Governor Mark Carney tells us time and time again that interest rates will rise, but will anyone believe him in the future?Mark Carney is not so much an unreliable boyfriend as a schoolboy who keeps getting his homework wrong. The Bank of England governor gave his quarterly review of the economy last week and yet again confounded earlier expectations that he would increase the cost of borrowing.Whereas in the past Carney has confidently predicted that the economy is robust and capable of absorbing increases in interest rates, only to find plausible excuses for not going ahead, this time he was unable to offer any coherent defence. Continue reading...

The customs union issue – and the fall in foreign investment to the UK – is consuming ever larger amounts of the party’s energyRemain voters must wish someone had considered the Irish border question before they voted on 23 June 2016.It probably would not have changed the outcome. The referendum, as the pollsters remind us, was a cultural phenomenon linked more closely to people’s attitudes to immigration and sovereignty than to economic success – a situation that persists today. Still, it would be satisfying to rewind and show that the reason many now believe Britain must stay connected to the EU for five years or so relates to complex customs rules and how they cannot be reconciled with open borders.Even the most confident Brexiters have noticed the economy flagging under the weight of the uncertainty Continue reading...

Jes Staley has been fined by UK regulators for a breach of conduct after he tried to uncover the identity of whistleblower

Brexiters must recognise the ‘collateral damage’ leaving the EU will cause in Northern Ireland, says former PMSir John Major has warned that a hard border in Ireland will be unavoidable unless Brexiters start to take on board the “collateral damage” that exiting the EU will cause in Northern Ireland.He said that the words “customs union” had become “toxic” and that efforts to find an alternative solution to the border amounted to “limp promises”.Counties and customsA customs union is an agreement by a group of countries, such as the EU, to all apply the same tariffs on imported goods from the rest of the world and, typically, eliminate them entirely for trade within the group. By doing this, they can help avoid the need for costly and time-consuming customs checks during trade between members of the union. Asian shipping containers arriving at Felixstowe or Rotterdam, for example, need only pass through customs once before their contents head to markets all over Europe. Lorries passing between Dover and Calais avoid delay entirely.Related: Brexit plan drawn up for border checks between NI and rest of UK Continue reading...

Decision seemingly based on data showing economy faltering in first few months of 2018The weaker-than-expected performance of the economy in early 2018 has forced the Bank of England to put back plans for an increase in interest rates until later this year.One of Gordon Brown’s first moves as chancellor in 1997 was to hand control of interest rates to an independent Bank of England. Previously the cost of borrowing had been decided between the chancellor and the governor of the Bank. Continue reading...

It won’t be easy to wean Britain off the obsession with ever increasing property values, but it’s important to tryThe housing market is dead. Britain’s biggest mortgage lender, the Halifax, says that prices fell in April by 3.1%, the biggest monthly drop in almost eight years. Newspapers bury this disastrous news way back in their editions for fear that it will spread gloom and despondency.We need to wean ourselves off this way of thinking. Falling house prices are not disastrous, and only in a country with such a perverted relationship with bricks and mortar could they be seen as such. In Germany, they scratch their heads in bemusement when they hear Britons boast of how the value of their house has soared.We should make the tax system less biased and start a mass public-sector housebuilding programmeRelated: Don't tell generation rent the fall in house prices is bad news | Larry Elliott Continue reading...

US ranks poorly for providing opportunities to join top 25% of earners, says World BankChildren around the world have failed to get a better education than their parents and improve their economic circumstances, so generations of poor people in developing countries are becoming “trapped in a cycle of poverty determined by their circumstance at birth”, says a World Bank report.According to the report, Fair Progress? Economic Mobility across Generations Around the World, successive generations in the postwar era, far from enjoying a better life than their parents, have been “unable to ascend the economic ladder due to inequality of opportunity”, or they have seen their progress stall in recent years.Related: Give millennials £10,000 each to tackle generation gap, says thinktank Continue reading...

All the day’s economic and financial news, as Brent crude hits $77 per barrel for the first time in three and a half years

Argentina’s president and IMF leave troubled relationship behind to shore up peso – but people have long memories

Readers respond to the Resolution Foundation’s proposal to give £10,000 to 25-year-olds in a bid to reduce intergenerational inequalityThe Resolution Foundation’s recommendation to give £10,000 to all young people when they turn 25 (Report, 8 May), irrespective of income, may make a small contribution to reducing generational inequalities, but it is also highly likely to increase inequality. For those young people who are already well off, it will provide additional family capital, by potentially reducing the dependence on “the bank of mum and dad” for funding accommodation and educational and business opportunities, but at the same time increase inequalities between better-off and poorer parents. Surely a simpler and more equitable policy to meet the changing income, housing, health and social care needs of different generations would be to introduce a single progressive system of income tax which incorporates inheritance tax and replaces national insurance, which overall has a regressive impact.

