As the currency plunges holidays in Turkey get cheaper but markets fear contagionTurkey’s currency is in freefall, its exports face US sanctions, inflation is rising but its president is defiant. So what’s going on in the country with 80 million inhabitants that is a key Nato ally?What has happened to the currency? The lira fell by one fifth against the dollar last week alone. But even before the current crisis, the lira was the world’s worst performing currency, dropping by almost 50% against the dollar in the past 12 months.Related: Global markets braced for hectic trading as Turkish crisis unfoldsRelated: Turkey's crisis could widen, and its options are running out Continue reading...

Final €15bn loan brings new era, says Tsipras, though IMF views GDP growth forecasts as ‘very ambitious’After nearly nine crisis-filled years, relentless austerity and four governments, Greece will next week exit its third bailout programme – in contrast to the economic crisis enveloping Turkey.On 20 August, at midnight, Athens will reclaim its sovereignty in what the prime minister, Alexis Tsipras, has called a transcendent moment for the debt-stricken nation.Related: Greece relaxes capital controls to prove worst of turmoil is overLast year, 135,000 people filed court papers handing over real estate to the stateRelated: Creditors agree terms to disburse Greece's €8.5bn bailout funds Continue reading...

Erdoğan or the central bank have days to prevent a tsunami of selling and a collapse of the liraThe financial crisis a decade ago struck at the very heart of the global economy – the strategically important banks in the United States and Europe. But it took time to arrive. The “big one” of 2008 followed a series of mini-crises elsewhere in the world.Over a 15-year period, problems in the emerging markets worked their way to the heart of the international system. Mexico, Thailand, Indonesia, South Korea, Brazil, Russia and Argentina were all warning signs that unchaining global finance would eventually prove costly to the rich developed countries as well. Unfortunately, the warning signs were ignored. Continue reading...

Having complained that no one took no-deal seriously, the ideologues now seem unhappy that it is getting close scrutinyIt couldn’t happen to a nicer bunch of fantasists. Worried that the government was not making enough preparations for the possibility of no deal being reached in the “negotiations” with the other 27 members of the EU, the voluble Brexiters within and without the cabinet called for evidence.They have got it, in spades. The so-called impact assessments for no deal are, quite simply, horrifying. They were underlined recently by the Bank of England governor, Mark Carney, who rightly drew attention to the messages coming through loud and clear from business, trade unions, the City and, not least, food suppliers, road hauliers, ports and airports.My suspicion is that the MPC only raised interest rates the other week to give it scope to lower them again Continue reading...

The banking crisis prompted talk of economic reform, shared prosperity and a ‘march of the makers’. None of it has happenedA decade ago, Britain was in the early stages of what would turn out to be the deepest recession of recent times. It has never really recovered.Only twice in the past 10 years has the economy broken out of its post-crisis torpor. The first time was in late 2009 and early 2010, when the country was jolted back into life by the monetary and fiscal stimulus provided by the Bank of England. That rally was killed off by George Osborne’s ill-timed austerity and by the protracted troubles of the eurozone. Continue reading...

Figures for wages, inflation and consumer spending, due this week, are likely to reinforce the view that the British economy is far from boomingThe ability of the British economy to improve the living standards of workers will come back under the microscope this week, when the latest figures for wages, employment and inflation are revealed by government statisticians.The Bank of England reckons higher wages are just around the corner, helped by the lowest rate of unemployment since the mid-1970s, yet economists are doubtful there will be much positive news just yet. While the economy has gathered pace in recent months, helped by the warmer weather, the royal wedding and the World Cup, there has been little evidence so far of the spoils being shared through pay increases. Continue reading...

Ghost broking, gross written premiums and capex, not to mention the wonderful world of opexThe world of finance and business and, by extension, the City pages of newspapers, continues to be a bewildering place. Last week, there was mention of ghost broking and gross written premiums, while another report had the following gem: “Given that guidance was reiterated 10 weeks ago, operations have clearly taken a marked turn for the worse and the lack of new guidance indicates that management is currently unable to forecast its own business.” Reading between the lines, I suspect this means that the high-ups haven’t a bloody clue what they are doing and need a big kick up the backside.Elsewhere, reporting on Blackstone, a $43bn investment giant, we had: “When companies’ earnings are up, they tend to be more inclined to hire. They tend to be more inclined to capex [capital investment].” Thank heavens for the explanation in square brackets, though I do feel that the above was a bit stating the bleeding obvious. And I’m giving Jonathan Gray, Blackstone’s chief operating officer, the benefit of the doubt that he is using capex as a noun and not a verb, but given the looseness of language use of executive types, I still harbour doubts. And I think we’ll leave opex for another day. Continue reading...

Turkey’s currency has plummeted as relations with the US have worsenedThe Turkish president, Recep Tayyip Erdoğan, has repeated a call for Turks to sell dollars and euros to support the national currency, which has been in freefall over concerns about the economy and deteriorating ties with the US.On Saturday, Erdoğan urged Turks to help support the lira to win what he described as a “war of independence”.Related: Turkey's economic crisis deepens as Trump doubles tariffs Continue reading...

Recep Tayyip Erdoğan tried to restore confidence in the Turkish lira after it plunged by more than 20% against the dollar on Friday. The sudden drop came when Donald Trump announced on Twitter he was doubling US import tariffs on Turkish steel and aluminium.The Turkish president called on Turks to exchange dollars, euros and gold for Turkish lira. He said this would be Turkey’s response ‘to those who wage economic war against us’.The lira has been under sustained pressure on foreign exchanges, dropping by almost 50% against the dollar in the past 12 months.

