President imposes import tariffs that will affect US consumers as he criticises ‘unfair practices’Donald Trump has intensified his trade war with China by imposing new tariffs of $200bn on Chinese goods arriving in the US from next week.The US president announced the tariffs in a statement, saying: “If China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267bn of additional imports.”Related: Markets wary as US-China trade talks end without breakthrough - as it happenedTariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country - and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be “Tariffed!”Related: American farmers fear being caught up in Trump's trade wars Continue reading...

The Obama administration’s refusal to write down mortgage debts led to the rise of TrumpThe recent exchange between Joe Stiglitz and Larry Summers about “secular stagnation” and its relation to the tepid economic recovery after the 2008-09 financial crisis is an important one. History does not repeat itself, but it rhymes, Mark Twain reportedly once said. But, to paraphrase Bob Dylan, in light of our recent economic history, history doesn’t rhyme, it swears.Stiglitz and Summers appear to agree that policy was inadequate to address the structural challenges that the crisis revealed and intensified. Their debate addresses the size of the fiscal stimulus, the role of financial regulation and the importance of income distribution. But additional issues need to be explored in depth.Related: Lehman collapse: what has happened to the markets since?Related: Ten years after the crash: have the lessons of Lehman been learned? | Yanis Varoufakis and othersRelated: What became of the G20 leaders who met in 2008 to avert financial crisis?Related: We are due a recession in 2020 – and we will lack the tools to fight it | Nouriel Roubini Continue reading...

Christine Lagarde says tackling gender inequality will boost growth and productivityThe head of the International Monetary Fund has said it should be “politically incorrect” for companies not to have a woman in a senior position.Christine Lagarde said even companies with “no moral compass” should recognise they can boost their profits through promoting women to senior and boardroom positions.Related: Sustainable development goals: changing the world in 17 steps – interactive Continue reading...

Michael Jacobs, Bill Hughes, Carolyn Jones, Nick Mayer and Richard Stallman offer ideas for a fairer BritainSurveying the legacy of the 2008 financial crisis (A decade on, rethink the relationship between the state and the market, Editorial, 15 September), you rightly call for the vacuum created by the collapse of free-market economics to be filled. But you wrongly imply that no one has done this.In fact, there has been huge progress in building an alternative. Economists have a better analysis of how sustainable growth and innovation occur, and how the state can co-invest with industry to meet challenges such as climate change and an ageing society. It is clear that the decline in bargaining power in an overly casualised labour market has held down wages, and that both stronger trade unions and regulation are needed to raise low-income earnings and productivity. Continue reading...

The International Monetary Fund warns that Brexit is hurting UK growth, and things could get a lot worse...

Christine Lagarde warns of ‘dire consequences’ if UK has disorderly exit from EU

Rise of machines could lead to 133m jobs globally in next decade – WEF reportThe rise of machines, robots and algorithms in the workplace stands to create almost double the number of jobs for the global economy by the middle of the next decade than it puts at risk of being replaced.According to the World Economic Forum (WEF), about 133m jobs globally could be created with the help of rapid technological advances in the workplace over the next decade, compared with 75m that could be displaced.Related: Meet Eva, the workplace robot that won’t necessarily steal your job Continue reading...

BCC predicts fall to 1.1% this year and 1.3% in 2019 amid Brexit uncertaintyThe British Chambers of Commerce (BCC) has downgraded its prediction for UK growth this year and the following, joining a growing number of forecasters that warn Brexit uncertainty has sapped the economy’s strength.Related: The Brexit economy: things are starting to deteriorateRelated: 'Brexit is a disaster' – experts debate the latest economic data Continue reading...

Readers respond to Simon Jenkins’ article on the archbishop of Canterbury’s criticism of the gig economyMight it have occurred to Simon Jenkins (God aside, for whom does Welby speak?, 14 September) and others that a possible reason for decline in Church of England attendance might have something to do with the church not being radical enough? By such it would expose itself to the risk of relevance in the world in which we actually live rather than the world we might eventually wish to be.Justin Welby is right to examine economic issues (about which he is competent to speak) and taxation and benefit policies that adversely affect often the poor and most vulnerable. It is unfortunate that he failed to check the current church commissioners’ investment portfolio, which now presents the church with the opportunity to disinvest from the likes of Amazon. It ought to be noted, too, that the church follows the life and teachings of Jesus of Nazareth, who violently turned over the tables of the moneychangers in the temple (Matthew 21: 12-13 et al), who quite simply were defrauding the ordinary worshippers, rather like tax evaders and avoiders today. Continue reading...

