European Central Bank provides an arena split between anti-austerians and expansionistsChristine Lagarde will take up the position of head of the European Central Bank as a self-confessed economic outsider who has preferred to emphasise her ability as a listener and tough negotiator during her seven years as managing director of the International Monetary Fund.A lawyer by training, the former French finance minister is credited with turning around the Washington-based IMF after it was thrown into turmoil by the abrupt resignation of her predecessor Dominique Strauss-Kahn following unproven allegations of sexual assault and attempted rape.Related: Women to head top EU institutions for first time Continue reading...

Bank of England boss says Donald Trump’s widening trade spats and Brexit uncertainty are denting growthTrade tensions triggered by Donald Trump’s tariff policies could “shipwreck” the global economy and are having a chilling effect on growth, the governor of the Bank of England has warned.Mark Carney said on Tuesday that policymakers were underestimating the impact of the US president’s trade spat with China, Mexico and the European Union. He added that trade tensions had increased the “downside risks” for a UK economy already grappling with Brexit uncertainty. Continue reading...

Support from both Tory leadership contenders for free ports draws criticismBelfast could be turned into a Singapore-style tax-free zone under proposals being considered by Boris Johnson, the frontrunner to become the new prime minister.At a hustings in the Northern Ireland capital on Tuesday he expressed enthusiasm for the idea, when asked by a member of the audience.Related: Everyman plastic politician Jeremy Hunt mutates into Kamikaze Kurtz | John Crace Continue reading...

Only a fool would trust Facebook with their financial wellbeing. But maybe that’s the point of the Libra currencyFacebook and some of its corporate allies have decided that what the world really needs is another cryptocurrency, and that launching one is the best way to use the vast talents at their disposal. The fact that Facebook thinks so reveals much about what is wrong with 21st-century American capitalism.In some ways, it’s a curious time to be launching an alternative currency. In the past, the main complaint about traditional currencies was their instability, with rapid and uncertain inflation making them a poor store of value. But the dollar, the euro, the yen, and the renminbi have all been remarkably stable. If anything, the worry today is about deflation, not inflation.Related: What is Libra? All you need to know about Facebook's new cryptocurrencyWhat is Libra?Related: Cryptocurrencies have a mysterious allure – but are they just a fad? | Robert ShillerRelated: Libra cryptocurrency: dare you trust Facebook with your money? | John Naughton Continue reading...

Boris Johnson and Jeremy Hunt could learn a lot from the Local Government Association elections. Don’t hold your breathIn the Tory party leadership contest you didn’t hear about, which ended last week, Brexit machismo was not an issue. Promises of fantastical tax cuts and uncosted splurging on farmers and fishing weren’t on the agenda either. In the other leadership battle, key issues wereongoing austerity, the social care crisis, and councils going bust. This contest (unlike the one you have heard of) requires a successful candidate who is, as one insider said acidly, “engaged with reality”.Related: When Tory outsourcing and cuts end in fatal social services errors | Letters Continue reading...

Housebuilders blame Brexit uncertainty for a lack of new residential projectsBritain’s construction industry “dropped like a stone” in June to record its worst monthly performance in more than 10 years as firms blamed the Brexit crisis for a lack of new work.Housebuilders joined civil engineering firms and commercial building contractors to warn that a wait-and-see approach to commissioning projects across the public and private sectors had hit the industry.The purchasing managers' indices, or PMIs, track services sector companies, manufacturers and building firms around the world. Continue reading...

Trade optimism is pushing markets up despite weak factory data in the UK, the eurozone and China

Wall Street hits record high after Donald Trump and Xi Jinping agree to resume talksStock markets around the world have rallied sharply as hopes of a peace deal in the US-China trade war rise.Shares on Wall Street hit intraday highs on Monday after Donald Trump and the Chinese president, Xi Jinping, agreed to resume trade negotiations following a meeting at the G20 gathering of world leaders in Japan at the weekend. Continue reading...

