Unconventional policies may have staved off short-term economic collapse but they may not foster long-term growthIn recent years, central banks have made a large policy wager. They bet that the protracted use of unconventional and experimental measures would provide an effective bridge to more comprehensive measures that would generate high inclusive growth and minimise the risk of financial instability.But central banks have repeatedly had to double down, in the process becoming increasingly aware of the growing risks to their credibility, effectiveness and political autonomy. Ironically, central bankers may now get a response from other policymaking entities, which, instead of helping to normalise their operations, would make their task a lot tougher.Related: The ECB must heed calls to review its policy framework | Stefan Gerlach Continue reading...

Protecting people against the chaos wreaked by automation should be a priority. But populists would rather talk about tradeThis week’s nightmare is the arrival of Boris Johnson; the autumn brings the Brexit watershed. Soon after, the 2020 US election takes shape, compounding the sense that politics everywhere is in a state of complete unpredictability. All that is clear, perhaps, is that the forces gathered around Brexit, Donald Trump and the various brands of European populism still think things are going their way.For some people, everything comes down to the failures of neoliberalism and its inbuilt globalisation, and the long aftershocks from the crash of 2008. Others, with very good reason, focus on racism and bigotry, and the spectacle of white men who are apparently convinced that their time at the top is about to come to a close and therefore lashing out. There are also people who seem to think that any sober, cause-and-effect explanations of a global crisis are impossible amid the mess: they tend to take refuge in rather specious ideas about “collective derangement” and national nervous breakdowns.The ongoing transformation of production and consumption by computing power is everywhereRelated: Automation threatens 1.5 million workers in Britain, says ONS Continue reading...

Does a doctor in England’s capital really work three times harder than one in Merthyr Tydfil?Britain’s regional divide is well known and well documented. The richer bits of the country tend to be clustered below a line drawn from the Wash to the Severn estuary, while London is so different from everywhere else that it may as well be its own city-state.There is also another divide: between the big cities and the smaller towns. The north-west may be less prosperous than the south-east but on average people are better off in Manchester than they are in Blackpool.There is a demand for solicitors in Bodmin just as there is in Barking Continue reading...

Is the economy to blame? Sure. But there’s something else behind the trucking industry’s woes: mismanagementTimes are good right? Economic growth is strong. Unemployment is low. Business and consumer confidence remains high. It’s pretty easy to say that most small business owners are doing pretty well this year. Except if you’re in the trucking business.That’s according to a number of recent reports that cover the freight industry. They are not great. Continue reading...

Fighting talk on Brexit from Jeremy Hunt and Boris Johnson has inevitably hit the value of sterlingSun, sea and sinking sterling. News of a fresh decline in the value of the pound was greeted with forbearance by travellers at Luton airport last week. The currency has been under pressure at various times since the referendum, having fallen by 14% against the euro since the vote, and it hit a six-month low of €1.105 last Wednesday in the wake of renewed pledges by Boris Johnson and Jeremy Hunt over pursuing a no-deal Brexit.Against the US dollar, sterling took even more of a battering last week, falling at one stage to below $1.24.After what one currency analyst described as a no-deal arms race between Johnson and Hunt, the only way for the pound was down Continue reading...

The Conservatives would use cash for tax cuts, while Labour plans investment. But the economic climate is chillyAs the next Tory leader, and possibly a general election, loom, the UK electorate must consider one fundamental economic question: does it want a huge increase in government borrowing?Both Boris Johnson and Jeremy Hunt are ready to break out of the austerity straitjacket and spend huge sums. Not just to blast their way through the chaos that will follow leaving the European Union on 31 October, but also to inflate spending on a long shopping list of items, from social care to defence.Labour may find that, following decades of neglect, pouring financial fertiliser on the regions has little effectRelated: Jeremy Corbyn's spending plan for public services backed by majority Continue reading...

Allegra Madgwick challenges the idea that the prime minister is a feminist champion, Hester Doherty questions how she stood up for domestic abuse victims, and Judy Stober thinks we are too kind. Plus letters from Les Bright, Mark Lewinski, Kip Bennett and Tony ColeThe question of whether Theresa May is a feminist champion posed by Martha Gill in her opinion piece (Journal, 15 July), surely depends on what sort of feminism you are talking about. As a socialist feminist, the idea that one of the great movements of human liberation in our times could be reduced to getting a few more female Tory MPs into parliament is truly depressing.Gill acknowledges that Tory austerity policies have been terrible for working-class women, but makes no mention of how the scandals of Windrush, Grenfell and the hostile policy towards asylum seekers and immigrants, which can be directly traced to May’s time at the Home Office, show class politics at its most brutal and demonstrate indifference to the lives of the most vulnerable women. Continue reading...