The country is a beacon of Enlightenment – a world leader in democratic, sustainable, and inclusive economic growth, writes Joseph StiglitzWith authoritarianism and proto-fascism on the rise in so many corners of the world, it is heartening to see a country where citizens are still deeply committed to democratic principles. And now its people are trying to redefine their politics for the 21st century.Over the years, Costa Rica, a country of fewer than 5 million people, has gained attention worldwide for its progressive leadership. In 1948, after a short civil war, President José Figueres Ferrer abolished the military. Since then, Costa Rica has made itself a centre for the study of conflict resolution and prevention, hosting the UN-mandated University for Peace.Related: Globalisation: time to look at the past to plot the future | Joseph Stiglitz Continue reading...

Commerce has deserted Newcastle-under-Lyme’s town centre. The latest in our new economics series looks at how the community is filling the gap

British Retail Consortium’s latest health check shows 3.1% fall, the biggest dip since its survey launched in 1995Britain’s retailers suffered the sharpest drop in business in more than two decades last month as bad weather, the squeeze on household budgets and the timing of Easter led to a hefty cut in consumer spending.In the latest evidence of the slowdown in the economy since the turn of the year, the latest health check from the British Retail Consortium (BRC) and KPMG found that sales were down by 3.1% in April, the biggest decline since the survey was launched in 1995.Retailers that have gone bust 2017-18 Continue reading...

President Macri says it would help country ‘avoid a crisis like the ones we have faced before’Argentina has appealed to the International Monetary Fund for an emergency credit package in an effort to avoid a financial crash and rescue its faltering peso currency from a long downward slide against the dollar.

All the day’s economic and financial news, including the latest on two takeover deals

The wealthy co-founder of DIY chain Home Depot is so fond of the free market that he has written a book defending it. He would think that, though, wouldn’t he?Thoughts and prayers for capitalism, please. It is doing its best, it really is, but nobody loves it any more. Poll after poll shows that young people in the west are disillusioned with the prevailing economic system. And pundit after pundit is forecasting the end of capitalism as we know it.Enter Ken Langone, an 82-year-old billionaire, whose mission it is to make young people appreciate capitalism again. I know, weird, isn’t it? A billionaire who loves capitalism! Who would have thought? Anyway, Langone loves capitalism so much that he has written a book called I Love Capitalism!, which comes out next week – shortly after the 200th anniversary of Karl Marx’s birth. And you know what? I can’t wait to buy Langone’s celebration of capital on the FREE MARKET. (Sorry for getting all shouty, I just really love capitalism.)The idea of graduating debt-free and not having to worry about being bankrupted by medical bills is borderline dystopic Continue reading...

Weak data has surprised the Bank of England. Not the first time it’s misread the economyThe City has had the date ringed in the diary for months. On Thursday the Bank of England is supposed to raise interest rates, taking them above 0.5% for the first time in almost a decade.It’s not going to happen. A deluge of weak data over the past month has surprised the Bank. It has badly misread the economy, and not for the first time. Continue reading...

Each time the Bank of England appears to succumb to a burst of hopefulness, officials seize on some reason not to raise rates above 0.5%Bank of England governor Mark Carney has already faced accusations of behaving like the Grand old Duke of York and he will probably do so again should Britain’s central bank opt to keep interest rates on hold.Since he joined the Bank in 2013, he has marched borrowers and savers up the hill with heavy hints about the imminent prospect of a rate rise, only to march them back down again. Last November’s restoration of 2016’s emergency rate cut hardly qualified as a major move, whatever the Bank said about its significance. Continue reading...

Those who say questioning the referendum would cause disruption should consider the chaos caused to everyday life by a cliff-edge departureFive of the managers of the top six teams in the Premier League as I write are continental Europeans. I don’t know about the managers of Chelsea, Manchester City, Manchester United or Arsenal, but Jürgen Klopp, hero of Liverpool, has said loud and clear that he cannot understand why this country should be heading for the Brexit cliff.For the terrible prospect now, as the so called “negotiations” with our European partners proceed nowhere slowly, is that unless someone exercises serious leadership soon, there is quite possibly going to be an almighty political and social crisis.The geopolitical case for not disrupting Europe at any time – and certainly not at a time like this – is overwhelming Continue reading...

