Strong economies tend to boost incumbents yet the Democrats are riding high in midterm election polls. Why?The US economy is growing, inflation has finally hit the US Federal Reserve’s 2% target and unemployment is quite low – and at an all-time low for African-Americans and Hispanics. For the first time in memory, there are more job openings listed by US companies than there are unemployed people. Such conditions usually foreshadow rising real (inflation-adjusted) wages, which would indicate that American workers, many of whom were left behind in the anaemic post-crisis recovery, might finally reap benefits from the strong economy.Electoral models predict a strong economy favours the party in power and a weak economy dooms it to crushing losses. And yet, with the economy in its best condition in more than a decade, most polls show a substantial Democratic party lead in the run-up to the midterm congressional elections in November. Moreover, most political pundits predict the Democrats will take back control of the House of Representatives. And some even foresee a “blue wave” in which Democrats also retake the Senate, despite having to defend far more seats than the Republicans. In several recent special elections, Republicans have held on by far narrower margins than in past elections for the same congressional seats.Related: Can Turkey rewrite the rulebook for crises in emerging markets?Midterm elections are almost always a referendum on the president and his policies Continue reading...

The Maduro administration has taken one of the world’s big oil exporters to the brink of collapse. Donald Trump wants to tip it over the edgeA century ago, John Maynard Keynes recognised the deadly threat inflation posed to a body politic. He wrote: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.” It is a lesson that Venezuela’s Nicolás Maduro has yet to learn. Yearly price rises are predicted to hit 1,000,000%. Venezuela’s situation, says the IMF, is not as bad as that faced by Germany in 1923 or Zimbabwe in the 2000s. But it’s not far off. The economy is set to shrink by a fifth. Jobless Venezuelans are leaving in droves for neighbouring countries – only to be greeted by mob violence over the borders.Keynes warned that the ruling class could be overthrown. The irony is that it is Venezuela’s revolutionaries who risk being toppled in nightmarish scenes. Mr Maduro, heir to Hugo Chávez’s populist politics, narrowly escaped an assassination attempt this month. Chávez’s Bolivarian revolution had its roots in social justice, and tapped the world’s biggest oil reserves to aid the poor. Mr Maduro took over just as inflation took off and before oil prices crashed. He failed to tackle an incipient crisis. Instead, he oversaw Venezuela’s descent into economic and social catastrophe. Security forces, who are suspected of killing hundreds of demonstrators, enjoy immunity from prosecution. In June the United Nations warned that the rule of law is “virtually absent” in the country. Continue reading...

A £2bn public finances surplus has fallen to Philip Hammond so he could yet boost the NHSPhilip Hammond just got lucky. What was shaping up to be an extremely tricky budget for the chancellor all of a sudden looks quite a lot easier. July is normally a good month for the public finances because it is a time when tax receipts come rolling in to the exchequer, but the size of the surplus – £2bn – has been a pleasant surprise.Not since Gordon Brown was in his frugal phase at the Treasury during Tony Blair’s first Labour administration 18 years ago has there been a July as good.Related: Squalid prisons are just the start. The entire justice system is in meltdown | Polly Toynbee Continue reading...

Philip Hammond given more scope to increase NHS spending in autumn budgetBritain has recorded the biggest July budget surplus since the millennium, giving a boost to Philip Hammond as he considers ways to pay for greater NHS spending in the autumn budget.The Office for National Statistics said public sector net borrowing, excluding the state-owned banks, went into surplus for July by £2bn, meaning the government received more in tax income than was spent on public services. Continue reading...

EU-imposed austerity is finally over for pauperised Greece – and it’s time for a rethink of the whole European projectGreece has entered a new, “normal” phase now that the formal lending agreement with the troika (International Monetary Fund, European Central Bank, European commission) has come to an end. But after eight years of austerity, the truth is that no one can afford rose-tinted glasses. The crisis has cost Greece 25% of its GDP – unprecedented for any European nation during peace time – the unemployment rate sits at almost 20%, even after hundreds of thousands of people have migrated, and national debt is about 180%.Even without its lending arrangements in place, Greece is not totally free from the creditors – a series of audits will ensure that the continuing reforms will go ahead to ensure a “healthy” economy.Related: Greece's bailout is finally at an end – but has been a failure | Larry Elliott Continue reading...

UK foreign secretary will urge US president to tighten rules on online election advertisingJeremy Hunt has urged the EU to stand shoulder to shoulder with the US administration by imposing more comprehensive sanctions against Russia.In his first speech since his appointment as foreign secretary, Hunt renewed the British attack on Russian efforts to undermine liberal democracies, saying Vladimir Putin had made the world “a more dangerous place”, and that, after a chemical weapons attack in England, the EU should apply more pressure to protect western democracy from Russian interference and ensure Russia sticks to international rules.Related: Is free trade always the answer? Continue reading...

