A rise in growth above 1.5% in 2020 and 2021 would be enough for the economy to begin overheatingBank of England governor Mark Carney has warned that a modest recovery over the next three years will warrant higher interest rates than financial markets currently expect as inflationary pressures force the central bank to act.Unlike the European Central Bank and and the US Federal Reserve, which have signalled a significant easing of monetary policy in recent weeks, Carney said investors were under-estimating the likelihood of higher interest rates in three to five years’ time.Related: Climate activists disrupt Barclays AGM; UK interest rates left on hold - business live Continue reading...

Mark Carney is giving a press conference after leaving UK interest rates on hold, as protesters urge action on climate change

Over the last few years, the Guardian talked to many people for whom capitalism isn’t working – here are a few of their storiesWork hard, get paid, thrive. That’s the way the system is supposed to work. If you’re not thriving, according to this logic, you’re simply not working hard enough.But that’s not the reality many people live, even in wealthy, industrialized nations like the United States. For many Americans, long hours and unrelenting dedication to their job are not enough to save them from homelessness, debt, and other humiliations. Continue reading...

With Brexit making the economy ‘unusually volatile’ the Bank of England thinks it best to leave rates well aloneWelcome to limbo land. That was the message from the Bank of England as it once again decided that Britain’s delay at the EU departure gate meant the wisest course of action was to leave interest rates well alone.But only for now, because it was also clear from Threadneedle Street’s quarterly update on the economy that the wait-and-see approach will only last for as long as Brexit uncertainty persists.Related: Bank of England holds interest rates and vows to restrict pace of rises Continue reading...

The Bank of England needs to blacklist high-carbon bonds and commit its huge buying power to ‘green QE’As the adage goes: “There are decades when nothing happens, and there are weeks when decades happen.” After decades of climate complacency, for those in the environmental movement it certainly feels like we might be living in those weeks.Direct action by striking students and Extinction Rebellion has propelled the climate emergency to the top of the news and the political agenda. But while protesters have – quite rightly – called on the government to take more responsibility, the City of London has largely escaped the firing line.Positive Money and Fossil Free London will be demonstrating outside the Bank on ThursdayRelated: Mark Carney’s warning on climate change is timely, but it’s only a start | Larry Elliott Continue reading...

Manufacturers’ exports declined at second-fastest rate in four and a half years in AprilFears over the threat of a disorderly Brexit lost UK companies new orders from international clients last month as factory exports plunged, according to a survey.UK manufacturers’ exports declined at the second-fastest rate in four and a half years in April, amid a slowdown in factory output, the figures from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) show.Related: UK factory export orders slide as Brexit scares overseas clients away - business live Continue reading...

With $128,308 per capita in annual gross domestic product, Silicon Valley residents out-produce almost every nation on the planetWere it real, the Sultanate of Silicon Valley would be among the world’s richest countries.Cranking out $128,308 per capita in annual gross domestic product (GDP), residents in California’s tech belt out-produce almost every nation on the planet. The valley’s output, pegged at $275bn by the federal Bureau of Economic Analysis, is higher than Finland’s.Related: House-hunting in Silicon Valley: tech's newly rich fuel a spectacle of excess Continue reading...

Eurozone economy grew by 0.4% in the last quarter, faster than expected, as Italy escaped its third recession in a decade

Spain and Italy fuel recovery but analysts say that boost will only be short-term

Universal credit’s effect on food bank use may be greater than statistics suggest, says Jane Middleton, while an anonymous reader eligible for £1.26 a month of the benefit wonders how many others are in her situationThe Trussell Trust is absolutely right to make clear that it is not, and must not be, part of the welfare state (Food bank network hands out 1.6m parcels in a year, 25 April). At the food bank where I volunteer, many of our clients are referred by our local council, which has apparently discovered that it is easier and cheaper to give people on the verge of destitution a food bank voucher than to attend to the underlying issues. Food banks are thus being forced by stealth to become part of the welfare system. Most worryingly, I have noticed recently that when clients tell us they have resorted to the food bank because of delays to their universal credit payment, council referral agencies no longer tick “benefit delays” or “benefit problems” on the referral voucher. Instead they go for “low income”, or even invent their own category, “budgeting”. If other councils are doing the same, the impact will be to distort the Trussell Trust’s statistics on reasons for referral. Given the Department for Work and Pensions’ repeated denial that universal credit drives food bank use, it is impossible not to wonder whether this obfuscation is deliberate.

