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Updated 2025-01-11 01:30
Bank of England holds interest rates at 0.75% amid Brexit chaos
Bank warns of increasing risks for economy because of impasse over UK’s exit from EUThe Bank of England has warned that continuing Brexit uncertainty and the prospect of further delay until the summer is serving as a brake on the economy, as it left interest rates on hold.Amid signs that the political turmoil is increasingly taking its toll on business investment decisions, paving the way for weaker economic growth in future, the Bank’s nine-member monetary policy committee (MPC) voted unanimously to leave interest rates at 0.75%.Related: Bank of England leaves interest rates on hold as UK braces for no-deal Brexit - business live Continue reading...
Shoppers increase spending despite Brexit uncertainty
UK retail sales rose 0.4% in February, although food stores recorded big drop, says ONS
US-China trade: Trump says tariffs on Beijing may linger
‘We have to make sure that if we do the deal, China lives by it,’ says president ahead of resumption of trade talksDonald Trump has warned that the United States may leave tariffs on Chinese goods for a “substantial period” to ensure that Beijing complies with any trade agreement, while later emphasizing he wanted them to reach a “great” trade deal.Trade talks are set to resume next week and Chinese officials have been pressing for a full lifting of US tariffs as part of any deal.Related: How a US-China trade war would hurt us all | Linda Yueh Continue reading...
Fed "kowtows to Trump"; UK inflation rises; Pound get Brexit jitters - as it happened
US central bank leaves borrowing costs on hold, cuts growth forecasts, and says rates probably won’t rise this year
HS2 gives the game away: the plan for northern towns is managed decline | Lynsey Hanley
The high-speed rail network may never be built any further north than Birmingham. It is utterly nonsensicalYesterday, on the day a report from the New Economics Foundation comprehensively exposed the HS2 project as a London-boosting white elephant, I found myself writing this sitting in a station Wetherspoons because my train from Liverpool to Huddersfield had been cancelled. Last Saturday, I missed a talk for which I had tickets because my train to Manchester, again from Liverpool, was cancelled. On Monday, I was an hour late dropping my daughter at her grandma’s because our train – a Northern Pacer due for the knacker’s yard – broke down at the terminus.NEF’s report, which can be read as much as an utter indictment of a directionless, actively neglectful government as a cool-headed analysis of a single bad idea, exposes the fact that high-speed rail is unnecessary for everyone except London-based frequent travellers who dislike leaving the capital unless they can be there and back in half a day. The report demands a better service for northern commuters, the electrification of rail lines stuck in the mid-20th century, and the reopening of old branch lines to places lost to the car.Related: HS2 would widen UK north-south divide and should be axed, says reportRelated: Economic benefits of local buses eclipse unrealistic HS2 target | Larry Elliott Continue reading...
UK manufacturers in despair at Brexit impasse, says CBI
Total orders fall back in March as firms put off investment and stockpile goodsBritain’s manufacturers are in despair at the failure of politicians to end the Brexit impasse, according to the CBI, which reported a drop in output in March as businesses cut back production.Export order books increased among the 358 manufacturers in the survey, supported by the low level of sterling, but this was cancelled out by a decline in domestic demand to leave the industry in a weakened position ahead of a decision in parliament on Brexit. Continue reading...
House price growth at six-year low and inflation rises to 1.9%
UK is predicted to suffer first fall in prices since 2011 towards the end of this yearHouse prices grew at the slowest rate since 2013 in January, according to official figures that signalled the UK was heading later this year for the first fall in property values since the financial crash.Average house prices in the UK increased by 1.7% in the year to January 2019, down from 2.2% in December 2018 and 5.1% in October 2017, the Office for National Statistics said.Related: Manufacturers 'in despair' over Brexit; UK inflation rises - business live Continue reading...
Most people want higher taxes on rich to support poor – OECD
‘Deeply troubling’ survey of 21 countries finds 60% believe they are not getting ‘fair share’A majority of people living in developed countries want their government to increase taxes on the rich in order to help the poorest in society, according to a major global study.In all 21 countries included in the OECD study, more than half of those polled said they were in favour when asked: “Should the government tax the rich more than they currently do in order to support the poor?”Related: MPs to launch inquiry into ‘survival sex’ by benefit claimants Continue reading...