238 academics call on the European Union and its member states to plan for a post-growth future in which human and ecological wellbeing is prioritised over GDPThis week, scientists, politicians, and policymakers are gathering in Brussels for a landmark conference. The aim of this event, organised by members of the European parliament from five different political groups, alongside trade unions and NGOs, is to explore possibilities for a “post-growth economy” in Europe.For the past seven decades, GDP growth has stood as the primary economic objective of European nations. But as our economies have grown, so has our negative impact on the environment. We are now exceeding the safe operating space for humanity on this planet, and there is no sign that economic activity is being decoupled from resource use or pollution at anything like the scale required. Today, solving social problems within European nations does not require more growth. It requires a fairer distribution of the income and wealth that we already have.Dr Dan O’Neill, Associate Professor, University of Leeds, UKDr Federico Demaria, Researcher, Universitat Autònoma de Barcelona, SpainDr Giorgos Kallis, Professor, Universitat Autònoma de Barcelona, SpainDr Kate Raworth, Author of ‘Doughnut Economics’, UKDr Tim Jackson, Professor, University of Surrey, UKDr Jason Hickel, Lecturer, Goldsmiths, University of London, UKDr Lorenzo Fioramonti, Professor, University of Pretoria, South AfricaDr Marta Conde, President of Research & Degrowth, SpainDr Kevin Anderson, Deputy Director, Tyndall Centre for Climate Change Research, UKDr Steve Keen, Professor, Kingston University, UKDr Saskia Sassen, Professor of Sociology, Columbia University, USADr Ann Pettifor, Director, Policy Research in Macroeconomics (PRIME), UKDr Serge Latouche, Université Paris Sud, FranceDr Kate Pickett, Professor, University of York, UKDr Susan George, President of the Transnational Institute-TNI, NetherlandsDr Joan Martinez Alier, Professor, Universitat Autònoma de Barcelona, CataloniaDr David Graeber, Professor, London School of Economics, UKDr Juan Carlos Monedero Fernández, Universidad Complutense de Madrid, SpainDr Dominique Méda, Professor, University Paris Dauphine, FranceDr Lourdes Beneria, Professor Emerita, Cornell University, USADr Inge Røpke, Professor, Aalborg University, DenmarkDr Niko Paech, Professor, University of Siegen, GermanyDr Jean Gadrey, Professor, University of Lille, FranceDr Nadia Johanisova, Lecturer, Masaryk University, Brno, Czech RepublicDr Wolfgang Sachs, Research Director Emeritus, Wuppertal Institut, GermanyDr Stefania Barca, Senior Researcher, Centre for Social Studies, University of Coimbra, PortugalDr Gilbert Rist, Emeritus Professor, Graduate Institute of International and Development Studies, SwitzerlandDr György Pataki, Professor, Corvinus University of Budapest, HungaryDr Simone D’Alessandro, Professor, University of Pisa, ItalyDr Ian Gough, Visiting Professor, London School of Economics, UKDr Iñigo Capellán-Pérez, Researcher, University of Valladolid, SpainDr Amaia Pérez Orozco, Researcher, Colectiva XXK, SpainDr Max Koch, Professor, Lund University, SwedenDr Fabrice Flipo, Professor, Institut Mines Télécom-BS et LCSP Paris 7 Diderot, FranceDr Matthias Schmelzer, Researcher, University of Jena and Konzeptwerk Neue Ökonomie, GermanyDr Óscar Carpintero, Associate Professor, University of Valladolid, SpainDr Hubert Buch-Hansen, Associate Professor, Copenhagen Business School, DenmarkDr Christos Zografos, Pompeu Fabra University, SpainDr Tereza Stöckelová, Associate Professor, Institute of Sociology of the Czech Academy of Sciences, Czech RepublicDr Alf Hornborg, Professor, Lund University, SwedenDr Eric Clark, Professor, Lund University, SwedenDr Miklós Antal, Researcher, University of Leeds, UKDr Jordi Roca Jusmet, Professor, Universitat de Barcelona, SpainDr Philippe Defeyt, Chairman, Institute for Sustainable Development, BelgiumDr Erik Swyngedouw, Professor, University of Manchester, UKDr Christian Kerschner, Assistant Professor, Modul University Vienna, AustriaDr Agata Hummel, Assistant Professor, University of Adam Mickiewicz, PolandDr Frank Moulaert, Emeritus Professor, Katholieke Universiteit Leuven, BelgiumDr Frank Adler, Researcher, Brandenburg-Berlin Institute for Social Scientific Research, GermanyDr Janne I. Hukkinen, Professor, University of Helsinki, FinlandDr Jorge Riechmann, Professor, Universidad Autónoma de Madrid, SpainSamuel Martín-Sosa Rodríguez, Responsable de Internacional, Ecologistas en Acción, SpainDr John