A symbolic slap in the face for Jair Bolsonaro as Trump accuses the two countries of devaluing their currencies and hurting US farmersDonald Trump announced on Monday that he will restore tariffs, effective immediately, on all steel and aluminum shipped into the United States from Brazil and Argentina.In a surprise move, Trump accused the two countries of devaluing their currencies and hurting US farmers. All the US stock markets fell on fears of rising trade tensions. Continue reading...

Monthly manufacturing snapshot shows seventh month of contractionBritain’s factories are laying off workers at the fastest rate in seven years as manufacturing remains in the doldrums amid political and economic turmoil.The monthly UK manufacturing snapshot from IHS Markit/Cips shows the headline purchasing managers’ index (PMI) slipped to 48.9 in November from 49.6 in October. It has been stuck for seven months below the 50 mark that separates expansion from contraction. Continue reading...

Areas with higher probability of automation match those with greater percentage of BrexitersBrexit supporters are more likely to live in areas most threatened by the economic impact of automation, according to a study of the impact of robots and artificial intelligence in the workplace.A map of the parts of the UK likely to be hit by automation fits more closely with the map of leave voters than any other factor, said the Institute for the Future of Work (IFW).Related: Automation could destroy millions of jobs. We have to deal with it now | Yvette Cooper Continue reading...

If he wants working-class Labour votes the PM can’t promote the rightwing post-Brexit ideal of Singapore-on-Thames

If pro-EU politicians stopped fighting each other, the majority of voters, who agree with them, may yet prevail against BrexitThis is my last column before the 12 December election. At the time of writing, the Conservative Brexit party – for that is what it is – is way ahead in the polls, and the ineffable Johnson is set to take the British economy hurtling towards the cliff edge.He, his henchman Dominic Cummings and their time-serving accomplices have fooled far too many people into believing that, within weeks, they will have “got Brexit done”.These are classic micro-examples of the chaos in the Remain camp, even though the majority of people in this country are Remainers Continue reading...

In an exclusive interview, Kristalina Georgieva tells why global heating is as big a threat to economic stability as another financial crashKristalina Georgieva is very keen to talk about the research one of her International Monetary Fund economists is doing. Surprisingly, this is not about any of the issues that have gripped the organisation in the past 75 years: balance of payments crises or global recessions. It is about whales and the part they play in the fight against climate change.“Whales act like giant pumps,” says Georgieva, noting that in its lifetime each of these mammals sequesters 33 tonnes of carbon dioxide from the atmosphere, while an average tree absorbs about 20kg a year.Climate change is not just already visible, but tends to hit the world’s poorest countries and poorest people hardest Continue reading...

After nine years of austerity, much of Britain is in a dire state. But we’re not talking enough about whose fault that isIn this acrimonious election, seemingly the one thing everyone can agree on is that Britain’s future is at stake. Yet as a result, so far this election has been too much about the future and not enough about the past and the present. And one party has benefited much more than the others.Related: In this climate, how does Boris Johnson not melt with shame? | Marina HydeRelated: Brexit? This election is about something much bigger than that | Ash Sarkar Continue reading...

Home economics | Shortest-serving PMs | Logistics | Attender | Brexit anagramHow my mother would have loved to be called a beatnik (Learning to cook like a beatnik, G2, 28 November). Growing up in the north in the late 40s and 50s our weekly menu was an “unmovable feast”. Sunday roast provided gravy for meatless panackelty Monday or minced leftover meat for a pie. The week progressed through mince and tatties, mince on toast, shepherd’s pie, and once in a blue moon a mutton chop. Friday was putting the knife into my brother’s money box for pennies for a tin of beans until my father’s pay came.