HS2 would widen UK north-south divide and should be axed, says report
Thinktank says London would benefit most and money should go to less wealthy areas insteadThe government’s planned HS2 high-speed rail project will make the UK even more divided and should be scrapped in favour of boosting services in the less well-off parts of the country, a left-leaning thinktank has said.A report from the New Economics Foundation found that 40% of the benefits of the controversial project would go to London and that the £56bn budget would be better spent on upgrading the existing network and smaller-scale local projects.Full electrification of much of the northern rail network.The reopening of the trans-Pennine Woodhead line between Manchester and Sheffield to provide a fourth east-west link in the north.A Bradford Crossrail to link the two lines that terminate in the city and put it at the centre of northern rail.The full electrification of the Midland and Great Western lines.The creation of more four-track sections on the three core, north-south mainlines and the building of bridges to take slower, regional lines over intercity tracks to speed up long distance journeys. Continue reading...
Heritage blighted by a decade of austerity | Letters
Funding cuts are forcing impossible choices on our local authorities, say Dr Ellen McAdam and Dr Frank ComptonYour coverage of the staff restructuring by Leicester museums in response to funding cuts (‘Engagement team’ replaces curators at Leicester museums, 14 March) is hardly fair. A decade of austerity has forced even local authorities that, like Leicester, value their cultural institutions highly to make impossible choices. Social care or arts? Children’s services or museums?For over 30 years most regional museum funding has targeted audience engagement. This has unfortunately been at the expense of curatorial and other care for the public asset represented by the collection, even in museums with collections designated by government as being of national importance, albeit not so funded. When shops, pubs and restaurants are closing, museums and their collections are among the few attractions left to draw people into our town and city centres. No other country would have allowed its family silver to tarnish so badly.
Sainsbury’s to publish price cut data if Asda merger goes ahead
Supermarkets ‘happy to be held to account’ on reducing prices by £1bnSainsbury’s has promised to publish an annual breakdown of the £1bn-worth of price cuts it has promised shoppers if it merges with Asda, as it scrambles to reverse the competition watchdog’s opposition to the £7bn deal.Many analysts think the tie-up between Sainsbury’s and Asda, the UK’s second and third largest supermarket chains respectively, is doomed after the Competition and Markets Authority (CMA) warned last month that the tie-up threatened to push up prices and reduce the choice and quality of products on sale. Continue reading...
UK jobless rate hits 44-year low; markets keep climbing – as it happened
Rolling coverage of the latest economic and financial news, including the latest UK unemployment report
UK unemployment falls to 44-year low despite Brexit fears
Employers’ hiring reduces jobless rate to 3.9%, the lowest since the start of 1975UK unemployment has dropped to the lowest level in more than 44 years despite mounting fears over Brexit, as employers across the country ramped up hiring at the fastest rate in more than three years.The Office for National Statistics said Britain’s jobless rate fell to a fresh low of 3.9% in the three months to January, down from 4% a month earlier, the lowest point since the start of 1975.Related: UK jobless rate hits 44-year low of 3.9% despite Brexit uncertainty - business live Continue reading...
Office Outlet is latest retailer to go into administration
Former Staples chain with 90 stores hit by falling stationery sales and high street woesThe stationery chain Office Outlet has collapsed into administration, putting 1,200 UK jobs at risk.The struggling retailer, formerly known as Staples, has 90 stores, predominantly in out-of-town retail parks. Its collapse comes less than a year after its management team resorted to a company voluntary arrangement (CVA) to jettison unwanted stores and slash its rent bill.Related: 'It could be terrible for us': how one British high street is preparing for Brexit Continue reading...