To the left he’s a union-bashing president for the rich, but the 40-year-old’s agenda also confuses rightwingers – which could work in his favour‘The left and the right don’t know how to respond to President Macron’s reform agenda,” said a former senior trade union official. “What he’s doing doesn’t fit with the way we think about politics. It’s not like the third-way politics championed by Tony Blair.“It is based on empowerment of the individual – which threatens the left – and on the deployment of the state to invest and drive through reforms – which upsets the right. Neither has found a language or an alternative agenda with which to confront him.” Continue reading...

Pubs, retailers and landlords hopeful of bumper weekend to celebrate Harry and Meghan Markle’s weddingThe royal wedding could provide a shot in the arm of more than £80m for the country’s slowing economy as retailers, pubs and hoteliers look to cash in on Harry and Meghan’s looming nuptials.

Aided by tech, entertainment and agriculture, state’s GDP rose between 2016 and 2017, while UK’s has fallen since 2014California’s economy has surpassed that of the United Kingdom to become the world’s fifth largest, according to new federal data made public on Friday.Despite having a population of only 40 million compared with the UK’s 65 million people, California’s gross domestic product of $2.7tn has overtaken the UK’s $2.6tn.Related: Who ruined San Francisco? How its scooter wars sparked a blame game Continue reading...

All the latest economic and financial news, as China says some progress was made in US trade talks but ‘relatively big differences’ remain

Foreign investors switch from emerging currencies to the dollar as inflation runs at 25%Argentina’s central bank raised the country’s interest rates to 40% on Friday, the third hefty increase in eight days in a continuing attempt to defend the slumping peso and put a lid on soaraway inflation.On Thursday the bank lifted borrowing costs from 30.25% to 33.25%, having already raised them from 27.25% on 27 April.Related: US trade mission ends with limited progress, China says - as it happened Continue reading...

Unemployment falls again as labor force participation rate drops – but wages continue to grow slowly for most American workersThe US unemployment rate fell to 3.9% in April, its lowest rate since December 2000, as employers stepped up hiring, modestly adding 164,000 jobs over the month.Related: US-China talks end in increased tension and demand for $200bn trade deficit cutJUST OUT: 3.9% Unemployment. 4% is Broken! In the meantime, WITCH HUNT! Continue reading...

Talks in Beijing between Steven Mnuchin and Liu He end in ‘significant disagreements over certain issues’Tensions between the US and China increased on Friday as it emerged US officials had handed Beijing a list of demands including a $200bn cut in its trade deficit and an end to state subsidies on strategic industries.The two days of talks in Beijing between Steven Mnuchin, the US treasury secretary, and Liu He, the vice-premier, ended on Friday after weeks of escalating rhetoric between the two nations.Related: Pentagon accuses China of shining lasers at US pilots in Djibouti Continue reading...

NIESR cuts forecast from 1.9% after evidence growth almost came to halt in first three monthsOne of the UK’s leading economic thinktanks has slashed its forecasts for 2018 following evidence that growth almost came to a halt in the first three months of the year.The National Institute for Economic and Social Research said it expected expansion of 1.4% in 2018 – down from the 1.9% it had been predicting three months ago – and anticipated that interest rates would not rise until August at the earliest.Related: UK construction sector bounces back after 'beast from the east' Continue reading...

Ministers need to adopt measures that secure a basic human right to engage in productive employmentVictor Hugo once remarked: “You can resist an invading army; you cannot resist an idea whose time has come.” Today, in the United States, a job guarantee seems just such an idea. Progressives of all shades – from Cory Booker to Bernie Sanders – have embraced policies that to varying degrees say the state should seek to do away with involuntary unemployment. This is a welcome return to a politics of work, which has been missing for too long from advanced economies. It is also heartening that polls suggest the job guarantee is popular, with half of voters backing it. This seems starkly at odds with America’s apparently low unemployment figures. The reality is that the unemployment rate only counts those who are actively seeking employment, missing out the millions not seeking work altogether. When those people are included too, it turns out that about one in seven working-age men in the US are actually jobless. The cumulative effect on communities is a layering of despair. A job guarantee offers hope in what for many are desolate times.Related: Number of zero-hours contracts in UK rose by 100,000 in 2017 – ONS Continue reading...

