In contrast with the mood of largesse, economists say Johnson’s deal will lower state revenues by £26bn a yearIf the president of the United States, a non-European, feels entitled to air his views about Brexit, I see no reason why the outgoing president of the European council, Donald Tusk – a much more agreeable Donald – should not air his.Quoting Hannah Arendt, Tusk said: “Things only become irreversible when people start to think so.” Tusk, who rightly thinks the very idea of Brexit is, to quote another US observer, Michael Bloomberg, “a mistake”, says: “Don’t give up.”It would be better to tell those Brexiters who say 'the people have spoken' that, with a lot more knowledge about the implications, the people should be allowed to speak again Continue reading...

No wonder the wealth tax turns the Gray Lady white as a sheet: it will help the needy and its author is a good bet for presidentOn Thursday, the New York Times reported on a study showing that Elizabeth Warren’s proposed wealth tax (and presumably Bernie Sanders’ even more ambitious version) would reduce economic growth by nearly 0.2% a year, over the course of a decade.Related: Elizabeth Warren rips into billionaires who oppose wealth tax in scathing adWarren has repeatedly argued that taxing the super rich is the fairest and most efficient way to pay for critical needsRelated: Elizabeth Warren helps out 'confused' billionaires with new tax calculatorRobert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. He is also a columnist for Guardian US Continue reading...

Labour’s plan for free broadband is one of many high-spending promises made by both sides: and they seem to be popularVoters are becoming more open to calls for a radical change to the way the economy is organised and more accepting of the role of government in pushing through significant reforms, according to a major poll of public attitudes last week.Sixty per cent of respondents to a YouGov poll of more than 1,600 people were in favour of the next government making “moderate” or “radical” changes to the way the British economy is run, while only 2% said the government should leave the economy as it was. Those in favour of change split between 29% who backed moderate policies and 31% who wanted a more radical agenda. Continue reading...

Data shows the economy has been weaker since 2010 than under Labour between 1997 and 2007How did the Conservatives get away with inventing and publicising a ridiculous figure for Labour spending? Their claim that Labour’s plans would cost £1.2tn included many things the party ruled out doing, such as abolishing public schools; it doubled the cost of policies such as bringing the National Grid into public ownership; it counted 10-year commitments (such as making housing more energy-efficient) as happening over five years; and so on.Related: Labour derides £1.2tn Tory costing claims as 'work of fiction' Continue reading...

The party hasn’t even published its manifesto yet – but already it’s changed the notion of what elected politicians can achieveIn today’s troubled Britain, it is commonplace to say that the political parties need to come up with some fresh ideas to transform the country. But what happens if one of the big parties starts announcing radical new policies and yet most people don’t seem to be listening?That sobering question hangs over Labour’s hugely ambitious but so far only moderately successful election campaign, judging by the slow improvement in its poll ratings.It's making promises of a scale and novelty rarely encountered in the often content-free world of British electioneering Continue reading...

The health service is in crisis and Tory cuts are to blame. But bigger budgets are not the only answerThe health service is a big issue in any UK election. There are two main reasons why, this time round, the arguments are particularly fraught. One is the sense of crisis engulfing the system after a decade of cuts, with A&E waiting times in England the worst on record, and a shortage of 100,000 staff (in a workforce of 1.3 million) predicted by experts to grow to 350,000 by 2030. Allied to this is a consensus that many of the long-term challenges faced by the system are simply not being addressed. These include the overhaul of social care, which is universally acknowledged to be necessary but apparently no closer to happening than it was in 2010, and huge rises in the number of people who are obese, and children being referred to mental health services.The second theme is the prospect of US demands for market access and higher drug prices as part of any post-Brexit trade deal. There were typically mixed and confused signals on this issue during the summer from President Trump, and strong denials from Conservative leadership contenders that the NHS would feature in bilateral talks. But set against such assurances are the US administration’s stated goal of raising prices for US medicines abroad, in order to lower them at home, and expert opinion. Andrew Hill, an adviser to the World Health Organization, predicts that the NHS drugs bill could rise from £18bn to £45bn a year. Continue reading...

Rolling coverage of the latest economic and financial news, including reaction to Labour’s pledge to bring BT under partial state ownership if elected

In adopting the Green New Deal, the party has a plan for a more inclusive economy. And even the Tories have done a U-turnMany people want this election to be about whether Brexit will solve or exacerbate the problems the UK faces. But most of these problems were born inside the UK’s borders, and long predate the Brexit referendum.This week’s growth figures showed a 0.3% rise in GDP in the last quarter, removing the immediate threat of a UK recession. Yet, a decade after the global financial crisis, the British economy remains weak and unbalanced. Economic growth remains highly dependent on consumption fuelled by private debt, rather than investment. The financial sector has largely retreated from funding the real economy, and today more than 80% of its revenue is channelled into the finance, insurance and real estate (“fire”) sectors.We need to move away from 'shovel-ready' projects and think about 'green transition' projectsRelated: In 1989, capitalism won. Today its greatest ideological challenge is the planet | Larry Elliott Continue reading...