Rolling coverage of the latest economic and financial news as European businesses grow gloomier, but US growth figures cheer investors

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

Two former members of Bank of England’s rate-setting committee on Britain’s economic prospects

Effects will continue to drag on economy for years to come, says Andrew Sentance

Uncertainty over future will cut growth and prevent interest rate rise, says EY Item ClubThe slow-burn impact of Brexit on the British economy will be a drag on growth for the rest of 2019, blocking the Bank of England from raising interest rates, a leading economics forecaster has warned.Ahead of the first major policy decision from Threadneedle Street since Theresa May agreed to delay Brexit until the end of October, the EY Item Club said uncertainty over the country’s future would cut the UK’s growth rate.Related: Names in the frame to be Bank of England governor Continue reading...

Call for developed and emerging economies to set up public registry of loan and debt dataBack in July 2005, the G8 summit at the Gleneagles hotel in Scotland announced a package of aid and debt relief for the world’s poorest countries. The event marked the high point of international development cooperation and was supposed to put the finances of low-income nations on a permanent sustainable footing.For a while, optimism seemed well founded. Public debt for those countries that qualified for help dropped from an average of 100% of their annual income in the early 2000s to just over 30% by 2013 – freeing up resources to spend on health, education and infrastructure projects.The commodity boom was actually a bubble and, like all bubbles, it burst Continue reading...

In 2009, Bob Diamond and BarCap were the financial sector’s Man Utd. Now investors want the unit brought to heelCast your mind back a decade, to the spring of 2009. The UK was four months into its first recession in 18 years, the banking crisis had reached its zenith – or perhaps its nadir – and Manchester United were on the verge of winning the Premier League title.The fortunes of the British economy and the Red Devils have certainly reversed since them, the former improving modestly and the latter … well, not so much.Critics say it has wasted resources, sucking up too much cash while offering little financial return Continue reading...

Incomes for retirees have risen by 60% in 12 years, but by just 36% for the rest. Maybe they should be made to share their good fortuneAt 76 years old, if some of the press coverage is to be believed, Joe Biden is too old to be US president. By the same argument, at 78, Ken Clarke MP is past his sell-by date and 82-year-old Ann Clwyd, MP for Cynon Valley since 1984, should definitely be put out to pasture.Entertainers, who have always pushed the boundaries of acceptability, go the extra mile. Whoever booked the crooner Tony Bennett to perform at the Albert Hall in 2017 to celebrate his 90th birthday, with a follow-up gig in June this year, hasn’t heard about retirement. Neither has the conductor Bernard Haitink, who in March took to the Barbican stage during his 90th year for two concerts with the London Symphony Orchestra: Mozart and Bruckner; and a few days later Mahler and Dvořák. Continue reading...

Rolling coverage of the latest economic and financial news, including first-quarter growth figures from America

Stockpiling by businesses helps provide growth of 3.2% in first quarter of 2019US economic growth surged in the first three months of the year to 3.2% as the threat of a trade war with China forced businesses to stockpile at the fastest rate since 2015.Figures from the Department of Commerce showed that a jump in hoarding raw materials and finished goods and an increase in government investment overcame weak consumer spending, a drop in housebuilding and low business investment to send GDP growth well ahead of the 2.2% in the last quarter of 2018. Continue reading...

Readers respond to George Monbiot’s piece on doing away with the current economic model and the recent Extinction Rebellion climate protestsGeorge Monbiot (Time to declare the system dead – before it takes us down with it, 25 April) says he has slowly and reluctantly rejected capitalism because the endless impulse for growth and wealth creation ineluctably drives climate change. Asad Rehman, executive director of War on Want, in his global justice seminar at the Extinction Rebellion protests, focused more on neoliberalism – the even more rapacious, ever-expanding incarnation of capitalist exploitation of people and planet over the last four decades – as the driver of global climate inequality and impending calamity. But left-of-centre ideologies also focus on growth in the bid to tackle inequality, with social and economic priorities overshadowing ecological imperatives.This paper has had occasional discussions of the degrowth movement. In one such, Christiane Kliemann (Let’s face it: we have to choose between our economy and our future, 23 January 2015) posited that once we have accepted there are only radical options left, we have a choice between our economy and our future if we are to meet everybody’s needs more sustainably and equitably, using fewer resources. More focus on degrowth on the political left, and more analysis in these pages of its underpinnings and its potential, could contribute to movements for creating a global economy that can truly be described as “ours”, and a future not only for those of us in the global north, but also a present for those in the global south already experiencing the ravages of growth-driven climate change.