Rolling coverage of the latest economic and financial news, as gold bullion prices burst through $1,450 per ounce and the UK’s budget deficit swells

Highest June deficit for four years shows economic slowdown is feeding throughPledges by Boris Johnson and Jeremy Hunt to cut taxes and increase spending have come just as the UK’s public finances have shown a marked deterioration, according to the latest official figures.In what analysts called a “reality check” for the two Conservative prime ministerial contenders, the Office for National Statistics said the government needed to borrow £7.2bn last month – more than double the £3.3bn in the same month a year ago.The government's finances are measured each month by the Office for National Statistics (ONS). Tax receipts make up the vast majority of government income, while spending on welfare and services make up most of its outgoings.Related: Fishy figures: Boris Johnson's public service pledges are fantasy economics | Richard Vize Continue reading...

One troy ounce reaches $1,452.60 amid increased US-Iran tensionsGold prices have hit their highest levels in six years as investors brace for an interest rate cut by the US Federal Reserve and seek a safe haven amid tensions between Washington and Tehran.The price of one troy ounce of gold peaked at $1,452.60 on Friday morning, the highest point since May 2013, with fears over the Persian Gulf standoff also driving up the price of a commodity that is viewed as a market refuge during geopolitical crises.Related: UK's June budget deficit hits four-year high in blow to next PM - business live Continue reading...

The chancellor has said he fears the cost of a no-deal Brexit to the British economy. Speaking at the G7 in France, Hammond said that a report published by the Office for Budget Responsibility showed that even the most benign version of no deal 'would be a very significant hit to the UK economy'. The OBR revealed that it would plunge Britain into a recession

Rolling coverage of the latest economic and financial news, including the Office for Budget Responsibility’s new stress test of the UK economy

Office for Budget Responsibility believes economy would shrink by 2% by end of 2020A no-deal Brexit would plunge Britain into a recession that would shrink the economy by 2%, push unemployment above 5% and send house prices tumbling by around 10%, according to the government’s independent forecasting body.In an assessment of the impact of Britain leaving the EU without a deal at the end of October, the Office for Budget Responsibility said the result would be a year-long downturn that would increase borrowing by £30bn a year.The Office for Budget Responsibility is the government’s independent forecaster, which gives its verdict on the outlook for growth and the public finances twice a year. Continue reading...

World leaders to back call to help rural poor and women access mobile bankingWorld leaders are to pledge to shape the technological revolution sweeping through Africa by acting to lift the threat of 400 million predominantly rural women being excluded from digital financial services.G7 finance ministers meeting in France are to endorse a paper from the Gates Foundation saying there is a serious risk that digital technology and mobile banking will bypass millions of women in Africa, leaving them disempowered for a generation.Related: Millions more have a bank account, but what is the impact on global poverty? Continue reading...

Fear of ‘hardline’ Boris Johnson and Jeremy Hunt could push sterling down to mid-80s levels, says Morgan StanleyThe pound’s fall to a two-year low against the dollar could be the start of a no-deal Brexit inspired wave of selling that would push sterling towards a one-for-one exchange rate against the US currency, a leading investment bank has warned.Morgan Stanley said the nervousness in financial markets over the hardline approach adopted by both Boris Johnson and Jeremy Hunt risked pushing the pound down from its current level of $1.24 to the lowest level since it almost reached parity in the mid-1980s. Continue reading...

Rolling coverage of the latest economic and financial news, as UK housing market keeps slowing and the pound hits fresh lows

Chancellor rubbishes claim by Boris Johnson ally that no-deal exit could boost economy by £80bn

It is the biggest plunge since the 7.0% annual drop recorded in August 2009, says ONSHouse prices in London have fallen at their fastest pace since the financial crash a decade ago as the capital bears the brunt of the nationwide torpor in the property market.Amid a dearth of potential buyers, the cost of a home in London was 4.4% lower in May than a year earlier, according to the latest official snapshot of the market from the Office for National Statistics. Continue reading...

Resolution Foundation says households suffering worse than 1990s recession

Sterling falls by a cent against dollar after Tory leadership candidates’ backstop remarksThe pound has fallen to its lowest level in more than two years after pledges by both Boris Johnson and Jeremy Hunt to ditch a key part of the UK-EU withdrawal agreement intensified City fears over a no-deal Brexit.Sterling fell by a cent against the US dollar after a Sun and Talkradio debate in which both the contenders to replace Theresa May in Downing Street said they would not accept a Northern Ireland backstop in its current form. Continue reading...