Institute for Fiscal Studies launches scathing review of plans to cut in-work poverty

Sector slows for sixth month amid growing uncertainty over pact with WashingtonChina’s manufacturing sector slowed for the sixth month in a row in October, and by more than expected, as the tit-for-tat trade war with the US and weaker consumer demand dampened activity in the world’s second-largest economy.Industrial production, the main engine of the Chinese economy, grew at annual rate of 4.7% in October, down from 5.8% in the previous month, according to the National Bureau of Statistics.Related: Burberry and Cathay Pacific profits dented by Hong Kong protests Continue reading...

Charlie Mason and Richard Middleton take issue with Larry Elliott’s assertion that the EU is pro-business and anti working peopleLarry Elliott expresses support for Brexit on the basis that the EU is pro-business, anti working people, and the embodiment of neoliberal ideas (Inside the Guardian, 9 November). However, he does not confront the fact that his decision to vote leave has provided support for an even more extreme form of neoliberalism promoted by the leave campaign of Boris Johnson, Michael Gove and the ERG. Out of the frying pan into the fire might be the appropriate observation.

Rolling coverage of the latest economic and financial news, including German growth figures

The Tories’ obsession with policy costings as the only measure of economic credibility is austerity logic in actionThis week the election campaign has been squarely focused on public finances, with the Conservatives publishing a widely derided £1.2tn assessment of Labour’s spending plans. In spite of the debunking of these figures, the party has doubled down with a separate assessment of Labour’s tax plans – it says Labour’s spending plans outweigh how much it plans to collect in tax, leading to a £2,400 per taxpayer “gap” that will need to be filled by borrowing or raising taxes.Of course, the Conservatives are aware of the quality of the claims they are making. As a tactic, the £1.2tn is straight out of the “£350m a week” playbook: come up with a big figure, and no matter if it’s indefensible, wait for it to stick. The more your opponents complain, the more they end up repeating the big number until it’s indelibly imprinted on voters’ minds.While we’re all obsessing over the numbers, we lose sight of the questions that really matterRelated: Worsening public finances give next PM a sharp 'reality check' Continue reading...

Drop of 0.1% blamed on pre-Brexit concerns and declines in employment and wages growthBritain’s shops were hit by a surprise downturn in sales in the run-up to Christmas after official figures showed a 0.1% drop in October.City analysts had expected consumers to continue their month-on-month spending increases with a 0.1% rise, albeit largely built on heavy discounting by retailers. Continue reading...

Tax revenues ever more reliant on small group of high earners, says Institute for Fiscal StudiesThe top 1% of earners in the UK now account for more than a third of income tax paid to the government, following changes over the past decade that have left almost half the population exempt from making payments.In research underlining the dual nature of Britain’s income tax structure, the Institute for Fiscal Studies said above-inflation increases in the personal allowance to £12,500 a year meant 42% of adults paid no income tax. Continue reading...

Consumer prices index inflation falls to 1.5%, in a boost to households, thanks to lower energy bills

Cuba's strange dual system means that public sector workers and those in private enterprise are paid in different currencies. Laura, a GP, earns Cuban pesos, whereas Rogelio, who was a doctor, now makes more in an hour as a taxi driver than he used to in a month because he is paid in 'convertible pesos', which are worth 24 times more. As doctors and teachers struggle to buy basic goods, is it time for change?

Heavy discounting at furniture stores also helps pull down rate from recent peak of 3.1% in 2017Inflation fell to 1.5% in October, its lowest level in three years, pushed down by heavy discounting at furniture stores and a decline in the price of energy.The Office for National Statistics said price cuts across the recreation and culture sectors coupled with the falling cost of household goods more than offset increases to clothing and footwear to pull down inflation from its recent peak of 3.1% in 2017.RPI

In a reversal from a few decades ago, American consumers are facing oligopolies while Europeans benefit from competition

Slowdown in growth and Brexit uncertainty are making businesses more cautiousEmployment in the UK has fallen at its fastest rate in four years amid growing evidence that a slowing economy is taking its toll on the labour market.Figures from the Office for National Statistics showed that pay growth had fallen back in the three months to September, leading to speculation that the jobs market is past its peak. Continue reading...

