Uncertainty over Brexit dominates the landscape – but there will be more predictable changes, such as rail fare risesWe will soon be waving goodbye to a turbulent 2018 and saying hello to a 2019 that – because of the ongoing Brexit chaos – will also be swathed in uncertainty. The UK is due to leave the European Union in about 90 days’ time, but will Brexit actually happen, or will it be delayed or even halted? How the year pans out will inevitably have a huge impact on the money in our pockets.Here are some of the key dates over the next year: Continue reading...
Guardian readers discuss the high social cost of austerity being imposed on the UK’s legal processIt is certainly true that many people are being deprived of access to justice following the legal aid cuts (Legal aid cuts force parents to drop fight for children, 27 December). Many parents who cannot possibly afford solicitors’ fees are faced with the possibility of losing their children or financial rights on divorce, or the incredibly daunting prospect of representing themselves in an archaic justice system that is not designed with them in mind.Every day we hear from litigants in person who try to muster the energy, strength and resources for the latter. We at Advicenow provide step-by-step guides, films and tools to try to help people going to court without the help of a lawyer as much as we can, but obviously writing “simple†guides to an incredibly complex system is a mammoth challenge. Continue reading...
The west will need to balance security fears with a confidence that global trade is key to our prosperityA visit to Huawei’s HQ in Shenzhen is a glimpse into the way China’s leadership would like to envision its future. About 180,000 workers throng quietly around a pristine campus in the new-build city, which prizes digital expertise so highly that some outstanding engineers are lured with special rent deals to work on a campus that looks more like architect-designed Silicon Valley than the crowded factories that feature in much of urban China.I was whisked around examples of sleek bicycles, remote-controlled fridges telling me when food needed to be consumed and super-fast immersive gaming – all showcasing the speed and flexibility of 5G-honed technology. Huawei is the jewel in China’s tech crown, a subject of pride at home and an export success as the world’s biggest supplier of telecoms equipment. But that jewel is fast turning into a flashpoint between Beijing and western governments, emblematic of deeper tensions about trade, security and a divide over the hidden risks of globalised digital advances.Related: Google’s Earth: how the tech giant is helping the state spy on usRelated: The giant that no one trusts: why Huawei’s history haunts it Continue reading...
Leaders must focus on domestic matters in 2019 to solve world problems such as trade and climate changeFor many of the world’s economies, financial markets, heads of government, and carbon policies, 2018 did not end well. The scars of the global financial crisis, combined with longer-term structural economic, technological, cultural, and demographic trends, have left large swaths of the population in many countries feeling politically neglected, culturally disparaged, and/or economically wounded. And their expression of their grievances – at the polls, on the internet, and in the streets – has left their leaders profoundly weakened.In Germany, the four-term chancellor Angela Merkel has long acted as the European Union’s de facto leader. Then came her fateful 2015 decision to welcome more than 1 million refugees into Germany. The backlash – fuelled by frustration with the added pressure on public services, finances and law enforcement, not to mention political fearmongering – left Merkel so wounded that she did not seek re-election as leader of her party this month and will not stand for re-election as chancellor after her current term expires in 2021.Related: EU growth forecast has boosted confidence – but is it misplaced? | Mohamed El-Erian Continue reading...
A former dame hits back | Paddy Ashdown the historian | Festive misspellings | Consumerism | Welsh Bethlehem | Kent’s DunkirkI agree with David Konyot’s objections to the use of the words “circus†and “clown†to describe the behaviour of our elected representatives (Letters, 27 December). As a former amateur pantomime dame I feel that the word “pantomime†is also misused. Pantomime is hard work, amusing, entertaining and popular. Parliament appears to be none of these things.
From shrinking Ryanair bags to falling house prices, via Iceland and Wall StreetA marathon business blog by Graeme Wearden on 6 February topped the list of our most-read articles this year, charting the panic selling that swept through global markets after a week in which $4tn (£3.2tn) was wiped off share values. Continue reading...
Directors’ survey shows almost 60% of business leaders expect things to get worse in 2019Business confidence in the British economy has fallen to the lowest level since the EU referendum, according to a survey of company directors.Business leaders in all parts of the UK are gloomy about 2019, said the Institute of Directors, with Scotland and London – areas where voters were heavily in favour of remaining in the EU – most pessimistic. Continue reading...