In the wake of the Brexit vote, ultra free market thinktanks have gained exceptional access to the heart of Boris Johnson’s government. By Felicity Lawrence, Rob Evans, David Pegg, Caelainn Barr and Pamela DuncanWhen Boris Johnson assumed office as prime minister in July 2019 and proceeded, without the mandate of a general election, to appoint a cabinet that was arguably one of the most rightwing in post-second world war British history, many commentators called it a coup. The free market thinktank the Institute of Economic Affairs felt self-congratulation was more in order, however. “This week, liberty-lovers witnessed some exciting developments,” the IEA said in an email to its supporters. The organisation, whose mission is to shrink the state, lower taxes and deregulate business, noted that 14 of those around the Downing Street table – including the chancellor, Sajid Javid, the foreign secretary, Dominic Raab, and the home secretary, Priti Patel – were “alumni of IEA initiatives”.The IEA had good reason to boast about its influence. Just a few years earlier, on the occasion of its 60th birthday in 2015, Javid had declared that it had “reflected and deeply influenced my views, helping to develop the economic and political philosophy that guides me to this day”. In a speech to the IEA the same year, Raab also enthused about the organisation’s effect on his younger self. A few years back, he told the audience, he had been on a beach in Brazil. He’d had a couple of drinks, and had gone in to the sea to mull over an idea: that New Labour had “eroded liberty” in Britain and created a “rights culture” that had fostered a nation of idlers. Lost in thought, the tide had dragged him far from his starting point, and back on the beach, he had trouble locating his family among all the “scantily clad Brazilians”. On stage, he thanked the IEA for helping him develop this idea, which became the starting point for the book Britannia Unchained, an anti-statist tract, co-written with other MPs who would go on to join Johnson’s new cabinet – Patel; Elizabeth Truss, now trade secretary; Kwasi Kwarteng, business minister; and Chris Skidmore, then health minister.Related: Wealthy US donors gave millions to rightwing UK groupsRelated: The US donors who gave generously to rightwing UK groupsRelated: Neoliberalism: the idea that swallowed the world Continue reading...

We are producing and consuming fashion at a rate like never before – and mass shopping sales are simply fanning the flamesThis morning I opened my inbox to find reams of emails – mid-season sale, 50% off, exclusive offer – enticing me to grab the best deal while it lasts. When we’re barraged by messages from the fashion industry to buy more, it’s hard to resist – and I have easily succumbed to these temptations in the past.Related: Millions set for Thanksgiving disruption as storms sweep across USEva Kruse is the CEO of Global Fashion Agenda, a non-profit organisation working to mobilise and guide the fashion industry to take bold and urgent action on sustainability. The Copenhagen Fashion Summit 2020 in May 2020 will convene leaders from across the industry to discuss the issue and potential solutions Continue reading...

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Respected thinktank describes stark choice between Labour’s sweeping change and Tories pledging nothing new

Whoever wins the election is likely to make sure that their heretical gamble will be vindicatedIs this election turning out to be a Lutheran moment for the Church of Economics? If one listens to the high priests of the dismal science it might seem so. The Institute for Fiscal Studies says neither the Conservatives nor Labour have produced a “credible prospectus” for balancing the nation’s books in this election. The Resolution Foundation says both parties will break their tax and spending rules announced less than a month ago.Economic sects rely on the faith of the people for their legitimacy. The priesthood are concerned about the radicalism of the two main parties. Boris Johnson wants Brexit over with, whatever the economic cost. Jeremy Corbyn wants to reset the economy along tax-and-spend lines. National debt will rise, warn the experts. Continue reading...

Two main parties’ plans ‘not credible’ but Lib Dem idea to put a penny on income tax is praisedThe much awaited judgment of the Institute for Fiscal Studies was brutal and even-handed: a plague on both your houses.A feature of every election campaign is the day when the thinktank that specialises in tax, public spending and government borrowing does a number-crunching exercise on the party manifestos. Continue reading...

He warned against cuts in London when he was mayor but has consistently voted in support of austerity policies

Properties are becoming more affordable but economic uncertainty is still putting buyers off, say expertsHouse price growth in the UK has picked up despite continued economic and political uncertainty, but remains far below the levels seen before the EU referendum.The average price of a home rose by 0.5% in November to £215,734, according to Nationwide building society. This is the biggest monthly rise since July 2018, and up from 0.2% in October. The annual growth rate picked up to 0.8% from 0.4%, the highest since April. Continue reading...