Barry, Professor, Queen’s University Belfast, Northern IrelandDr Linda Nierling, Senior Scientist, Karlsruhe Institute of Technology, GermanyDr Ines Omann, Senior Researcher, Austrian Foundation for Development Research, AustriaDr Hug March, Associate Professor, Universitat Oberta de Catalunya, SpainDr Jakub Kronenberg, Associate Professor, University of Lodz, PolandYayo Herrero, Miembro del Foro de Transiciones, SpainDr Isabelle Anguelovski, Professor, Universitat Autònoma de Barcelona, SpainDr François Schneider, Researcher, Research & Degrowth, FranceDr Vasilis Kostakis, Senior Researcher, Tallinn University of Technology, EstoniaDr Enric Tello, Professor, University of Barcelona, SpainDr Andrew Sayer, Professor, Lancaster University, UKDr Kate Soper, Emerita Professor, London Metropolitan University, UKDr Klaus Hubacek, Professor, International Institute for Applied Systems Analysis, AustriaDr Brent Bleys, Assistant Professor, Ghent University, BelgiumDr Jill Jäger, Independent Scholar, Vienna, AustriaDr Mauro Gallegati, Professor, Università Politecnica delle Marche, ItalyDr Peadar Kirby, Professor Emeritus, University of Limerick, IrelandDr Inés Marco, Researcher, University of Barcelona, SpainDr Ivan Murray Mas, Assistant Lecturer, Universitat de les Illes Balears, SpainDr Alexandros Kioupkiolis, Assistant Professor, Aristotle University of Thessaloniki, GreeceDr Aurore Lalucq, Co-Director, Veblen Institute, FranceDr Gaël Plumecocq, Researcher, French National Institute for Agricultural Research (INRA), FranceDr David Soto Fernández, Associate Professor, Universidad Pablo de Olavide, SpainDr Christian Kimmich, Researcher, Masaryk University Brno, Czech RepublicDr Giacomo D’Alisa, Researcher, Centre for Social Studies, University of Coimbra, PortugalDr Seth Schindler, Senior Lecturer, University of Manchester, UKDr Philippe Roman, Researcher, ICHEC Brussels Management School, BelgiumDr Lorenzo Pellegrini, Associate Professor, Erasmus University Rotterdam, NetherlandsDr Erik Gómez-Baggethun, Professor, Norwegian University of Life Sciences, NorwayDr Tommaso Luzzati, Assistant Professor, University of Pisa, ItalyDr Christoph Gran, ZOE Institute for Future Fit Economies, GermanyDr Tor A. Benjaminsen, Professor, Norwegian University of Life Sciences, NorwayDr Barry McMullin, Professor, Dublin City University, IrelandDr Edwin Zaccai, Professor, Université Libre de Bruxelles, BelgiumDr Jens Friis Lund, Professor, University of Copenhagen, DenmarkDr Pierre Ozer, Researcher, Université de Liège, BelgiumDr Louison Cahen-Fourot, Researcher, Institute for Ecological Economics, Wirtschaftsuniversität Vienna, AustriaDr Tommaso Rondinella, Researcher, Italian National Institute of Statistics, ItalyDr Julia Steinberger, Associate Professor, University of Leeds, UKDr Andrew Fanning, Marie Curie Research Fellow, University of Leeds, UKJose Luis Fdez Casadevante Kois, Miembro del Foro Transiciones, SpainDr Seema Arora-Jonsson, Professor, Swedish University of Agricultural Sciences, SwedenDr Astrid Agenjo Calderón, Lecturer, Universidad Pablo de Olavide, SpainDr Tom Bauler, Professor, Université Libre de Bruxelles, BelgiumDr Gregers Andersen, Independent Researcher, DenmarkDr Peter Söderbaum, Professor Emeritus, Mälardalen University, SwedenDr Lourenzo Fernandez Priero, Professor, Universidade de Santiago de Compostela, SpainDr John R Porter, Emeritus Professor, University of Copenhagen, DenmarkDr François Thoreau, Senior Researcher, University of Liege, FranceMariagiulia Costanzo Talarico, Researcher, Universidad Pablo de Olavide, SpainDr Maria Nikolaidi, Senior Lecturer, University of Greenwich, UKDr Ekaterina Chertkovskaya, Lecturer, Lund University, SwedenDr Stefan Gaarsmand Jacobsen, Assistant Professor, University of Roskilde, DenmarkDimitar Sabev, Researcher, University of National and World Economy, BulgariaDr Mladen Domazet, Research Director, Institute for Political Ecology, CroatiaDr Hans Diefenbacher, Professor, University of Heidelberg, GermanyDr Marco Armiero, Director of the Environmental Humanities Laboratory, Royal Institute of Technology, SwedenDr Irene Ring, Professor, Technische Universität Dresden, GermanyDr Christine Bauhardt, Professor, Humboldt-Universität zu Berlin, GermanyDr Dominique Bourg, Professor, University of Lausanne, SwitzerlandDr Tomas Ryska, Lecturer, University of Economics, Czech RepublicDr Filka Sekulova, Researcher, Universitat Autònoma de Barcelona, SpainDr Andrej Lukšič, Associate Professor, University of Ljubljana, SloveniaDr Adrian Smith, Professor, University of Sussex, UK