The Guardian view on special educational needs: segregation is not the answer | Editorial
As the proportion of SEN children in alternative schools continues to rise, it’s time to stand up for inclusionA showdown between parents of children with special needs and the government is coming. Three families from different parts of England have won the right to a judicial review of the funding allocated to local authorities to fulfil their obligation to educate the 253,680 young people in England with an Education, Health and Care plan (EHC) – or “statement” – and the 1,022,535 other children also entitled to some form of SEN support. Such budgets have been stretched beyond breaking point, while the number of children assessed as having special needs has increased for two years in a row until these groups now form 14.6% of the school population – with autistic spectrum disorders the most common type of need for pupils with a statement.In December the Local Government Association predicted a funding shortfall of £1.6bn by 2020/21. Paul Whiteman of the National Association of Headteachers believes the code governing special needs education has been reduced to an “empty promise”. Yet so far the response from ministers has served to underline the problem rather than solve it. This is because, while additional resources are urgently needed, there is another aspect to the special needs crisis in England. Namely, that decades of progress towards an inclusive model in which, as far as possible, all children are educated together, are being rolled back. Continue reading...
Deutsche's deal with Commerzbank a sign of sector's weakness | Larry Elliott
Merger plan comes amid problems that find many European banks in a zombie-like stateThe proposed merger between Deutsche Bank and Commerzbank is far from a done deal. Politicians in Berlin might be supporting the tie-up, but there are plenty of critics – from unions fearful of tens of thousands of job losses to shareholders worried about the impact on already depressed share prices.Clearly, this is not an ideal moment for Deutsche to be considering swallowing up its smaller rival. It will take up valuable management time and involve booking a hefty loss on the Italian and Spanish bonds sitting on Commerzbank’s books.Related: Deutsche Bank and Commerzbank confirm merger talks Continue reading...
It's the comedy economy, stupid! Elf Lyons on the true cost of standup
After a Franglais Swan Lake, the comic explains economics with sex dolls in ChiffChaff. She talks about loving horror, how guinea pigs helped her through illness and standing up for comediansElf Lyons loves economics. Or rather, as she warbles to The Lion King’s They Live in You, “eco-eco-no-nomics”. In her show ChiffChaff, which is equal parts John Maynard Keynes and Lorelei Lee, Lyons breathily considers fiscal policy by asking the audience to blow up sex dolls, play plinky-plonk instruments and imagine inflation as spinach. “I’m what the Times called ‘an ordeal’,” she informs us during a vigorous bout of hula-hooping. That review was for her 2017 rendition of Swan Lake, delivered in Franglais while dressed as a parrot. It earned her an Edinburgh comedy award nomination but left some looking for le exit.When we meet for coffee in Soho, Lyons says she wants audiences to share her passion and think of finance as fun rather than “George Osborne holding a briefcase”. Unusually, it was the economy – rather than comedy – that really excited her as a child. “I don’t have a good comedy knowledge,” she says. “I’ve never seen Blackadder. Never watched Fawlty Towers or The Young Ones.” Growing up, she travelled a lot with her father, City economist Gerard Lyons. In China, he would explain the financial booms that built the skyscrapers. They watched films like Blade Runner and The Man in the White Suit together then discussed how they depicted expansion and the free market. “It’s about loving something,” she says of the irresistibly silly ChiffChaff. “Economics is beautiful.”I want to play a really nice IagoOn Fridays we’d all go to the bar. Everybody would swap partners and drink bottles of crap wineRelated: A new way to love: in praise of polyamoryElf Lyons: ChiffChaff is at Omnibus theatre, London, 25-30 March. Continue reading...
Why has the US Fed turned away from interest rate rises? | Nouriel Roubini
Stalling inflation and a need to show independence have pushed it to a dovish stanceThe US Federal Reserve surprised markets recently with a large and unexpected policy change. When the Federal Open Market Committee (FOMC) met in December 2018, it increased the Fed’s policy rate to 2.25%-2.5%, and signalled that it would raise the benchmark rate another three times, to 3%%-3.25%, before stopping. It also signalled that it would continue to unwind its balance sheet of Treasury bonds and mortgage-backed securities indefinitely, by up to $50bn (£38bn)per month.But just six weeks later, at the FOMC meeting in late January, the Fed indicated that it would pause its rate rises for the foreseeable future and suspend its balance-sheet unwinding sometime this year.Related: Global stock markets gain as investors predict cautious Federal Reserve – business live Continue reading...