Policymakers could do worse than return to formula of negotiating reciprocal elimination of tariffsThe “bicycle theory” used to be a metaphor for international trade policy. Just as standing still on a bicycle is not an option – one must keep moving forward or else fall over – so it was said that trade negotiators must engage in successive rounds of liberalisation. Otherwise, global openness would gradually succumb to protectionist interests.I don’t know whether the theory was right. In fact, had governments stood still on trade policy over the last three years, the world would be a lot better off than it is now. Trade is faltering – global volumes are down a remarkable 1.1% over the last 12 months – as inept bikers collide chaotically with one another.Related: The IMF is losing influence – and for that it must share the blame Continue reading...

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

Two former members of BoE’s rate-setting committee on prospects for Britain’s economy

Guardian analysis shows average wage rises dropping back to 3.6%

Two main parties on track to break their own spending rules, says Resolution FoundationBoris Johnson’s election spending pledges have left a Conservative-led administration with a slender chance of staying within its borrowing limits if it returns to power, according to a leading thinktank.The extra costs of employing 50,000 more nurses and increasing the national insurance personal threshold to £9,500 would leave the “smallest headroom any chancellor has had” against a government borrowing rule, the Resolution Foundation said. Continue reading...

America’s economy grew faster than thought in July-September, despite the trade war with China

It may feel like capitalism isn’t working because western wages should be higher. But really it has a vice-like gripAn avalanche of recent books and articles about the “crisis of capitalism” is predicting its demise or dépassement. For those who remember the 1990s, there is a strange similarity between this and the literature of the time, which argued that the Hegelian “end of history” had arrived. That theory was proved to be wrong. The former, I believe, is also factually wrong and misdiagnoses the problem.The facts show capitalism to be not in crisis at all. It is stronger than ever, both in terms of its geographical coverage and expansion to areas (such as leisure time, or social media) where it has created entirely new markets and commodified things that were never historically objects of transaction.While politics as entrepreneurship was often seen to afflict only less developed countries, it has now spread to EuropeRelated: The WeWork debacle should be an indictment of modern finance | Nesrine Malik Continue reading...

The territory’s recession is getting deeper and the US is threatening its special trading status, bringing serious consequences for BeijingAlmost six months after the protest movement that has upended life in Hong Kong began, the region is now facing serious questions about its future as Asia’s leading international business centre.The most recent violence in the autonomous Chinese region have been the worst disturbances of the six-month long pro-democracy protests. US lawmakers have passed legislation threatening Hong Kong’s special trading status and the territory has slumped into its worst recession for 10 years.Related: My beloved Hong Kong has become a war zone and daily life is full of anxiety Continue reading...

Rolling coverage of the latest economic and financial news, as De La Rue warns of ‘material uncertainty’ about whether it can continue as a going concern

Because Germany imports so little, other countries go into debt to pay for its exports. Higher pay could turn this aroundEarlier this month, at a large gala hall in Berlin, the European Central Bank’s president, Christine Lagarde, presented Wolfgang Schäuble – the former German minister of finance – with the Ehren-Victoria award for outstanding achievements in challenging times. “Few have done so much for Europe and the euro. His commitment, rigour and statesmanship are a source of inspiration,” Lagarde later tweeted.Such is the dominant image of Germany: the rock holding fast in the high seas of global economic turmoil and southern European fiscal mismanagement.The surpluses, the official line goes, are simply driven by success of private German companiesRelated: German recession fears after big decline in industrial production Continue reading...