Treasury secretary talks to bank CEOs and calls together working group created after 1987 market crashThe US Treasury secretary has sought to calm market jitters about White House dysfunction and the government’s partial shutdown, calling the heads of the nation’s six largest banks and gathering the “plunge protection team†that formed after the crash of 1987.Steven Mnuchin called the bank CEOs on Sunday in an apparent attempt to reassure financial markets. In the unusual move, Mnuchin disclosed that he had spoken to the heads of Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo.Related: White House attacks on Fed chair fuel fears of market turmoil in 2019 Continue reading...
US Treasury secretary denies Donald Trump had suggested ousting Jerome PowellGlobal investors are braced for more turbulence in 2019 after the White House intensified its criticism of the US’s most senior central banker.Over the weekend, a flurry of reports claimed Donald Trump had discussed the possibility of firing the Federal Reserve chairman, Jerome Powell. Such an unprecedented move would trigger further instability in the markets, which have already had their worst year since the 2008 crisis.(1/2) I have spoken with the President @realDonaldTrump and he said “I totally disagree with Fed policy. I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute terrible thing to do at this time,...(2/2) especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.â€Related: Wall Street stocks suffer worst week in a decade Continue reading...
Equivalents of Lord Grantham and his family are hedge fund financiers and City lawyersChristmas Day telly has not been quite the same since there stopped being a Downton Abbey special to savour. For many families, it was part of the yuletide ritual to watch the soap opera centred on the lives of the Crawley family and the servants who waited upon them.Downton was an idealised high-Tory view of the world. The aristos – Lord Grantham in particular – were paternalists, seeing it as their duty to look after the people they employed, provided they worked hard and knew their place. There was harmony between rulers and ruled; devotion to duty was rewarded; wrongdoing punished. It was David Cameron’s big society in microcosm.Related: Global markets are desperate for some Christmas spirit after a dismal yearIf history is any guide, the coming industrial revolution will create more jobs than it destroys Continue reading...
Investors hoping for a ‘Santa rally’ look set to be disappointed, as many fear the strong run of recent times is overInvestors are entering the Christmas holidays hoping for some respite from a brutal few months in which stock markets have sold off across the world, with little sign of the customary “Santa rally†in December.The UK’s FTSE 100 is on track for its worst performance in a decade in 2018 – barring dramatic moves in the three days of trading left on the London Stock Exchange, including half days on Christmas Eve and New Year’s Eve. At Friday’s close London’s blue-chip index had lost more than 12% for the year to date, which would equate to the worst run over a calendar year since the global financial crisis hit in 2008.Bouts of market volatility can be expected in an environment which is likely to remain on edge Continue reading...
The president’s $1tn tax cuts gamble hasn’t worked – the House of Representatives has been lost, the economy has imploded and the stock market has tankedThe accomplishments of a US president’s first year in office can be credited to his predecessor, at least where the economy is concerned. And Donald Trump was handed the best performing economy on the planet. All the tough decisions – to refinance the banks, rescue the car companies and deflate the real-estate bubble – had been made. The stock market was tearing along, setting records almost every week.Trump gave this rising balloon extra air with $1tn of tax cuts. It was borrowed money, but no matter. The economy sailed along for another year and the stock market carried on rising. His plan was to win the midterm congressional elections and then persuade the Republican party to give him another $1tn, or as near to it as possible. Continue reading...
The home secretary’s plans will be bad both for Britain’s finances and for workers’ rightsWe have become illiberal and lowered quotas at a time when we have an acute shortage of labour.†So observed the cabinet minister Richard Crossman in his diaries in 1966, after the Labour government, fearful of public hostility, slashed Commonwealth immigration into Britain.The conflict between those who see immigration as an economic necessity and those who fear its political consequences has long shaped immigration debate. One consequence has been incoherent policy. That’s as true of the home secretary Sajid Javid’s white paper on immigration published last week as it was in Crossman’s day.Immigration has become the most potent symbol of a world out of controlThe white paper estimates that it will lower GDP by ‘between 0.4% and 0.9% ’ by 2025 Continue reading...
Government shutdowns hurt millions. Great depressions hurt even more. History suggests real pain is round the cornerOn Friday, Donald Trump said: “We are totally prepared for a very long shutdown.†It was one of his rare uses of the pronoun “we†instead of his preferred – and in this case far more appropriate – “Iâ€.Related: Chaos at home, fear abroad: Trump unleashed puts western world on edgeThe shutdown is stoking fears that Trump could do something even more alarmingRelated: Trump and Democrats play blame game over government shutdown Continue reading...
