Rolling coverage of the latest economic and financial news, as America hits Huawei with a double-whammy

CEO Gerald Reichmann urges workforce not to be ‘distracted’ by talks over firm’s futureBritish Steel has told its 4,500 employees that “at present” it plans to pay them at the end of the month, as talks between its owners, lenders and the government continue over a £75m bailout package.The company, which has been charged £20m in loan interest and fees by its private equity owner, Greybull Capital, says it needs the government to contribute to a rescue deal to prop up its finances, blaming Brexit-related issues. Continue reading...

40 researchers, educators and campaigners on inequality criticise the makeup of the IFS Deaton review’s expert panel. Plus letters from David Sang and Ian MitchellWe welcome the idea of a major review of inequality (Britain ‘risks heading to US levels of inequality’, 14 May). With Brexit looming and recent analyses linking income inequality to voting for rightwing populists, mass shootings, mental ill health, status consumerism and domestic violence, this is indeed a critical issue for our times.However, there is widespread concern about the composition of this review’s “expert panel”, which has a majority of white economists. Although the panel includes an expert on health inequalities, none of the world’s leading experts on the health and psychosocial effects of income inequality itself are included, nor is there expertise in the spatial aspects of inequality. And there is a conspicuous absence of world-leading economists for whom income inequality is their primary focus – no Piketty, no Stiglitz, no Galbraith, no Frank, no Fitoussi, no Palma, no Chang, no Milanovic. Sir Angus Deaton, leading the review, stated in the journal Science in 2014 that he “get[s] angry” about the theory that inequality has psychological and social effects on health – perhaps he has changed his mind now that his own research has uncovered rising deaths from addiction and suicide in the US, but there are many researchers with much greater depth in this area. Even more troubling, there is no ethnic minority representation on the “expert panel”, no people with lived experience of inequality, no representatives of charities, trade unions or other NGOs. The number of disciplines represented is also small, although the impact of inequality goes far beyond economics. Continue reading...

The last Ebola outbreak, in Sierra Leone, left that country with a huge debt to the IMF, for loans taken on to fight the disease, writes Frances MiddletonAs a veteran door knocker with Christian Aid’s red envelopes, I was horrified to read about the worsening Ebola crisis in the Democratic Republic of the Congo (Report, 15 May). The last Ebola outbreak, in Sierra Leone, left that country with a huge debt to the IMF, for loans taken on to fight the disease. That money is still being repaid, leaving Sierra Leone’s healthcare programmes, such as they are, even worse off. In a country of 7 million people there are 130 doctors.Sierra Leone is the focus of this year’s Christian Aid Week, aiming to fund more health clinics to reduce the number of women who die in childbirth – currently 10 a day. Part of the campaign is a petition asking the government to lobby the IMF to cancel this debt. Please sign it on the Christian Aid Week website. Continue reading...

Germany’s economy has returned to growth, but retail spending has fallen in China and the US

A damning new study on social injustice should mirror the postwar Beveridge report, and call for wholesale changes to the economyReports by the great and the good are ten a penny. All too often they are an excuse for kicking a tricky political issue deep into the long grass. Only rarely do they count for much. Maybe, just perhaps, the review into inequality launched by the Institute for Fiscal Studies and headed by the Nobel prize-winning economist Sir Angus Deaton will be one that makes a difference. It has the potential to be a very big deal indeed, as important in shaping the Britain of the 21st century as the Beveridge report was in the mid-20th century.Related: Tackling inequality means addressing divisions that go way beyond income | Gaby HinsliffRelated: Britain risks heading to US levels of inequality, warns top economist Continue reading...