Labour’s proposals are not so dramatic by international standards, writes Joe McCarthy, while Rodney Smith remembers a time when many more services were nationalised. Plus letters from Kimon Roussopoulos, Matthew Taylor, John Weeks, Asaf Mir and Alain HeadYour editorial (22 November) is right that “Labour’s 2019 general election manifesto ... is its most radical in more than 35 years”. But Labour’s new policy initiatives are not quite so dramatic by international standards. Even if all of Jeremy Corbyn’s promises are implemented, the role of the state in the UK will still be smaller than in European countries like Sweden, Norway and France.Britain’s social fabric has been worn thin to breaking point by almost a decade of savage austerity. For instance, millions now depend on food banks to make ends meet, including many in full-time work. Continue reading...

Rolling coverage of the latest economic and financial news

Prime minister pins his hope on ‘getting Brexit done’ while not scoring any own goalsTake no chances. Make no mistakes. Maintain strict message discipline. Like a football team two up with 20 minutes to play, the Conservatives think the only way they can lose the election is if they throw it away.The contrast between the manifesto launched by Boris Johnson and Labour’s last week was marked. Behind in the polls and with only three weeks to go before election day, Jeremy Corbyn has gambled that voters are ready for radicalism. In sporting terms, he has thrown on three strikers as subs and sent his centre half up from the back in the hope of getting back in the game. Continue reading...

The Conservative programme unveiled by Boris Johnson rests upon a central untruth: the promise to ‘Get Brexit Done’The Conservative manifesto launched today looks at first glimpse decidedly modest, even unremarkable. It is so by design. It is intended to reassure, whereas Labour’s programme last week was meant to rouse. There is, however, something ambitious about it: the scale of the dishonesty at its heart.The message – delivered somewhat perfunctorily by the prime minister in Telford – is simple: yes to Brexit, no to tax rises, and God save you all from Jeremy Corbyn. There was no attempt to even approach the bonanza which Mr Corbyn boldly promised for public services last week – the biggest hike in current spending in peacetime, said the Institute for Fiscal Studies (IFS). The Conservative offer is just £3bn a year to Labour’s £83bn. Continue reading...

The US favours small government and low taxes, but many developed countries thrive on the oppositeLabour’s plans for Britain involve a big increase in the size of the state. Government spending as a share of national output would rise to 45%. And apart from brief spikes in the mid-1970s and during the more recent financial crash, it has not reached those levels since the second world war.To which the mature response should be: so what? A glance around the world shows that there are rich developed countries where the state is relatively small and there are rich developed countries where the state is large. In democracies, voters get the right to choose between the competing models. Continue reading...

The way we assess economic performance and social progress is fundamentally wrong, and the climate crisis has brought these concerns to the fore

For 40 years now, British people have had to take responsibility for their financial future. An educational museum where people could learn how this is best done is long overdueWhat Britain needs is another museum. No, really. Amid all the hand-wringing about whether Britain’s economic destiny lies in or out of the European Union, there is a clear need for a place to visit that can help people discover how money works.A Brexit deal may have been passed and this election will be a distant memory whenever the museum opens its doors, but with financial education at such a low ebb, a centre that facilitates the discussion of modern-day market capitalism (and its alternatives) must be worth the relatively small outlay.We tie economics to nature, because economics starts in nature and ends in nature. We try to relate everything in the museum to people as economic actors Continue reading...

The Institute for Fiscal Studies seems unable to imagine an economic model that is different from the one we haveThe Institute for Fiscal Studies on Thursday gifted the rightwing tabloids a key argument against Labour’s plan to raise taxes. “Not credible …” say the headlines, as if the entire proposal had been rubbished.Dig deeper, and the claim is actually far more specific than that. The head of the IFS, Paul Johnson, says that it is not credible for all £82bn of Labour’s planned increase in tax revenue to come from companies and people earning over £80,000 a year. So instead of the rich and big companies paying for better public services, the argument goes, “we collectively will need to pay for it” – and will pay for it, according to the IFS, through the £44bn rise in taxes on corporations being passed on to shareholders, consumers and workers, in the forms of price increases and cuts to wages.Only if all companies had an absolute monopoly could they force workers and consumers to bear all the pain of increased taxesRelated: A brighter, more equal future is Labour’s greatest manifesto pledge | Gary Younge Continue reading...