Global stock markets gain as investors predict cautious Federal Reserve – as it happened
Central banks in spotlight amid Brexit uncertainty and growth concerns
Fire sale Britain: Mike Nelson on why he turned the Tate into a big salvage yard
The artist scoured asset-stripping websites for the things British companies toss out as they close. He relives his six-month journey into a country in declineMike Nelson is feeling his age. He’s halfway through installing his new work, in the soaring Duveen galleries of Tate Britain, and as we sit down to chat, I notice the support strapped to his arm. The artist gives me a quick run-through of all the dislocations, injuries and strains that decades of vigorous construction work, all in the name of art, have exacted on his arms and shoulders. “I’m starting to feel long in the tooth,” he mutters apologetically.It all feels apt, given the work he’s installing. Redundancy, decrepitude and physical labour are central themes of The Asset Strippers. In preparation, over the last six months, he has amassed an array of industrial equipment from British manufacturers downsizing, closing or moving out of the country. Shelved, archived, stacked, clustered and sitting on reinforced flooring, this collection of machines large and small recasts the London gallery as a storage facility for the detritus of British industry.Related: A modern masterpiece: Mike Nelson's The Coral Reef | Jonathan JonesIn the 20th century, sculptures started to look like machines – and machines started to look like sculptures Continue reading...
‘It is an end-of-tether moment’ – Estelle Morris on the schools crisis, cuts and child poverty
The former education secretary has watched as class sizes have gone up, schools have fallen into disrepair and teachers have covered for cleaners. What’s next, she asksEstelle Morris is someone who tries to see the positive side. She’s polite about political foes; she hopes that something better will come out of the nightmare that is Brexit. But she is finding it hard to sound upbeat about the financial crisis facing schools.The former teacher and education secretary is plainly worried about mounting evidence of school cuts. A recent Guardian investigation found there’s not enough money for the basics such as textbooks, stationery and science equipment; support staff are being cut; teachers are covering for lunchtime staff and cleaners; buildings are falling into disrepair, and headteachers are relying on parents’ donations to make ends meet. One school is holding extra, non-uniform days to raise funds; another is delaying turning the heating on until November; and a teacher in Rotherham told the Guardian she buys sanitary pads and deodorant for her students as well as pens. Class sizes have gone up, school trips are off, subjects have been scrapped and pastoral care has been axed. The list goes on.Related: Schools have become 'fourth emergency service' for poorest families Continue reading...
As recession looms, could MMT be the unorthodox solution? | Larry Elliott
The modern monetary theory debate is welcome in a world laying bare the constraints of conventional policyThe last few months of 2018 saw a real bout of jitters in the financial markets. Growth was slowing everywhere and share prices were in full retreat. There were fears that this was the start of Global Financial Crisis 2.0.In the end, central banks managed to calm things down. The US Federal Reserve abandoned plans for increases in interest rates, the European Central Bank put back the date at which it expects to start raising the cost of borrowing, the Bank of Japan left rates negative and the People’s Bank of China eased lending constraints on commercial banks. Continue reading...
Hammond could and should have ended his crippling freeze on benefits
Of course Brexit creates uncertainties. But the chancellor has funds available now to fulfil the pledge to end austerityLow-income families will be hit hard in April by government spending cuts and tax rises. Philip Hammond might have considered the double whammy that awaits them when he stood up last week to deliver his spring statement. There was an expectation, especially among some anti-poverty charities, that the chancellor would open his wallet to ease their financial pain following his promise last year to end austerity.Families in the bottom fifth of earners will lose, on average, £400 a year from a freeze on benefits. Universal credit will be cut for all but the lowest-income households, and council tax bills, which affect the poorest much more than those in higher income brackets, are set to rise by an average of 4.5%. Continue reading...