US president has tweeted that ‘our relations with Turkey are not good at this time!’Turkey’s unfolding economic crisis has deepened further after Donald Trump announced he was doubling US import tariffs on Turkish steel and aluminium, stoking the country’s currency freefall and rattling financial markets.The Turkish lira plunged by more than 20% against the dollar after the president announced the move, amid a widening dispute between Washington and Ankara over the imprisonment of the US pastor Andrew Brunson.I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!What is the IMF? Continue reading...

All the day’s economic and financial news, including new growth figures for the UK and the financial crisis in Turkey

Warmer weather helps British economy grow by 0.4% but factory orders drop againWarmer weather helped the British economy grow at a faster pace in the three months to the end of June, despite official figures showing the manufacturing sector slumped into recession for the first time since the Brexit vote.The Office for National Statistics (ONS) said GDP increased by 0.4% in the second quarter from a rate of 0.2% in the previous three months, helped by stronger retail sales and good weather, which enabled the construction industry to make up lost ground from heavy snow earlier this year.Gross domestic product (GDP) is a key government statistic and provides a measure of the UK's total economic activity. Continue reading...

Outgoing MPC member Ian McCafferty predicts rates below 5% and wages up 4%The era of low interest rates will last for at least another 20 years, despite gently rising official borrowing costs in the coming years, one of the Bank of England’s leading policymakers has forecast.In a valedictory interview before leaving Threadneedle Street’s monetary policy committee (MPC) at the end of the month, Ian McCafferty said structural changes in the global economy meant UK borrowers and savers should get used to interest rates being “significantly” below the 5% average in the 10 years leading up to the financial crisis. Continue reading...

At local level Conservatives can see the harm wrought by austerity, but that insight has not reached the party’s upper echelonsThe Conservatives often seem unsure whether to present budget cuts as painful but necessary or painless and desirable. Tory ideologues see state spending as inimical to enterprise and corrosive of personal freedom, but pragmatists recognise that public service users do not feel austerity as a kind of liberation.To reconcile the two positions, David Cameron invented the “big society” – the idea that voluntary work could fill gaps in government provision of services. But piecemeal good work done under the “big society” banner could never soften blows from the chancellor’s axe. Continue reading...

The ‘whole month approach’ to changes of circumstances will create problems for universal credit recipients, says Fran Bennett; Sarah Sheils says parliament’s failure to tackle child food poverty has a long historyYour report (Households left in debt by flaws in design of universal credit system, 6 August) rightly focuses on the rigidity of the monthly assessment for universal credit when it comes to the different ways in which people are paid. But the report from the Child Poverty Action Group published that day also highlighted the “whole-month approach” to changes of circumstances, which will create additional problems. So, for example, if you move to a flat with a lower rent in the middle of the month, that is the rent you are assumed to have paid for the whole month when your universal credit is worked out – leaving you with a shortfall. And if your daughter moves out the day before your assessment date, you will get no universal credit for having fed her for the whole of that month. So your universal credit may go up and down in an arbitrary way in relation to your needs, depending on when things happen. Yet you are expected to be learning to budget on a monthly basis. You couldn’t make it up.

Peak Pegasus became unlikely hit on Chinese social media as it tried to beat tariff deadlineA shipment of soya beans worth more than $20m (£15.5m) has been bobbing aimlessly in the Pacific Ocean for a month, a casualty of the escalating trade war between China and the US.Lingering uncertainty over the cargo’s fate offered a timely reminder of the fallout from a dispute that intensified on Wednesday, as the US president, Donald Trump, unveiled a second round of tariffs on $16bn of Chinese goods, prompting Beijing to respond in kind.Related: China hits back against latest US tariffs; pound hit by Brexit worries – business live Continue reading...

That life expectancy in Britain has slowed to a standstill is down to one thing only: the Tories’ ideologically driven policies“We got there in the end – a remarkable national effort”: that’s how former chancellor George Osborne celebrated the government meeting his deficit target on the day-to-day budget two years late. “It was the right thing to do,” was David Cameron’s smug echo.It’s easy for the architects of the Tories’ ideologically driven austerity to be triumphalist, given they did not suffer the consequences: the worst squeeze in wages of the major industrialised countries except depression-ravaged Greece; the slashing of social security for low-paid workers and disabled people; the surging child poverty. New research suggests that austerity played a key role in the Brexit vote, which plunged Britain into national crisis, too, and which turfed both men out of office, although both continue to prosper, Cameron with his “trotters up”, as Danny Dyer so memorably put it. But there is another devastating consequence of their austerity that is too little discussed: that it kills.What is austerity?Related: The growing gulf in life expectancy shows how austerity has deepened inequalities Continue reading...

Citigroup analysis also points to rapid growth in consumer spending and rise in royaltiesMusicians in the US received just 12% of the revenues their music generated in 2017, according to a report, though that figure is an improvement on the 7% they received in 2000.The report, by Citigroup, finds that “consumer outlays (concerts, subscriptions) are at all-time highs”, returning to a peak after a decline from 2006-10. Continue reading...

Musk tweets plan as it emerges Saudi Arabia has built up $2.9bn stake in tech giantElon Musk has launched a campaign to take Tesla private on a day that included several provocative tweets, a suspension (and resumption) of trading in the company’s shares, reports of a significant Saudi investment, a surge in stock price, and an evocative, Musk-tinged appeal to the Tesla faithful: “The future is very bright and we’ll keep fighting to achieve our mission.”The ride started with Tesla’s stock rising more than 7% after Musk tweeted he was “considering taking Tesla private” and had funding in place to do so at a price of $420 (£325) per share. Shortly afterwards, Tesla published a blogpost written by Musk entitled ‘Taking Tesla private’ that had been sent to all employees.Am considering taking Tesla private at $420. Funding secured.Related: Tesla countersued by 'whistleblower' it accused of sabotage and shooting threat Continue reading...