President of the European Central Bank says US/China tariff war should be seen as an opportunityChristine Lagarde has called for European governments to boost innovation and growth with higher rates of public investment, in her first major speech as president of the European Central Bank.Speaking to an audience of bankers in Frankfurt, Lagarde said that rising trade barriers triggered by the US/China tariff war should be grasped by European governments as an opportunity to build a stronger internal market. Continue reading...

Debate deepens on whether savers should be compensated or taught how to invest their moneyGerman policymakers are locked in debate over how to react to negative interest rates, with a split between those who believe savers should be compensated and others who say they should learn to invest.The Christian Social Union (CSU), the sister party to Merkel’s Christian Democrats, has proposed either banning banks from passing on negative rates to savers, or giving savers tax concessions.Related: German lenders stick up for savers as ECB rate cut looms Continue reading...

Economics dominates public debate while being seen as an abstract authority over which people have little control. That must changeOn BBC Question Time on Thursday there was an exchange between an audience member and a Labour politician – Richard Burgon – that revealed how poor economic literacy deepens the democratic deficit. The audience member, a man who said he earned more than £80,000, rounded on Mr Burgon and called him a liar for claiming that Labour’s manifesto pledge of raising income taxes for those with salaries like his and larger would only affect the top 5% of the population.Yet Mr Burgon did not lie and the Labour party is right: 95% of workers earn less than £81,000. The man was undeterred, with a heartfelt plea that he was “not even in the top 50%” of earners. In fact, anyone with an annual salary of more than £25,500 would be in the top half of UK wage earners. Plenty of heads nodded along with the questioner’s falsehoods, underlining perhaps the post-truth nature of our times that many consider it better to be sincere than to be correct. The back-and-forth also exposed how mainstream economic stories have been successful in convincing people that there is no alternative to help the country. Continue reading...

Economy forecast to contract as services and manufacturing firms blame fall on uncertaintyBritain’s private sector companies suffered the sharpest drop in activity this month since the EU referendum, as the prospect of a general election added to Brexit-related uncertainty.Most businesses blamed a contraction in activity in November on faltering confidence among both domestic and overseas customers, who are worn out by continuing political indecision. Continue reading...

John McDonnell argues it is wrong to say taxing companies inevitably costs workers

Rolling news coverage of markets, economics and business as purchasing managers indices show economy in decline

As a CEO, it’s clear my peers do not take their tax savings and reinvest it in higher wages and job creation – they tend to keep it all for themselvesI am a multimillionaire in Tennessee, one of the more deeply conservative states in America. In my circle of friends here, I’m often met with scorn for wanting to tax myself and all of my fellow wealthy friends. I’m called a “class traitor” by some, and altruistic by others, but neither are quite true.The way I see it, the reason for any law is to temper the worst vices of individual human nature, so our society can work for everybody. Not just for the rich or the poor or even just for the middle class – but for everyone.Individual actions aren’t enough to counter an entire system that supports and incentivizes the worst of human greedStephen Prince is the vice-chair of the Patriotic Millionaires and a businessman who founded National Business Products, now known as Card Marketing Services, in 1993 Continue reading...

Only top 5% of earners would pay more tax under party, shadow chancellor saysJohn McDonnell has rejected suggestions that Labour’s economic policy would increase prices and lower wages, arguing that structural changes would challenge “extreme inequality” and unstable investment.Speaking after Labour’s manifesto was unveiled on Thursday, the shadow chancellor said people would have much more control over their lives and the economy as a result of the party’s plans to restore trade union rights and collective bargaining.Related: Labour manifesto: what it says and what it means Continue reading...

