Economics | The Guardian

Whatever the form Brexit eventually takes, there will need to be more public spending to repair the fraying fabric of the British stateWhen a headteacher pops up on the nation’s flagship radio news programme to say that cuts have left her scrubbing school toilets and serving lunch to pupils, ministers ought to be in listening mode. That is especially the case since the complaint is echoed by 7,000 headteachers in England who say they are facing a funding crisis. One would imagine a forum being convened in Whitehall to address such a serious charge. Not at all. Instead the education secretary has his fingers in his ears and his diary full. There is a depressingly familiar ring to this ministerial response. This week the prime minister denied the possibility that cuts to the police contributed to a rise in crime, despite Home Office research to the contrary. Similarly, ministers decry any suggestion that austerity played a part in the biggest fall in British adults’ life expectancy, when it seems obvious to many experts that it does.There is a reasonable argument to be had about the size of the state, the level of taxation that a society thinks is fair, and how large a deficit the Treasury ought to run. It’s just that the United Kingdom is not having such a conversation. Instead this nation’s politics is dominated by factional fights in Westminster about this country’s departure from the European Union, an issue that seems far removed from people’s lives, however essential it is. As Britain’s former chief negotiator on Europe, Ivan Rogers, pointed out, this is just the beginning. The next phase of the process will be about defining a new relationship with the EU, and promises to be much more difficult and wide-ranging than our attempts to leave the European bloc. Continue reading...

America’s non-farm payroll only rose by 20,000 in February, much weaker than expected, and the lowest monthly growth in almost 18 months

In March 2009 the Bank of England began to slash interest and buy bonds – has it worked?Over the past decade an experiment has been underway in Britain since the Bank of England reduced interest rates to almost zero and cranked up the money printing presses of quantitative easing (QE).Ten years ago this week, Threadneedle Street dropped borrowing costs to the lowest level in the Bank’s 324 years of existence and embarked on the bond-buying programme of QE, never before tested in Britain. Continue reading...

Austerity | International Women’s Day | Generic forms of address | Alternative names for the looThank you, Aditya Chakrabortty, for giving us hope (In an era of cuts, one city has the imagination to fight back, 6 March). You show that there are alternative ways to live other than the ruthless, cut-throat world which is all we have had for so long. What we need now is someone to turn these ideas into a new political position that we can all vote for.

Eurozone banks also promised extra liquidity as ECB follows in US Fed’s dovish footstepsThe European Central Bank has reacted to the threat of recession across the eurozone with a promise to keep interest rates at historically low levels for at least the rest of the year.Highlighting the dramatic effect of Donald Trump’s trade war with China on Europe’s manufacturing industry, the ECB president, Mario Draghi, said he would also offer cheap loans to the eurozone’s troubled banks, which need to roll over billions of euros of funding over the next two years.Related: ECB unveils measures to revive eurozone as it cuts growth forecasts – as it happened Continue reading...

The US trade gap with China has hit a record level, in a blow to president Trump’s America First policies

Annual growth will fall below 1% for first time in decade even with a deal, says thinktankA no-deal Brexit would plunge the UK economy into recession and annual growth will slip below 1% this year for this first time since the financial crisis even if a deal is secured, the Organisation for Economic Cooperation and Development (OECD) has warned.The thinktank, which advises 34 of the world’s richest countries, said that even with a smooth Brexit, the UK economy would slump to 0.8% growth in 2019 from 1.4% in 2018 as Brexit uncertainty and Donald Trump’s trade war with China harmed the UK’s economic prospects. In November it was forecasting 1.4% growth for the UK this year.Related: UK economy close to stalling amid Brexit uncertaintyRelated: It's not Brexit Britain most likely to have a recession. It's Germany Continue reading...

These are bleak times for progressives, but in Preston a socialist Dragons’ Den is proving to be inspirationalThe story of local government today can be summed up in one word: cuts. Brutal, life-changing, future-cancelling cuts. As many as 1,000 children’s centres have been closed by English councils since David Cameron took office in 2010. Almost 130 libraries closed across Britain last year alone. That’s people with disabilities trapped in their homes, grandparents denied adequate care and lifeline bus services scrapped.This is news that rarely makes the news. It is announced through notices tied around lamp-posts, rather than in the national newspapers. When Cameron and George Osborne designed their historic spending cuts to fall most heavily on local government, this was the outcome they wanted: private tragedies delivered through tens of thousands of brown envelopes plopping on to doormats across the land, rather than one glaring public outrage. Yet stack them all together and you can make two big bets about this country’s future.Related: In 2011 Preston hit rock bottom. Then it took back control | Aditya Chakrabortty Continue reading...