Bob Cannell insists that co-operatives are not another form of capitalism, while Ed Mayo says the limits of neoliberal economics are increasingly evident and extremeIn the long read (There is now an alternative, 25 June) Andy Beckett repeats the canard that co-operatives are another form of capitalism. No they are not. In a capitalist business the owners, because they are protected by private wealth laws, take away a part of the value created and do what they want with it: hide it in tax havens, buy other businesses, spend it on megayachts.Co-operatives are democratic. The workers and other members decide what to do with all the value they create. More is distributed in the community via higher wages and local purchasing, in most cases. The far higher level of engagement of worker owners in their businesses solves the “productivity deficit”. Regions where co-operatives form a substantial part of the economy, such as Emilia-Romagna in northern Italy, enjoy higher levels of community wealth. As they say in Bologna: “When 30% of the local economy is co-operative, capitalism has to behave itself”, because there is an alternative.

Both Tory leadership hopefuls have made promises ranging from tax cuts to defencePhilip Hammond has warned the two Conservative leadership candidates their tax and spending plans would be impossible under a no-deal Brexit.Here is an analysis of what Boris Johnson and Jeremy Hunt have promised and the constraints on their proposals.Related: Hammond warns Johnson and Hunt over spending promises Continue reading...

Chancellor says no-deal Brexit would drain £26bn that rivals claim could be a ‘war chest’

Manufacturing sector scales back orders after stockpiling and slowdown in EuropeUK manufacturers have recorded the sharpest drop in factory output for more than six years amid mounting concerns over Brexit, as growth in consumer borrowing eased to the lowest level in more than five years.The monthly snapshot from IHS Markit and the Chartered Institute of Procurement and Supply showed that activity levels in the UK manufacturing sector dropped to the lowest level since February 2013 in June, as firms scaled back their orders due to existing high stock levels. Continue reading...

Cryptocurrencies, new payment systems and digital banking all signal a financial revolution that needs better oversightBanking supervision teams at the Bank of England “now receive the equivalent of twice the entire works of Shakespeare of reading each week”. So says Huw van Steenis, the author of Future of Finance, a report commissioned by the Bank’s outgoing governor, Mark Carney.One might argue with the word “equivalent”. Few regulatory submissions rival the bard’s output in their timelessness or vivid use of language: the Bank of England would probably send them winging straight back to their originators if they did. But Van Steenis’s point about the volume of reporting is a valid one. The system of banking supervision has become highly complex, with a risk that the forest is entirely lost from view in the midst of thousands of trees.Related: The growing risk of a 2020 recession and crisis | Nouriel Roubini Continue reading...

Agreement to cut 99% of tariffs is first with developing country in Asia and swiftly follows deal with South American blocThe European Union has signed a landmark free-trade deal with Vietnam, the first of its kind with a developing country in Asia, paving the way for tariff cuts on almost all goods.The EU has described the deal as “the most ambitious free trade deal ever concluded with a developing country”.Related: Is free trade always the answer? Continue reading...

Group for central banks says borrowing by firms with low credit scores is growing alarmingly, especially in US and UKCorporate borrowing poses a danger to the global financial system and could trigger a crisis in the same way US sub-prime mortgages sparked the 2008 banking crash, the organisation that represents the world’s central banks has warned.Citing the US and the UK as the worst offenders, the Bank for International Settlements (BIS) said in its annual health check of the global financial system that a dramatic rise in borrowing in recent years by businesses with low credit scores meant the market for corporate debt was becoming increasingly unstable.Related: The sub-prime timebomb is back – this time companies are lighting the fuse Continue reading...

Favourite to be PM is challenged over how he would invest in services and cut taxesBoris Johnson has said he would be willing to increase public borrowing to pay for infrastructure projects as he was pressured over how a government he led could invest heavily in new schemes and public services while also cutting taxes.Johnson, the overwhelming favourite to replace Theresa May as prime minister in just over three weeks, said that while there was fiscal “headroom” to spend more, if needed he would use low interest rates to borrow for new infrastructure.Personal style Continue reading...