Rampant inflation, a falling currency and tensions with the US are hurting Turkish consumers and businessesTurkey is facing mounting pressure to announce an emergency rise in interest rates as rampant inflation, a plunging currency and American sanctions pushes one of the world’s key emerging market countries to the brink of crisis.Analysts said Turkey’s central bank would have no choice but to increase borrowing costs aggressively in the coming days to stem the fall in the lira, which is down by almost a third against the US dollar in the past 12 months and hit a record low this week. Continue reading...

Sterling still struggling on fears of a no-deal Brexit but recovers some of Monday’s losses2.46pm BSTThe pound has stabilised a little after this week’s drop to an 11 month low on growing concerns about a no-deal Brexit.It has gained a little ground against the dollar - up 0.03% - but is still in negative territory against the euro - down 0.37%.2.34pm BSTThe rise in the oil price has lifted US energy stocks and pushed Wall Street higher at the open.The Dow Jones Industrial Average is currently 0.4% or 101 points while the S&P 500 has opened up 0.23% and the Nasdaq Composite is 0.28% better.2.26pm BSTAnd here’s our full story on the Halifax house price survey:Related: UK house prices rising faster than wage increases, Halifax says1.23pm BSTHere’s our latest story on the US sanctions on Iran:Donald Trump has warned America’s trading partners that anyone who does business with Iran will not be doing business with the US, after his administration reimposed blanket sanctions.The US president described the new sanctions, which hit Iran’s access to dollars, gold and precious metals, as “the most biting ever imposed”.Related: Trade with Iran and you won't trade with US, Trump warns1.06pm BSTUS markets are expected to open higher:US Opening Calls:#DOW 25580 +0.30%#SPX 2855 +0.17%#NASDAQ 7453 +0.18%#IGOpeningCall12.03pm BSTThe VIX index - a measure of the stock market’s expectation of volatility - is heading lower.It is currently down 2% at 11.03 having earlier fallen to 10.9, the lowest level since January.Vix getting crushed back to Jan lows, complacency taking over again11.49am BSTThe US-China trade battle could spill over from goods into services, according to S&P Global Ratings. The S&P report ssays:This is because China is running out of room to retaliate on goods.. China’s recent threat to impose tariffs of 5% to 25% on a further $60 billion worth of U.S. goods (5,207 product lines) means that, together with the $50 billion of goods already announced, about 85% of its American imports (totaling $130 billion in 2017) could be taxed.The threat is in response to the Trump administration last week announcing that it may increase its proposed tariff rate on Chinese imports valued at about $200 billion to 25% from 10%. Together with the previously-announced tariffs on $50 billion of Chinese imports, the total amount of $250 billion represents about 50% of the value of China’s annual exports to the U.S. in 2017.11.21am BSTOil prices are continuing to rise in the wake of Trump’s new Iranian sanctions. Brent crude is now up 1.27% at $74.69 a barrel. West Texas Intermediate - the US benchmark - has climbed 0.94% to $69.66. David Cheetham, chief market analyst at XTB, says:The US has reimposed sanctions against this morning, with an executive order signed by President Trump that targets financial transactions involving the US dollar, the purchase of commercial plans and metals including gold and the Iranian automotive sector coming into effect. From a financial markets point of view, the price of crude oil could be where these decisions are most keenly felt, with the increased animosity threatening to disrupt Tehran’s significant output. This is unlikely to be reflected immediately, with Iranian production expected to remain at present levels for the time being, but should further more stringent sanctions come into play then we could well be set for a supply shock in the oil market which would trigger a sharp move higher.The complex nature of this situation means that it is not just the US and Iran that could be impacted, with the bulk of Iranian crude actually being sold to other countries. The issue lies in whether the US look to force allies to also shun oil from Iran, and if this occurs then there’s a real chance that OPEC will struggle to make up the lost supply and this would drive the price of oil up.10.45am BSTBack with the Iran sanctions, and President Trump has just tweeted:The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!10.38am BSTUK consumers are continuing to spend, boosted by the World Cup and the heatwave, according to the latest Barclays trend survey, although there are reasons to be cautious about the outlook.Spending grew by 5% year on year in July, the third consecutive month with spending growth around this level. Barclays said:[This] is the strongest consistent growth in our data history. UK domestic sectors have held up year to date and resilient spending should continue to support their near-term performance.There are reasons to be cautious, as consumers remain negative about the general economy and appetite for large purchases remains muted.Outside influences, such as oil price inflation and FX, combine to push up spending on Petrol. Consumer confidence moved slightly lower in July, as negativity about the general economy persists. The appetite for major purchases remained muted, with consumers cautious about making significant spending commitments, evident in subdued spending on electronics, furniture, household appliances and vehicle sales.This summer’s heat wave and World Cup fever boosted consumer spending in July, with people spending on picnics, BBQs and pubs.People are making the most of the sunshine as spending on food increased 6.7% in the month, while more families are also going on day trips and doing outdoor activities.10.23am BSTA reasonably strong performance from US markets on Monday is one of the reasons for a more positive mood in Asia (the Nikkei 225 was up 0.69%) and Europe. Chris Beauchamp, chief market analyst at IG, said:UK and European markets have rallied this morning, carrying the baton over from last night’s better showing for US markets. Confidence has returned as the S&P 500 moseys its way to towards the January record high, and it remains encouraging to see stock markets hold their ground despite a drumbeat of trade war headlines of late.Earnings season is shaping up very well indeed, which accounts for why US equities remain comfortably ahead of the likes of Europe, but a rising tide lifts all boats and will reinforce the impression that this economic recovery and its associated bull market has further to run. Reasons to be cautious still abound however, with the Reserve Bank of Australia’s overnight view that China is seeing a modest slowdown in growth reminding us that all is not entirely rosy out there, and this morning’s decline in German industrial production added to this impression, coming as it does after yesterday’s grim factory orders data.10.00am BSTThe positive mood in stock markets is holding up as the morning progresses.With copper prices edging higher, mining shares are leading the FTSE 100 higher, with the leading UK index now up 0.69%. Oil is also giving support, with crude moving ahead on the prospect of curtailed supplies from Iran following the imposition of US sanctions on the country.9.18am BSTThere are a few notes of caution over UK house prices despite the stronger