The UK increasing overseas sales to 35% of GDP is a nice idea but too few British firms are onsideThe timing of the government’s latest export drive is far from accidental. With Theresa May intent on showing Brussels that Britain could not just survive but thrive in the event of a hard Brexit, Whitehall has come up with a plan for increasing the amount of goods and services sold overseas.This is by no means the first attempt to broaden the horizons of UK plc. Back in 2015, the aim was to double exports to £1tn a year by 2020. That always looked a stretch and the target was dropped by the international trade secretary, Liam Fox, early last year. Continue reading...

Trade secretary hopes package of measures will transform UK into an ‘exporting superpower’Liam Fox is to unveil a plan intended to increase Britain’s exports after Brexit to 35% of GDP as his cabinet counterpart Dominic Raab heads to Brussels for the latest round of divorce talks with the European Union.The international trade secretary believes there are 400,000 UK businesses that could export but do not, and will try to target them with better loans, guarantees and support – and ask businesses to spell out what barriers to trade they face.Related: Liam Fox says no-deal Brexit now more likely than an agreementRelated: The Guardian view on Brexit and trade: the WTO is not a safety net | Editorial Continue reading...

Caracas shears five zeros from bolívar, which will be pegged to new cryptocurrencyVenezuela moved to shore up its crumbling economy on Monday, devaluing its currency and preparing to raise the minimum wage by more than 3,000% in what the country’s president, Nicolás Maduro, declared a visionary bid to tame rampant hyperinflation.

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Nicolás Maduro’s emergency package to tackle the problem looks doomed to failCountries suffering from an inflationary problem fall into three categories: the ones that have a sharply rising cost of living; the ones gripped by hyperinflation; and the ones where things are so bad comparisons are made with Germany in 1923. With the International Monetary Fund predicting that inflation will hit 1,000,000% by the end of the year, Venezuela falls into the third category.It wasn’t always this way. Venezuela has the highest oil reserves in the world and could once boast of being one of the richest countries in Latin America. Poverty levels were more than halved under the former president, Hugo Chávez, and there was bountiful public investment in health and education.Related: 14m bolivars for a chicken: Venezuela hyperinflation explained Continue reading...

As South American country faces soaraway prices, what is hyperinflation and why is it bad for the economy?Venezuela is introducing economic reforms including new banknotes that lop five zeros off its fast-depreciating currency as the country battles hyperinflation.Banks will close on Monday as they prepare to release the new “sovereign bolívar” amid warnings from International Monetary Fund economists that Venezuela’s inflation rate could exceed 1,000,000% this year.Related: Venezuela prepares to devalue currency, amid fears it may worsen economic crisisRelated: Venezuela's plan to fight runaway inflation lacks key ingredients | Larry Elliott Continue reading...

Greece is now able to raise money in markets after €289bn bailout ends

‘Let the market decide’ has been the mantra for decades. This dysfunction and inequality is the inevitable resultA new report from the Economic Policy Institute calls attention to the hardy perennial of how much America’s corporate titans make: bosses of the top 350 firms made an average of $18.9m in 2017. That’s a ratio of 312-1 over the median worker in their industries. Big bucks to be sure. And a big change since 1965, when the ratio was just 20-1. But what does it mean? And if there’s a problem, what is it, exactly?What it means, as the EPI economists carefully document, is that the top US corporate chiefs are paid overwhelmingly with stock options, and their income fluctuates with the market. About 80% of the pay packet is in stocks, and the rise of 17% in 2017 after two flat years surely suggests that the top CEOs (not unreasonably) sensed the market peaked last year. So they cashed in. On the other 20% of the pay packets, no gains occurred.Related: Crashed: How a Decade of Financial Crises Changed the World – reviewRelated: Inequality gap widens as 42 people hold same wealth as 3.7bn poorest Continue reading...

‘The worst is over’ after eight very difficult years for the country, commissioner saysGreece has turned the page to become “a normal” member of the single currency, European Union authorities in Brussels declared as the country finally exited its eight-year bailout programme.Its three bailouts during the eurozone crisis totalled €288.7bn (£258bn) – the world’s biggest-ever financial rescue. During that time, as the crisis threatened to lead to the nation’s ejection from the single currency – “Grexit” – Greece has had four governments and endured one of the worst recessions in economic history.Related: Greece's bailout is finally at an end – but has been a failure | Larry ElliottYou did it! Congratulations to Greece and its people on ending the programme of financial assistance. With huge efforts and European solidarity you seized the day. Continue reading...