The major international agencies should devise a progressive tax regime that penalises the biggest carbon emitters and offsets costs for the poorestPresident Macron needs to win the war on fuel tax. Every country does. It is an issue on which the governments in Paris and Nairobi have been forced to make U-turns. It is rising up the political agenda in other countries, including the UK and Germany, where the rebirth of the Greens and the rise of the rightwing AfD has paralysed the Bundestag.Without some kind of resolution to how much consumers and business pay for burning fossil fuels – a deal that most agree gets near being fair and addresses the problem of climate change – the battle will not be fought politely inside parliamentary debating chambers, but on the streets. Continue reading...
Revolut customers are protected by the Bank of Lithuania – but it’s not certain it will pay upIt is almost exactly 10 years since the 300,000 British customers lured into Icesave by high interest rates woke up to find that their £4bn in deposits had disappeared when parent company Landsbanki collapsed and the country’s entire financial system went into meltdown.Iceland’s deposit protection scheme instantly fell over. How could it not? A tiny country with a population about the same as Brighton found itself as the guarantor for savers across Europe, with Dutch as well as British savers heavily invested in the Landsbanki accounts. Today, we’re told, it’s all different. Banks have been forced to raise more capital, supervision and solvency testing is much more robust, and the EU has set a €100,000 (£90,000) minimum deposit protection level for member states.Related: The smartphone apps that will change the way you bank Continue reading...
Senior figures say PM will struggle to get deal signed off in current political uncertaintyTheresa May’s waning authority means the idea of concluding a three-year spending review next year is a fantasy and is only likely to be achieved if she were replaced as leader, cabinet ministers have said.The government has promised a full spending review in 2019 as part of a pledge to end austerity in the coming years, but senior figures say May will struggle to get the plan signed off.Related: Cash-strapped Britons keep spending but firms cut investment Continue reading...
Rolling coverage of the latest economic and financial news, as Britain’s balance of payments worsens, and markets fluctuate at the end of a tricky week
We’ve been trashing the planet over recent decades while creating a miserable, insecure society, writes Natalie Bennett. Plus Siân Charnley on the changing language of environmental protestIn Larry Elliott’s article (We’re back to 1930s politics: anger and, yes, appeasement, 20 December), it is good to see an economics editor addressing, as Kate Raworth has done so effectively with Doughnut Economics, the fact that the economy is a complete subset of the environment. And Elliott is right to say that the official declaration that came out of Katowice was not nearly enough.But that wasn’t the only thing that came from the climate talks. There was a newly prominent place for civil society, from teenager Greta Thunberg to nonagenarian David Attenborough, and some companies, and many state and city governments, stepping up to the plate. Continue reading...
Households help UK economy bounce back over quarter as Brexit fears spook businessesCash-strapped households provided most of Britain’s growth in the three months to September, as businesses cut investment again amid fears over Brexit.Official figures confirmed the economy bounced back from the freezing temperatures earlier in the year as shoppers spent heavily during the football World Cup and a long heatwave.Related: Asos shock shows UK's economic problems extend beyond high street Continue reading...
OECD’s predictions may prove overly optimistic due to EU leaders’ lack of team spiritThe European commission, the International Monetary Fund and the OECD predict that, on average, the EU’s economy will grow by 1.9% next year, a rate that is broadly consistent with the average of 2% expected for this year. But the picture this paints may prove to be overly optimistic, not only because the growth rate itself is likely to disappoint, but also because there is significant downward pressure on the EU’s growth potential beyond 2019 – pressure that, at present, European leaders seem unprepared to counter effectively.If the EU were a soccer team, it would not lose games for lack of a gameplan or due to inadequate capacity. Worth nearly $19tn (£15tn), the EU’s economy remains the world’s second largest, constituting about one-fifth of the global output. The problem is that the team as a whole is not playing cohesively, and all of the top players are struggling individually, owing to messy problems at home. Continue reading...