Emma Burgisser is sceptical of Christine Lagarde’s claims to have embraced women’s empowerment

Rolling coverage of the latest economic and financial news, as China sets its lowest growth target in almost three decades

Employment levels falling at fastest pace in almost nine years, survey findsThe UK economy came close to flatlining last month as Brexit uncertainty intensified and the global economy weakened, with employment levels falling at the fastest pace in almost nine years.According to the latest snapshot of Britain’s services sector – which accounts for 80% of economic growth – businesses have begun to delay hiring staff against a backdrop of subdued demand and concerns about the economic outlook as the scheduled date of the UK’s departure from the EU draws nearer.Related: UK retailers suffer weaker sales due to Brexit uncertainty Continue reading...

Li Keqiang tells annual political gathering the nation will face ‘a graver and more complicated environment’China has set its lowest growth target in nearly three decades as premier Li Keqiang warned of “tough” challenges facing the world’s second-largest economy.He set the country’s growth at 6.0 to 6.5%, down from a target of 6.5% last year. In 1990, growth sank to 3.9% because of international sanctions sparked by the Tiananmen square protests. Growth in 2018 was 6.6%, the slowest rate since 1990.Related: IMF reminds US that a China slowdown is a drag for everyoneRelated: 'Two sessions': Beijing locked down for China's greatest political spectacle Continue reading...

Total growth drops to 0.5% in the year to February, down from 1.6% a year earlierBritain’s retailers suffered from weaker sales last month as mounting uncertainty over the UK’s departure from the EU led to consumers becoming more wary of making bigger purchases before Brexit.In the latest evidence that momentum in the economy is fading during the weeks before Britain is scheduled to formally leave the EU, the British Retail Consortium (BRC) and accountancy firm KPMG said that total sales growth dropped to 0.5% in the year to February, down from 1.6% a year earlier. Continue reading...

British builders report that Brexit anxiety is creating delays in new projects, and making it harder to get materials

The government’s actions reveal a weakened Tory party more than ever in hock to a powerful City disconnected from the people it ought to serveThe government’s decision to pull its financial services bill is revealing about who calls the shots in parliament. In a word: the City. Rather than accept a small step forward for tax fairness, a move backed by a cross-party coalition, ministers dropped one of six key pieces of legislation required to pass by the end of March as part of a no-deal Brexit safety net. It is a sign of Theresa May’s weakness in office that the bill could not pass in the form the government wanted and a clear demonstration that big finance continues to call the tune in the upper reaches of the Conservative party.Over the last few decades the British tax system and broader economy have been steadily reconfigured to serve the interests of a class of offshore super-rich. The Square Mile sits at the centre of a spider’s web that allows London bankers, accountants and lawyers to create a tax-free way for the richest people on the planet to place their assets under UK management but without UK regulatory oversight. Britain’s archipelago of territories and dependencies account for about a quarter of all global offshore financial services provided to non-residents. Brexit was supposed to be a clarion call to end the political class’s subservience to such interests. Tragically this nation’s departure from the European Union appears to be boosting it. Continue reading...

Conservatives may crow about employment but beneath the headlines it is a false readHere are two things you might already know. As Britain prepares for life outside the EU, there have been repeated warnings of economic oblivion. Despite this, things have been good enough for the economy to create half a million more jobs over the past year, sending employment to a record high.The dole queue has not been this short since Steve Harley & Cockney Rebel held the No 1 spot with Make Me Smile (Come Up and See Me) in March 1975, not long after the UK first joined what is now the EU.Related: UK firms' growth at six-year-low amid Brexit and global trade fears Continue reading...

Labour MPs who vote for May’s deal in fear of supposed European neoliberalism could see it backfire on themThere is a widespread view in far-left circles that the European Union ranks among the world’s foremost neoliberal institutions, along with the US Congress and the White House under Donald Trump.Even Remain supporters can be heard at Labour party meetings saying things such as: “The EU is a neoliberal construct, but we should be changing it from the inside, not walking away.”Related: If Labour aids a Tory Brexit it will be destroyed by what follows | Aditya Chakrabortty Continue reading...

The US president says it is ‘very important for our farmers’ while adding that trade talks are ‘moving along nicely’Donald Trump has urged China to abolish tariffs on agricultural products imported from the United States – adding that trade talks between the rival powers were going well.“I have asked China to immediately remove all Tariffs on our agricultural products (including beef, pork, etc.),” the US president wrote on Twitter.....and I did not increase their second traunch of Tariffs to 25% on March 1st. This is very important for our great farmers - and me!Related: Trump’s trade war: what is it and which products are affected?Related: The trade war with China is top strand in the White House soap | Larry Elliott Continue reading...