President’s ‘economic protectionism’ harkens back to errors that fueled Great Depression, say experts including 14 Nobel winnersOver a thousand economists have written to Donald Trump warning his “economic protectionism” and tough rhetoric on trade threatens to repeat the mistakes the US made in the 1930s, mistakes that plunged the world into the Great Depression.

All the latest economic and financial news, as a US delegation lands in Beijing for crucial negotiations that could avert a trade war

Hotels and restaurants worst hit amid weaker recovery from cold snap than forecastBritain’s services sector struggled to bounce back in April from the big freeze in March that brought the economy to a grinding halt, increasing the likelihood of the Bank of England holding interest rates at 0.5% next week.Services firms reported the third lowest level of business activity since the EU referendum in 2016 to defy City economists, who expected a stronger recovery from the cold weather in March.Related: UK economy suffers weakest period of GDP growth in five years Continue reading...

TSB chief executive Paul Pester criticised by Treasury committee over the collapse of its banking services

Markit/Cips PMI shows return to growth in April after slump caused by wintry MarchA pick-up in housebuilding helped the hard-pressed UK construction sector to bounce back last month from the harsh winter weather that led to a shutdown of building sites in March.After dropping sharply as a result of the blizzards brought to Britain by the “beast from the east”, the latest health check showed construction – which accounts for 6% of the economy – returning to growth in April.Related: Millennial housing crisis engulfs Britain Continue reading...

All the day’s economic and financial news, including a new healthcheck on UK manufacturing, as America announces a reprieve over steel tariffs

Worse than expected factory orders and weak consumer demand for credit dents prompts sterling sell-offHeavy selling sent the pound tumbling to its lowest level against the US dollar in more than three months after a double dose of economic bad news convinced currency dealers that the Bank of England would ditch plans to raise interest rates next week.A sharper than expected slowdown in manufacturing and signs that hard-pressed consumers have lost their appetite for borrowing added to growing evidence that the UK economy has lost momentum since the turn of the year.Lenders have already bumped up the cost of fixed rate mortgages ahead of the Bank of England’s decision to raise base rate from 0.25% to 0.5%, and mortgage borrowers on tracker and variable rates will see their monthly payments become more expensive in the coming days. ​ Continue reading...

Dr Stan Moore, Anne Williams, Anne Watson, and John Robinson argue that there is a hostile environment throughout British societyThe term “hostile environment” (Opinion, 30 April) has only, so far, been used in an immigration context. As the widower of a late multiple sclerosis sufferer I also see this political ambience in a number of other areas. Disabled people have been discriminated against over the past several years and have certainly been subjected to a “hostile environment”. And society, in general, has also suffered from the “hostile environment” of the austerity agenda perpetrated on us over the past several years by the “nasty party”. Common to all of this has been Mrs May. I trust that she and her Brexit hardliners will not throw us out into a world economic “hostile environment”.

Diplomatic talks continue, but Europe remains in the dark about Donald Trump’s mindsetThe EU has warned that it will not “shoot from the hip” but is fully prepared for a trade war with the US amid heightened concerns that the bloc’s last minute crisis talks are doomed to fail.With tariffs on steel and aluminium on European exports to the US due to come into force on Tuesday, Cecilia Malmström, the European commissioner for trade, made a final diplomatic push in call with the US commerce secretary, Wilbur Ross.Related: Lord Price: 'UK has up to five years of bumps along the road' Continue reading...

All the signs are there that a recession is just around the corner – but who will admit it?In any other world there would be national soul searching. Britain’s economic growth rate over the past 12 months is half its average over the previous 25 years – and set to deteriorate further. Investment is stagnating. Mortgage approvals in March slumped by almost 21%. Car output for the domestic market has dropped in the same month by 13%, for export by 12%. These are dramatic numbers.To drive the point home, on Friday we learned that in the first three months of the year, Britain grew at its slowest rate for five years. One comforting explanation is that the “beast from the east” hit construction. But dig a little deeper, and the cold snap also prompted a surge in demand for electricity and gas. As the Office for National Statistics observed, the weather alone explains little of the setback.Everyone, outside the closed world of the Brexit advocates, knows that vandalising our hi-tech sector is supreme folly Continue reading...