Milestone unlikely to be celebrated by many households feeling effects of crippling debt repayments

Britain’s growth model is unsustainable, and has created scandalous levels of inequality – we should rely more on production, not consumptionThe British growth model is well and truly broken. If any more evidence for this was needed, it came from figures last month showing that households had become net borrowers for the first time since records began in 1987. They took out almost £80bn in loans last year, the highest amount in 10 years. Only £37bn was deposited in banks. This has echoes of the pre-2008 boom period, and we all know how that ended.The Office for National Statistics also reported that reliance on short-term unsecured loans, such as credit cards and payday loans, had exceeded £200bn: a record high. Nine out of 10 new car purchases are made using hire purchase or some kind of similar arrangement. Rather than serve as a corrective, the financial crisis and its aftermath has just reaffirmed that we remain addicted to this debt-fuelled route to growth.Related: Pay growth slows to weakest in a year despite fall in joblessness Continue reading...

Data shows sector starved of investment and losing ground as Brexit uncertainty persistsBritain’s manufacturing industry has fallen to ninth in the world behind France, reversing a recovery in its performance since the financial crash.The UK’s total manufacturing output stayed ahead of Brazil and Indonesia but slipped below France and remained well adrift of Germany in fourth position and Italy in seventh at the end of 2016.

The strategy of austerity will have long-term consequences throughout EuropeAfter eight years, Greece will on Monday be deemed strong enough to stand on its own feet. The international bailout programme that has provided Athens with emergency financial support will come to an end. Aside from the tough budget rules in place for the next decade or more, Greeks can wave goodbye to the troika – the officials from the International Monetary Fund, the European Central Bank and the European Union – that has in effect been running the country since 2010.Beware the hype that trumpets this as a great success story, a tribute to solidarity and a commonsense approach that has restored economic stability and prevented Greece from being the first country to leave the euro. Nothing could be further from the truth. Continue reading...

Bosses now get paid 300 times what workers do. In the 60s, that ratio was far lower, and growth and investment were higherDefenders of the astronomical amounts routinely being trousered by leading executives have a stock response to critics who say that such rewards are excessive. Chief executives have to be paid the going rate. Without the right incentives, these alpha males (and occasionally alpha females) would take their talents elsewhere and everyone would lose. It’s a global marketplace out there. The market rate for talent has to be paid. Having a pop at these titans of industry over their remuneration packages is simply the politics of envy.Interestingly, the same explanation is used to justify the nugatory pay awards executives hand out to their staff. When it comes to people lower down the pay s cale, the message is that jobs can always be outsourced overseas if the workers get too bolshie about pay. Continue reading...

Fewer children will collect GCSEs in arts subjects this week, as education reforms stifle a sector also hit by petty regulationsThis week thousands of young people will learn how they performed in their GCSEs. One thing we already know is that the number of GCSE music entries is down over the last five years by 8%.Worse, performing and expressive arts entries have slumped by 26% over the period, while the number sitting exams in media, film and TV studies has dropped by 22% and drama entries are down 14%. Continue reading...

Trump trade tariffs and higher borrowing costs are causing problems from Turkey to ChinaDonald Trump’s trade tariffs are causing tremors in global markets. Emerging economies from Turkey to China are finding it more expensive to export to the US. Investors who put their money in safe havens after the 2012 Greek crisis are nervous again. The FTSE Emerging Index of stocks in the developing world tumbled last week, taking the decline in its value since the beginning of the year to more than 20%.It is not only the US president troubling investors though. The country’s central bank, the Federal Reserve, has quadrupled interest rates in the last couple of years. Countries that borrowed heavily in dollars to fund their growth face the prospect of paying a heavy price in extra interest payments. It is a crippling bill that has already forced Argentina to seek help from the International Monetary Fund. Others could follow: Continue reading...

This week’s currency crisis has prompted a flood of overseas buyers seeking bargainsProperty investors have been flocking to Turkey this week in a bid to grab houses and apartments that have in some cases dropped from £55,000 a month ago to below £37,000 now.The highly-publicised collapse in the Turkish lira may have been a disaster for the country – and any British expat who bought there in the last two years – but it has been described as a bonanza for those holding US dollars, pounds or euros. Continue reading...