President recognises protesters’ demands but vowed to still liberalise the economyEmmanuel Macron has vowed to make his style of politics more “humane”, but insisted he would press on with his project to liberalise the French economy and overhaul its welfare state despite five months of demonstrations by gilets jaunes (yellow vest) anti-government protesters.In his first press conference in two years as president, Macron promised €5bn (£4.3bn) worth of cuts to income tax for lower and average earners as well as pension rises for the poorest and vowed no more schools or hospitals would be closed during his presidency, as he responded to protests.Related: Notre Dame €1bn fund pits Paris against provinces Continue reading...

All the latest economic and financial news, as tech stocks rally in New York and a UK supermarket merger is blocked

Plans to ease austerity slightly over next five years are not believable, according to NIESRBritain’s growth rate will bounce back above 1.5% next year as ministers exceed existing public spending budgets to cope with an ageing population, a leading thinktank has said.The National Institute of Economic and Social Research (NIESR) said plans to ease austerity only slightly over the next five years were “unbelievable”. It added that government spending would almost certainly need to increase by more than expected in the next few years, increasing the UK’s GDP growth. Continue reading...

Lords committee calls for free TV licences for over-75s and other perks to be scrappedFree TV licences for over-75s should be scrapped, the age threshold for free bus passes raised and the triple-lock on pensions abolished to close the widening gap between young and old in Britain, according to a Lords report.The House of Lords committee on intergenerational fairness and provision said it was time to rebalance government policy in favour of the young, to remove the risk of the social bonds between generations fraying further. Continue reading...

With plenty of suitable candidates for governor, the chancellor needs to ask them the right questionsPicture the scene. It is high summer at the UK Treasury. Outside in St James’s Park, the tourists are feeding the ducks but inside a selection panel is interviewing a shortlist of candidates to be the next governor of the Bank of England.Attracting suitable candidates has not been a problem. The headhunters have found plenty of people to fit the job description: a person of the highest calibre respected in the highest echelons of central banking. A shortlist of three names has been drawn up.Related: Chancellor hires diversity specialists to find new Bank governor Continue reading...

Kate Andrews of the Institute of Economic Affairs responds to a recent column by Zoe Williams; Elizabeth Manning points out the old pound coins in the illustration accompanying the pieceZoe Williams wonders whether the “courtly courtesy” I showed to her is genuine or sarcastic (Why pay-gap truthers are on the rise, G2, 23 April). I’m pleased to confirm it’s the former – perhaps it’s my American friendliness, or perhaps it’s how any decent person acts in a green room, but I’ve always found that debate on-camera should not preclude pleasantries off-camera. I do take issue with the description of “practically curtseying”, however; Yankees ruled out this act on 4 July 1776.From courtesy to curt – Ms Williams’ description of my pay gap report as legitimising “alt-right YouTube narrative[s]” makes me wonder if she believes it is problematic or offensive for a woman, in her own time and off her own back, to show an interest in statistics – and indeed, the manipulation of statistics. Continue reading...

Southwark Playhouse, London

ONS says borrowing in latest full financial year was £24.7bn, down 41%Philip Hammond has missed his annual target for bringing down the budget deficit, despite borrowing dropping to the lowest level since 2002.The Office for National Statistics said that borrowing in the latest full financial year, which ended in March, was £24.7bn, down by 41% from a year earlier but above the target set for the chancellor. Continue reading...

The workings of capitalism have been challenged both from the populist right and the socialist left. At the heart of the discontent in the US is faltering wages

Our economy works best when no one is left on the sidelines, writes Cory Booker, US senator for New Jersey and a Democratic presidential candidate

Those on disability benefits and low incomes will be among worst affected, IFS concludesAlmost 2 million people will lose more than £1,000 a year following the switch to universal credit, with those claiming disability benefits the worst affected, according to research by a leading thinktank.Self-employed workers on below average incomes and low-income families with little savings will also be among the biggest losers, the Institute for Fiscal Studies study concluded, as the government aims to complete one of the biggest overhauls of the benefits system since the introduction of tax credits in 2003.Related: 'Universal credit is a nightmare – the stress is overwhelming' Continue reading...

Britain’s blue-chip share index has risen over 7,500 points, but Brexit anxiety is pushing sterling down

US warns any country not complying that ‘the risks will not be worth the benefits’Oil prices surged to their highest level in six months on global commodity markets after the US said it would take a harder line against countries that breach its oil embargo on Iran.Brent crude, which provides the benchmark for global oil prices, hit $74.70 a barrel on Tuesday morning while the lighter grade US West Texas intermediate rose to $66.31. The price of both slipped slightly later in the day. Continue reading...