Rolling coverage of the latest economic and financial news, including the latest developments in the US-China trade row

MPs should take inspiration from President Kennedy’s call in 1961 to put a man on the moon within a decade, says Colin Hines. Plus letters from John Stone and Paul AtkinYour editorial (13 May) correctly states that Britain needs a Green New Deal now, and indeed in your letters page last autumn (10 September) our report detailing what form such a “jobs in every constituency” Green New Deal could take, and how to pay for it, was supported by a cross-party group of MPs, NGO leaders and academics. Since then the idea has gained international traction thanks to the likes of Alexandria Ocasio-Cortez and the support of grassroots movements. The US approach also includes the need to improve economic security for the majority, which has widened its support base. Finally, the scientific data underscoring the need to act in the next 10 years to tackle climate change and biodiversity loss has resulted in unprecedented activist pressure on politicians to respond.As a result, all opposition parties are calling for the declaration of a climate emergency, but the government’s actual policies – from fracking to the rollback of support for renewables and energy efficiency – are making things worse. Yet all is not lost. At the end of last year more than 60 Tory MPs signed an all-party letter calling on the prime minister to back a net zero-emissions target ahead of 2050. Clearly the disconnect here is the lack of necessary political will. MPs should take inspiration from President Kennedy’s call in 1961 to put a man on the moon within a decade, but this time the priority must be to save the planet, rather than leave it.

Rising vacancies and falling unemployment fail to push firms into raising wagesWage growth has slowed in the UK to put a squeeze on living standards despite the unemployment rate falling to its lowest level for more than 40 years.The fall in pay growth to 3.3% on the year in the three months to March, from 3.5% in the three months to February, also came as the buoyant labour market recorded a rise in employment to a new high of 32.7 million.Related: 'You can’t really win': 4m Britons in poverty despite having jobsWholesale and retail trade, repair of motor vehicles and motor cycles (139,000).Human health and social work activities (134,000).Accommodation and food ( 92,000).Professional, scientific and technical activities (80,000).Manufacturing (61,000). Continue reading...

World markets hit by further losses on Tuesday in wake of Beijing’s retaliatory tariffs on US imports worth $60bnWorld markets plunged further on Tuesday following heavy losses on Wall Street after China delivered a swift rebuff to Donald Trump by imposing retaliatory tariffs on $60bn of US imports.Beijing ignored warnings from Trump about the dangers of escalating the trade conflict and sent tremors through global markets by announcing a new 25% import duty on a range of US products.Related: US-China trade deal: Donald Trump insists there's no rush to secure deal Continue reading...

Beijing retaliates to America’s new tariffs with fresh taxes on US food, machinery and consumer goods, despite president Trump warning them not to

Deputy governor of Bank of England says UK faces longest fall in business investment since second world warA senior Bank of England policymaker has warned more delay to Brexit could further depress business investment and damage the long-term economic outlook.The Bank’s deputy governor, Ben Broadbent, said a delay beyond the new deadline of 31 October would harm Britain’s prospects as it faced the longest run of falling business investment since the second world war.(May 23, 2019)Related: Interest rates: welcome to UK plc, an economy in limbo | Larry Elliott Continue reading...

Despite all the talk of supporters being gouged over travel costs, this is the way markets workFor supporters of Liverpool, Spurs, Arsenal and Chelsea it has been quite a week. First they had the joy of seeing their teams get through to the finals of Europe’s two cup competitions: the only time there has been a clean sweep by English clubs. After the euphoria, though, came a hard lesson in basic economics.As the final whistle blew at Anfield, following Liverpool’s amazing comeback against Barcelona, anyone logging on to airline websites found the price of a ticket to Madrid – where the final of the Champions League will be held – had rocketed to more than £700 on the weekend of the match. When Spurs scored a last-minute winner against Ajax to join Liverpool in the final, prices rose again and not just for direct flights to Madrid but for alternative routes as well. Continue reading...

Ambivalence over Brexit may be the only thing stopping it from being the party of progressive reformOur landscape is changing and this spring the pace is accelerating. It’s there in the mounting public recognition that the challenges society confronts are common to us all – from climate change to the growth of food banks – and so must require a common response marshalling common resources.It feels as if we’re at an inflection point, whether in the degree of support for Extinction Rebellion, the cross-party concern to promote social mobility or the growing acceptance that gender should be non-binary.The derided state is emerging as an essential partner in co-creating a value-creating capitalismA smarter capitalism needs new forms of ownership to complement the private limited company Continue reading...