In 1989, the economist’s essay The End of History? asked whether liberalism had triumphed over ideology. History, however, had other ideas and his new book responds to the return of extremismEvery “thought-leader” needs a catchy leading thought. Francis Fukuyama made his name and fortune with the definitive “one-liner” political meme The End of History?, which in the early 1990s seemed a smart way of describing the collapse of communism, and the “triumph” of the west. Since then, in the years in which history has clearly refused to end, Fukuyama, a senior fellow at Stanford University, has had various stabs at repeating that initial success. His new book, Identity, proposes the term “thymos” as the key to understanding our unnerving political moment.“Thymos” (it does no harm, for credibility or book sales if the crucial thought-leading term is best understood by Ancient Greeks) comes from Plato’s Republic.It represents a kind of third way for a soul instinctively divided into two competing impulses – reason and appetite – by Socrates. If the former of those two made us human and the latter kept us animal, thymos fell somewhere in between. Most translations of The Republic suggest its sense for Plato as “passion”. For his purposes, Fukuyama takes it to mean “the seat of judgements of worth”, a kind of eternal status thermostat.The disturbing thing is the support Trump gets, despite these racist things he does(October 27, 1952) Continue reading...

The big winners of post-crisis politics have been the insurgent populists who have fed on and amplified the injustice felt by many votersGod moves in mysterious ways. The Archbishop of Canterbury is of mortal flesh. Justin Welby’s hellfire sermon about the “evils” of capitalism, which won him repeated ovations from his congregation of trade unionists, was a speech very much of its time. In both its content and its contradictions, the Church of England’s senior prelate was channelling not so much the infinite divine as a highly contemporary and earthly mood about what has happened over the past decade.The Great Crash exposed things that were very wrong with the way the economy is organised and those ills – sins, to an archbishop – have still not been fixed. This argument is now so pervasive that you sometimes even hear it from senior Conservatives.Related: Ten years after the crash: have the lessons of Lehman been learned? | Yanis Varoufakis and others Continue reading...

Investment is low, growth is slow and crisis in China would leave central banks with little firepower to stave off declineTen years after the collapse of Lehman Brothers and the financial crisis that followed, it is clear that far from being safer, the world is a more unstable and worrisome place. In the UK, average wages remain below pre-crisis levels and inequality is high. Investment in equipment and hi-tech processes, the cornerstone of future growth, is low.Not surprisingly, given the emphasis on extracting funds from companies rather than investing them, the productivity of the average worker, as measured by their output per hour, is well behind that of comparable developed nations.Lehman Brothers filed for bankruptcy on 15 September 2008. With $639bn in assets, it was the biggest bankruptcy filing in history – 10 times the failure of the fraud-riddled energy company Enron. Continue reading...

The grim scenarios presented to No 10 only arise because the Bank proposes to raise rates in a crisis. Why would it do that?The case for staying inside the EU remains solid, but reinventions of project fear are wrecking the chances of ever persuading Leave voters, possibly in a second referendum, that quitting the single market and customs union would harm the economy irrevocably.That’s because project fear – as first put forward by the Treasury before the referendum vote and supported by the likes of the International Monetary Fund – is full of almost as many barmy assumptions as are held true by Jacob Rees-Mogg and his European Research Group (ERG). Continue reading...

Shadow chancellor will say ordinary people are still paying the price of 2008 crisisLondon’s vast financial services industry must never again be the “master of the economy”, the shadow chancellor, John McDonnell, will say on Saturday in a speech accusing bankers of profiting from speculation at the expense of ordinary people.The veteran socialist who is now seeking to reassure business, promises higher taxes and tougher regulation on banks on the 10th anniversary of the collapse of Lehman Brothers – the pivotal moment in the global financial crisis.Related: Britain is locked in a low-wage, low-skill economy. This is a job for the unions | Larry Elliott Continue reading...

Politicians have failed to come up with a transformation in how we view the role of the state and marketTen years ago tomorrow, the US government allowed the Wall Street bank Lehman Brothers to go bust, an event that seemed to mark a historical denouement: the end of an American century culminating in humiliating failure of its economic policy. In the days that followed, the shock waves crippled other major institutions, petrified money markets and ultimately destroyed millions of jobs. The banking crisis was transatlantic: German lenders were bailed out, in Ireland the state stood behind bank liabilities three times the size of the nation’s GDP, and in Britain one of the biggest banks in the world, RBS, was nationalised. The only comparable event was the great depression of the 1930s. As the historian Adam Tooze, in his magisterial work Crashed: How a Decade of Financial Crises Changed the World, points out, “global industrial output, stock markets and trade were all falling at least as fast in 2008-2009 as they had in 1929”.The economic consequences of events a decade ago are still reverberating through politics. While ordinary workers in advanced economies saw public services cut, wages stagnate and living standards fall, the state saved the collapsing financial system by creating money and cutting interest rates. In the US, while the banks and lenders were bailed out, more than 9 million American families lost their homes to banks or were forced to sell up. In Britain, bankers’ bonuses are almost back to pre-crisis levels, while the nation endures the longest period of wage stagnation since the 1860s. The 2008 financial crash exposed the US Federal Reserve as the vital link in a global chain of a few dozen banks. According to Mr Tooze, the Fed’s unpublicised role was to bail out the world. It provided about $5tn in liquidity and loan guarantees to large non-American banks. It also sent $10tn to foreign central banks through currency swaps. All this money was eventually repaid, with interest, but it was nevertheless made available to the banks, their shareholders and their outrageously remunerated staff who had, through acts of commission or acts of omission, brought the world to its knees. Continue reading...