Social media platform’s revenues up 18% as president criticises its treatment of himTwitter has reported better-than-expected financial results, sending its shares surging, as Donald Trump accused the social media platform of “playing political games”.Revenues for the first quarter climbed by 18% to $787m (£605m), beating Wall Street forecasts of $776m. Revenues were boosted by ad sales that also rose 18%, to $679m. Its shares jumped nearly 13% to $38.81. A year ago, they were changing hands at $31.22.“The best thing ever to happen to Twitter is Donald Trump.” @MariaBartiromo So true, but they don’t treat me well as a Republican. Very discriminatory, hard for people to sign on. Constantly taking people off list. Big complaints from many people. Different names-over 100 M..........But should be much higher than that if Twitter wasn’t playing their political games. No wonder Congress wants to get involved - and they should. Must be more, and fairer, companies to get out the WORD! Continue reading...

Hopes of a US-China deal, as well as Brexit delays, have cheered investors, but there are risks aheadFinancial markets tend to undergo manic-depressive cycles, and this has been especially true in recent years. During risk-ons, investors – driven by “animal spirits” – produce bull markets, frothiness, and sometimes outright bubbles; eventually, however, they overreact to some negative shock by becoming too pessimistic, shedding risk, and forcing a correction or bear market.Whereas prices of US and global equities rose sharply throughout 2017, markets began to wobble in 2018, and became fully depressed in the last quarter of the year. This risk-off reflected concerns about a global recession, Sino-American trade tensions, and the Federal Reserve’s signals that it would continue to raise interest rates and pursue quantitative tightening. But since this past January, markets have rallied, so much so that some senior asset managers now foresee a market “melt-up” (the opposite of a meltdown), with equities continuing to rise sharply above their current elevated levels. Continue reading...

Bone-headed reforms and deep cuts have left our education system in a scandalous state of disrepairLast summer, as the politics of Britain’s exit from the EU staggered on and England’s World Cup run offered some kind of respite, I spent an afternoon in Brownhills, near the West Midlands town of Walsall. I was there to try to get beyond the deafening inanities of Brexit, and report on the mounting financial crisis facing England’s education system. At Millfield primary school, everything once again became clear.Millfield serves a deprived catchment area, and is the kind of place whose everyday magic becomes obvious as soon as you walk in. It has an imaginative approach to education and a track record of helping children in difficult circumstances. Despite its location among tarmac and trunk roads, it specialises in outdoor activities such as canoeing and hiking. But the day I was there, all the talk was of which bits of its provision would have to go. Its headteacher, Michelle Sheehy, was blunt: “We’re heading for a £200,000 deficit. So we need to cut.”Related: One in five teachers using own money for school supplies – reportRelated: More than 1,000 English schools turn to online donations to close funding gap Continue reading...

There isn’t a shortage of Brits to succeed Carney, but the net may well be spread beyond these shoresWanted: suitable candidate to run one of the world’s leading central banks. Applicants should demonstrate the economic acumen of a Keynes, the diplomatic skills of a Metternich, the political cunning of a Machiavelli, and the hide of a rhinoceros. Those interested should register their interest with the Right Hon Philip Hammond Esq at HM Treasury. Interviews will take place in the coming months and the name of the new governor will be announced in the autumn.Now that there is a bit of Brexit breathing space, Hammond can get on with a couple of the other issues in his intray, one of which is to find a successor to Mark Carney at the Bank of England when he leaves next January. Continue reading...

The UK has not been ‘badly treated’ by the EU. All it is doing is pointing out the consequences of our follyOne vox-pop remark in a Financial Times article – “On the verge of a Brexit breakdown” – illustrated what we Remainers have been up against. Ironically, it came from a former Remainer: “I voted Remain, but in a second referendum I would vote Leave because of the way the EU has treated us.” This ill-informed whine apparently came from “an educational psychologist at a west London shopping mall, who declined to give her name”.Treated us? All our friends in the rest of the European Union have been doing is spelling out the consequences of leaving the club while desperately hoping we will change our minds. I fear that our educational psychologist friend must be a reader of those well-known newspapers that spent decades poisoning the minds of their readers with ill-informed or deliberately distorted reporting about “Brussels” before the referendum, and since then have continued their distortions of what has really been going on.There does seem to be a widespread recognition that a reflective referendum is the only way out of the stalemate Continue reading...