Exclusive: IMF managing director presses for female empowerment in interview to mark International Women’s DayEmploying more women and tackling sexism in the workplace is the key to making the world economy richer, more equal and less prone to devastating financial collapses, according to the head of the International Monetary Fund.In an interview to mark International Women’s Day next week, Christine Lagarde said some countries could boost the size of their economies by 35% if they abandoned discriminatory laws and took advantage of the skills women had to offer.Related: Davos: head of IMF warns against rising fat-cat payI don’t encounter sexism because I am too old and too tall. It is hard to be sexist towards someone who is older and taller than you Continue reading...

Decline in sector mirrors falls across eurozone, Japan and China, say analystsManufacturers’ optimism about their prospects for the rest of the year fell to a 27-year low last month amid record stockpiling to cope with the potential fallout of a no-deal Brexit, according to a survey of the industry.Worries about the UK leaving the European Union without an agreement also prompted manufacturing firms to cut jobs at the fastest rate since February 2013, the IHS Markit/Cips study found.Related: UK factories slash jobs and stockpile at record rate ahead of Brexit - business live Continue reading...

British manufacturing confidence has dropped, while over the channel the eurozone factory sector is shrinking

Sweden and France among states found by the World Bank to enshrine gender equality in laws, but implementation haphazardIf you’re a woman and want to be on an equal footing with men, it’s best to live and work in Belgium, Denmark, France, Latvia, Luxembourg or Sweden. The World Bank, which has tracked legal changes for the past decade, found these were the only countries in the world to enshrine gender equality in laws affecting work.The bank’s women, business and the law 2019 report, published this week, measured gender discrimination in 187 countries. It found that, a decade ago, no country gave women and men equal legal rights. Continue reading...

America’s economy cooled last quarter, but not as much as feared, as consumer spending slowed

These painkillers don’t work against chronic pain. The UK must find alternatives to help sufferers in deprived areasPeople in Blackpool are twice as likely as the inhabitants of Wokingham to die before they are 70. A recent paper which measured the distribution of opioids not by the number of prescriptions, but in equivalent units of morphine, found that NHS prescriptions of opioid painkillers have been generally rising in England and Wales, but have risen most in the north of England and more in poorer areas. Blackpool, again, tops the list. In part this is because poverty is correlated with chronic physical pain: both men and women in the lowest income quartile report suffering chronic pain at rates much higher than those in the top quartile. That, in turn, reflects that fact that hard physical labour and unemployment are both bad for health in the long term.But the prevalence of pain can’t entirely account for the pattern of prescription. Many forms of chronic pain do not respond well to opioids. For lower back pain the Nice recommendation is not to treat it at all, except perhaps with ibuprofen, exercise and massage. It will go away on its own, or it will not. Figures suggest that only one opioid prescription in eight was written out for cancer pain in 2014. The others were written for conditions where is it much less obvious that they are the best possible treatment. Continue reading...

Readers condemn the massive budget surplus which has been achieved through stringent cuts to public servicesThe severe cuts to children’s services since 2010 reported by the five major children’s charities (Cuts plunge children’s services in England into crisis, charities warn, 26 February) are an indictment of this government and its predecessor’s austerity which no amount of evasive waffle by the minister for children and families can justify. Poverty and material deprivation are known to be detrimental to brain and physical development in early childhood, and the negative effects track into adulthood. Austerity is responsible for both an increase in child poverty and material disadvantage, and a reduction in services which help to mitigate the worst effects. Government policy is blighting the lives of a whole generation of children and setting them up for mental and physical health problems as adults.

Traders still have doubts about the PM getting her deal away despite chance of extra timeThe pound jumped to a fresh 10-month high on Wednesday after it became obvious that Britain will avoid crashing out of the EU without a deal. Obvious, that is, to City traders, who have always bet that a deal is the most likely outcome of the Brexit talks and now believe it to be a racing certainty.Theresa May’s concession of a vote in a fortnight to delay Brexit, which she agreed as a way to keep her own deal in play, was the trigger for a Mexican wave across the City. Continue reading...

Rolling coverage of the latest economic and financial news

Government officials hold talks after they realise UK has shortage of the right palletsThe government is holding talks with distributors after realising that the UK has a dire shortage of the “right sort” of pallets to import and export goods in the event of a no-deal Brexit.The Department for Environment, Food and Rural Affairs (Defra) will on Tuesday hold meetings with distribution industry representatives about how to keep household goods moving to and from supermarkets if the UK crashes out of the EU next month.Related: Brexit uncertainty slows economy and raises risk of job losses Continue reading...