Letters from David Purdy, David Beake, Martin London, Bernard Watson, DBC Reed and Adrian BerridgeGordon Brown is right to lambast the architects of fiscal austerity for killing off the recovery brought about by the prompt and coordinated efforts of the G20 governments to prevent a rerun of the Great Depression (World is ‘sleepwalking to a new financial crisis’, says Brown, 13 September). But why did the progressive left in Britain fail to repel the fiscal conservative backlash? One contributory factor was Brown’s ill-judged decision to step down as leader of the Labour party when he resigned as prime minister after the 2010 election.This unforced error precipitated a Labour leadership election that left the incoming coalition government unchallenged at a critical time and was compounded when Brown’s successor, Ed Miliband, appointed Alan Johnson as shadow chancellor, instead of the better qualified Ed Balls. By the time that mistake had been corrected, it was too late: the public had accepted the case for fiscal austerity.

Tory council latest casualty of drastic austerity measures imposed on local governmentOn Wednesday the eight-person cabinet of Somerset county council voted through £28m of spending cuts, spread over the next two years. Over the previous six months, speculation had raged about whether Somerset would become the next Conservative-run council to join Northamptonshire in effectively going bankrupt and to call in government commissioners to sort out its mess.And here was the answer, delivered at not much more than a week’s notice. To avoid a final disastrous plunge into the red, there would be a hacking down of help for vulnerable families and children with special educational needs, youth services, road gritting, flood prevention and much more.Related: Austerity kills: this week’s figures show its devastating toll | Owen JonesWhat is austerity?Related: Northamptonshire forced to pay the price of a reckless half-decade | Patrick ButlerRelated: Austerity, outsourcing and English councils in crisis | Letters Continue reading...

Our panel of writers considers what has changed – and what still needs to Continue reading...

Steelmaker blames weak pound and euro but pledges not to close plantsBritish Steel is cutting 400 jobs at its sites in the UK and elsewhere in Europe as it blamed a weak pound and euro for driving up costs.The firm said it was shedding almost 10% of its 5,000-strong workforce in a bid to “streamline” its operations and secure a long-term future.Related: British Steel plans 400 job cuts and blames weak pound – business live Continue reading...

Monetary policy committee sticks with 0.75% and hints of rise if recovery continues

Rolling coverage of the day’s political developments as they happen, including the latest batch of government no-deal Brexit planning papers

With Labour moving left and the Tories turning right, there ought to be room in the centre of British politics. Yet the Liberal Democrats are struggling to appear relevantOne side-effect of the ideological mania gripping the Conservatives is to put a retrospective gloss on the 2010-15 coalition government. There is not much to cherish in the legacy of the administration that set Britain on an ill-judged course of austerity. But the unleashing of a more fanatical rightwing Tory impulse since 2015 testifies, in hindsight, to the restraining, if limited, influence of the Liberal Democrats in government. That isn’t much use to Vince Cable, a coalition cabinet minister three years ago, now leading a party parked on the margins. A reconfiguration of British politics – with Jeremy Corbyn’s Labour moving leftward and a radical rightwing Tory agenda – ought, perhaps, to leave room for a third-way English party. Yet the Lib Dems haven’t expanded into the space.Their desultory performance has many causes. To protest against New Labour governments from a liberal-left position, only to then join forces with the Conservatives, was too violent a lurch for many of the party’s natural supporters. It looked craven in pursuit of power and the brand never recovered. Britain’s electoral system doesn’t help, squeezing smaller parties. The Lib Dems find themselves defined more by what they are not (neither Labour nor Tory) than by what they are. To articulate a positive identity will be Mr Cable’s most challenging task at his party’s annual conference next week. It should be added that the task is the same one that faced his predecessors, Tim Farron and Nick Clegg. When a mission goes unaccomplished for so long the question arises as to whether it can be done at all. The Lib Dems have been written off in the past and recovered. They are a resilient bunch, but no party has an inalienable right to be relevant. Continue reading...

All the day’s economic and financial news, as UK central bank leaves interest rates on hold and Turkey announces a whopping rate hike

Central bank ignores Recep Tayyip Erdoğan’s calls for restraint and sees lira recoveryTurkey‘s central bank has raised its key interest rate to 24% in a dramatic bid to control rocketing inflation and prevent a currency crisis.Ignoring calls for restraint from President Recep Tayyip Erdoğan, the bank raised its main short-term rate from 17.5% following weeks of pressure from international investors. Financial markets have grown increasingly concerned that Turkey is in danger of adding its name to the list of countries seeking a rescue loan from the International Monetary Fund. Continue reading...

Downing Street says UK has reformed City regulation in an ‘incredibly robust system’Downing Street has rejected Gordon Brown’s warning that the UK is at risk from a worldwide drift towards a new financial crash, insisting that a revamped UK regulatory regime would properly insulate the country.Brown, who was prime minister at the time of the 2008 crash, said that after a decade of stagnation the global economy was now moving into a decade of vulnerability.Related: Gordon Brown’s tragedy is not his flaws, but his failure to admit them | Deborah Orr Continue reading...