than expected Halifax data.Jonathan Samuels, chief executive of property lender, Octane Capital, said:It would be premature to pop the champagne corks on the back of this seemingly robust data.The annual rate of growth may have shot up between June and July but weak supply rather than robust demand is the primary driver. The market might look punchy on the outside but it’s pallid on the inside. Transaction levels overall are low and it’s hard to see them picking up materially in the months ahead as Brexit uncertainty heightens.We remain doubtful #UK #housing market is stepping up a gear despite #Halifax reporting #house prices spiked 1.4% m/m in July taking annual increase up to 3.3% . Activity is still relatively lacklustre despite coming modestly off 2018 lows with consumer conditions challenging https://t.co/IP3NDFhmIxThe market has seen far too many false dawns to allow itself to get carried away by these surprisingly strong numbers.Yet with the rate of annual price growth rising to its highest level so far this year, the progress is no flash in the pan.8.56am BSTMarkets are holding on to their opening gains, limited though they may be. Connor Campbell, financial analyst at Spreadex said:After yesterday’s trade war-fearing, Brexit-bitten session, the markets got off to a brighter start on Tuesday, without really any reason to do so.Though it still couldn’t break out of its recent trading bracket, the FTSE at least pushed to the upper end of it after the bell, climbing 25 points to hit 7685. The index’s main boost came from the commodity sector. With copper up 0.7% the likes of Rio Tinto and Anglo American rose anywhere between 1.3% and 2%, while BP and Shell jumped 0.8% and 0.5% respectively as Brent Crude crossed $74 per barrel following the resumption of the US sanctions on Iran.8.40am BSTSigns of life in the UK housing market with a better than expected report from mortgage lender Halifax.House prices rose 1.4% month on month in July, compared to expectations of a 0.2% increase, according to the Halifax. The 3.3% year on year increase was higher than the forecast 2.7% gain. But managing director Russell Galley said:Whilst the quarterly and annual rates of house price growth have improved, housing activity remains soft.#Halifax reports #UK #house #prices rose much stronger-than-expected 1.4% m/m in July; annual rate of increase picked up to 3.3% in 3 months to July (highest since 3 months to November 2017) from 1.8% in 3 months to June (equal lowest level since 3 months to March 2013).8.27am BSTSterling is set for continued volatility in the run up to Brexit day next March, according to Thanos Vamvakidis, head of G-10 foreign exchange strategy at Bank of America Merrill Lynch. He told CNBC:If we don’t get a deal, sterling can be weaker by about 10 percent, (or) even lower. If you get a deal, any deal, …. (sterling) can be up by 10 percent. I don’t think any other currency can have this kind of moves in the next few months.8.23am BSTAs expected, markets have got off to a slow start in Europe, but a mainly positive one.The FTSE 100 is up 0.28%, helped by a rise in commodity stocks following the stronger oil price, while France’s Cac has climbed 0.32% and Germany’s Dax is up 0.48%.Domino’s Pizza reported another firm set of half-year numbers this morning as the investment in digital, especially mobile, pays off in terms of driving top line sales. There’s still plenty of evidence that shifting consumer habits are supportive and while the hot weather took the shine off the second quarter numbers a little, the World Cup offered some compensation. However, investment in its international expansion weighed on profit growth.Underlying profits rose 2.5% but on a statutory basis profits were down 10% due to a load of exceptional costs that seem to have mounted: £1.9m from its Warrington supply chain centre, a £2.1m hit from Norway as it transforms Dolly Dimples into Domino’s, £1.4m from joint venture store conversion in Germany and a further £4.2m from tax, amortisation and German Market Access Fee increase charges recognised on the income statement as non-underlying items. Nevertheless the underlying picture remains positive.8.16am BSTThe June data for Germany so far has been uniformly weak, says Dr Andreas Rees, economist at UniCredit Bank:Industrial production declined 0.9% mom, while exports treaded water (yesterday’s new orders: -4.0%). However, in all three cases, the decreases (or stagnation) came after strong rises in the previous month.Going forward, we expect a moderate acceleration in the industrial sector on average, driven by global trade and solid domestic demand. However, it could become a bumpy ride over the summer months. July, August and sometimes September months are notorious for even more volatility, given the start and end of the vacation period. The usual suspect is the car sector. In the last five years, auto production embarked on a wild rollercoaster four times. Auto companies ramp up their production before the summer holidays with a technical setback following suit one month later. This effect then plays havoc with the headline figures in the corresponding two months.7.57am BSTThe disappointing industrial figures from Germany do not necessarily mean the country’s economy is heading for trouble, suggests ING Bank economist Carsten Brzeski:German industrial production took a hit in June, dropping by 0.9% MoM, from 2.4% MoM in May. On the year, industrial production was still up by 2.5%. The drop in industrial activity was broadly-based. After three strong months, activity in the construction sector also weakened, declining by 3.2% MoM. At the same time, exports held up relatively well, despite the delayed impact from last year’s euro strengthening and trade tensions, remaining flat in June after a 1.8% MoM increase in May. As imports increased by 1.2% MoM, the seasonally-adjusted trade surplus narrowed to 19.3bn euro, from 20.4bn euro in May.After yesterday’s disappointing new orders data, speculations about an imminent downswing of the German economy have gained new momentum. Intuitively, weak June data can be associated with trade tensions. However, in our view, this intuition is not so straight-forward. The analysis of the German economy requires more nuances. Here is our take on the state of the economy.2. Looking at bilateral trade data, German exports have gone through a slight structural shift since the start of the year. While the share of German exports to the US is currently lower than in 2017, the share of other Eurozone countries like the Netherlands, Italy or Spain has actually increased.3. At least in the short run, weakening demand for German products as illustrated by yesterday’s disappointing new orders data could actually bring some relief. Particularly the manufacturing sector has been suffering from severe supply-side constraints, with capacity utilisation at its highest level since early 2008, a high lack of qualified workers and equipment as a limiting factor. Orders books are still richly filled and it would take a while before a protracted decline in demand would show in activity data.7.45am BSTGood morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.With growing concerns about a no-deal Brexit in the past couple of days - as warned by such diverse personalities as Bank of England governor Mark Carney and Sir Liam Fox - the pound hit an 11 month low on Monday.European Opening Calls:#FTSE 7672 +0.10%#DAX 12617 +0.15%#CAC 5486 +0.15%#MIB 21625 +0.21%#IBEX 9730 +0.07% Continue reading...