Turkish currency falls 5% at the end of a tumultuous week; European stocks drop after Turkish court rejects US pastor’s appeal for release2.46pm BSTThe Turkish lira has taken another battering today, falling 5% to 6.1 to the dollar (it lost nearly 7% at one stage) and the Turkish stock market is down 1%.It has been a tumultuous week that saw the lira go into meltdown on Monday when it hit a record low of 7.2 against the dollar and the panic spread to other emerging markets. A pledge by Turkey’s central bank to provide liquidity to banks and other measures, a pledge from Qatar to provide $15bn in loans to Turkey, and reassuring words from the finance minister yesterday helped calm nerves.1.41pm BSTEven so, Schmieding reckons that the impact on the eurozone will be very limited. He says:Exports: The eurozone earns 0.57% of its GDP by selling goods to Turkey. Even a 20% fall in exports to Turkey would not subtract more than 0.1ppt from annual Eurozone GDP growth. As global demand remains healthy, eurozone firms could likely contain the damage further by switching to other markets for some of these affected goods with only modest reductions in their selling prices.1.39pm BSTHolger Schmieding, economist at Germany’s Berenberg, says the bank has lowered its year-end forecasts for the euro to $1.17 from $1.21, due to the Turkey crisis.Turkey is no small fry. It contributes 1% to global GDP. Beyond the obvious geopolitical concerns, a major Turkish recession would pose a significant challenge for financial markets and for other economies.Remembering the tremors which Turkey’s smaller neighbour Greece once sent through European and global markets, investors are understandably nervous. Adding to concerns about Italy’s 2019 budget and Brexit uncertainty, the noise from Turkey could delay the rebound in eurozone business confidence and growth for a few more months despite the easing of US-EU trade tensions.1.24pm BSTOver in the US, Donald Trump has revealed that he has asked the Securities and Exchange Commission to look into whether American companies should report earnings on a half-year, rather than a quarterly basis.In speaking with some of the world’s top business leaders I asked what it is that would make business (jobs) even better in the U.S. “Stop quarterly reporting & go to a six month system,” said one. That would allow greater flexibility & save money. I have asked the SEC to study!1.21pm BSTThe Turkish lira is still down 5.4% on the day, with one dollar buying 6.14 lira. The Turkish stock market has turned positive, however, gaining 0.6%.Other emerging markets currencies are also under pressure, with the Mexian peso down 0.7% and the South African rand losing 0.9%.1.18pm BSTEuropean stock markets have turned negative, after a Turkish court rejected the US pastor Andrew Brunson’s appeal for release.11.55am BSTMichael Hewson, chief market analyst at CMC Markets UK, has tweeted:If talk of an S&P downgrade of Turkey priced in - surely Turkish banks downgrade will follow soon after if downgrade occurs $TRYA $15bn rescue package from Qatar, and a limited package of exchange controls in limiting banks’ ability to take out short positions has bought the Turkish lira some brief respite in the last few days, but let’s not kid ourselves here, unless president Erdogan takes steps to restore confidence in his stewardship of the Turkish economy then we could well see the lira come under further pressure.The US doesn’t appear in any mood to relieve the pressure on the Turkish government in securing the release of their pastor, if recent comments from vice President Mike Pence, and Treasury secretary Steve Mnuchin are any guide. President Erdogan may be able to defray some of the risks to the Turkish economy by trying to improving his ties with Germany and Russia, but if the US really wanted to turn the screws it’s unlikely that these countries would be able to do much about it.11.46am BSTOne currency trader told Reuters that the weakness of the lira was driven by the “new US sanctions threat and the S&P decision, with position-closing in markets ahead of the public holiday”.Standard & Poor’s is expected to downgrade Turkey’s sovereign credit rating after markets close today. Next week, the Turkish markets will be closed for Eid al-Adha, the Festival of Sacrifice, from Tuesday until Friday.11.38am BSTWilliam Jackson of Capital Economics said:There has been no sign that the central bank will be allowed to raise interest rates significantly and return rates to positive territory. Similarly, there has been no improvement in relations with the US, and additional sanctions may be on the horizon.11.37am BSTThe Turkish lira is under pressure again, falling nearly 7% against the dollar at one stage to 6.24. It is now trading at 6.04, down 4% on the day.The currency has lost almost 40% against the dollar this year, hit by a diplomatic row with the US and and investor concerns about the country’s financial policies and its foreign-currency debts. The independence of the Turkish central bank and its finance