Brexit or no Brexit, our real problem is failure to invest
And even staying in the EU would only lessen the effects of this shortfall, not solve itAs we enter the dog days of article 50 negotiations, with the political heat rising to boiling point, MPs should stop a moment and consider what kind of Brexit catastrophe awaits the country.Brexit supporters argue that MPs’ information could be a little out of date. And it’s not just them. Listen to the governor of the Bank of England, Mark Carney, who says a no-deal Brexit is not the catastrophe many believed it would be when forecasts were made last year. Continue reading...
Biscuit fund: the volunteers patching up Britain's welfare state
The Guardian columnist Frances Ryan explains why she was so determined to cover the volunteer-run Biscuit Fund ‘gifting service’ for people going through hard timesA few weeks ago, I decided to have a clear-out. There were several years’ worth of clutter best assigned to the rubbish, but among the old birthday cards and assorted keyrings, one box stood out: it was full of letters and cards from readers.
Interserve goes into administration after rescue deal rejected
Ownership falls to lenders but company will continue trading and operating public servicesThe government contractor Interserve has gone into administration after its largest shareholder, the US hedge fund Coltrane, led a rebellion against financial rescue plans drawn up by the company’s lenders.About 16,000 small shareholders have lost their investment, with the business sold to hedge funds and banks via a “pre-pack” administration which means Interserve, which employs 45,000 people in the UK, can continue trading.Related: Interserve: a calamity created in the boardroom | Nils PratleyFirst Carillion and now Interserve. The gov't model of outsourcing services to cut costs has failed. It is time to bring these contracts back in-house. https://t.co/yjfvTqBmpo Continue reading...
BoJ slowdown warning and weak US manufacturing add to economic worries - as it happened
Rolling coverage of the latest economic and financial news
Interserve: a calamity created in the boardroom | Nils Pratley
Another outsourcing company that was making huge profits has gone into administration“I voted for Donald Trump,” said the representative for Coltrane, flippantly, when asked after Interserve’s shareholder meeting how he cast the New York hedge fund’s critical 27% stake in the outsourcing firm. Maybe he did, but in this case he voted against a board-backed rescue deal and helped to send into administration a company employing 45,000 people in the UK.Related: Interserve to go into administration after rescue deal rejected Continue reading...
UK signs post-Brexit trade deal with Fiji and Papua New Guinea
Ministers rush to do deals with countries UK trades with under EU free trade arrangementsBritain has signed a post-Brexit trade deal with the Pacific islands of Fiji and Papua New Guinea, as the government rushes to sign as many agreements as possible before 29 March.The Department for International Trade said the agreement would maintain access to goods including sugar and fish imported from the islands 10,000 miles away. Total trade between Britain and the region is worth about £369m a year. Continue reading...
Big pay rises for top earners deepening inequality, says IFS
Wage hikes of nearly 6% could signal return of pre-2008 rewards, thinktank saysBig pay rises for people already earning at least £1m a year could be the result of a return to levels of reward for bankers and top company bosses not seen since before the financial crisis, according to the head the UK’s leading economic thinktank.New data collected by HMRC and released alongside the chancellor’s spring statement showed pay for the highest earners rose nearly 6% between April and September last year, compared with 3.7% for the rest of the workforce. The Institute for Fiscal Studies (IFS) said the pay disparity would exacerbate inequality.Related: Benefits freeze means 'no reprieve' for 10 million poor families – business live Continue reading...
Barter and dollars the new reality as Venezuela battles hyperinflation
As inflation soars, Venezuelans have been forced to find new ways to pay for essentials – when the power supply allows“Barter” reads a simple sign on Angélica Monasterios’s stall in Cupira, a town on the main road east from Caracas. Her niece painted the sign for her in early February, after soaring inflation and vanishing reserves of hard cash made it hard to do business.Related: 'A city of shadows': fear as Venezuela's crippling blackout enters day fourAll this government talk of American imperialism and now we have to use dollarsRelated: Venezuela blackout: what caused it and what happens next? Continue reading...