Credit ratings agency says failing to agree deal will lead to weaker pound, higher inflation and pay squeezeBritish households would face a renewed squeeze on living standards from a no-deal Brexit that could tip the country into recession, according to a report.Issuing a stark warning for Britain that crashing out of the EU without a deal next year would have widespread ramifications, the credit ratings agency Moody’s said the risks to the British economy had “risen materially” in recent months.Related: Government publishes latest round of no-deal Brexit planning documents - Politics liveRelated: Driving licences may be invalid in EU if no Brexit deal, UK warns Continue reading...

Conditions will soon be ripe for a financial crisis, but governments will have their hands tiedAs we mark the 10th anniversary of the collapse of Lehman Brothers, there are still ongoing debates about the causes and consequences of the financial crisis, and whether the lessons needed to prepare for the next one have been absorbed. But looking ahead, the more relevant question is what actually will trigger the next global recession and crisis, and when.The current global expansion will likely continue into next year, given that the US is running large fiscal deficits, China is pursuing loose fiscal and credit policies, and Europe remains on a recovery path. But by 2020, the conditions will be ripe for a financial crisis, followed by a global recession.Related: Lehman collapse: what has happened to the markets since?Related: What became of the G20 leaders who met in 2008 to avert financial crisis?Related: Ten years on from the crash, we need to get ready for another one | Robert Skidelsky Continue reading...

Annual earnings more than 3% lower than in 2008 with millenials worst hitThe financial crisis has had a lasting impact on the UK economy and people’s incomes, with annual wages still £760 lower than they were a decade ago , according to the Institute for Fiscal Studies.The institute’s analysis shows median annual earnings fell to £23,327 last year, 3.2% lower than in 2008 when the average wage was £24,088. Continue reading...

All the day’s economic and financial news, as Chinese leader calls for Asian states to unite against US protectionist trade policies

Former PM delivers scathing analysis of how the problems of 2009 remain unresolvedA leaderless world is sleepwalking towards a repeat of its near meltdown in late 2008 and early 2009 because it has failed to remedy the causes of the financial crash of a decade ago, former prime minister Gordon Brown has warned.Britain’s leader during the period when the collapse of the US investment bank Lehman Brothers put every major bank at risk, said that after a decade of stagnation the global economy was now moving into a decade of vulnerability.In the next crisis a breakdown of trust in the financial sector would be mirrored by breakdown in trust between governments Continue reading...

The effect on the FTSE 100 through to pensions, house prices and savers

Our bold proposals would raise £15bn per year, which we would use to revive public services and create a citizens’ wealth fundMuch of the anger in today’s politics stems from an ongoing stagnation in living standards, coupled with the sight of a small minority becoming infinitely richer. Britain is one of the most unequal societies in Europe, where success increasingly depends on where you live and who your parents are. Forty-four per cent of UK wealth is owned by 10% of households, while just 9% of wealth is owned by the bottom half. This looks set to continue, with more than half of the net increase in wealth between 2010 and 2014 captured by the top decile of households.Yet although wealth inequality is twice as great as income inequality, which has on some measures actually fallen slightly in recent years, it has strangely received far less attention.Related: Thinktank calls for major overhaul of Britain's economy Continue reading...

We look at their fortunes and how their countries coped with the worst financial collapse since the 1930sIn the wake of the collapse of Lehman Brothers in 2008 the G20 called an emergency meeting in Washington in a bid to contain the fallout from the mounting financial crisis. In the decade since each nation represented has had diverging fortunes.Of the world leaders who attended the summit, only two are still in position today – Angela Merkel and Recep Tayyip Erdoğan. One is in prison and four others have become embroiled in corruption charges. Here we look at the global ramifications of the crash for those present and the countries or organisations they represented. Continue reading...

The lessons of 2008 have not been fully learned: stop risky lending by banks, address fiscal policy and reduce inequalityThe collapse of Lehman Brothers on 15 September 2008 unleashed the worst global downturn since the Great Depression of 1929. And it was almost entirely unanticipated. Ten years on is a good time to ask what governments, policymakers, and economists might learn from this catastrophe – how to prevent future ones, and how to overcome them if they happen. Of these two, prevention is far better than cure. Once a downturn gathers momentum, the scale of intervention needed to reverse it becomes frighteningly large. Budget deficits balloon, public debts soar, governments take over banks – all conjuring up visions of looming state bankruptcy, or worse, state control over the economy. So the most important question is: how can these catastrophes be prevented?By prevention, I do not chiefly mean trying to stop the semi-regular fluctuations of the business cycle. Capitalist market economies exhibit rhythms of economic activity. The political economist Joseph Schumpeter called them waves of creation and destruction, or perhaps they simply arise from temporary mistakes of optimism and pessimism. The authorities already possess the tools to dampen, if not altogether prevent, these fluctuations – if they want to. Central banks can use interest rates to restrict or expand credit; government budgets have built-in stabilisers, with revenues falling when the economy turns down, and rising when it expands.Related: Ten years after the financial crash, the timid left should be full of regrets | Larry ElliottRelated: Our financial system only works for the 1%. It will take another crash to fix it | John Quiggin Continue reading...