Rolling coverage of the latest economic and financial news, including new health checks on the eurozone private sector

Year-on-year rise in March of 6.7% was highest since October 2016, says ONSBritain’s consumers ignored the turmoil at Westminster last month and splashed out in high street stores and online.Despite fears that spending would plummet as a result of mounting Brexit uncertainty, figures from the Office for National Statistics showed retail sales were up 1.1% in March. Continue reading...

EU threatens $20bn of tariffs in long-running battle over Boeing and Airbus subsidiesTomato ketchup, handbags and video game consoles are among the US imports facing EU tariffs, as the European bloc hit back in the latest twist in the transatlantic dispute over aircraft subsidies.The European commission threatened to impose tariffs on US imports worth $20bn (£15.3bn) on Wednesday, publishing an 11-page catalogue of items at risk, which also included aircraft and tractors, following a World Trade Organization ruling against Washington last month.Related: Trump threatens tariffs on $11bn of EU imports such as food and wine Continue reading...

London experiences biggest slump in a decade but Midlands and north-west race aheadHouse prices across Britain have increased at their slowest rate for more than six years, with London experiencing its biggest slump in a decade as Brexit concerns drag on growth.The Office for National Statistics said average house prices in the UK rose by 0.6% in the year to February, the lowest rate of growth since September 2012, and down from 1.7% in January.Related: UK property market ‘in line for summer Brexit relief rally’ Continue reading...

Rolling coverage of the latest economic and financial news, as UK house price slowdown spreads from London to the South East

If firms were really taking on more people as a result of Brexit jitters, there’d be more part-timersThere is a straightforward explanation for the continued strength of the UK jobs market. Firms are reluctant to invest because acute Brexit uncertainty means it is almost impossible to forecast future demand. Rather than be left with a bit of unwanted and expensive kit on their hands, businesses have taken on more workers instead.That all seems to make perfect sense. Britain has a reputation for having a flexible labour market, so companies can easily take on staff to meet temporary surges in demand knowing that they can get shot of them later. Continue reading...

Almost 180,000 workers hired, while unemployment remains at lowest level since mid-70sPay growth in Britain has risen at the fastest rate in more than a decade, as companies keep hiring despite growing fears over Brexit.Average weekly earnings, including bonuses, rose by 3.5% on the year in the three months to February, according to the Office for National Statistics, matching the rate recorded in January and the joint highest level since mid-2008. Continue reading...

Overwork can have business costs and is the main reason for workplace sickness in the UKIn the backlash against the “996” working schedule, China’s tech workers say their bosses have lost valuable productivity gains that could have been generated with a shorter working week and fewer hours.Related: Working 9 to 9: Chinese tech workers push back against long hours Continue reading...

Carolyn Hayman says action must be taken to bring prices back into an affordable ratio with incomes, while Tom Booth says section 21 should not be abolishedThere was a note of scepticism (Labour’s home truths, Nils Pratley, 10 April) about Labour’s proposal to seek to control growth in house prices. Giving the job to the Bank of England alone is unlikely to work. But a government statement of intent to bring house prices over, say, a 10-year period back into an affordable ratio with incomes, using a number of different levers (personal tax, incentives to downsize, development land tax, mortgage supply, house-building investment etc) is more feasible and highly desirable. While people are paying up to half their disposable income on housing, the government’s ability to increase tax rates to fund public services will continue to be a struggle, not to mention the misery of so many people living in cramped and unsuitable housing.It won’t be popular with homeowners, but we are a shrinking number. And at least some of us will see the benefits for our younger relatives.

Novel ways of monitoring the UK economy include counting the number of trucks on roadsGovernment statisticians are trying to harness the power of big data technology, monitoring the number of lorries on roads and company VAT receipts, in an attempt to more rapidly spot changes taking place in the UK economy.The Office for National Statistics (ONS) believes rapid advances in technology, including around big data, machine learning and online activity, could enable economists to update their traditional toolkits. Continue reading...

Eight out of 10 finance leaders expect long-term environment to be worseBritish businesses are the most gloomy they have been about Brexit since the 2016 referendum, with eight out of 10 finance leaders expecting the long-term business environment to be worse as a result of the UK leaving the EU.The accountancy group Deloitte has warned that worries over the long-term impact of Brexit are mounting, with more than half of finance bosses expecting to rein in recruitment and spending. Continue reading...