Demonstrators say Brexit and austerity have increased support for leaving the UKThousands have demonstrated in Cardiff to call for an independent Wales in what organisers said was the first such march in Welsh history.Some protesters said they had been lifelong supporters of independence, while others said they were converted by Brexit and austerity. A recent poll for ITV Wales showed that 12% of people support self-government.Related: How an act of anti-Welsh vandalism is fuelling the push for independence | Michelle Thomas Continue reading...

Rising pensioner wealth has muddied statistical measures of inequality and family poverty. It is time for fundamental changeOlder people are a nervous, anxious bunch. We know this from the way they vote. By quite a large margin, the over-65s vote for the Conservative party.Shoring up their wealth has become a priority during a period when Britain’s economic outlook has become more uncertain and their own finances may need to cope with years, possibly decades, of failing health. A more enlightened viewpoint might have led them to vote for governments that proposed pooling a greater share of wealth to ease these fears. But they haven’t.Labour wants to prise pensioners away from the Tories with promises to match their generosity. That’s a costly business Continue reading...

The president’s bullish advisers may be taking a hard line, but the chances of a deal are better than they lookDuring Donald Trump’s campaign to be president, he regularly cited China’s export subsidies as “evil”, and in his manifesto he pledged to “cut a better deal with China that helps American businesses and workers compete”.The president turned decades of musings into a policy mission after his son-in-law, Jared Kushner, handed him a book by the academics Peter Navarro and Greg Autry – Death by China – which set out to explain how China manipulated the global trade system for its own ends.The conciliatory language and the measured response from Beijing is reassuring Continue reading...

US has hiked the tariffs on $200bn of Chinese goods to 25% overnight, from 10%, escalating the battle between the two economic powers

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The time has come to rewrite the rules so that the world’s largest economies are able to trade peacefullyDonald Trump has been an opponent of free trade deals all his public life. A protectionist message was central to his run for the White House. On the campaign trail he promised “reversing two of the worst legacies of the Clinton years”: railing first against the North American Free Trade Agreement, Nafta, and second against China’s entry into the World Trade Organization. His bluster led to a new trade agreement brokered with Canada and Mexico, although it is unclear whether the changes achieved were little more than cosmetic. Unburdened by modesty or honesty, Mr Trump hailed his “new Nafta” agreement as “truly historic”.Having decided “trade wars are good, and easy to win”, the US president has for months been on course for a battle with Beijing. The trouble is that China is not a Mexico or a Canada, which appear prepared to feign a defeat for a quiet life with a bigger bully. China is a pugilistic power, led by its most powerful leader in decades, intent on recovering global respect. That might explain why, on the cusp of a deal between Washington and Beijing, China tore up the negotiating text that both countries had been using as a blueprint for a sweeping trade pact. In retaliation, the US imposed higher tariffs on $200bn worth of Chinese goods, sparking fears for a full-blown trade war. Global trade could decline by 2%, with GDP slowing by 0.8%. Continue reading...

Dispute between economic powerhouses is reminiscent of cold war standoff in CubaThe economic conflict that has been simmering between the US and China has entered a new and dangerous phase. Without question, the world is closer to a full-blown trade war than it has been since the 1930s.The issue now is whether the two sides can step back from the brink. So far, financial markets think the standoff is akin to the Cuban missile crisis of October 1962, the closest the US and the Soviet Union came to nuclear conflict during the cold war. Continue reading...

Damaging trade war could destabilise the already slowing global economy

If we want to head off mass extinction, we should grasp this once-in-a-species chance to throw out the old rules completelyWe seem to be caught between parallel universes. You may have caught a glimpse of the first last week, when GDP was announced to have grown by 3.2% in the first quarter of 2019, a “blockbuster” result that the White House economic adviser Kevin Hassert told CNBC is “absolutely” sustainable in the coming months and years. With unemployment at its lowest levels since 1969, Democrats eyeing the 2020 elections are starting to worry the economy might even be too good, making it more difficult to beat Trump next year.Related: How to fix capitalism: nine expert solutions for America's broken systemPreventing runaway catastrophe means throwing the logic of endless accumulation out the windowRelated: Fiscally-conservative Democrats have declared war on the Green New Deal | Kate Aronoff Continue reading...