For Schumpeter it was the creation that caused the economy to advance, the destruction was a regrettable consequence, writes Michael Heaslip; while Susanne MacGregor says Schumpeter would have seen the crises relished by Brexiters as a political choicesJoseph Schumpeter might have regretted describing the process of economic development as “creative destruction” had he known that disaster capitalists would misinterpret its meaning and invert cause and effect (Darroch’s fate is a taste of the chaos to come, Simon Jenkins, 12 July). Schumpeter described a process of innovation creating new market conditions which destroyed the old: where are the farriers, loco firemen, telephonists and typists now? For Schumpeter it was the creation that caused the economy to advance; the destruction was a regrettable consequence, not a cause of the innovation. “Destructive creation” would have put the emphasis on the substantive element of the process.You can’t make an omelette without breaking eggs. But you must have a plan to create the omelette; you can’t just break some eggs and trust that an omelette will then appear as if by magic – unless of course, you live in the looking-glass world of Brexit.

Sterling is sliding as UK and Brussels head for fresh clash over the Irish Backstop

Rolling coverage of the latest economic and financial news, including reaction to the latest Chinese GDP report

The incoming European Central Bank chief must call for an end to the eurozone’s suicidal fiscal rules, which have now run out of roadChristine Lagarde was a key member of the infamous troika – Greece’s official creditors – who crushed our people’s resistance to perpetual debt bondage. The other key figure alongside the International Monetary Fund’s then managing director was Mario Draghi, president of the European Central Bank, who played a central role in that drama by engineering the closure of Greece’s banks. Now, four years later, Lagarde has been anointed to succeed Draghi at the helm of the ECB.Despite her role, and the dealings we had when I was Greece’s finance minister, not once did I feel animosity towards her. I found her intelligent, cordial, respectful. She even acknowledged, in private at least, that Greece had been given a raw deal and that my campaign to cut our public debt was right and proper. Lagarde’s priority was holding the troika’s line and minimising any challenge to its collective authority.Forced to choose between Berlin’s favouritism and the interests of her institution, she unfailingly opted for the formerRelated: Easy money won’t solve Christine Lagarde’s economic problems | Phillip Inman Continue reading...

Chinese economic growth falls to slowest pace since 1992 – but is expanding faster than the USDonald Trump has claimed that his tariff battle with China is working after official data from Beijing showed growth in the world’s second biggest economy dropping to its slowest pace since 1992.The US president said the impact of his protectionist measures had been to cause an exodus of companies from China, as Beijing announced that its annual rate of expansion had slowed from 6.4% to 6.2% in the second quarter of 2019.Related: Trump fact check: is the Chinese economy really 'going down the tubes'? Continue reading...

Footfall drops to seven-year low for June prompting fears UK economy is at a standstillShoppers deserted UK high streets during June as the washout weather and continuing Brexit uncertainty helped drive store visits down to a seven-year low for the month.The “summer slump” took a particularly heavy toll on high streets, with shopping centres also badly affected, according to the British Retail Consortium’s (BRC) monthly footfall tracker for the period from 26 May to 29 June.What's the problem? Continue reading...

The BoE governor stands more chance than the ex-chancellor but the likely choice may just be a Bulgarian womanEver since he set his departure date from the Bank of England, there has been speculation about what Mark Carney will do next. There are not that many bigger jobs around than his current one but one of them has become available after the news of Christine Lagarde’s planned departure from the International Monetary Fund for the European Central Bank.Carney would certainly like a move to Washington, not least because the other job he has had his eye on – prime minister of Canada – is currently occupied by Justin Trudeau. Asked at a Bank press conference whether he is interested, Carney replied he had lots of admiration for Lagarde and that the proper processes should be followed. What he pointedly didn’t say was “no”.Christine Lagarde’s nomination to run the European Central Bank has prompted speculation over who could replace her as managing director of the International Monetary Fund.Related: Labour sounds alarm over George Osborne's ambitions to run IMF - business live Continue reading...

The economy expanded just 0.3% in May, and a slump awaitsOne swallow doesn’t make a summer, so the old saying goes. For the warm middle months of the year, the British economy looked remarkably frosty, chilled by fears over a no-deal Brexit, until the Office for National Statistics reported a surprisingly strong month for growth in May.The figures, released last week, were a glimmer of hope that Britain might yet shrug off the worst of the Brexit cold, which has laid the economy low over recent months as companies put their investment plans on ice. Continue reading...