Pro free trade economists claim leaving the EU single market would increase UK living standards – but beware of how they crunch the numbersBritain has “nothing to fear” from a “clean break” with the European Union, according to a report by the group of economists who have consistently argued that Brexit will be a liberating experience.The Economists For Free Trade (EFFT) report argued that moving outside the EU’s single market could lead to prices in the shops declining by 8% and the economy growing by an extra 7% over the next 15 years, or by more than £1tn in today’s money.Related: Unilever's decision to go Dutch should be shot down | Nils Pratley Continue reading...

Forget all the worries about no deal being reached – there are literally no downsides to BrexitShortly before 11am, committee room nine began to fill up. First in were Owen Paterson, Steve Baker, Peter Bone, David Davis, Iain Duncan Smith, Bill Cash and Andrew Bridgen. Next was Matt Ridley. Always useful to have a climate change denier who destroyed Northern Rock onboard. Then came Jacob Rees-Mogg, followed a short while later by a sleep-deprived Boris Johnson, trying to slip in unnoticed. A full house. Just about all those whom no sane person would dream of leaving in charge of the country were gathered together to tell the world how they proposed to run the country if given half a chance.It was all very confusing. Last week, we were told by the Brexiters that they would be announcing their alternative cunning plan to the prime minister’s Chequers deal this week, only for them to change their mind when it was revealed the best they could come up with was to turn the UK into a tax haven, spend billions on a “star wars” defence system and invade the Argies. Continue reading...

US subprimes set off the last crisis. We look at the possible causes of another crashIn early 2007, the then chairman of the Federal Reserve, Ben Bernanke, dismissed the idea that the slowdown in the US housing market had profound implications. It was, according to the man running the world’s most powerful central bank, just a local affair.Everybody knows what happened next. Within 18 months the local problem in the US subprime mortgage market had ballooned into the biggest global financial crisis since the 1930s. When Lehman Brothers went bankrupt 10 years ago this week, it was the catalyst for a month of turmoil in which no financial institution was considered entirely safe. Continue reading...

New cryptocurrencies such as Tether may be pegged to the dollar, but they have big flawsWhile the mania for cryptocurrencies may have peaked, new units continue to be announced, seemingly by the day. Prominent among the new arrivals are so-called “stable coins.” Bearing names such as Tether, Basis, and Saga, their value is rigidly tied to the dollar, the euro, or a basket of national currencies.It’s easy to see the appeal of these units. Viable monies provide a reliable means of payment, unit of account, and store of value. But conventional cryptocurrencies, such as bitcoin, trade at wildly fluctuating prices, which means that their purchasing power – their command over goods and services – is highly unstable. Hence they are unattractive as units of account.Related: UK in strong position to be leader in crypto economy, report says Continue reading...

Ten years ago Lehman Brothers collapsed amid the worst financial crisis in almost a century. Photographer Andy Hall takes to the streets of the City of London to see what’s changed Continue reading...

Ten years ago this weekend the investment bank’s bankruptcy caused panic in US and UKTen years ago this weekend Lehman Brothers crashed into bankruptcy – the biggest corporate failure in history – and sent the world’s financial system reeling close to collapse, causing panic among policymakers on both sides of the Atlantic. The US government was forced into a $700bn (£540bn) bailout of the banking sector, while in the UK, Lloyds Bank rescued HBOS and the government was then forced to rescue Lloyds and Royal Bank of Scotland.A decade on, what has happened to the key players involved in the financial crisis and its aftermath?In 2009 Fuld sold an apartment in Manhattan for $25m and a collection of art for $13.5mPaulson has been a severe critic of TrumpRelated: Have the 'too big to fail' banks really met their Waterloo? | Richard PartingtonOnly a year after the HBOS crisis Hornby was back in business Continue reading...

Companies in Wales, Scotland and Northern Ireland more pessimistic on hiring plansEmployers in England are more optimistic about being able to shrug off the impact of Brexit than anywhere else in the UK but a gloomy outlook across the rest of Britain has dragged overall hiring optimism to its lowest level in six years.Revealing increasing divisions across the country, the latest snapshot from the jobs market by the employment agency ManpowerGroup comes less than 200 days before Britain is due to formally leave the EU. Continue reading...

Ten years on from the financial crisis, the sustainability of the planet is at stake – markets cannot survive without moralsThe real question that should mark the 10th anniversary of the financial crash is a moral one: what was finance for, what was investment for, what was corporate activity for, in 2008, and what is it for now? So far, analyses have focused on two dimensions of the crisis. First, whether enough was subsequently done, in terms of new regulation and technical fixes such as ringfencing the banks, to prevent a repeat meltdown. And second, a focus on the consequences – the global political upheaval that came in its wake, or more precisely, the decade of immiseration that the briefly thrilling, phosphorous destruction unleashed.Both approaches risk being a distraction. The next crisis most likely won’t come from improperly supervised instruments of speculative finance. The Economist, for example, suggests the risks lie in the level of household borrowing and the euro. And while it is impossible to avoid asking whether the super-rich simply walked away from the wreckage, laughing as they left societies trying to hold themselves together through painful austerity, the answer generates resentment and a lust for revenge. To know that a disproportionate concentration of wealth is destabilising as well as unjust does not give us a meaningful or creative blueprint for the future we want to build.Related: Our financial system only works for the 1%. It will take another crash to fix it | John QuigginRelated: 'If it was Lehman Sisters, it would be a different world' – Christine Lagarde Continue reading...

