandria Ocasio-Cortez has recently reinvigorated in the US. And it could scarcely be more urgent. The UN’s top scientists have warned we have just 11 years to halve global emissions and avoid climate catastrophe. Global wildlife populations have collapsed by nearly 60% in our lifetimes. This has led 1.4 million young people to join the inspiring global school strikes movement to demand change. The response from ministers? To continue to force fracking on local communities, and to hand millions in tax breaks to the fossil fuel industry. Last week, unbelievably, a new coal mine was given a green-light on their watch.Related: The Earth is in a death spiral. It will take radical action to save us | George Monbiot Continue reading...

Rolling coverage of the latest economic and financial news, including weaker-than-expected housing data from Britain and America

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

Two former members of Bank of England’s rate-setting committee on the economic outlook

Latest Guardian analysis finds economic indicators positive but weaker growth is forecast

European leaders and China’s Xi Jinping put on a show of unity in the face of US tariffsDonald Trump was not on the guest list for Emmanuel Macron’s mini-summit in Paris, but the presence of the US president was still very much felt as Europe’s leaders sat down to talk trade, business deals and geopolitics with China’s Xi Jinping.At one level, the message from the meeting of China’s leader with Macron, the German chancellor Angela Merkel and the European commission president Jean-Claude Juncker was obvious: this was a show of unity in the face of Trump’s tariffs aimed across both the Atlantic and the Pacific.Related: Emmanuel Macron hosts Xi Jinping in attempt to strengthen EU-China relationship Continue reading...

Rolling coverage of the latest economic and financial news, as markets are hit by anxiety over the global economy

Christine Lagarde says governments must address corporation taxation concernsThe managing director of the International Monetary Fund has joined the growing clamour to further tax tech firms Google, Facebook and Amazon as part of a wider review of “outdated” global corporation tax rules.In a speech in Washington, Christine Lagarde said governments must react to growing concerns that digital companies pay little tax in most countries where they operate, which denyies exchequers vital funds for public services and welfare. Continue reading...

Australian treasury yields hit a record low in a grim portent for the economy, while the Nikkei falls 3% in wider share selloffShares in Asia Pacific have slumped after a key market indicator flashed an “amber warning” that the United States could be heading for a recession.Bond yields also continued to fall across the world with Australian 10-year treasury yields falling to a record low on Monday of 1.756% in what analysts see as a strong indicator of a downturn hitting the resource-rich country.Related: The European Union has bigger problems to deal with than BrexitJapan 10Y yields collapse further into negative territory pic.twitter.com/UViHgcb3dSRelated: Donald Trump and Xi Jinping miss a trick over trade | Jeffrey FrankelBond futures: A closely watched measure of the yield curve briefly inverted Friday — with the yield on the 10-year Treasury note falling below... https://t.co/uJKcXpyxN0Aussie yields collapsing - 10 year bond opened below 1.8% for the first time on record, hit record low 1.762%

The next recession will expose the eurozone as a half-baked project in need of leadershipAs the clock has ticked down towards Brexit, the state of the UK has attracted even more attention than normal. Every scrap of official data and every survey of business opinion has been pored over by leavers and remainers alike.Much less attention, understandably enough, has been paid to what is happening in the rest of the European Union, where the recent news has been poor. The frustration of the leaders of the other 27 EU countries towards Theresa May is that Europe has plenty of issues that need addressing, with Brexit not even the most serious of them.Related: As recession looms, could MMT be the unorthodox solution? | Larry ElliottA real solution to Europe’s growth problems means fixing the design flaws in monetary union Continue reading...

Headteachers tell of the damage caused by years of cuts to their capital and maintenance budgetsIn one of the classrooms of Gillotts secondary school in Henley-on-Thames, there is a mysterious, acrid smell. It is a school day but the room is empty because this “awful” scent, a mix of damp and chemicals, clogs children’s throats and clings to the teachers’ hair and clothes long after they go home.“That classroom is shut and unusable because of the smell – and I could really do with that classroom,” said headteacher Catharine Darnton. Her state school has 900 pupils and, like many other heads across the country, she has struggled to maintain her dilapidated building in the face of the government’s austerity cuts. As well as the stink, heating failures and electricity blow-outs have led to partial temporary closures of the school and blocked drains have threatened to leak raw sewage onto the playground. Darnton has been forced to take money intended for the education of students and allocate it to repairs and even capital expenditure. The low point came when, in winter, the building was so cold and dark she had to consider closing the school. “It was insane,” she said.By not maintaining our schools, we are storing up problems and the cost is higher when we have to do it in an emergency. Continue reading...

Avoiding the B word, (no, not Barcelona) will be tricky at the British Chambers of Commerce conference this weekAs aficionados of 1970s situation comedy know well, Basil Fawlty did not support the UK’s entering the “continent”, but graciously pledged to make as good a stab at it as he could.“I didn’t vote for it myself, quite honestly, but now that we’re in I’m determined to make it work,” he told a family of unfortunate German visitors staying at his terrible Torquay hotel. That was just after a bump on the head was to have disastrous consequences, causing Fawlty to ignore his own advice and repeatedly mention the war to his guests. Continue reading...