The favourite for Downing Street has aggravated the uncertainty that is undermining confidence and hitting sterlingWimbledon fortnight brings back happy memories of growing up in that pleasant suburb. But the recent news that the leading pretender to the Conservative throne was told by his girlfriend to “get out of my flat” stirs a particular memory: of the number of offenders brought before the courts who would be described in the Wimbledon Borough News as being “of no fixed abode”.It was therefore a stroke of genius for Private Eye to put a picture of Alexander “Boris” Johnson outside No 10 Downing Street with the caption “I really need somewhere to live.”His budgetary plans are so wild that he undermines any Conservative arguments about the budgetary dangers of a Labour government Continue reading...

A no-deal Brexit comes closer, thanks to Donald Trump’s little helper•You can buy your own print of this cartoon Continue reading...

MPC member Gertjan Vlieghe issues warning during speech in LondonA no-deal Brexit could result in a prolonged period with interest rates at a record low level of almost zero, according to one of the Bank of England’s key policymakers.In signs of growing Threadneedle Street concern about the fragility of the economy, Gertjan Vlieghe, a member of the rate-setting monetary policy committee, said he would be prepared to cut borrowing costs aggressively in the event that the UK left the EU without a transition agreement on 31 October this year.Related: Bank of England's Vlieghe: no-deal Brexit could mean near zero interest rates - business liveIn a ‘no deal’ scenario, the UK would leave the single market and the customs union immediately with no ‘divorce’ arrangement in place. The European court of justice would cease to have jurisdiction over the UK, and the country would also leave various other institutions including Euratom and Europol. Continue reading...

Policymaker Gertjan Vlieghe said rates might have to be cut to virtually zero if the UK crashes out of the EU without a deal

Governor says EU firms might also face lending crisis by being cut off from banks in LondonThe Bank of England has warned that a no-deal Brexit could trigger a material shock to the UK economy while causing widespread disruption for EU companies by cutting them off from London-based banks.Stating that the risk of Britain crashing out without a deal had risen, the Bank said the City of London was ready to withstand such a scenario and avoid banks failing, as they did in the financial crisis. However, there would still be major disruption for companies. Continue reading...

Bank of England governor refuses to rule out succeeding Christine LagardeMark Carney has positioned himself as a contender to be the next head of the International Monetary Fund after refusing to rule out joining the race to take over from Christine Lagarde.The Bank of England governor has been widely cited as a potential candidate to replace Lagarde as the IMF’s managing director after her nomination to head the European Central Bank.Related: Bank of England warns of lending crisis for EU firms after no-deal Brexit Continue reading...

US has said it will investigate planned levy on firms such as Amazon and Facebook

Financial Stability Report says UK banks can ride out a no-deal Brexit, but there could be serious volatility in the markets

The men vying to be prime minister have promised the kind of spending for which they once lambasted LabourThe nation’s credit card has been maxed out. The government failed to fix the roof while the sun was shining. When times are tough a country has to tighten its belt and live within its means. Remember all that? Of course you do. Those were some of George Osborne’s favourite soundbites in 2010 when he was pinning the blame for the global financial crisis on Labour’s profligacy. And mighty effective they were.Related: Johnson says lavish spending plans would work after no-deal BrexitThe race to the bottom on tax is in some sense welcome – it validates the use of tax and spending as an economic toolRelated: Hammond warns Johnson and Hunt over spending promises Continue reading...

Triumph turns to sober realisation after founder Julian Dunkerton’s spectacular boardroom coupThree months after founder Julian Dunkerton returned to Superdry via a spectacular boardroom coup, the tone of triumph has been replaced by sober realisation that the aims of the revolution will not be secured quickly.Last year’s ugly numbers – a statutory loss of £85m and a 57% fall in “underlying” pre-tax profits to £41.9m – were pinned on the old regime, which was fair. But the promise for this year is merely “stabilisation” and “reset”, which translates as dull. Continue reading...

GDP rose by 0.3% in May from a month earlier, says Office for National StatisticsThe British economy pulled out of a one-month downturn to return to growth in May as carmakers resumed production in the wake of shutdowns for the original Brexit deadline.The Office for National Statistics (ONS) said UK GDP rose by 0.3% from a month earlier, when stoppages at car plants resulted in negative growth of 0.4%.Gross domestic product (GDP) measures the total value of activity in the economy over a given period of time. Continue reading...