Bank puts annual rate of property inflation at 3.3%, but experts say market activity still lacklustreA surprise spike in UK house prices in July has increased the annual rate of property inflation to 3.3%, pushing the cost of buying a home to a record high.Halifax said house prices rose 1.4% in July alone, taking the average house price to a new record of £230,280. The annual growth rate jumped from 1.8% in June to 3.3% in July, the largest increase since last November. Continue reading...

Companies told to ignore White House demands to drop all business with IranThe EU has launched an attempt to protect European businesses from Donald Trump’s sanctions against Iran as the US administration voiced its intent to apply maximum pressure on Tehran by vigorously applying its punitive measures.

Many of the building society’s savers will see only a 0.1% increaseNationwide is not passing on last week’s Bank of England’s 0.25% rate rise in full to savers in the first sign that big financial institutions will use the base rate to increase profit margins.The building society, one of the biggest mortgage and savings institutions in the UK, said that while its tracker mortgage customers will see a 0.25% rise in their payments, many of its savers will see only a 0.1% increase in rates.Related: Bank of England raises interest rates to 0.75% Continue reading...

All the day’s economic and financial news, as Germany’s manufacturers suffer a big drop in new orders, and the pound falls towards $1.29

The country’s presidents have more influence over long-term trends than short-term fluctuationsPresident Donald Trump regularly thumps his chest and claims credit for each new uptick of the fast-growing US economy. But when it comes to economic performance, the country’s presidents have considerably more influence over long-term trends than over short-term fluctuations.Trump’s tax cuts and spending hikes have indeed provided extra short-term stimulus. So, too, apparently, have foreign buyers of American products such as soybeans, who are rushing to stock up before the tariff war fully heats up.Related: Is this the end of the road for the euro? | Hans-Werner SinnMany of the regulations that Trump is targeting ought to be strengthened, not eliminated Continue reading...

Up to 28,000 fewer EEA care workers in five years, says Department of Health reportWomen will be forced to quit their jobs to look after ill or ageing relatives if the supply of EU care workers is severed after Brexit, the Department of Health has warned.In a worst-case scenario, there could be 28,000 fewer workers in the care sector in England five years after leaving the European Union if employers were no longer able to recruit European Economic Area (EEA) staff, it says.Related: Too many carers feel alone, invisible and unsupported | Heléna Herklots Continue reading...

Government and trade unions urged to do more for those at risk from new technologiesMore than six million workers are worried their jobs could be replaced by machines over the next decade, according to a report urging trade unions and the government to provide more support for those at risk.The findings come as Yvette Cooper, the Labour chair of the Commons home affairs select committee, launches a commission on workers and technology for the Fabian Society and the Community trade union.Related: Cleaners to strike in first action by UK’s low-paid ‘army’ Continue reading...

After the 2008 meltdown, there is limited scope for monetary policy, nations are divided and populism is on the riseNobody really knew it at the time but 10 years ago the world was sitting on the edge of the precipice. It seemed like a normal sleepy August but the calm was illusory. The global financial system was seizing up. The collapse of Lehman Brothers was but a month away.Eventually policy makers finally understood the enormity of what was happening. They responded swiftly and decisively as the crisis spread from the banks to the rest of the economy. They needed to. During the winter of 2008-09, trade and industrial production were collapsing more quickly than they had during the Great Depression.Related: Interest rate rise: lack of dissenting voices came as a surpriseOne of the small comforts from the crisis of 2008-09 was that it generated a sense of international solidarity Continue reading...