Readers respond to the allegations that Jeremy Corbyn called Theresa May a ‘stupid woman’The “did he or didn’t he†over what Jeremy Corbyn actually mouthed at the PM in PMQs (‘Oh no he didn’t…’ Corbyn denies calling PM a ‘stupid woman’, 20 December) reminds me of the “fuddle duddle†that Pierre Trudeau claimed he mouthed at his opponents in the Canadian House of Commons on 16 February 1971 instead of what many observed to be far more Anglo-Saxon language. Two pop songs emerged from that incident, including Do the Fuddle Duddle, from a band opportunistically named the House of Commons.
by Richard Partington Economics correspondent on (#45D0A)
Consumer demand and business investment are likely to have suffered, says MPCGrowing worries over prospects for the world economy and the mounting fallout from Brexit uncertainty have pushed the Bank of England to keep interest rates on hold before Christmas.Sounding the alarm that Brexit worries had intensified considerably in recent weeks to unleash heightened volatility in the financial markets, Threadneedle Street said it would wait for greater clarity next year before considering raising interest rates again. Continue reading...
Rate rises are off the agenda due to Brexit uncertainty and mothballed investmentBy now, had things turned out differently, Theresa May would have secured the passage of her Brexit withdrawal bill through parliament and the UK would unquestionably be on course to leave the EU at the end of March.In those circumstances, the Bank of England would be taking a very different view of the prospects for the economy and a much more hawkish view about interest rates. There would have been a good chance that at the December meeting of the Bank’s monetary policy committee, at least one member would have voted for an immediate tightening of policy. Continue reading...
Tokyo falls almost 3% and Sydney hits two-year low on news, as China responds with a targeted rate cut for businessesAsian stock markets have taken a battering after the US Federal Reserve voted to raise borrowing costs for the fourth time this year, signalling a further squeeze on liquidity around the world.In Tokyo, the Nikkei closed down nearly 3% to its lowest point for 14 months as the Fed’s pledge to continue with “gradual†rate hikes next year sent shivers through financial markets.Related: Why are markets falling, and are we heading for global recession?Stocks tumble on deepening fears of Fed mistake. Japan enters bear mkt as Topix slides 21% from Jan high, S&P 500 hits 15mth low after Fed Chair Powell disappointed excessively dovish mkt expectations. US 10y ylds drop to 2.75%, Oil continues downtrend, Bitcoin stable at $3.7k. pic.twitter.com/VrKquOckxrRelated: We’re back to the 1930s politics of anger and, yes, appeasement | Larry Elliott Continue reading...
Echoes of a horrific decade are getting louder, and the UN climate accord is the equivalent of Chamberlain’s piece of paperMore than any other decade, the 1930s act as a reference point for just how bad things can get. Mass unemployment, totalitarianism, war: a repeat of these horrors is to be avoided at all costs. Eighty years after Neville Chamberlain agreed to Hitler’s demands over the Sudetenland, there is still no greater insult than to dub a politician an “appeaserâ€.The determination in policy circles to avoid a return to the 30s helps explain why up until now it has never happened. Central banks slashed interest rates and turned on the electronic printing presses a decade ago because they feared a second Great Depression. Welfare states are more generous than they were when John Steinbeck was writing The Grapes of Wrath. Decades of growth have made societies wealthier; advances in medical science have made them healthier.Related: Are we living through another 1930s? | Paul Mason Continue reading...
Fed said rates will rise a quarter of a percentage point to 2.25% to 2.5% but it is carefully watching ‘event risks’, including BrexitThe US Federal Reserve raised interest rates again on Wednesday despite intense, and unprecedented, pressure from Donald Trump to leave rates unchanged.After a two-day meeting, the central bank announced rates would rise a quarter of a percentage point, to a range of 2.25% to 2.5%, the ninth such move since late 2015. The rate rise further signals the Fed’s confidence in the US economy.Related: Why are markets falling, and are we heading for global recession?I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck! Continue reading...
The US central bank went ahead with the interest rate rise, seemingly relaxed about the economyFor the past couple of months Donald Trump has been waging war against the US central bank. The Federal Reserve thinks strong growth and the lowest unemployment since the days when the US was putting men on the moon warrants a gradual increase in interest rates. Trump has been telling the Fed to stop before it craters the economy.In the end, the Fed on Wednesday did what it was always going to do: it went ahead with the planned rate rise.Related: Stock market volatile after Federal Reserve raises interest rates – business live Continue reading...