Average income of the poorest fifth of the population shrunk by 1.6% last year, says ONSIncome inequality across Britain increased over the course of 2018 as cuts to benefits damaged the finances of poorer households while the wealthiest in society got richer, official figures show.According to the Office for National Statistics, the average income of the poorest fifth of the population after inflation contracted by 1.6% in the last financial year ending in 2018, while the average income of the richest fifth rose by 4.7%.Related: Experts debate the Brexit outlook: 'Stand by for gale-force winds' Continue reading...

Two former members of Bank of England’s rate-setting committee assess the economic future

Latest Guardian analysis shows companies shutting plants and pausing investment

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

Companies around world need to repay or refinance as much as $4tn over next three yearsThe global economy faces escalating risks from rising levels of corporate debt, with companies around the world needing to repay or refinance as much as $4tn (£3.1tn) over the next three years, according to the OECD.Sounding the alarm over the scale of the debt mountain built up over the past decade since the last financial crisis, the Paris-based Organisation for Economic Co-operation and Development found that global company borrowing has ballooned to reach $13tn by the end of last year – more than double the level before the 2008 crash.Related: Analysts urge caution over hopes for US-China trade solution Continue reading...

Despite Donald Trump saying deal ‘could happen fairly soon’, analysts warn against over-optimismTrade tensions between the US and China could rapidly rekindle despite rising hopes of a deal, analysts have warned, after Donald Trump promised to pause the launch of higher import tariffs on Chinese goods.The US president announced late on Sunday that he would delay raising tariffs on as much as $200bn (£153bn) of Chinese goods from 10% to 25% after progress was made in talks between Washington and Beijing, averting the imposition of the higher rate from 1 March.I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very...... Continue reading...

Shares surge in Asia and on Wall Street after president Trump delays a planned hike in Chinese import tariffs

Delay would be preferable to leaving the EU without an agreement, says ABIBritain’s insurers are to warn that a no-deal Brexit would be an “unforgivable act of economic and social self-harm”, arguing that a delay to the process would be preferable to leaving the EU without an agreement.In the strongest warning on Brexit yet from the Association of British Insurers (ABI), the industry body’s director general, Huw Evans, will say in a speech on Monday evening that “leaving the world’s single biggest trading block overnight with nothing but WTO [World Trade Organization] rules to replace it … would be wholly inadequate and unprecedented”.Related: UK and US agree post-Brexit derivatives trading deal Continue reading...

Asian shares rise sharply after US president says he will hold a summit with Xi Jinping to conclude an agreement to end trade standoffShares in Asia have soared after Donald Trump said he would delay an increase in tariffs on Chinese goods, citing “substantial progress” in trade talks with China over the weekend.Related: Memo of misunderstanding: Trump clashes with trade adviser over China talksI am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very..........productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!Related: How Xi Jinping became a networked authoritarian thanks to his little red app | John NaughtonRelated: When multilateralism crumbles, so does our rules-based order | Mark Medish Continue reading...

Robert Lighthizer, the US trade representative, argued with the president about whether an MOU is binding or notTensions between Donald Trump and one of his top trade negotiators have been brought into the open as the two disagreed publicly about the definition of a memorandum of understanding.In a White House meeting between US officials and China’s top negotiator, which was televised and attended by journalists, Robert Lighthizer, the US trade representative, contradicted the president’s claim that memoranda of understanding (MOU) are non-binding.Related: Donald Trump delays tariff hike on Chinese goods after 'great' trade talks Continue reading...

Manchester could net £220m and Liverpool £133m thanks to football fans’ spending – reportTaking part in the Premier League title race can be worth hundreds of millions of pounds to a football club’s home city, according to a report that said Manchester City and Liverpool are squaring up for a £300m battle.The report by the thinktank Centre for Economics and Business Research (CEBR) said competing for a league title could increase a city’s economic growth by 1.1 percentage points. Continue reading...

Peter Muchlinski says Brussels needs to wake up and offer a cooperative solution to Brexit. Michael Cunningham says Peter Mandelson’s endorsement of neoliberalism helped to lead us to BrexitMatthias Bergmann’s piece (My grandfather was a Nazi. I’ve seen why we need the EU, 20 February) reminds us of the EU’s peace-fostering effect. Bergmann also admits that the EU is “far from perfect” but does not tell us how.The currently precarious state of European politics arises in large part because the Brussels technocrats swallowed the Thatcherite mantra of neoliberal market policies and, in addition, created the euro. That shielded Germany’s sluggish economic performance by fuelling cheap credit, provided in part by German banks, in the economically weaker “European south” and Ireland, leading to the eurozone crisis and EU-wide “austerity”. Continue reading...