The Bank of England governor’s slow and steady approach failed to stop the pound falling further against the dollarThere may be times when Mark Carney regrets extending his stint at the Bank of England by an extra year. Had things gone as originally planned, Carney would have handed over the keys to Threadneedle Street a month ago and someone else would have had the task of steering the economy through what is certain to be a fiendishly tricky period.That would be the case even without Brexit. The UK economy has recovered more slowly and more unevenly than Carney envisaged when he took over at the Bank from Mervyn King in 2013. It was only last week that the Bank’s monetary policy committee felt confident enough to raise interest rates above the 0.5% emergency level that they reached in March 2009.There was a time when plain speaking from the Bank of England would have raised eyebrows in Downing Street Continue reading...

Universities that only train young people to be City analysts leave us unable to learn from the past or predict the futureLast year the chief economist at the Bank of England, Andy Haldane, gave a fear-inducing speech that warned of Armageddon in the jobs market. Robots threatened 15 million UK jobs, he said.This dystopian picture of busy machines and queues of jobless Britons was replaced this month by a rosier view from PwC, which made the opposite claim: robots and artificial intelligence could create as many jobs as they destroy, which happens to be around 7 million.It seems it is still seen as radical to analyse the flows of money in the world as if much of it was stolen Continue reading...

Beijing retaliates against Trump’s threatened tariffs on $200bn of Chinese importsChina has unveiled plans to impose retaliatory tariffs on US imports worth $60bn (£46bn), firing the latest volley in the mounting trade dispute between the world’s two largest economies – which are currently conducting “zero” dialogue on trade, according to reports.Signalling the nation’s readiness to respond to the higher tariffs threatened by Donald Trump on $200bn of Chinese imports, officials in Beijing said countermeasures were ready and waiting for the next move from Washington. Continue reading...

Readers respond to education secretary Damian Hinds’ proposals to improve social mobilityDamien Hinds’ reported proposal for early years education (Children starting school ‘cannot communicate in full sentences’, 31 July) reflects a lack of knowledge about how language works. Firstly, the proposal conflates school-based literacy norms with the everyday speaking and communication skills that children from all social backgrounds are generally equally proficient in. The main assumption is that communication necessarily involves “speaking in sentences”. It does not. Spoken language works to a communicational design that does not fit into the structures of the written language “sentence”. Listen to any conversation between communicatively competent adults and you will find very few “complete sentences”. Being able to write in “sentences” is necessary for school literacy but this is something that school is supposed to teach.The report also alleges that more than a quarter of children are starting school without the “required level of speaking or reading skills”. Again, speaking and reading are very different skills learned in different contexts for different purposes – so what exactly is this “required level” and who is requiring it? We suspect that Hinds is following an agenda set by middle-class speakers of standard English who assume that their linguistic conventions are the only ones worth knowing and must therefore be required of all children. This proposal for intervention in early years education will therefore very likely be based on nothing more than prejudice, dressed up as concern for social mobility. Instead of a divisive educational policy based on stigmatising the linguistic skills of some children, we need an inclusive one in which the role of the school is to value and positively build on the communicational proficiencies that all children develop in their families and communities.

The gain, below the 190,000 anticipated, was the lowest since March, as the unemployment rate dropped to 3.9%After two months of dependable US jobs growth, the labor department reported a touch of lethargy in the economy on Friday, with jobs increasing to 157,000 in July – below the 190,000 economists had expected.The gain was the lowest since March, though it still dropped the unemployment rate to 3.9% from 4%, or roughly the lowest in half a century.Related: US economy growing at annual rate of 4.1%, fastest pace in four years Continue reading...

The MPC has made this decision on the basis that wage growth is about to finally skyrocket. It isn’tUK interest rates have risen from 0.5% to 0.75% because the monetary policy committee (MPC) believes the labour market is at full employment and wage growth is set to explode. Pull the other one, it’s got bells on. I don’t buy it.The pound initially rose on the news and then fell back by more than a cent against the US dollar in a sign that the markets didn’t like what they heard and didn’t believe the MPC’s claims either. The Institute of Directors came out against the increase, as have many economists who see no basis for a rise that lowers spending power. This in the same week when the Bank of Japan said it would loosen monetary policy further. Along with the European central bank it has negative rates and is still operating quantitative easing programmes. Continue reading...

China already accounts for 46% of Pakistan’s trade deficit – yet few have questioned acceptance of huge loans as part of a new economic allianceChen Zhu, a 46-year-old director of a Chinese shipping company in Karachi, Pakistan, was sitting in his car after finishing lunch. He had dispensed with his normal security since it was a public holiday, and his next task for the day was to buy some groceries.An unknown assailant crossed the road, approached Chen’s car and shot him nine times. He was declared dead soon after reaching hospital.China’s Belt and Road Initiative is a huge, $1tn infrastructure project to better connect China – and Chinese goods – with the rest of the world. It is meant to be a 21st-century "silk road", made up of a "belt" of overland corridors (including roads, bridges and railways) and a maritime "road" of shipping lanes.Related: What is China's Belt and Road Initiative?Related: Follow the New Silk Road Continue reading...