The increasing absurdity of the Tory party’s march towards isolation would need Joseph Heller to do it justice‘There was only one catch and that was Catch-22, which specified that a concern for one’s own safety in the face of dangers that were real and immediate was the process of a rational mind.” As explained in Joseph Heller’s great novel, one had to be crazy to want to do combat duty, but “anyone who wants to get out of combat duty isn’t really crazy”.Lots of people are talking about George Clooney’s new television series of the book, but I also recommend to the many people who fear they are being driven crazy by this Brexit nonsense that, at least to my mind, there is no substitute for a return to the original novel.Hunt and Johnson are vying with each other in an absurd battle of increasingly unrealistic promises Continue reading...

Rolling coverage of the latest economic and financial news, as traders monitor the meeting in Osaka for signs of a break in the trade deadlock between the US and China

The president reckons Beijing will jump at a trade deal because the country’s grow is slowing. Martin Farrer takes a closer lookDonald Trump has claimed ahead of his crunch meeting with Xi Jinping that China’s economy is “going down the tubes” and that Beijing is desperate to do a trade deal to avert a bigger slowdown.So is there any truth to the US president’s claims? Continue reading...

Rolling coverage of the latest economic and financial news, as US president blasts India for raising tariffs on American goods

Zoopla finds London buyers must be paid £84,000 while Liverpool requires £26,000First-time buyers now need an average income of £54,000 to purchase a typical property in a UK city, but the priciest locations have become a little more affordable, according to the latest data.This average income required has risen by 9% since 2016, when it was £49,900, largely down to higher house prices, said the property website Zoopla.Related: Brokenshire criticised for suggesting first-time buyers dip into pension Continue reading...

Trump also attacks Germany and Japan as he set off for the G20 summit in OsakaPresident Donald Trump flew to the G20 summit on Wednesday sounding warnings that China was “ripe” for new tariffs and suggesting that Vietnam, which he called “the single worst abuser of everybody”, could be next.Air Force One took off on a fiercely hot day from Washington and Trump seemed to promise heat of his own when he meets leaders of the G20 countries in Japan.Related: Trump and Xi trade talks loom large over G20 meeting in JapanRelated: Why tariffs could be Trump's undoing | Ross Barkan Continue reading...

US president adds to his attacks on central bank, accusing it of ‘insane’ policyDonald Trump has launched an extraordinary attack on the Federal Reserve chairman, Jerome Powell, adding to a barrage of recent criticisms of the central bank, which he blames for slowing economic growth.The US president has previously asserted that he has the power to demote Powell but denied that he had threatened to do so.Related: Trump reportedly discussed firing Fed chair Jerome Powell over rate hikes Continue reading...

Governor Mark Carney says no deal would probably require stimulus for the economyMark Carney has indicated that the Bank of England could have to cut interest rates should Britain crash out of the EU without a deal as he said the mounting risks of such a scenario were slowing down growth.Answering questions from MPs on the Commons Treasury committee on Wednesday, the governor of the Bank said a no-deal Brexit would probably require economic stimulus. Continue reading...

ICAEW tells MPs there could be ‘systemic’ impact on economic confidence if UK crashes outCrashing out of the EU at Halloween could result in a “flurry of profit warnings” from publicly listed companies in November, MPs have been warned.The Institute for Chartered Accountants for England and Wales (ICAEW) told MPs that this could have a “systemic” impact on the confidence in the British economy.Related: Liam Fox 'tilting at windmills' over tariffs, say Tory Eurosceptics Continue reading...

Latest Guardian analysis finds business alarmed by prospect of Boris Johnson or Jeremy Hunt leaving EU without deal

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 Bank of England’s rate-setting committee on Britain’s prospects

The US and Chinese presidents are expected to discuss the year-long dispute, but experts say substantive agreement is unlikelyTrade talks between Donald Trump and Xi Jinping are expected to dominate the upcoming G20 summit in Osaka, where the two leaders are expected to meet on the final day of the event.Despite the highly anticipated meeting between the US and Chinese presidents on Saturday, the first since trade talks broke down in May, few expect a substantive agreement to end almost a year of trade tensions and months of deteriorating ties between the world’s two largest economies.Related: The growing risk of a 2020 recession and crisis | Nouriel RoubiniRelated: US-China trade skirmishes obscure the start of tech cold war Continue reading...