Store closures, shift to online shopping and political uncertainty fuel £147m loss at LandsecLandsec, which owns shopping centres including Trinity Leeds, Westgate Oxford and Bluewater in Kent, has slumped to a first-half loss after being hit by store closures as retailers battle weak consumer spending and a shift to online shopping.The property group’s chief executive, Robert Noel, said the general election and Brexit delay meant “continued uncertainty in the near term”. “The retail market continues to be challenged as retailers adapt to structural change, rising costs and a more cautious consumer,” he said. “Limited demand for space and poor investor sentiment is impacting rental and capital values.” Continue reading...

Number of people in work across Britain has fallen by the most since 2015

Millions of people with disabilities need help to get out of bed, wash and go to the toilet. Their needs must not be ignored in this electionI can’t help but wonder what the social care equivalent of the well-worn NHS general election photo op would be. Instead of health secretaries putting on scrubs and a party leader looking sympathetic next to a patient’s bedside, perhaps Boris Johnson would like to wait with a paraplegic as she soils herself in her front room because she has no assistant to help her get to the toilet.This is not so much a public policy issue as a full-blown humanitarian crisisRelated: Labour to announce it would reverse austerity cuts to adult social care Continue reading...

Is the regime at risk of the kind of protests seen in Hong Kong, France and Chile?For more than a decade, China has accounted for a quarter or more of global economic growth. With its economy currently navigating a rough patch, the question is whether this impressive performance will persist.Cassandras pointing to the possibility of a Chinese growth slowdown regularly invoke the spectre of a middle-income trap. Now that China is no longer poor, they warn, growth rates will fall, just as they have in all but a handful countries that have reached the same income level. Growth is harder, they observe, when it can no longer be based on brute-force capital accumulation. Now, it must be based on innovation, which is difficult to bring about in an economy that is still centrally directed.Related: A Chinese digital currency is the real threat, not Facebook's Libra | Kenneth RogoffIf unrest does, in fact, break out at some point in the future, foreign investors will be quick to withdraw Continue reading...

Britain’s economy grew by 0.3% in the last quarter, after shrinking in Q2, but annual growth slowed to just 1%

Business figures from film and TV, housebuilding and manufacturing discuss how their firms are doingThe UK has avoided recession after official figures showed the economy growing by 0.3% in the third quarter of the year. We talk to businesses in key sectors about their view of the economy’s performance. Continue reading...

There was little good news in the ONS’s latest growth figures

Western governments need to start thinking about their response to currencies they cannot controlThe Facebook chief executive, Mark Zuckerberg, was at least half right when he recently told Congress that there was no US monopoly on regulation of next-generation payments technology. You may not like Facebook’s proposed Libra (pseudo) cryptocurrency, Zuckerberg implied, but a state-run Chinese digital currency with global ambitions is perhaps just a few months away, and you will probably like that even less.Perhaps Zuckerberg went too far when he suggested that the imminent rise of a Chinese digital currency could undermine overall dollar dominance of global trade and finance – at least the large part that is legal, taxed, and regulated. In fact, US regulators have vast power not only over domestic entities but also over any financial firms that need access to dollar markets, as Europe recently learned to its dismay when the US forced European banks to comply with severe restrictions on doing business with Iran.Related: 'You're trying to help drug dealers': Zuckerberg faces angry lawmakers at Libra hearing Continue reading...

GDP figures show 0.3% growth in third quarter but economy shrank in SeptemberBritain’s economy avoided a recession in the third quarter after it expanded by 0.3% but the annual pace of growth was the slowest for nearly 10 years as Brexit uncertainty depressed business activity.Official figures showed the UK returned to growth between July and September after a dip of 0.2% in the three months to the end of June. A technical recession is defined by two successive quarters of negative growth. Continue reading...

The league tables created by conservative thinktanks show that neoliberalism is about ringfencing economic powerTwo of the “freest economies” in the world are on fire. According to indexes of “economic freedom” published annually separately by two conservative thinktanks – the Heritage Foundation and the Fraser Institute – Hong Kong has been number one in the rankings for more than 20 years. Chile is ranked first in Latin America by both indexes, which also place it above Germany and Sweden in the global league table.Violent protest in Hong Kong has entered its eighth month. The target is Beijing, but the lack of universal suffrage that is catalysing popular anger has long been part of Hong Kong’s economic model. In Chile, where student-led protests against a rise in subway fares turned into a nationwide anti-government movement, the death toll is at least 18.Related: Neoliberalism promised freedom – instead it delivers stifling control | George MonbiotRelated: Neoliberalism is killing our love lives | Bhaskar Sunkara Continue reading...