Stocks surge as US central bank chief hints at interest rate cuts, while UK economy remains weak

Shares on Wall Street rose on the comments, with the S&P 500 briefly moving above 3,000 for the first timeThe US looks increasingly likely to cut interest rates for the first time in over a decade, the Federal Reserve chairman, Jerome Powell, hinted on Wednesday.“Many” Fed officials now believe a weakening global economy and rising trade tensions have strengthened the case for a rate cut, Powell wrote in a report released ahead of his appearance before Congress.Related: UK economy returns to growth; Fed chair hints at US rate cut - business live Continue reading...

Trump pledged to stop ‘offshoring’ but manufacturing workers at GE and Carrier say Trump has broken his campaign promiseNext Friday, Eddie Martin will work his last day at the General Electric plant in Salem, Virginia, after working there for seven years.Related: Trump denies 'ever threatening to demote’ Fed chairman Jerome PowellI gave the best years of my life to that corporation that threw me out like I was a rag dollRelated: Trump 'disrespectful and wrong' over UK ambassador, says Hunt Continue reading...

Family take share of £100,000 award with study of UK’s golden eras of growth including pioneering welfare systemBritain could look back more than 400 years to the reign of Queen Elizabeth I for inspiration on how to reboot the economy and tackle inequality, according to a joint winner of one of the most valuable prizes in economics.Simon Szreter, a professor of history and public policy at Cambridge University, his wife, Hilary Cooper, an economics consultant, and their son Ben Szreter, the chief executive of a community-based charity in Cambridge, were collectively one of two winners of the inaugural IPPR economics prize, worth a total of £100,000. Continue reading...

Two women won the backing of EU leaders to head the European commission and the European Central Bank, breaking with more than 60 years of male dominance Continue reading...

Politicians and pundits may be distracted, but economists are already talking about another financial crisisGod bless Britain’s political class, for in their capacity for happy self-absorption they are as reliably easy to please as a puppy. Just chuck them the right chew toy.Who won last night’s head-to-head, Boris or Jeremy? Gnaw gnaw. What is George Osborne playing at? Snuffle, snuffle. Doesn’t young Matt Hancock look tortured these days? Slobber, slobber. And so politicians and pundits paw away, the existential questions facing an entire country somehow never quite as rousing as the latest gossip from Versailles.In the construction sector, which has just had its worst month since the immediate aftermath of the financial crisis, they now talk of 'quicksand'Related: No-deal threat causes sharpest investment drop since 2009 recession Continue reading...

Concerns rise over strength of UK economy with figures expected to confirm recession

The pound has hit its lowest level since January amid Brexit worries, as the European Central Bank’s new chief economists takes questions

The European Central Bank last looked at its monetary policy framework 16 years agoFinland’s central bank governor, Olli Rehn, has reiterated his call for the European Central Bank to conduct a long-overdue review of its policy framework. The upcoming change of leadership at the institution – with Christine Lagarde, the International Monetary Fund’s managing director since 2011, likely to succeed Mario Draghi as president – offers an important opportunity to heed that call.When the ECB was established 20 years ago, central banks were generally not too clear about the details of their policy frameworks. At that time, some ambiguity may have been helpful, because of the flexibility it offered when the ECB started operating. Furthermore, it allowed central bankers with different experiences and perspectives to agree on a framework, even though they may not have agreed on its precise details.Related: It's high time to create a World Carbon Bank | Kenneth Rogoff Continue reading...

Retailers say total sales fell by 1.3% in June while annual rate of growth slowed to 0.6%Fears that Britain’s economy has come to a standstill have been heightened by a report from retailers showing annual consumer spending at its weakest since their records began in the mid-1990s.The British Retail Consortium said clarity over Brexit was urgently required after falling sales in June came as a marked contrast to the bumper World Cup and weather-related activity of a year earlier. Continue reading...

Bank that once seemed to have beaten big US rivals at their own game is a national embarrassmentLittle more than a decade ago, Deutsche Bank seemed to have achieved the remarkable feat of beating the big Wall Street banks at their own game. Germany’s biggest financial institution, fuelled by an acquisition spree, a long bull market and willingness to pay fat bonuses, owned one of the world’s top five investment banks.Its rise looked natural and inevitable. Why wouldn’t the biggest bank in the eurozone’s biggest economy be able to compete with JP Morgan and Goldman Sachs and outmuscle Barclays, the UK’s would-be investment banking champion? In the summer of 2007, just before the arrival of the global financial crisis, Deutsche’s share price reached €110.Related: What went wrong at Deutsche Bank? Continue reading...