Outgoing boss tells MPs why regulator couldn’t do much about one claim of wrongdoing after anotherNobody fears the Financial Conduct Authority. Nobody fears its genial boss, Andrew Bailey. Not really. Or at least not enough to worry about doing jail time or even being banned from working in the City if they do something wrong.The FCA might be the main regulator of the financial services industry on behalf of Britain’s vast army of consumers. It might have a wide range of powers to bring financial services companies to heal when they rip off individuals. Yet it appears to be a creature of the establishment, overly keen to join the Treasury and the Bank of England in protecting the industry when questions arise about the bad behaviour of companies flogging financial products. Continue reading...

Ex-US vice-president says only big solutions can offset impact of systemic shifts and avert disasterAl Gore has said the global economy requires a fundamental upgrade to become more sustainable in order for the world to survive an environmental crisis and widening social divides.The environmentalist and former US vice-president said the world was in the early stages of a “sustainability revolution” that had “the magnitude of the Industrial Revolution and the speed of the digital revolution”.1. Extreme weather events Continue reading...

The strategy for building homes is so skewed towards the south, whole swathes of the country are having to go it aloneEnglish housing policy has one objective: build more. The country needs extra, and better, housing. Right? On the surface, it might seem an obvious objective. But where? And should better housing always mean more homes, rather than renewed homes and revitalised communities?Currently, the government’s strategy is largely focused on areas facing what its housing agency calls “affordability pressures”. The rationale appears simple: build more, and assuredly house prices will fall. That neatly ignores the fact that its heavily criticised “help-to-buy” scheme, offering subsidised loans of up to 20% of a property price (40% in London) has pushed up prices further and boosted the profits of the big house-builders. More contentiously, though, the strategy of Homes England skews funding overwhelmingly towards the south-east – and away from other towns, cities and once-thriving industrial communities, largely in the north.Should better housing always mean more homes, rather than renewed homes and revitalised communities?Related: For England’s new councillors, the reality of life in our boroughs will hit hard | Peter Hetherington Continue reading...

After decades of rightwing dominance, a transatlantic movement of leftwing economists is building a practical alternative to neoliberalism. By Andy BeckettFor almost half a century, something vital has been missing from leftwing politics in western countries. Since the 70s, the left has changed how many people think about prejudice, personal identity and freedom. It has exposed capitalism’s cruelties. It has sometimes won elections, and sometimes governed effectively afterwards. But it has not been able to change fundamentally how wealth and work function in society – or even provide a compelling vision of how that might be done. The left, in short, has not had an economic policy.Instead, the right has had one. Privatisation, deregulation, lower taxes for business and the rich, more power for employers and shareholders, less power for workers – these interlocking policies have intensified capitalism, and made it ever more ubiquitous. There have been immense efforts to make capitalism appear inevitable; to depict any alternative as impossible. Continue reading...

President at the White House signs executive order that he says will hurt Iran’s economy – follow the latest live

Plan would cost £9bn and endanger promise to end austerity, according to IFS

Rolling coverage of the latest economic and financial news

David Redshaw says the existence of a fee-paying sector keeps this country in the educational and social dark ages, Jane Moorhouse suggests all children have the right to a decent education, and Dr Ambrose Smith points out the reality of funding cutsThe headmaster of Colfe’s School says he would welcome a debate about the role of independent schools within our education system (Letters, 18 June). The debate is simple. As long as rightwing governments continue to close state school playing fields, cut the education budget to below first-world standards and generally make life difficult for state schools, they will flounder. By contrast, the well-funded private schools will provide even more state-of-the-art facilities and more middle-class parents will bankrupt themselves in order to get their children into these institutions.The pleas from the Independent Schools Council about bursaries and assisted places are just tokenism. The continued existence of a private fee-paying sector is a big part of what keeps this country in the educational and social dark ages. It’s 70 years since Churchill and RA Butler failed to grasp this particular nettle. The only good thing that might be said about Brexit is that it may finally force us to confront these systemic problems in our national life – but at what cost.