by Lorenzo Tondo and Angela Giuffrida in Rome on (#45B5V)
Compromise with European commission will reduce deficit target to 2.04% of GDPItaly has managed to avert EU sanctions after reaching a compromise with the European commission over its 2019 budget.The Italian prime minister, Giuseppe Conte, said the government had managed to reach an agreement to reduce the deficit target to 2.04% of GDP from 2.4%. This has been achieved without making drastic changes to key budget proposals such as the promise of a universal basic income and lowering the pension age. Continue reading...
by Lisa O'Carroll Brexit correspondent on (#45AR1)
Business leaders criticise curbs on migrants earning £30,000, proposed in new white paperThe government’s proposals for a post-Brexit immigration system will deal a “sucker punch†to the economy, leaving industry short of the migrant workforce they rely on, business leaders have said.The plans, unveiled in the long-awaited immigration white paper, introduce a new skills-based immigration system and the end of free movement of people from the EU.Related: May's cabinet split over £30,000 immigrant salary thresholdRelated: I’m a carer. The £30k immigration rule would decimate the sector | Karolina Gerlich Continue reading...
Stalling house prices, slowing inflation and Brexit will deter interest rate rise – analystsLondon house prices slipped in October, dragging the growth in average property prices to its lowest level since July 2013.The slump in the capital, which began after the Brexit vote in 2016 and reached a fall of 1.7% for the year to October 2018, pulled down the average increase across the UK to 2.7%, down from 3% in September, according to official data.Inflation is when prices rise. Deflation is the opposite – price decreases over time – but inflation is far more common. Continue reading...
Crashing out of the EU would imperil hundreds of thousands of jobs. Here’s how we can force the government to change courseTo fail to deliver Brexit would be to “break faith with the British people†said the prime minister earlier this week. And yesterday, in pursuit of that logic, she did an extraordinary thing. Recognising that there is no majority in parliament for her deal she began preparations in earnest for us to leave without one. And here is what that will mean.Gavin Williamson said we will “have 3,500 service personnel held at readiness†– he must anticipate civil unrest. Dominic Raab had confirmed we were taking measures to “make sure that there is adequate food supply†and Matt Hancock says we have begun to stockpile perishable medicines. And if that planning is adequate, we will continue to be safe and have enough to eat and there will be no further deaths. If it is adequate.Related: Ivan Rogers’ Brexit bombshell, digested | Martha Gill Continue reading...
The health service’s long-term plan won’t work if brave staffing decisions aren’t made, says incoming head of the King’s FundRichard Murray, a former academic, management consultant and civil servant, is about to take on the most high-profile role among the health thinktanks: as the King’s Fund’s new chief executive.Related: Long-term plan for NHS funding delayed amid Brexit chaos Continue reading...
Minimum salary threshold of £30k-a-year will also apply to migrants from the EU27Sajid Javid is expected to publish a long-delayed white paper on Britain’s tough new immigration regime on Wednesday, as the prime minister seeks to build the case for her Brexit deal by pledging to “take back control of our bordersâ€.Related: Business leaders warn against plan to slash EU immigration to UKRelated: UK immigration: what is the government proposing?Related: Sajid Javid says freedom of movement ends, 'deal or no deal' Continue reading...
PwC analysis predicts India will rise to fifth as Brexit impact pushes UK to seventhBritain’s stalled economy will fall back in the international rankings next year to sit in seventh place behind India and France, according to a report by consultants at PwC.A fall in the value of the pound, combined with slower growth this year and next as Brexit takes its toll, will mean the UK drops from fifth in the GDP rankings to sit just above Italy in eighth place and Brazil in ninth. Continue reading...
Gender equality has stalled, says WEF, as women globally are paid 63% of what men getThe global pay gap between men and women will take 202 years to close, because it is so vast and the pace of change so slow, according to the World Economic Forum.The WEF, which organises the annual meeting of business and political leaders in Davos, said the global gender pay gap has narrowed slightly over the past year, but the number of women in the professional workplace has fallen. In 2017, the WEF estimated that it would take 217 years to close the pay gap.Related: Gender pay gap: when does your company stop paying women in 2018?Related: Carrie Gracie says BBC is blocking pay gap campaigners Continue reading...
by Richard Partington Economics correspondent on (#458F8)
Financial markets nervously eye the US Federal Reserve as it moves to raise interest ratesFinancial markets have been nervously eyeing the US Federal Reserve as it prepares to raise interest rates for the fourth time this year on Wednesday, with big investors fearing that higher borrowing costs could damage the global economy. Continue reading...