Trade tariffs have been a recurrent theme of US history ever since the late 18th centuryFor years the rivals had been shaping up for a fight. Eventually, the talking and the insults stopped and there was a duel, and it was America’s leading proponent of trade tariffs who came off worse.Donald Trump and his stand-off with China’s Xi Jinping? No, this was how Alexander Hamilton – the first US treasury secretary and the originator of the protectionist ideas enthusiastically embraced by the current occupant of the White House – met his end. Continue reading...

The battle between the world’s two largest economies is hotting up – here’s the lowdown

Factory output up 2.2% – the strongest quarterly performance since 1988Britain’s economy strengthened in the first three months of the year, with growth of 0.5% helped by unprecedented stockpiling by manufacturers fearful of the impact from a no-deal Brexit.It was an improvement on 0.2% growth in the previous three months and was bolstered by the strongest quarterly performance for manufacturers since 1988, with factory output up 2.2%, according to the figures from the Office for National Statistics. Continue reading...

The Greek economist is back battling the EU establishment, this time at the helm of a new movement, DiEM25. Backed by Pamela Anderson and the world’s most famous cyborg, he is fighting ultra-right populism with a radical agenda he thinks can restore people's lost faith in democracy. As the European parliamentary elections approach, is anyone listening? Phoebe Greenwood finds out

Higher tariffs have been imposed on a broader range of imports as talks continue

US is poised to hike tariffs on Chinese goods, as vice-premier Liu He travels to Washington for crunch talks. This live blog has closed. Follow the link below for the latest updates.

Negotiators working to avoid escalation in tariffs that could result in full-scale trade warInvestors were hopeful of a breakthrough in talks between the US and China as negotiators worked to prevent an escalation in tit-for-tat tariffs that threaten a full-scale trade war between the world’s two largest economies.Amid rising concerns that President Donald Trump would unilaterally raise tariffs from 10% to 25% on $200bn (£153bn) of Chinese goods on Friday, Beijing scrambled to assure Washington that it was sincere in wanting to reach a deal.The roots of the dispute come from US president Donald Trump’s “America first” project to protect the US’ position as the world’s leading economy, while encouraging businesses to hire more workers in the US and to manufacture their products there. Continue reading...

A regional revolution in England is long overdue. Here’s how to deliver itGet off the train in Wigan and the first thing you see is a branch of Cash Converters. Turn right, up Wallgate, and you are in a landscape familiar in post-industrial Britain, with many outlets selling either saturated fat, nicotine or alcohol. Life expectancy for men is 12 years lower than in Britain’s most prosperous areas.Related: Most depressed English communities 'in north and Midlands'Related: North of England continues to see bigger cuts in public spending, report finds Continue reading...

US president tells rally China ‘broke the deal’ and publishes list of imported products that will face higher tariffs from FridayDonald Trump has accused China of “breaking” a deal it had reached in trade talks with the US, as the two countries moved to within 36 hours of a full-scale trade war and the US trade representative’s office filed the formal paperwork needed to increase duties on $200bn (£153bn) of Chinese goods.Speaking at a rally in Florida on Wednesday night, the US president said: “By the way, you see the tariffs we’re doing? … Because they broke the deal. They broke the deal. So they’re flying in, the vice premier tomorrow’s flying in – good man – but they broke the deal. They can’t do that, so they’ll be paying.”

The UK’s General Electric Company was a global tech titan in the 1980s. Then it was swept away in the riptide of ThatcherismChances are that you have learned rather a lot about Huawei. That the Chinese giant is one of the world’s most controversial companies. That security experts, those people we pay to be paranoid on our behalf, warn its telecoms kit could be used by Beijing to spy on us. That Theresa May was begged by cabinet colleagues to keep the firm well away from our 5G network – yet ignored them. And that one or more senior ministers were so eager to prove their concern for national security that they leaked details of their meeting, thus breaching national security.So you can already guess what will happen when Donald Trump’s secretary of state, Mike Pompeo, meets May and her foreign secretary, Jeremy Hunt, on Wednesday. Once the pleasantries about Harry and Meghan’s baby are over, top of America’s agenda will be to warn No 10 of the threat Huawei poses to British privacy – and to restate that Washington may retaliate by freezing London out of its intelligence network.Related: The Huawei incident points to a deeper lesson for Great Britain | Larry Elliott Continue reading...