Exclusive: Special rapporteur on health says social justice more important for mental health than therapy and medicationAusterity, inequality and job insecurity are bad for mental health and governments should counteract them if they want to face up to the rising prevalence of mental illness, the UN’s top health envoy has said.In an exclusive interview with the Guardian to coincide with a hard-hitting report to be delivered to the UN in Geneva on Monday, Dr Dainius Pūras said measures to address inequality and discrimination would be far more effective in combatting mental illness than the emphasis over the past 30 years on medication and therapy. Continue reading...

Cost of leaving EU will also impede new policy initiatives, thinktank’s report saysMost forms of Brexit will worsen the country’s finances and reduce space for new initiatives to address child poverty, social care and left-behind communities that some argue drove the Brexit vote, a report has found.Academics at the UK in a Changing Europe thinktank found a positive outcome depended on politicians being able to move on from the Brexit impasse and focus on longer-term challenges including productivity, regional imbalances and democratic reform.Related: UK heading for no-deal Brexit on 31 October, EU leaders conclude Continue reading...

Foreign powers have no right to interfere in ‘internal affair’, says Zhang Jun, as Beijing also calls for trade compromiseChina has said it will not allow the G20 nations to discuss the Hong Kong issue at its summit this week, assistant foreign minister Zhang Jun said on Monday.Millions of people demonstrated on the streets of the city this month against a bill that would allow people to be extradited to the mainland to face trial in courts controlled by the Communist party.Related: Hong Kong’s elite fear extradition law could harm their reputationWhat is the proposed extradition law?Related: Forget China – it's America's own economic system that's broken | Robert Reich Continue reading...

Donald Trump to meet China president at G20, raising hopes of trade war breakthroughFinancial markets around the world are braced for a renewed period of turbulence this week as the US readies fresh sanctions against Iran and amid rising hopes for a breakthrough in the US-China trade war.Donald Trump tweeted over the weekend that “major” additional sanctions were being prepared to use against Iran from Monday to block Tehran from developing nuclear weapons.Iran cannot have Nuclear Weapons! Under the terrible Obama plan, they would have been on their way to Nuclear in a short number of years, and existing verification is not acceptable. We are putting major additional Sanctions on Iran on Monday. I look forward to the day that..... Continue reading...

Amid talk of a snap election, could Boris Johnson or Jeremy Hunt do what John Major did in 1992?The new prime minister could hardly have chosen a worse moment to enter Downing Street. Growth had stalled, there was serious trouble in the Middle East, the government’s flagship policy had made it deeply unpopular. Yet at the next general election, the Conservative party won an overall majority against all the odds.That was how things panned out for John Major after he took over from Margaret Thatcher in late 1990. The economy had just entered a recession that resulted in record bankruptcies and home repossessions; oil prices were soaring after Iraq’s invasion of Kuwait; and Britain had been convulsed by a summer of poll tax riots. The economy actually got a lot worse during the course of 1991 but Major still won in April 1992. Continue reading...

Echoes of that decade are getting uncomfortably loud as Trump imposes tariffs and the eurozone devalues its currencyA trade war followed by a currency war. Tariffs used as a protectionist weapon followed by attempts to secure a competitive advantage by exchange rate manipulation. That was the story of the 1930s and, the way things are shaping up, it could easily be the story of the 2020s as well.Consider the historical parallels. In 1930, the US Congress passed the Smoot-Hawley Act, which raised tariffs on imported goods. The next year, Britain became the first major country to come off the gold standard. Sterling quickly lost 25% of its value against the US dollar, making British exports cheaper on world markets. But the full benefits were short-lived. Soon after being sworn in as president in 1933, Franklin Delano Roosevelt unpegged the dollar from gold, eroding Britain’s advantage.If one currency is depreciating, another currency must be appreciating Continue reading...