Northamptonshire county council is preparing to impose unheard-of levels of cuts. But the underlying problems are nationwide and require big solutionsWhen political fixations are imposed on basic practical needs, the results are rarely pretty. In Britain today they look downright disastrous. The resolutely unglamorous but essential business of local government – emptying our bins; helping the elderly wash – is in crisis. In Northamptonshire, the situation is downright disastrous. The council is effectively bankrupt. The years of austerity, which will have seen £16bn slashed from council budgets nationwide by 2020 – 60p in every pound of core funding – have been compounded in Northamptonshire by the Conservative council’s obsession with low then frozen rates of council tax and a radical plan for the outsourcing of almost all services. This was sold as a distinctively Conservative approach.With grotesque mismanagement added to the equation, the result is the £70m hole in its finances which has not only led to the slashing of services such as buses and libraries but now to warnings that even essential services such as those for vulnerable children can no longer be protected. Its legal obligations to its residents clash with its legal obligation to balance its budget; court challenges have already begun. This is certainly distinctive. But numerous other local authorities are edging close to this territory. While their funding from the centre plummets, the demand for social care for an ageing population and child protection soars. And the consequences of early and supposedly “easier” cuts are now coming home to roost. Slashing preventative services has spawned an increase in damaging (and much more expensive) emergency interventions. The Tory MP Tim Loughton, a former children’s minister, has said the “woeful underfunding” of children’s services is leaving social workers feeling they have no way to keep children safe but by taking them into care, instead of supporting their families. Continue reading...

Monetary policy committee lifts cost of borrowing to highest level since 2009

Bank had been poised to act for some time but the unanimous vote should raise eyebrowsIn the end, there were no doubters. Despite some markedly mixed signals from the economy in recent months, the nine members of the Bank of England’s monetary policy committee (MPC) voted unanimously to raise interest rates by a quarter point to 0.75%. The decision to lift official borrowing costs above 0.5% for the first time in almost a decade came as no surprise, but the lack of any dissenting voices certainly did.The Bank’s latest quarterly health check on the economy is almost identical to the one it produced in May. Back then, the MPC had been gearing up for a rate rise but put the move on hold because it wanted to make sure that the weakness of the data for the first three months of 2018 reflected only temporary weather-related effects linked to the “beast from the east” storm.Related: Bank of England raises interest rates to 0.75%Related: How will interest rate rise affect mortgages, savings and property? Continue reading...

Impact of Bank of England’s decision to lift base rate for only second time in a decade

Markets suggest a 91% chance of rates returning to levels unseen since March 2009The Bank of England is poised to raise interest rates above the level set since the aftermath of the financial crisis for the first time, despite a weakening outlook for the British economy and growing risks from Brexit.Related: Interest rates raised to 0.75% by Bank of England - business live Continue reading...

The time has come for a land value tax to redistribute wealth and help fix our broken housing marketThe government is short of money. The Treasury is scrabbling around looking for ways to fund Theresa May’s pledge to spend an extra £20bn a year on the NHS. Pressures on the public finances are bound to continue increasing because the population is ageing and older people need more health and social care. The way to square the circle is obvious. Philip Hammond should use his autumn budget to announce the abolition of council tax and its replacement with a fairer system of property taxation. That means a land value tax, an idea whose time has come.Council tax is 25 years old this year, even though it was a quick-fix solution to the mess the Conservative party found itself in as a result of Margaret Thatcher’s determination to replace domestic rates with the poll tax.Related: Could we build a better future on a land value tax?Related: Richest UK households 'should pay more to fund clean energy' Continue reading...

Rolling coverage of the day’s political developments as they happen

UK and eurozone manufacturing sectors show sluggish progress, while Apple shares jump 4% after stellar results2.59pm BSTA host of manufacturing surveys for July showed a disappointing outcome for the UK, while eurozone growth was also sluggish.

Prime minister urged to offer more concessions to EU to minimise economic damageTheresa May will be forced to offer further politically difficult concessions to the EU to minimise damage to the economy caused by Brexit, said one of the UK’s leading economic thinktanks.The National Institute for Economic and Social Research (NIESR) said Britain was gripped by an epidemic of uncertainty about the terms of its EU departure, and warned that the government would have to pay a bigger financial contribution or accept higher migration to get the deal it wanted. Continue reading...

Lack of power to act will feed belief that those who caused crash have escaped punishmentThe Financial Conduct Authority is usually described as the City’s watchdog. In the case of the disgraceful treatment of small businesses by the Royal Bank of Scotland’s global restructuring group the FCA has proved to be a paper tiger.Let’s be clear. Businesses were badly and systematically let down by GRG, a unit that was specifically created by RBS to help customers cope with the tough business conditions created by the financial crisis of a decade ago. Continue reading...

Almost 20 years on, the single currency experiment has gone from party mood to hangoverIn May 1998, irrevocable conversion rates for the currencies that would be merged into the euro were implemented. In a sense, this makes the single currency just over 20 years old. The first decade of its life had the feeling of a party, particularly in southern Europe; but the second decade brought the inevitable hangover. Now, as we enter the third decade, the prevailing mood seems to be one of increasing political radicalisation.The original party was a cornucopia of cheap credit, which capital markets happily issued to the countries of southern Europe under the protection of the euro. For a while, these countries finally had enough money to increase public-sector salaries and pensions, as well as spur private consumption and investment. Continue reading...