Chancellor claims Labour set on raising expenditure by 30% but £1.2tn price tag fails to assess pay-back through nationalisationSajid Javid has attacked Labour’s spending plans, saying the price tag of the party’s proposal to reshape the economy and public services would be as high as £1.2tn over five years.Ahead of the general election in December, the Conservatives published a dossier over the weekend assessing the cost of Labour’s plans. Here is an analysis of the costing document.Related: General election: parties announce policies for veterans on Remembrance Sunday – live news Continue reading...

The children’s centres were one of the vital public services Britain once took for granted. A decade on, much has been lostBoth Labour and the Liberal Democrats announced policies this weekend to dramatically increase free childcare hours. Understandably, these plans dominated the headlines – parents, and especially women, currently face extortionate bills just to take care of their children. Recent figures show that under the Conservatives, childcare costs have risen twice as fast as wages.Related: Lib Dems promise 35 hours of free childcare from nine months old Continue reading...

As the rival chancellors square up for the general election, each is promising a version of ‘cakeism’The Conservatives say Labour’s £1.2tn spending plans would bankrupt the economy. Labour says all its commitments will be fully costed and that the Tories are running scared. Predictably, it hasn’t taken long for the election to descend into slanging matches, dodgy dossiers and a battle for economic credibility.In truth, both parties want to have their cake and eat it. John McDonnell, the shadow chancellor, says ordinary voters need not fear his spending proposals because investment in infrastructure will be covered by borrowing, and increases in the day-to-day costs of government – such as pay – will be paid for by higher corporation tax and an increase in income tax for the better off. Continue reading...

Celebrate the end of austerity. But the new cash must be spent wiselyIf there was one welcome development from the first week of the election campaign, it was the general acceptance that Britain needs more investment and that the government should pay for it. More than that, the two main political parties now agree that much of this investment should by financed with borrowed money, taking advantage of the ultra-low interest rates that the UK pays on its debts.It is a moment to celebrate, following almost a decade of austerity, when the main aim of the Treasury was to bring down the government’s annual spending deficit at the expense of, among other things, public investment. Continue reading...

The tangled relationship between London banks and the EU is hard to fix in a trade deal, and the conflict could anger ToriesOne of the many contradictions in Boris Johnson’s election prospectus is the plan to sign a free trade agreement with the EU by December 2020 and at the same time break free, by his own definition, of EU control.It’s a contradiction that has, among other things, spurred Nigel Farage to threaten to field 600 candidates in the general election. Farage rightly says that the only way Johnson can sign a deal within a year is if he maintains the current alignment with the EU and all its rules. And if this is his plan, any chance of merrily signing free trade deals with other countries is sunk.Europe might not sing with one voice. Yet that is likely to make for even slower progress on UK trade talks than otherwise Continue reading...

The fall of the iron curtain saw the market dominate. But environmental protection has become a significant rival beliefGeorge Smiley finally gets his man at the end of John le Carré’s Karla trilogy, but is far from jubilant as the Soviet spymaster defects from East to West Berlin. Reminded by a colleague that he has won his cold war battle, Smiley replies: “Did I? Yes. Yes, well, I suppose I did.”Smiley’s world-weariness was notable by its absence when the west finally claimed victory in the cold war 30 years ago this week. The Berlin Wall was a symbol of oppression. Its demolition was a euphoric moment.A decade of flatlining living standards has made voters far more questioning about the societies they live inRelated: Democracy is under attack in post-Wall Europe – but the spirit of 1989 is fighting back | Timothy Garton Ash Continue reading...

Our economics editor reflects on the ups and downs of 30 years at the Guardian – and why he felt compelled to vote LeaveIt was October 1988 – just over 31 years ago! I was hired to cover business, with a special responsibility for property. Canary Wharf was being built and the UK was in the middle of a house price boom. I remember my first day clearly. I reported on British Gas, with a deadline of about 5pm. Back then it was only a newspaper, so there was no huge rush to file copy like there is today. Continue reading...

US president says reports from Beijing he had agreed to start phasing out tariffs were untrueHopes of an early end to the US-China trade war have received a setback after Donald Trump said he had yet to agree to start reducing tariffs on imports from America’s rival.The US president said that while he was keen on a deal with China, reports from Beijing that he had agreed to start phasing out tariffs were untrue. Continue reading...