OBR caps UK growth forecast at 1.2% but says five-year outlook bright
Forecaster’s mid-term outlook buoyed by £50bn in tax increases, despite low growth and falling house prices in 2019Britain’s economy will struggle to grow by more than 1.2% this year as Brexit uncertainty hits business investment and sends house prices into reverse for the first time since the 2008 financial crash, the Office for Budget Responsibility has warned.The Treasury’s independent forecaster has cut its estimate of economic growth for 2019 from 1.6%, made only last October. It is also predicting a slide in house prices later this year, which will cut stamp duty tax receipts by £3bn. Brexit uncertainty and changes to the way corporation tax is paid, it said, will also knock a £2bn hole in tax payments made by companies. Continue reading...
Spring statement: Brexit deal could end austerity, but benefit freeze continues - as it happened
Chancellor reveals growth and borrowing forecasts, plus money for period poverty, knife crime prevention, and affordable housing
The Guardian view on ending austerity: in rhetoric alone | Editorial
If the Tories want to end austerity, they will have to focus on ending the lived experience of it
Hammond sidelined by Brexit as he holds out for 'deal dividend' | Larry Elliott
Sandwiched between Brexit votes, the chancellor’s spring statement was pretty low keyOne of Philip Hammond’s early decisions was to make his spring statement play second fiddle to the Treasury’s main event of the year, the autumn budget.Even the chancellor could not have expected his half-yearly update on the state of the economy to be as low key as it actually turned out to be, though. For the time being, all that really matters in UK politics is Brexit. There has been little or no appetite for the usual speculation about the tax or spending surprises the chancellor might announce. Continue reading...
Did no one tell Philip Hammond that austerity is raging outside? | Aditya Chakrabortty
Public services are in tatters, interest rates are negligible, and yet in his spring statement the chancellor gives us ‘reviews’ instead of policiesListen to Philip Hammond and it’s easy to get lulled into a false sense that he is an adult making sober, cautious decisions. Not blessed with the (ahem) charisma of a Boris Johnson, he is happily less given to spouting headline-grabbing rubbish. While his colleagues have spent the past two and a half years promising voters the moon on a stick, the chancellor has kept his cool. The spring statement was classic Hammond. Sandwiched between Tuesday’s humiliation for Theresa May and the no-deal vote Wednesday night, he was never going to command any front pages. Watching, you could mistake him for the bank manager your branch doesn’t have: sensible, dull, unremarkable.Related: Spring statement: fossil fuel heating ban for new homes, as Brexit warchest swells - liveRelated: Spring statement 2019: the chancellor's key points at a glance Continue reading...
Curator cuts at Leicester museums criticised as 'disastrous'
Heritage groups condemn plan to replace specialists with cheaper ‘engagement team’Museum leaders and heritage organisations have condemned a cost-cutting proposal to scrap all four of the curators at Leicester’s museums as concerns grow about the cultural impact of austerity.Specialist staff at Leicester’s flagship New Walk museum and art gallery have already been handed redundancy notices as part of a review that ends this month.Really shocking news. A great collection in a great city, with a proud history of scholarship, curatorial practice and public access...https://t.co/QJCAZhjphJ Continue reading...
Spring statement 2019: the chancellor's key points at a glance
Philip Hammond has delivered his spring statement – here are the main points, with political analysis• Spring statement 2019 - live blog• Forecast of 1.2% growth for 2019.Peter Walker, political correspondent: Hammond is, politically, having his cake and eating it – talking up what he says are achievements with growth and jobs, while noting what he called the “cloud of uncertainty” after last night’s Brexit vote.Related: Spring statement: Philip Hammond reveals state of UK's economy and finances - livePW: Hammond’s announcement of the three-year spending review – and the condition that this will only happen if there is a Brexit deal – is a reminder to rebellious Tory MPs that there is a world of other political decisions to make, beyond endless arguments about the Northern Ireland backstop. Austerity will end, he says, but not with a no-deal Brexit.PW: This is the chancellor the Tory hard Brexiters detest, in full flow. A no-deal Brexit would make the economy smaller, he says, and there are factors (not least borders) over which the UK would be dependent on others. Hammond has always held this view, but after last night’s vote the warning is all the more urgent.PW: The housing section of the speech has just a brief, passing mention of the help-to-buy scheme – perhaps Hammond is mindful of the recent reports about how one of its major apparent effects has been to boost housebuilders’ dividend payments.PW: Another pointed reminder from the chancellor to his MPs that there are more important policy priorities than Brexit, and that perhaps the government could be allowed to finally get on with thinking about a few of these.PW: This is a hugely politically difficult area for the government, whatever Hammond’s insistence that police funding is rising. This was billed overnight in the newspapers as a victory for Sajid Javid – either way, it will be a popular move.PW: Hammond’s final comments on Brexit are fairly extraordinary by usual political standards. He seems to welcome the likelihood of an extension to article 50 as a chance to start work on a new Brexit deal, one based on cross-party consensus. This is not Theresa May’s plan. But then, these are not normal political times. Continue reading...