It is hard to see how a child’s interests can be truly prioritised and safeguarded if one of the parties is not properly advised and represented, writes a former lay judge in the family courtLouise Tickle (Why I fought for the right to open up family court decisions to greater scrutiny, 20 February) focuses on reporting restrictions, by virtue of which errant local authorities and judges are, in her view, protected from scrutiny. In my view, the greater evil is the absence of legal aid in the majority of family court and court of protection cases. I served, for a decade, as a lay judge in the family court. I have subsequently supported many litigants-in-person in the family court, in one case in the court of protection, and sometimes in the courtroom as a McKenzie friend. This has been possible thanks to the moral and logistical support of the Citizens Advice Bureau where I have been a longstanding adviser.It was always obvious to me when I was chairing family courts that unrepresented parties were at a substantial disadvantage, especially where the other party was represented. Now that I am on “the other side”, as it were, it is all the more clear how very challenging it is for most unrepresented and unsupported parties to handle the complexities of court practice and procedure. The Children Act 1989 says that when a court determines any question, the child’s welfare shall be the court’s paramount consideration. It is very difficult to see how the welfare of any child can be truly prioritised and safeguarded in the family court, whether involving state action, via the local authority, or a dispute between parents and/or carers, if any one of the parties is not properly legally advised and represented.

Britain is sending all the wrong messages pre-Brexit to the migrant workers it sorely needsA perception had built up over the decade leading to Brexit that Britain was a country out of control. Brussels bureaucrats controlled our lives and money. Migrants were stealing jobs and sponging benefits, or so went the shock doctrine of the tabloid press, manifested among the myriad reasons 17.4 million people cried out from the ballot box two and a half years ago: “Enough is enough.”But as the countdown on Brexit approaches its chaotic finale in little more than 30 days’ time, it’s worth remembering that, until recently, that perception hadn’t travelled far overseas. Continue reading...

Nissan, Honda and Hitachi were the pillars of an Anglo-Japanese accord dating back to the 1980s. That deal is now in ruinsThe damage becomes more palpable by the day. So, far from winning a £350m-a-week boost to the NHS, we find that the mere prospect of Brexit is costing the economy £800m a week.And this is only the beginning, unless the madness can be stopped. I have pointed out before that her crucial contribution to setting up the single market was one of Margaret Thatcher’s finest achievements (the finest, according to Kenneth Clarke) and I say this as one who was not slow to criticise what I still regard as her originally misconceived approach towards British industry. That sado-monetarist period of the early 1980s was so disastrous that it provoked the chairman of ICI to go to Downing Street and ask the prime minister whether she wanted the company to remain in Britain. We now have present-day industrialists in a similar state of despair.I still hope that a second referendum will allow voters to have second thoughts, and young voters to have first thoughts Continue reading...

Two significant events have showed that a major adjustment of our economy is needed to end our reliance on coal

A decade after the crash, many nations are still on emergency monetary policies, even before a new downturn strikesCentral banks are getting twitchy. On average, recessions have come along once a decade since the mid-1970s and the nadir of the last downturn occurred almost a decade ago.The Nobel prize-winning economist Paul Krugman has predicted that there will be a recession in America by the time Donald Trump comes up for re-election at the end of next year. Continue reading...

Pound falls against the dollar and the euro after EU official says there will be ‘no deal in the desert’ at a summit in Egypt next week

A surplus of £14.9bn in January was the highest since monthly records began, in a boost to Philip Hammond ahead of his spring statement on 13 March

Deals containing clauses that threaten human rights are being debated in parliament – they must be defeatedThe government cancelled parliament’s recess at short notice so as not to give the impression MPs were on holiday a matter of weeks before we face crashing out of the EU.The international trade secretary, Liam Fox, is using the opportunity to avoid proper scrutiny of plans that threaten our rights, our environment and our democracy. He tabled a general debate on post-Brexit trade agreements with the US, Australia, New Zealand and the Trans-Pacific Partnership for Thursday. And he is expected to launch negotiations soon after the debate – with no chance for parliament to stop him.Related: Britain is discovering the difficult truth about trade deals | Phillip Inman Continue reading...

The chancellor will adopt a wait-and-see approach to talks before allocating his surplus fundsThe largest January budget surplus on record smashed City expectations and was a real surprise given the recent downbeat economic news. But Philip Hammond will take the gift with open arms.It is now five weeks until the scheduled date for Britain to leave the European Union and while most political and financial market analysts expect the current logjam to be broken, a no-deal outcome remains a possibility.Related: UK public finances hit record surplus to give Hammond pre-Brexit boostHammond is now in a better position than he was when he made his budget speech in late October Continue reading...