A growing number of people are renting damp, unsuitable homes, and action to protect them is overdueThe rise in property prices in the UK between 1970 and 2013 was unmatched in any other rich country. The housing policies pursued by successive UK governments in a rapidly globalising world have made millionaires of hundreds of thousands of families who still consider themselves to be middle-class, middle-income people, in defiance of the evidence of their assets.For those not lucky enough to have secured a foothold on the property ladder before prices began their vertiginous ascent, the effect has been quite different. As is widely understood by the public as well as politicians, millions of people who might once have aspired to become homeowners now recognise that this is likely to take them much longer than it took people in previous generations, if it happens at all. Prices in the south-east but also in other parts of the country have, at many multiples of average incomes, moved beyond the reach of anyone who does not have a cash deposit of tens of thousands of pounds. The property ladder has been kicked away. Continue reading...

Retail sales pick up, while construction sector bounces back after weak start to yearThe hottest summer since records began helped the British economy gather strength in the three months to July, as shoppers hit the high street and England progressed to the semi-finals at the World Cup.The Office for National Statistics said GDP increased by 0.6% in the period from a rate of 0.4% in the previous three months, driven by a rise in activity in Britain’s dominant services sector. The latest snapshot beat forecasts made by City economists for slower growth of 0.5% in the three months to July. Continue reading...

Slump in consumer spending and business investment likely to reduce chance of recoveryA sharp fall in consumer spending and business investment is expected to drag Britain’s growth rate down to just 1.3% this year, dispelling hopes that the UK’s sluggish rate of expansion in the first six months will recover in the second half of the year.According to the consultancy KPMG, Brexit uncertainty will take a bigger toll on the economy than many forecasters, including the Bank of England, expect following a slump in consumer spending from 1.9% last year to 1.2% in 2018 and an even bigger drop in business investment, from 3.4% in 2017 to 0.8% this year.Gross domestic product (GDP) is a key government statistic and provides a measure of the UK's total economic activity.Related: Personal debts 'shear almost £900m off British economy' Continue reading...

‘Some people think robots will make humans redundant, and we should prepare by lying on sun loungers. I don’t know’The world can be a very scary place. When I wrote Sapiens and Homo Deus I had no idea they would both become worldwide bestsellers. So I was totally unprepared when my publishers immediately demanded a follow-up. For a few hours I was in a state of panic, before inspiration came to me. If my previous books had dealt with the past and the future, why didn’t I just recycle a whole load of articles I had written for other publications and try to present them as my take on the present. Even though they also invariably dealt with the future. So here we go...Disillusionment: No one knows what the future will look like. Humans like to tell themselves stories, be they in the form of religion or political ideologies, such as nationalism, communism and liberalism. But none of these can adequately prepare us for what may happen in the next 50 years. New technology and climate change might make the world more different than we can possibly imagine. So we had better keep an open mind and hope for the best. Continue reading...

Ever since Lehmans went bust banks have been promising to reform, but we’re not there yetHistorians have recorded turning points for time immemorial. The crossing of the Rubicon by Caesar, the Boston Tea Party for the United States, Britain’s triumph at Waterloo and decline after Suez.For the chroniclers of capitalism, the collapse of Lehman Brothers a decade ago this week stands as the major tipping point in modern financial history. The talk in the City will be of the days before Lehman and those after. Continue reading...

Governments have failed to force banks to protect themselves from risks – and some are greater than they were a decade agoTen years ago this weekend, frantic efforts were being made to save one of the biggest banks in the world. When chancellor Alistair Darling overruled Barclays’ supreme stupidity in considering the takeover of the stricken Lehman Brothers investment bank – the extent and complexity of its debts would have brought down both it and probably the British banking system – the die was cast. Lehman collapsed and the shockwaves are still felt to this day.Suddenly, the proud buccaneers of high finance were exposed as “sapient nincompoops”, as the great economic commentator Walter Bagehot described the senior executives of Overend, Gurney & Co in the wake of its collapse 150 years earlier. All the assumptions made by a generation of free-market economists, conservative politicians and the financial establishment were shown to be ideological tosh propagated by today’s nincompoops.Finance can do more or less as it likes, but if it collapses, be sure that governments will be asked to step in again Continue reading...

Leavers may talk about the long term, but the damage to British life and institutions is already painfully apparentWhen the Bank of England was celebrating the 20th anniversary of becoming independent last year, I was asked whether I agreed that, notwithstanding my initial doubts, independence had proved a success.I replied that it was too early to tell. This was an echo of a widely misunderstood quotation from the Chinese prime minister Zhou Enlai, who, when President Nixon asked him what he thought of the impact of the French Revolution, reportedly replied: “It is too early to tell.”The terrible thing is the way so many people still assume that Brexit will have to happen Continue reading...