Her attempt to frighten everyone by talking up no-deal amounts to almost criminal negligence with the economy‘People,” a civil servant friend of mine once observed, “are divided into two distinct groups: those who blame others, and those who blame themselves.”After her preposterous address to the nation last Wednesday evening, it is abundantly clear to which group Theresa May belongs. She blames others, not least those of her fellow elected representatives who are trying to prevent her sacrificing the interests of this country to what the good Lord Adonis calls Jacob Rees-Mogg’s “Economic Ruin Group”. (For readers who may have missed this, Rees-Mogg runs an outfit that purports to be the “European Research Group”, but it does not seem to do much research, or even notice the economic and social damage in front of its very eyes associated with the mere prospect of Brexit.)She has been playing havoc trying to keep the party together while they have been plotting to tear her apart Continue reading...

Economists say a low joblessness rate is not necessarily a sign of a healthy economyBritain’s unemployment rate fell to 3.9% in January, the lowest level in more than 44 years. Is the return to levels of employment last seen in the 1970s a sign that the economy is more robust as Brexit approaches than many feared? We asked three eminent labour market economists. Continue reading...

Xi Jinping visits Rome as Italy becomes first G7 country to back Belt and Road initiativeItaly has become the first G7 country to endorse a contentious plan by China to build a Silk Road-style global trade network, irking its EU and US allies.The prime minister, Giuseppe Conte, and the Chinese president, Xi Jinping, have signed a non-binding memorandum of understanding (MoU) that could lead to Italy’s participation in China’s Belt and Road initiative (BRI), an ambitious project that envisages Chinese investment in a network of infrastructure projects connecting Asia, the Middle East, Africa and Europe.Related: Italy pulls out red carpet for Xi Jinping in trade charm offensive Continue reading...

US-Japan agreement on structural reforms in 1990 could be model for current China talksPresident Donald Trump has postponed until at least April the supposed deadline for concluding the United States’ trade negotiations with China. A good outcome for both sides would be reached if China agreed to protect property rights better and reduce the state’s role in its economy; the US agreed to strengthen national saving and public investment; and both sides agreed to reverse their recent tariff increases. Unfortunately, this is not the deal that is likely to materialise.For starters, Trump fixates on the bilateral US merchandise trade deficit. The Chinese could probably deliver on the verifiable – but worthless – step of committing to buy more US soybeans, natural gas and other commodities. But this would have little or no effect on the overall US trade balance because the US would export less soybeans and natural gas to other countries. Congressional Democrats would rightly point out that the gain was illusory, again highlighting the irrelevance of bilateral trade balances. The more meaningful measure – the overall US trade deficit – widened last year, the predictable result of Trump’s budget-busting fiscal policy.Related: Economists must think broader – or risk becoming irrelevant | Mohamed El-Erian Continue reading...

Dow Jones and FTSE 100 slump as eurozone output falls at fastest rate in almost six yearsFinancial markets around the world have dropped sharply amid mounting fears of a slowdown in the global economy, after eurozone factory output fell at the fastest rate in almost six years.Friday’s losses on stock exchanges across Europe and on Wall Street came after figures suggested economic growth across the European single currency bloc remained weak in the first quarter of 2019, dashing hopes of a rebound from a weak end to last year.Related: The global economy is slowing down. What can governments do about it? Continue reading...

The pound rises against the euro and the dollar after EU leaders give Theresa May a Brexit deadline extension

A series of freedom of information requests shows the UK capital has lost 104 youth centres as austerity continues to grip councilsLondon has lost at least 100 youth centres since the 2011 riots, according to new figures.The research, compiled from freedom of information (FOI) requests and shared exclusively with Guardian Cities ahead of publication later on Friday, shows the continued decline in youth service provision across the UK capital as austerity continues to grip local councils.Related: Do youth clubs really deter violence? I’ve seen for myself that they do | Robert BoothRelated: 'Security has deteriorated': young Londoners pay price as city expands Continue reading...

UK-wide austerity blamed as predictions put figure at 29% – rather than 18% – in 2023The Scottish government is at risk of missing its own child poverty targets by more than 100,000 children, according to projections from the Resolution Foundation.Westminster austerity measures will put child poverty across the country on course to hit a 20-year peak of about 29% of children living in relative poverty by 2023, its report forecasts. The figure is considerably higher than the Scottish government’s target of 18%. Continue reading...

Wall Street economists claim low unemployment rate and rising GDP point to Trump victory, despite his poor personal pollsForget Robert Mueller and Stormy Daniels. Ignore Russia. If the election were held today, Donald Trump would win – and if America’s economy remains robust he may well win again in 2020, according to Wall Street.Related: The race for 2020 is on. The time to prioritize the Hispanic vote is now | Claudia Romo Edelman Continue reading...

Shoppers ‘ignore Brexit’, while record employment levels contribute to £1bn deficit cutPhilip Hammond has received a twin boost after the latest official figures showed consumers ignoring the threat of a no-deal Brexit to carry on spending, and higher tax receipts leading to a fresh fall in the government’s budget deficit.Data from the Office for National Statistics showed retail sales – goods bought in shops or online – were up 0.4% in February, confounding City fears of a similar-sized decline.Related: Shoppers increase spending despite Brexit uncertainty Continue reading...

Bank’s Monetary Policy Committee maintains borrowing costs, and warns that further cliff-edge Brexit deadlines could hurt economy