Even capitalists agree our economic model is broken. Fundamental change on the scale of 1945 and 1979 is needed nowGeneral elections are rarely epoch-defining events. Though the parties pretend that their political differences are large, in economic terms they rarely are. But this one could be different.Of course, elections lead to change. Labour’s victory in 1997 marked a decisive break with the Thatcher-Major years in terms of public spending and welfare policy. Yet New Labour didn’t fundamentally challenge the dominant model of economic policy that it had inherited from the Tories: a globalised and declining manufacturing sector, and deregulated financial and labour markets. In 2010 the coalition brought in austerity. But Labour would have done so too, continuing the fiscal orthodoxy. Even at elections, economic policy is usually largely consensual.Related: The beauty of a Green New Deal is that it would pay for itself | Ann Pettifor Continue reading...

Like the big banks, big tech uses its lobbying muscle to avoid regulation, and thinks it should play by different rules. And like the banks, it could be about to wreak financial havoc on us all. By Rana Foroohar‘In every major economic downturn in US history, the ‘villains’ have been the ‘heroes’ during the preceding boom,” said the late, great management guru Peter Drucker. I cannot help but wonder if that might be the case over the next few years, as the United States (and possibly the world) heads toward its next big slowdown. Downturns historically come about once every decade, and it has been more than that since the 2008 financial crisis. Back then, banks were the “too-big-to-fail” institutions responsible for our falling stock portfolios, home prices and salaries. Technology companies, by contrast, have led the market upswing over the past decade. But this time around, it is the big tech firms that could play the spoiler role.You wouldn’t think it could be so when you look at the biggest and richest tech firms today. Take Apple. Warren Buffett says he wished he owned even more Apple stock. (His Berkshire Hathaway has a 5% stake in the company.) Goldman Sachs is launching a new credit card with the tech titan, which became the world’s first $1tn market-cap company in 2018. But hidden within these bullish headlines are a number of disturbing economic trends, of which Apple is already an exemplar. Study this one company and you begin to understand how big tech companies – the new too-big-to-fail institutions – could indeed sow the seeds of the next crisis.Related: Why Silicon Valley can’t fix itself Continue reading...

Returning infrastructure investment to 1970s levels may be undeliverable, says IFS

Mitsotakis government seeks foreign capital from new residents in prosperity driveNot so long ago, the idea of Greece announcing tax relief measures to entice the global rich would have been regarded as a joke. With the EU’s weakest economy and a leftist government that has been in power for just three months, the world’s wealthy were keen to keep their distance.But in a marked departure of policy, the centre-right administration led by Kyriakos Mitsotakis has offered an array of incentives to attract the rich.Related: Greek PM announces fast-track reforms and red tape cuts Continue reading...

Labour plans to tap historically low lending rates to invest in schools, hospitals and housing

Shadow chancellor says sum necessary to tackle climate crisis and deprivation

Two outside experts on MPC say weakness of UK economy warrants immediate reductionThe chances of a cut in interest rates have increased after two members of the Bank of England’s key policy body responded to a growth downgrade – inspired by Brexit and a trade war – by voting for cheaper borrowing.In the first split vote on Threadneedle Street’s monetary policy committee (MPC) since June 2018, the Bank voted 7-2 to keep official interest rates on hold at 0.75%. But two of the outside experts appointed to the committee by the government, Jonathan Haskell and Michael Saunders, said the weakness of the economy warranted an immediate reduction.Related: Bank of England in surprise split over interest rates - business live Continue reading...

Two outside experts on MPC say weakness of UK economy warrants immediate reduction

Chancellor to raise borrowing while claiming Labour would ‘saddle country with debt’

Treasury forecaster’s report was expected to show decline in UK public financesThe government’s top civil servant has blocked publication of a report by the Treasury’s economic forecaster that was expected to show the UK’s public finances have deteriorated over the last eight months.Mark Sedwill, the head of the Cabinet Office, pulled the plug only an hour before the Office for Budget Responsibility was due to send out documents that were also expected to chart how Brexit uncertainty has worsened the outlook for public finances.Related: Mark Sedwill: PM’s trusted adviser who led Gavin Williamson inquiry Continue reading...

Rolling coverage of the latest economic and financial news

As a member of the Patriotic Millionaires organization I’ve seen how our system perpetuates gross inequality but now I’m a proud ‘traitor to our class’If Donald Trump really wants to make America great again, he’d do what our country did when it was at the height of its economic stability and equality: increase the top income tax rate to 90%.Related: The IMF thinks carbon taxes will stop the climate crisis. That's a terrible idea | Kate AronoffPhilanthropy alone won’t cut it. Advocacy is in orderGeorge Zimmer is the founder and former CEO of Men’s Wearhouse, and the founder, CEO and chairman of Generation Tux Continue reading...