Hammond promises Brexit dividend in spring statement
OBR says lower borrowing has swelled chancellor’s five-year war chest to £26.6bnPhilip Hammond has promised a Brexit dividend to boost spending on public infrastructure projects and vital services after forecasts of lower government borrowing over the next five years swelled the chancellor’s war chest to £26.6bn.The chancellor said he remained confident that a Brexit deal would be agreed by parliament in the next few weeks and he could include the extra funds in a three-year Whitehall spending review, which he plans to begin before the summer recess.Related: Spring statement policies look to Brexit and a hi-tech future Continue reading...
Public services desperately need investment. But Brexit is all-consuming | Patrick Butler
Philip Hammond may announce today that austerity will soon be over, but then what? It was the Tories’ one clear strategyThe £20bn public services bung reportedly dangled before MPs by the chancellor Philip Hammond before this week’s spring statement, in an attempt to persuade them to vote for Theresa May’s Brexit deal, will not surprise anyone who believes the main cause of disintegrating public services is lack of ministerial will to invest, rather than lack of money.Like May’s desperate £1.6bn bribe for the leave-voting “left-behind” northern England towns, it tells us not so much that Hammond believes a weary, austerity-battered UK deserves a new era of public services settlement, but that resources can always be found when the future of the Conservative party is at stake.Related: Hammond call for police to prioritise knife crime is insult, say officersRelated: The Guardian view on ending austerity: it needs to happen | Editorial Continue reading...
UK avoids 'Brexit black hole' in January, but economy still sluggish - as it happened
Britain grew faster than expected in January, as consumers shake off Brexit anxiety, but the longer-term picture is less rosy
UK growth may be modest, but that's enough for Hammond
GDP figures defying the gloomy forecasts will bring cheer before the chancellor’s spring statementSurveys of business have been universally bleak. The Bank of England and the Organisation for Economic Cooperation and Development have cut their growth forecasts. Warnings from multinational companies about the consequences of a no-deal Brexit have been coming thick and fast.Little wonder, then, that the financial markets feared the worst from the last heap of official data before Wednesday’s spring statement from Philip Hammond. The feeling was that the chancellor would give his latest update against the backdrop of an economy losing further momentum after a sluggish end to 2018.Related: UK economy rebounds in January despite Brexit uncertainty Continue reading...
UK economy rebounds in January despite Brexit uncertainty
Monthly GDP growth posts biggest rise since December 2016 after weak end to yearThe British economy staged an unexpected fightback in January as manufacturing and retail sales growth recovered from a weaker end to last year, despite mounting uncertainty over Brexit.The Office for National Statistics said monthly GDP growth jumped to 0.5% in January, the biggest rise since December 2016, reversing a drop of 0.4% in the final month of last year.Related: Brexit: Cox says risk of UK being stuck in backstop remains – Politics live Continue reading...
Brexit uncertainty prompts more UK firms to prepare for job cuts
Two surveys also suggest increasing numbers are putting hiring plans on holdGrowing numbers of British companies are preparing to cut jobs or put hiring plans on hold as Brexit uncertainty intensifies, in the latest sign of stress on the economy.In an indication that Britain’s long jobs recovery since the financial crisis is gradually running out of steam as Brexit nears, IHS Markit said UK employers’ staff-hiring intentions had reached a six-year low in February.Related: No-deal Brexit could cost Japanese carmakers in UK $1bn a year Continue reading...