minister have been called into question. The central bank is refusing to raise interest rates to curb inflation, with Turkish president Erdoğan opposed to rate hikes.11.28am BSTAfter nearly nine years of financial crises and austerity, Greece is about to come out of its third bailout programme – on Monday, at midnight. Greece borrowed more than €288bn from international creditors in the biggest bailout in history.Greece’s finance minister, Euclid Tsakalotos, said earlier this week that Turkey’s woes would not affect Greece’s exit from the bailout. He said:A clean exit is based on the following: the Eurogroup agreement on Greece’s debt management, and the cash buffer the government has created which guarantees that the public sector’s funding needs will be met in the next two or three years.Therefore, the Greek government’s plans are not affected by short-term turmoil in the markets. On 21 August, Greece is turning the page, and this is final.Related: Greek bailout drama 'in last throes' but the hardship is not over yet11.22am BSTAccording to the Deutsche Bank economist Oliver Harvey, the UK, Germany and the US have lent the most to Turkey, says Ed Conway, economics editor at the Times. We are trying to get hold of the note...Contrary to what you might have read elsewhere, it’s not Spain/Italy who are most exposed to financial fallout in Turkey but the UK. Chart from Oliver Harvey at DB. More on this in my @thetimes column today: https://t.co/dgqwRyBHxg pic.twitter.com/ep3z2GqsnE11.12am BSTTurkish president Erdoğan’s administration has been adamant that it won’t have to seek a bailout from the International Monetary Fund. Qatar pledged about $15bn in loans on Wednesday but provided few details.10.57am BSTTurkey and its companies face repayments of nearly $3.8bn on foreign currency bonds in October, according to Société Générale.The country’s currency woes has sparked worries about Turkey’s external debts and the ability of its firms and banks to repay them. For companies, the cost of servicing their foreign borrowings has risen by a quarter in the past two months, due to the sharp fall in the lira.Turkey’s external financing requirements are large (IMF estimates around $250bn per year). It has the highest foreign-exchange-denominated debt in emerging markets and short-term external debt of $180bn and total external debt of $460bn.Principal and interest payments should be close watched to year-end – it is 25% more costly for the corporate sector to repay their obligations compared to June given FX depreciation.How will Turkey roll over existing debt? Refinancing via the bond market could be challenging.10.13am BSTInflation in the eurozone has been confirmed at 2.1% in July – above the European Central Bank’s target of 2%. The annual rate rose from 2% in June, pushed up by higher energy costs, according to the European Union’s statistics office Eurostat.This means the ECB can push ahead with plans to end its bond purchasing programme by the end of the year, and possibly raise interest rates next year.9.23am BSTMohamed El-Erian, chief economic adviser at Allianz, the parent of Pimco where he served as chief executive, and the former chairman of Barack Obama’s Global Development Council, writes: Can Turkey rewrite the rulebook for crises in emerging markets? By rejecting the conventional approach, Erdoğan risks greater trouble – and not just for Turkey.Whether by accident or design, Turkey is trying to rewrite the chapter on crisis management in the emerging-market playbook. Rather than opting for interest-rate hikes and an external funding anchor to support domestic policy adjustments, the government has adopted a mix of less direct and more partial measures – and this at a time when Turkey is in the midst of an escalating tariff tit-for-tat with the US, as well as operating in a more fluid global economy. How all this plays out is important not only for Turkey, but also for other emerging economies that already have had to cope with waves of financial contagion.The initial phases of Turkey’s crisis were a replay of past emerging-market currency crises. A mix of domestic and external events – an over-stretched credit-led growth strategy; concerns about the central bank’s policy autonomy and effectiveness; and a less hospitable global liquidity environment, owing in part to rising US interest rates – destabilised the foreign-exchange market.Related: Can Turkey rewrite the rulebook for crises in emerging markets?9.05am BSTThe euro is rising for a second day, heading towards $1.14, after coming under pressure on concerns over the exposure of major European banks to Turkey, after the lira went into meltdown.8.45am BSTThere is a sense of relief in financial markets today, following the news that Beijing will resume trade talks with Washington next week, although at a lower level than previously. It is the first round of trade talks since June and offers some hope to those worried about the impact of the tit-for-tat trade war on the world economy.Lukman Otunuga, research analyst at FXTM, said:

By rejecting the conventional approach, Erdoğan risks greater trouble – and not just for TurkeyWhether by accident or design, Turkey is trying to rewrite the chapter on crisis management in the emerging-market playbook. Rather than opting for interest-rate hikes and an external funding anchor to support domestic policy adjustments, the government has adopted a mix of less direct and more partial measures – and this at a time when Turkey is in the midst of an escalating tariff tit-for-tat with the US, as well as operating in a more fluid global economy. How all this plays out is important not only for Turkey, but also for other emerging economies that already have had to cope with waves of financial contagion.The initial phases of Turkey’s crisis were a replay of past emerging-market currency crises. A mix of domestic and external events – an over-stretched credit-led growth strategy; concerns about the central bank’s policy autonomy and effectiveness; and a less hospitable global liquidity environment, owing in part to rising US interest rates – destabilised the foreign-exchange market.Related: Turkey buys time before day of IMF reckoning Continue reading...

Beleaguered high streets cheered by rise but long-term trend spells more shop closures and job lossesEngland’s extended World Cup run and the summer sunshine gave an unexpected lift to retail sales in July as consumers spent heavily on supermarket food and drink.Heavy discounting by clothing stores also brought shoppers back to the high street to reverse a decline in sales in June.Maplin, Toys R Us and Jacques Vert have all collapsed in recent months, but a raft of retailers and restaurant groups are facing financial problems and are trying to close stores or negotiate rent cuts. Continue reading...

Main elements of crisis remain unaddressed, with eventual bailout most probable outcomeUntil reports came on Thursday night that the US was preparing to impose more sanctions, the Turkish government had had a decent few days. The currency crisis, which threatened to become chaotic on Monday, had improved. The lira had almost returned to its level of a week ago. During that time, the country had increased liquidity in its banking system, unveiled $15bn (£11.8bn) of direct investment from Qatar, announced a clampdown on short-sellers and on Thursday its finance minister, Berat Albayrak, talked the language of fiscal discipline on a phone call with investors. There have been worse fightbacks.Yet there is a big difference between buying time and turning a corner. Turkey has merely achieved the former. All the main elements of the crisis remain unaddressed. The Qatari money was pledged at impressive speed but the external funding requirement is enormous – about $220bn during the next 12 months, economists estimate.Related: Lira rallies as Turkey pledges spending cuts to avoid IMF bailout Continue reading...

All the day’s economic and financial news, including the latest on the Turkish currency crisis that has spooked investors

Finance minister out to convince investors but threat of fresh US sanctions loomsTurkey’s finance minister sparked a recovery in the lira after he addressed thousands of international investors, pledging to protect beleaguered local banks and cut public spending to prevent the country defaulting on its loans.Berat Albayrak, who has faced criticism for failing to tackle the country’s growing financial crisis, spoke to around 6,000 investors on a conference call to rebuff concerns that a funding squeeze on Turkey’s banks and a damaging trade war with the US would force him to seek a rescue bailout from the International Monetary Fund (IMF).

Currency rises from record low against US dollar but investors remain anxious at lack of interest rate riseTurkey’s lira continued its recovery on Thursday, ahead of a crucial conference call between the country’s finance minister and international investors.It rose 2.5% in early trading, with one dollar buying 5.8 lira. A diplomatic spat with the US helped send the lira into a tailspin last week and it hit a record low of 7.2 to the dollar on Monday, sending tremors through emerging markets. However, the lira remains about 20% below where it was a month ago.Related: Turkish financial crisis: Lira recovers as Ankara tries to calm markets - live updates Continue reading...

New round of talks to take place in Washington ahead of threatened $200bn worth of tariffs on Chinese goodsA Chinese trade delegation will visit the US this month to kick off a new round of talks, the first since negotiations broke down two months ago.China’s ministry of commerce said the US had invited a delegation, led by vice-commerce minister Wang Shouwen, to meet a group led by US Treasury undersecretary, David Malpass.Related: Turkish financial crisis: Lira recovers as Ankara tries to calm markets - live updatesOur Country was built on Tariffs, and Tariffs are now leading us to great new Trade Deals - as opposed to the horrible and unfair Trade Deals that I inherited as your President. Other Countries should not be allowed to come in and steal the wealth of our great U.S.A. No longer! Continue reading...

Anglo-Saxon capitalism’s drive to maximise profits in the short term won’t save the planet. Perhaps the Chinese model can?This summer’s heatwave has provided a glimpse of the future, and it is not a pretty one. On current trends, the years to come will see rising temperatures, droughts, a fight to feed a growing population, and a race against time to reduce dependency on fossil fuels.The struggle to combat climate change brings out the best and worst of capitalism. Decarbonisation of the economy requires alternatives for coal and cars that run on diesel, and that plays to capitalism’s strengths. Innovation is what capitalism is all about, and there has been staggeringly rapid progress in developing clean alternatives to coal, oil and gas. The cost of producing solar- and wind-powered electricity has collapsed. Great advances are also being made in battery technology, which is vital for the new generation of electricity-powered vehicles. Humans are endlessly creative. In the end, they will crack climate change.Related: Extreme temperatures 'especially likely for next four years'Related: Climate change denial won’t even benefit oil companies soon | Phil McDuff Continue reading...