Trade war fears send the Dow Jones down by over 500 points, as London stock market hits one-month low

European commission warns of ‘major shock’ and slashes growth forecast for the unionThe threat of a full-blown trade war between the US and China and Brexit uncertainty are posing mounting risks to the EU economy, the European commission has warned, after downgrading its growth outlook for 2019.Brussels’ executive arm said a recent slowdown in global trade volumes had taken its toll across the continent, as it cut its GDP growth forecast for the 28-nation bloc for 2019 to 1.4%, down from a forecast of 1.9% in the autumn. Continue reading...

Report calls for change of priorities and culture to avert catastrophic biodiversity lossGovernments need to ramp up investment in nature restoration and raise the tax burden on companies that degrade wildlife, according to recommendations made to the G7 group of rich nations.The proposals are part of a growing debate on how to radically change humanity’s relationship with nature in the wake of a new UN mega-report that showed an alarming decline in the Earth’s life-support systems.The Global Assessment Report is the most comprehensive study of life on Earth ever undertaken. It serves as a health check for the planet and is compiled by the United Nations Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) from more than 1,500 academic papers and reports from indigenous groups. The overall message is that the world’s life support systems, on which humans depend, are in trouble. Remedies are possible, but they require urgent, transformative action because policies until now have failed to halt the tide of man-made extinctions. The authors hope the mega-report will guide policymakers and generate public discussion on biodiversity (including wildlife, food crops, livestock and ecosystems) in the same way that the climate debate is shaped by reports from the Intergovernmental Panel on Climate Change. Continue reading...

Analysts blame Brexit uncertainty as April data shows 10% fewer private sales than last yearNew car sales fell more than 4% in the UK last month, the second-lowest April since 2012, with analysts blaming consumer reluctance to make significant purchases while Brexit uncertainty persists.Just over 160,000 new cars were sold, with 10.3% fewer registrations by private motorists than a year ago. Diesel sales continued to decline, and now account for just 29% of the market for new cars, compared to 50% in the year before the VW emissions scandal of 2015.Related: Scrapping UK grants for hybrid cars 'astounding', says industry Continue reading...

Attendance of chief negotiator reduces fears of collapse of discussions after Trump tweetsChina’s chief trade negotiator will travel to Washington this week, according to the commerce ministry, tempering fears that talks to resolve a protracted trade war between the US and Beijing had been scuppered.Liu He, a vice-premier, will hold negotiations in Washington on Thursday and Friday, according to the Chinese ministry, which did not elaborate on the agenda.Related: Why did Trump threaten to raise China tariffs – and what now? Continue reading...

Much of the middle class used to enjoy relative autonomy but now they are treated as automatons, says Pete Dorey, while Roger Brown says the real culprit is financialisationI fear the plight of the middle class is even worse than Larry Elliott portrays (Welcome to a world of rich and poor with little in between, Journal, 3 May). In addition to being “hollowed out” and suffering stagnant incomes, much of the middle class – public and private sector – has been subjected for two decades to increasing workplace monitoring and micromanagement, bureaucratic control, corporate compliance obligations, target-chasing, constant appraisals and monitoring, the loss of automatic pay increments based on length of service, hot-desking in battery-farm open-plan offices, “presenteeism” and attacks on “unaffordable” occupational pensions.Much of the middle class used to enjoy relative autonomy, creativity and professional discretion, based on expertise and trust, in performing their jobs; not any more. Now they are treated as automatons, with any sign of individuality or personality viewed with suspicion by management. Continue reading...

One in seven companies would have collapsed were it not for low interest rates, says KPMG

Stocks in Asia plummet after signal that US will hike import tax to 25%, dealing blow to hopes of a lasting dealDonald Trump has escalated the trade war with China by announcing plans to hike the tariff imposed on $200bn of Chinese goods from 10% to 25% on Friday.The US president also threatened to impose tariffs on all Chinese trade with America, a move that could further destabilise relations between the two economic powers.For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars....#Trump threat to impose 25% #tariffs on remaining Chinese goods may ironically be a sign of real progress. US, #China are nearing final deal but were bound to hit a wall. China shd have been expecting the Trump threat in final stages, could have compromise in back pocket ready.. Continue reading...