Brexit hopes boost sterling; BoE's productivity fears; Turkey in recession - as it happened
Bank of England policymaker Jonathan Haskel says businesses need clarity on Britain’s trade relationship with the EU
Smart speakers and bakeware added to UK inflation basket
Envelopes and three-piece suites axed in move that shows shifting consumer habitsAlexa, what is the rate of UK inflation? Smart speakers such as the Amazon Echo and Google Home have been added to the list of items monitored by the government to ensure the UK’s measure of the cost of living reflects the spending habits of modern Britain.The home technology devices will now have their prices checked once a month by the Office for National Statistics in order to calculate the annual inflation rate.Some of the items added to the list Continue reading...
Economists must think broader – or risk becoming irrelevant | Mohamed El-Erian
The profession must adopt a more open mindset and embrace diversity if it is to regain trustThe economics profession took a beating after most of its leading practitioners failed to predict the 2008 global financial crisis and it has been struggling to recover ever since. Not only were the years after the crash marked by unusually low, unequal growth; now we are witnessing a growing list of economic and financial phenomena that economists cannot readily explain.Like the Queen, who famously asked in November 2008 why nobody had seen the crisis coming, many citizens have grown increasingly sceptical of economists’ ability to explain and predict economic developments, let alone offer sound guidance to policymakers. Some surveys rank economists among the least-trusted professionals (after politicians, of course, whose trust economists have also lost). A solid economic training is no longer regarded as a must-have for candidates for top positions in finance ministries and central banks. This marginalisation has further weakened economists’ ability to inform and influence decision-making on issues that relate directly to their expertise (or what they would call their comparative and absolute advantage).Related: Anxiety running high about London's future as a financial centre | Barry EichengreenA discipline long dominated by 'high priests' must now adopt a more open mindset Continue reading...
Despite Hammond's threat, the Tories cannot be trusted to end austerity | Richard Partington
Chancellor hints that a no-deal Brexit will mean an unwanted extension to austerityDo you remember the days when the big debate in British politics was not interminable talk of backstops, parliamentary process and obscure trade deals? The days when it was about something far more simple: tax and spending.When Philip Hammond stands up at the dispatch box on Wednesday to deliver the spring statement, the agenda will remain all about Brexit. The traditional levers of government policy used to influence our everyday lives – income tax, NHS spending, school budgets and so on – will take a backseat. Continue reading...
The Tories hold the key to reversing Brexit’s decline and fall
Cameron never wanted a vote. Johnson wavered between Leave and Remain. Is there hope of a collective change of heart?In order to switch off from Brexit in the evenings, your correspondent has taken to re-reading his favourite novels. Yet there is no escape! At the start of Evelyn Waugh’s Decline and Fall, we find the Oxford University Bollinger Club running riot and disrobing a fellow undergraduate, Paul Pennyfeather, who dashes across the quad stripped naked for the safety of his rooms. His fate is to fall into the hands of the college authorities and be “sent down” for indecent behaviour. Meanwhile, the perpetrators escape unscathed.Now the Bollinger Club is obviously modelled on the notorious Bullingdon Club, to which David Cameron, Boris Johnson and George Osborne once belonged. And I cannot resist drawing the parallel between what the Bollinger Club do to Pennyfeather and what the Bullingdon trio have done to the country.As the OECD pointed out last week (in more polite language), the British economy is now a disaster zone Continue reading...
Philip Hammond weighs options for spring statement spending
Can the chancellor deliver the ‘end to austerity’?On Wednesday, MPs expect to hear the chancellor tell them that austerity will soon be consigned to history. Philip Hammond said in last year’s budget that “austerity is coming to an end” and teased ministers with the promise of the cash that he and his predecessor George Osborne denied them in the previous eight years.There is a huge gap to fill just to prevent further austerity taking effect. According to the Institute for Fiscal Studies, the chancellor’s pledge in October to boost NHS spending, defence and international aid failed to safeguard councils and some of the worst-hit government departments from further shortfalls. Continue reading...
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