Accountable Capitalism Act would bring about ‘fundamental change’, redistribute wealth and give more power to workersElizabeth Warren, the Massachusetts senator tipped as a Democratic presidential candidate in 2020, has unveiled new plans for legislation aimed at reining in big corporations, redistributing wealth, and giving workers and local communities a bigger say.Related: 'We made history': Vermont Democrats nominate US's first transgender candidate for governorOver the last year, corporate profits have soared while average wages for Americans haven’t budged. It’s been the same sad story for decades. Today I’m introducing a new bill to help return to the time when American companies & workers did well together: https://t.co/9isNoIyzoW Continue reading...

Higher costs at the pump add to squeeze on household incomes after months of falling wages growthHigher fuel prices in July pushed up the rate of inflation for the first time this year to put an extra squeeze on household incomes following several months of falling wages growth.The consumer prices index (CPI) rose at an annual rate of 2.5% last month after holding at 2.4% in the previous three months, following a steep rise in annual energy price growth from 8.7% in June to 9.3%. Continue reading...

Call for freeze on train fare increases after year of mass cancellations and strikesRail fares will increase by up to another 3.2% in January, the government has confirmed, with the cost of some season tickets to rise by hundreds of pounds.The figure is below the 3.6% increase to regulated fares in January this year, the steepest in five years, but continues the trend of fare increases far outstripping average wage rises.Related: Fare rises enrage rail commuters 'in this terrible mess'Studies have repeatedly found weekday commuter fares to be significantly higher in Britain than elsewhere in Europe.Related: Top pay in UK up by 11% as workers’ wages fail to match inflation Continue reading...

Economic insecurity means that real unemployment is double that which is officially recorded. A new institutional framework to deliver and maintain full employment is neededBritain’s employment problem would on the surface appear to have been solved. Officially just one in 25 Britons are now unemployed, the lowest rate since the winter of 1974-75. Younger workers look to be finding jobs more easily than ever. Older workers are staying in employment for longer. Although the economy has created over 1m jobs since 2010, real wage growth remains flat. Britain is a jobs factory but for insecure, low-paid work. More people are employed, but on static real – that is, inflation-adjusted – wages. Real wage growth averaged 2.9% in the 1970s and 1980s, 1.5% in the 1990s, 1.2% in the 2000s. It is zero today. This is not normal, yet the authorities are determined to believe it is so.The Bank of England is in denial. Wage growth is the clearest signal as to whether monetary policy is tighter or looser than the economy can sustain. Instead of focusing on that, the Bank concentrated on the record low employment and raised interest rates this month, putting pressure on indebted households. The Bank has been criticised for “clear signs of ‘groupthink’ among its leadership”. It seems to be still suffering from it. But the Bank is not to blame. The guilty are in power. The Conservative party’s achievement has been to strip away bargaining power from employees and have them work on the terms offered by employers. The result has been widespread use of zero-hours contracts, self-employment and other forms of underemployment. Continue reading...

Fears over emerging markets’ currencies ease slightly amid financial crisis in TurkeyThe Turkish lira recovered some of its losses on Tuesday, with the country’s finance minister pledging to take steps to support the under-pressure currency.There was some respite for the lira after days of heavy losses. The currency rose 5% to about 6.5 to the dollar on Tuesday afternoon, after slumping 20% in the past four working days. The country’s central bank stepped in on Monday by pledging to provide liquidity to its banking sector.

Jobless rate declines to 4% in the three months to June, the lowest since the winter of 1975Pay growth in Britain has slowed to its weakest in almost a year despite a fall in the jobless rate to a fresh 43-year low and the biggest annual drop in workers from the EU since modern records began more than two decades ago.Figures from the Office for National Statistics (ONS) showed wage inflation cooling in the second quarter of 2018 even though unemployment fell from 4.2% to 4.0% – its lowest level since the winter of 1974-5.Related: High street job losses mount with Homebase next in line for closures Continue reading...

Germany beats forecasts in the second quarter, outpacing the UK and FranceThe eurozone economy has shrugged off growing trade tensions to grow faster than previously estimated in the three months to the end of June, as Germany and the Netherlands beat expectations.GDP growth in the eurozone was revised higher from 0.3% to 0.4% between April and June, matching the rate in the first quarter, said Eurostat, the EU’s statistical office. GDP was also up 0.4% in the 28 EU countries. Continue reading...

Peso and rand are knock-on casualties of currency slide after lira falls 8% against dollarA fresh plunge in the Turkish lira sent tremors through global currency markets on Monday, amid fears that the failure of Recep Tayyip Erdoğan’s government to tackle its worsening financial crisis would have a domino effect on other vulnerable countries.Argentina’s central bank raised its key interest rate by five percentage points to 45% after a fall in the peso and the South African rand was also hit in a day of turbulence that saw the lira fall 8% against the ­dollar.