Beyond the leaks and even the data security lies a message about our attitude toward manufacturingThe debate over whether the Chinese telecoms company Huawei should be involved in building Britain’s 5G network has centred on two questions: was the former defence secretary Gavin Williamson the source of the leak from the National Security Council, and would Huawei represent a security threat?These are certainly important questions, but there is a third issue that deserves an airing – namely, why a country that emerged from the second world war with a technological edge in computers and electronics should require the assistance of what is still classified as an emerging economy to construct a crucial piece of national infrastructure. Continue reading...

The Bank of England governor believes the economy is at risk of overheating but there is no solid base for his predictionThe Bank of England governor Mark Carney must rank as one of Britain’s most popular policymakers. Since he took the post in 2013, the Canadian has often appeared to be the only adult in public life who can stay calm in a crisis. His recent observation that companies and financial markets must recognise the risks of climate change has made him a darling of the environmental movement.It is strange then that he should risk his reputation as a solid guardian of monetary policy – and with only nine months to go before he steps down from the role – with a warning that interest rates will soon rise and at a faster pace than previously expected, without a solid base for his prediction.The only reason economic activity has picked up in the US, eurozone and China is they dropped plans to raise rates Continue reading...

The Conservatives were punished in local government polls because George Osborne’s disastrous economic policy has caught up with themIt did not take the local election results to tell us how unpopular this chaotic government is; but they have certainly rammed the message home. I am wryly amused by reports that the main reason why the Tories are unpopular with certain voters (or leave voters) is that people are dissatisfied with the government for failing “to deliver Brexit”.I am also amused by a report that Michael Gove, a Brexiter minister, believes a failure to deliver Brexit would be “a disaster”. Personally, I can think of few political developments that would be less disastrous. But there you are. Continue reading...

Services companies returned to growth after contraction in previous monthBritain’s economy recovered some of its momentum last month after businesses shook off the threat of a no-deal Brexit, as data from the country’s dominant services sector showed modest growth.Services companies returned to positive territory after a brief period of contraction in March, according to a closely watched survey, while further data this week revealed that a dive in manufacturing exports was offset by a mild recovery in the construction sector. Experts said the figures indicated the UK economy was moving ahead but with a reliance on stockpiling – in case of a disorderly Brexit – rather than new orders to boost activity. Continue reading...

The US economy added 263,000 jobs in April, easily beating expectations of 185,000. The jobless rate fell to a 50-year low of 3.6%

Economy has now added jobs every month for 103 months in a row as wages rose an annual rate of 3.2%The US economy added 263,000 jobs in April, continuing an unprecedented run of jobs growth as the unemployment rate fell to 3.6%, a near 50-year low.The economy has now added jobs every month for 103 months in a row, the longest streak of job creation since records began. The unemployment rate is now the lowest it has been since December 1969.JOBS, JOBS, JOBS!

As the rewards of the digital age are hoarded at the top, automation and flexible working are hollowing out the rest of the economy

An independent Scotland in full control of all of its finances would be able to do so much more, writes Liam Cunningham, while Anne Dalrymple praises Nicola Sturgeon’s grit and compassionThe letters by Alex Gallagher, Maureen Henry and Gerard Scott (30 April) show that the correspondents’ unswerving attachment to the union is clouding their appreciation of the facts. In most areas where the Scottish government has competence, Scotland outperforms the other nations of the UK. This is despite successive cuts to the Scottish block grant and the Scottish government spending in the region of £60m per year trying to mitigate austerity measures introduced by the Conservative-led government at Westminster.This is the reason for the SNP currently having a more than 20% lead over the second-placed party in polls in all three levels of government (Holyrood, Westminster and the EU); people recognise that they are doing a good job with limited resources and severe handicaps imposed by an external agency. An independent Scotland in full control of all of its finances, both raising and spending, would be able to do so much more for the people of this country than is currently possible.