GDP growth slows in eurozone. Dixons Carphone says 10m accounts accessed in breach. City watchdog report on RBS’s GRG business2.52pm BSTIt’s been a busy day for economic and corporate news.And a good one for relieved executives at Royal Bank of Scotland, who have been told that the City watchdog does not have the powers to take action against them over the mistreatment of business customers by the bank’s GRG division. The chair of the Treasury Select Committee said it was bewildering the Financial Conduct Authority could not act.2.38pm BSTUS markets have made a positive start to the trading day, helped by a rebound in technology stocks and the upbeat consumer spending figures. Shares were also supported by talk that the US and China were looking to re-start discussions about the current trade dispute.The Dow Jones Industrial Average is currently up 95 points or 0.36% while the S&P 500 opened up 0.33% and the tech heavy Nasdaq Composite added 0.37%.2.05pm BSTUS consumers are continuing to spend, especially on restaurants and accommodation.The commerce department said consumer spending rose by 0.4% in June, in line with expectations. The May increase was revised upwards from 0.2% to 0.5%. The personal consumption expenditures price index - excluding food and energy - rose by 0.1%, compared to a 0.2% rise in May.1.26pm BSTAnother call for the Financial Conduct Authority to publish its full report on the Royal Bank of Scotland/GRG scandal, this time from the Federation of Small Businesses. Its chairman Mike Cherry said:There’s nothing in the current legislative framework to stop another GRG-type scenario. As long as commercial lending remains unregulated, small firms will be vulnerable. The hope is that – as the FCA claims – the new Senior Managers Regime will lead to a more responsible lending climate in future.Too often, the regulator doesn’t recognise that small business owners have far more in common with consumers than big corporations. Where you have personal guarantees for example – small business owners putting personal assets on the line to secure a loan – then surely that should be deemed consumer, regulated lending.12.32pm BSTThe All Party Parliamentary Group on Fair Business Banking, which includes members from both the House of Commons and the House of Lords, said the City watchdog should release all its information about the GRG case. In a statement, the group said:At the APPG we are extremely disappointed, but largely unsurprised, by [the FCA] announcement. It is simply not good enough from a regulatory perspective to say that the powers to hold individuals to account simply do not exist.Kevin Hollinrake MP, Co-Chair of the APPG, said: “The FCA should release all findings and evidence they have obtained in their investigation of RBS GRG, unredacted so that the individuals who are responsible for this misconduct are in the public domain. The FCA have an obligation to release this information so that politicians can have a say in whether it is truly the case that no further actions can be applied. As lawmakers we have an obligation to the public to ensure that those who are responsible are accountable and not untouchable, as indeed is the case now where the individuals responsible are protected by the regulatory inadequacy of our current system”.11.39am BSTIn the wake of the Financial Conduct Authority saying it does not have sufficient powers to disciple Royal Bank of Scotland executives over the GRG scandal, the head of the Treasury Select Committee has called for a review into whether new legislation is needed. MP Nicky Morgan MP said:It will be disappointing and bewildering for those who got caught up in GRG’s actions that the FCA is not able to act. This demonstrates the need for a change in how lending for SMEs is regulated. The Government should stand ready to introduce any legislation required when it sees the outcome of current reports on redress and should also urgently consider what additional powers the FCA requires to act in cases such as GRG.11.09am BSTHere’s Reuters wrapping up the day’s eurozone economic news:The euro zone economy grew more slowly than expected in the second quarter, preliminary data showed on Tuesday, but headline and core inflation accelerated with unemployment stabilizing at a lower level.The European Union’s statistics office Eurostat estimated that gross domestic product in the 19 countries sharing the euro expanded 0.3 percent quarter-on-quarter in the April-June period and was 2.1 percent higher against the same period of 2017.Core inflation, which excludes energy costs as well as unprocessed food and which the European Central Bank looks at in policy decisions, also rose to 1.3 percent year-on-year from 1.2 percent in June, beating economists expectations.An even narrower core inflation measure that economists pay attention to, which excludes also the costs of alcohol and tobacco, also rose to 1.1 percent from 0.9 percent in July — again, above expectations.Euro zone economic growth slows in second quarter, inflation accelerates https://t.co/GAMqoRy5fi via @Reuters pic.twitter.com/hHORuU5lCT10.41am BSTCommenting on the eurozone inflation figures, Joshua Mahony, market analyst at IG said:

The tiny fishing village of Bagamoyo is set to become Africa’s largest port in a $10bn Chinese development. Are locals right to be optimistic?As their hand-built wooden dhow approaches the shore, Ibrahim Chamume and his fellow fishermen take in the sail and prepare to sell their catch to the small huddle of villagers waiting on the white sand. He has been making a living like this on the Indian Ocean since he was 14. His father was a fisherman, too.Now in his 30s, Ibrahim says earning enough from traditional fishing is tough, but has its compensations. There is the view across the tranquil lagoon to the mangrove swamps; the unspoiled beaches and bays; the lush vegetation and smallholdings growing maize, cassava, cashews and mango. Such scenes must have played out in the tiny Tanzanian village of Mlingotini for centuries.China’s Belt and Road Initiative is a huge, $1tn infrastructure project to better connect China – and Chinese goods – with the rest of the world. It is meant to be a 21st-century "silk road", made up of a "belt" of overland corridors (including roads, bridges and railways) and a maritime "road" of shipping lanes.Related: What is China's Belt and Road Initiative?Related: Follow the New Silk Road Continue reading...

MPC will go out of its way to reassure consumers and businesses but it is riskyThe Bank of England has boxed itself into a corner. It has led the City to believe that interest rates will rise later this week and will pay a price if expectations are not met. Sterling, which has been looking sickly in recent weeks, will get a real thumping on the foreign exchanges if official borrowing costs remain at 0.5%.In truth, there is no real reason to push up interest rates to 0.75%. The recent official figures for earnings, which some monetary policy committee members have been citing as a reason to act, have shown pay growth decelerating. Inflation is lower than the Bank thought it would be three months ago and the latest set of retail sales figures were weak. Continue reading...