Adding up the cost of England’s gardens … from Capability Brown to geraniums and neat lawns in the suburbs“I love visiting other people’s gardens,” admits Roderick Floud. Nothing unusual about that, of course: what’s not to like about strolling around beautifully landscaped lawns and borders? But as well as admiring the flowers, Floud – a professor of economic history – has a keen eye for the investment of time, skill and money needed to create and maintain a garden. He has written a new kind of garden history, one which focuses on the economics of our love affair with water features and colourful flower beds.Beginning with the restoration of Charles II in the 17th century, Floud’s study ranges across 350 years of English history, from the designers of royal estates who could earn millions of pounds in today’s money to jobbing gardeners mowing lawns in the suburbs. He explores gardening as a major industry, one largely excluded from GDP figures, yet now worth at least £11bn, one which has “changed the face of England not once but many times”. Continue reading...

Critics could argue forecast revenues from party’s tax plan are on the optimistic side

Jeremy Corbyn has three weeks to win the argument with his strikingly radical tax and spending pledgesLabour’s 2019 general election manifesto, launched on Thursday by Jeremy Corbyn, is its most radical in more than 35 years. It will strike a chord with millions who want categorical change in Britain. The chord will be loudest with those who have seen life chances stall and fracture, and communities weaken, during the fiscally strangulated years that have followed the financial crash. It will ring out, too, for those who want inequality reversed, taxes increased to renew public services and the climate crisis placed at the centre of public policy.The manifesto raises the bar. Its ambitions match the seriousness of the times. The green agenda is the single most important pledge, an overarching imperative. But it is not the only issue the manifesto confronts in bold terms. The neglect of towns and regions, the need for modernised transport and infrastructure, the importance of reskilling, and of rights against employment injustice, the case for affordable housing, the demands for child and elderly care, a better deal in education and health spending all cry out too. Continue reading...

Party leader has taken postwar socialist ideas and added a modern populist twist

UK ran £11.2bn deficit last month, with fastest rise in public spending in 15 years

As global economic risks deepen and multiply, equity values rise further - is this what’s called a ‘melt-up’?This past May and August, escalations in the trade and technology conflict between the US and China rattled stock markets and pushed bond yields to historic lows. But that was then: since then, financial markets have once again become giddy. US and other equities are trending towards new highs, and there is even talk of a potential “melt-up” in equity values. The financial-market buzz has seized on the possibility of a “reflation trade”, in the hope that the recent global slowdown will be followed in 2020 by accelerating growth and firmer inflation (which helps profits and risky assets).The sudden shift from risk-off to risk-on reflects four positive developments. First, the US and China are likely to reach a “phase-one” deal that would at least temporarily halt any further escalation of their trade and technology war. Second, despite the uncertainty surrounding the UK’s election on 12 December, Prime Minister Boris Johnson has at least managed to secure a tentative “soft Brexit” deal with the EU, and the chances of the UK crashing out of the bloc have been substantially reduced.Related: The next global recession will be immune to monetary solutions | Nouriel Roubini Continue reading...

Prospect of crashing out of EU leaves UK more exposed to global financial risks, thinktank saysThe UK’s GDP growth rate will slip to 1% next year even if a no-deal Brexit is avoided, according to the Organisation for Economic Development and Cooperation.The OECD said the economy would slow down from growth of 1.2% this year if parliament passes Boris Johnson’s Brexit deal before the 31 January deadline, before returning to 1.2% in 2021. Continue reading...

On the day of Labour’s manifesto launch, economics editor Larry Elliott and financial editor Nils Pratley discuss the party’s radical plans to nationalise key British industries. Plus Max Rushden on the return of Jose Mourinho to the Premier LeagueLabour’s plans to bring key industries back into public ownership will be laid out in the party’s election manifesto today. There are nationalisation plans for energy, water, trains, mail and broadband in a radical shake-up of the economy worth tens of billions of pounds. With business leaders sceptical and the Conservative party attacking the plans as a return to the economic chaos of the 1970s, where does the truth about nationalisation lie?The Guardian’s economics editor, Larry Elliott, and financial editor, Nils Pratley, tell Anushka Asthana that public ownership of industries plays a significant role in the history of the Labour party and postwar Britain. Continue reading...