As Trump announces his candidacy, forces are already mustering to confront himBehold the new political yobs. The British and American right, once keen to engage intellectually with the left and firmly anchored in business and the middle class, have now become yobs in their evidence-free, argument-free attitude to trade and foreigners. They are guided by noxious prejudice and the simple rule that their flag and interest must rule whatever.Yobs too in their attitudes to all the decent impulses in society: tolerance; the rule of law (that’s for suckers); a welcome to immigrants, fair play; respect for truth, personal integrity. The triumph of the new nativism is the triumph of the yob. Our societies, let alone our politics, have never been so threatened.Trump rages at foreigners because it is easier than telling his electorate the truth Continue reading...

After five years, the northern powerhouse has to move beyond its big-city thinkingIt was in 2014 that the then chancellor, George Osborne, used the phrase “northern powerhouse” at the Museum of Science and Industry in Manchester. His speech was set against a backdrop of steam-powered engines that had driven the Industrial Revolution in the 19th and early 20th centuries. But five years on, what exactly has been done to drive the north of England’s economy forward?Certainly, as a slogan, the northern powerhouse has helped to put the north on the political map. And it has also provided a focus for the area to make the case for greater investment and devolution of powers. The phrase is powerful too because it invokes a visceral response, one of identity, innovation and dynamism, which speaks to northerners’ desire for a greater level of self-determination. We’ve seen this most recently in the #PowerUpTheNorth campaign, in which 33 newspapers across the region worked together to demand devolution of powers and resources to the north.Many people living and working in the north are not seeing the benefits of increased productivity in their pockets Continue reading...

US weakness is inbuilt – the big 500 companies owe loyalty only to themselves and the public is shut out from prosperityXi Jinping might possibly agree next weekend on further steps to bring down China’s trade imbalance with the US, giving Donald Trump a face-saving way of ending his trade war.Related: Elizabeth Warren’s economic nationalism vision shows there's a better way | Robert ReichThese giant corporations have no particular allegiance to America. Their only responsibility is to their shareholdersRelated: The gig is up: America’s booming economy is built on hollow promises | Robert ReichRobert 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...

Corporate borrowing has been rising fast – and while business investment remains low, payouts to shareholders have soaredWhen companies are borrowing like never before and yet investment is low, it is reasonable to ask what they are doing with the money.They could be stockpiling huge sums to guard against a no-deal Brexit. They could be cutting prices to win market share and emerge from the current downturn with a larger customer base. Or they could be paying their workers an inflation-busting pay rise to make up for the freezes and low pay awards that characterised the years following the financial crash.Companies that have over-borrowed and live in fear of their shareholders need one thing: cheap interest rates Continue reading...

What we do over the next decade will determine the future of humanity for the next 10,000 years, writes John BirdIt may prove to be incredibly difficult, but we must rethink our short-termist priorities if we intend to make good on our promises to those striking for the future (Our lives must be transformed to defeat this climate crisis, 15 June). Like your columnist, Susanna Rustin, I want us to break out of the short-term, four-year election inertia and reimagine our approach to policymaking via the prism of acting for tomorrow, today.This week, I led a parliamentary debate about how to protect and represent the interests of future generations, where I called on the government to look at how the Well-being of Future Generations (Wales) Act 2015 has shaken up “business as usual” by requiring public bodies in Wales to think about the long-term impact of their decisions and how best they can prevent persistent problems, including climate change, from happening. Continue reading...

Rolling coverage of the latest economic and financial news, as crude oil prices hit their highest levels since the end of May

This week the Upside looked at some alternatives to the quest for endless economic growthIn May we asked you: what are the alternatives to endless economic growth? Dozens of you got in touch with tips and suggestions.And so we persuaded the Guardian economics correspondent Richard Partington to try to make sense of it all by taking a good hard look at GDP and the alternatives.New episode! We talk about the limits of GDP, shifting to a wellbeing economy & what we can learn from New Zealand’s recent budget. With guests @grantrobertson1, @anniequick, @BMHayward & @Gus_ODonnell