Refusing standard monetary medicine means following Argentina is logical conclusionThere is not an easy way for Turkey to escape its financial crisis but three measures that might contain the coming pain would be these. First, raise interest rates to try to put a floor under the plunging lira. Second, tone down the bellicose rhetoric and certainly don’t pick new fights with the US. Third, call the International Monetary Fund.None of those actions arrived on Monday. The central bank lowered reserve requirements for banks, which may improve liquidity in the financial system for a short period but it kept the official interest rate at 17.5%. International investors knew how to read that decision. With inflation heading rapidly towards 20%-plus, it was a signal that Turkey is still refusing standard monetary medicine.Related: Lira crisis: action by Turkey's central bank fails to quell contagion fearsRelated: How serious is Turkey's lira crisis and what are the implications?Bain, you would think, would want to keep Wood in harness in some role Continue reading...

Thatcherite ideology, incompetence and the abolition of the Audit Commission have all contributed to local government failures, readers suggest. But there’s good news from the London borough of HaringeyAditya Chakrabortty’s excellent piece (The councils that embraced austerity will cost us all dear, 13 August) builds on an earlier one by Patrick Butler, who pointed out in 2012: “Outsourcing a local authority in its entirety is a long-held Tory municipal fantasy, first articulated by Margaret Thatcher’s local government minister Nick Ridley in the late 1980s.” Large Tory-run authorities in Cornwall, Suffolk and Barnet had “embarked on their own high-profile versions of the Ridley model, claiming that impoverishment gave them no choice but to pursue large-scale privatisation”.However, the idea of smashing up and reshaping the public sector had its roots in Tory thinking well before Cameron and May or even the late 1980s. Ridley, appointed by Thatcher “to head a policy group on the nationalised industries” in 1975, had chaired a similar group under Ted Heath in the late 1960s which concluded that there was “a very strong case for embarking on a course of gradually dismantling the public sector”.

Interest rates | Poetry in newspapers | Minister spotting | Cat namesSome 35 years ago I was a researcher at London Business School, sharing our sole computer with the renowned (or infamous) Economic Forecasting Unit, led by Terry, later Lord, Burns, before he was appropriated by Margaret Thatcher to advise the government. I well recall the announcement (though not the reason for it) by an EFU colleague: “We will never see single interest rates again.” If there is one observation I have made since, it is that all worldly things are subject to sudden, radical upheaval (Interest rate ‘will remain low for next 20 years’, 10 August).

The options as the country’s economic growth displays the classic signs of overheatingBad and getting worse by the day. Over the past five years, Turkey’s growth has been virtually keeping pace with that of China and India but it is now displaying the classic signs of overheating: a large trade deficit, a construction boom and soaring debt. Financial markets have taken fright at inflation, rising at an annual rate of more than 15%, and have been selling the Turkish lira, which is down by 45% against the US dollar since the start of the year.Related: Lira crisis: action by Turkey's central bank fails to quell contagion fears Continue reading...

Euro falls to one-year low as investors worry lira’s crash could infect European markets

As Brexit talks continue, we answer the key questions on the free flow of goodsAs concerns over Donald Trump’s import tariffs intensify and ministers renegotiate Britain’s trading relationship with Europe, the postwar consensus towards ever-closer economic cooperation between wealthy nations is being unpicked. Continue reading...

Analysis by New Economics Foundation says lost jobs are a £1.5bn cost to GDPThe DIY chain Homebase is expected to reveal the closure of up to 80 stores this week as job losses from Britain’s high streets total more than 30,000.

Rise in hotels and restaurants is more than offset by falls elsewhere, says VisaSpending in the shops fell in July according to Visa, in another blow for Britain’s struggling high streets.The credit card company, which accounts for £1 in every £3 spent in the UK, said that despite hopes that the heatwave could lift retailers, spending was down 0.9% in July compared with the same month a year ago.Related: UK retailers benefit from England World Cup run and heatwave Continue reading...

Erdoğan accuses foreign interests of waging trade war after lira goes into freefallGlobal markets are braced for another hectic day of trading amid Turkey’s unfolding economic crisis after the country’s currency, the lira, continued its fall on Monday.Related: Turkey financial crisis: lira plunges again amid contagion fearsRelated: Turkey's economic crisis deepens as Trump doubles tariffsRelated: Erdoğan gets backing to strengthen his autocratic grip on Turkey Continue reading...