If it lasts till 2019, it will have run for a decade. But this upswing, marked by weak growth and inequality, is not a normal oneIt all started in the summer of 2009. Barack Obama was six months into his presidency and desperate for some good economic news. The US had just suffered its deepest post-war recession, unemployment was heading for 10% and Washington had been forced to bail out the banks.But in June of that year, the world’s second-biggest economy turned the corner. A recovery began that has continued uninterrupted ever since. At the end of this month, the US will have enjoyed its second-longest period of economic expansion in history, beating the upswing under John F Kennedy and Lyndon Johnson between 1961 and 1968. Continue reading...

Having been forced into emergency measures in the austerity years, Mark Carney is now stymied by last week’s GDP figuresWith little more than a week to go before the Bank of England considers its next interest rate move, it has become clear that the Old Lady of Threadneedle Street has missed the boat. Its governor, Mark Carney, hinted as much in comments earlier this month when he spoke about the weakening of the economy since the start of the year.“I don’t want to get too focused on the precise timing – it is more about the general path,” Carney told the BBC. In particular, he said the turmoil on Britain’s high streets, which has seen a worrying number of businesses go to the wall, was a matter of interest to the bank’s interest-rate-setting committee.Is Carney kicking himself for inaction now? He shouldn’t be Continue reading...

Committee will assess potential financial disruption if Britain leaves EU without dealThe financial disruption that could result if Britain leaves the European Union without a deal is to be examined by the Bank of England in a joint working group with the European Central Bank.Intense lobbying by banks and insurance companies in the City, fearful that billions of pounds’ worth of cross-border financial contracts would lose their legal status if negotiations failed, appeared to have succeeded when EU officials agreed that the ECB would join Threadneedle Street officials to assess the risks. Continue reading...

Ex-trade minister is optimistic of an eventual good independent trading relationship after BrexitThe former trade minister Lord Price is unswayed. He voted remain and is still a remainer, despite spending a year at the heart of the government Brexit machine. “I voted to remain and if I voted again today I’d vote to remain,” he explained. With the experience of more than a year in the trade department, criss-crossing the world banging the drum for Brexit Britain, he reckons the UK has up to five years of “bumps along the road” ahead.“The UK had a remarkable set of opt-outs and opportunities,” Price told the Guardian as he prepared to take an unpaid role as chairman of the Fairtrade Foundation.Related: How has the Brexit vote affected the economy? April verdictI don’t think European countries want to impose tariffs on food Continue reading...

Economists fear Britain’s economy is losing momentum as quarterly growth falls to just 0.1%, the weakest since 2012

GDP rose from January through March at a lower level than the third and fourth quarters, despite Trump’s promises cuts would boost itUS economic growth slowed moderately in the first quarter, the first preliminary assessment of the health of the economy since Donald Trump signed huge tax cuts into law last year.Gross domestic product (GDP) – a broad measure of goods and services produced in the US – rose at an annual rate of 2.3% from January through March, the commerce department said on Friday. Continue reading...

Weak GDP growth of first quarter could be low point but chancellor faces serious headwindsPhilip Hammond was in an upbeat mood when he held a breakfast at the British embassy in Washington DC during last week’s spring meeting of the International Monetary Fund. The economy had turned a corner, the chancellor insisted, once again comparing his mood to the ever-cheerful Tigger in AA Milne’s Winnie the Pooh stories.Whether Hammond remains quite so Tiggerish in the light of the latest UK growth figures remains to be seen. In the first three months of the year, gross domestic product grew by only 0.1%, the weakest quarterly result since the UK was having a post-London Olympics hangover in late 2012. The City knew the news was going to be bad but not that bad.Related: UK economy suffers weakest period of GDP growth in five years Continue reading...

Bailed-out bank easily beats forecasts but US expected to impose multimillion-pound fineProfits at Royal Bank of Scotland more than trebled in the first three months of 2018, easily beating expectations as income rose and costs fell.The bailed-out bank, which is still majority owned by UK taxpayers reported first-quarter profits of £792m, compared with £259m for the same period last year.Related: 'We're on our knees,' says TSB boss as IT crisis drags on Continue reading...

ONS figures show construction output slump as rate in first quarter slows to 0.1%

In this new, hi-tech era, the old production indicators fail to tell us whether the economy is working for peopleThis morning at 9.30am, the Office for National Statistics will release its latest estimate of UK economic output – gross domestic product, or GDP for short. The figures, which will be revised when better data becomes available, will be endlessly discussed and analysed, and will form the basis for economic commentary and policy in the months ahead.At their best, economic indicators such as GDP can be a viewfinder through which we see the economy. After all, we need statistics to shed light on economic imbalances and unfairness, and help citizens and policymakers understand what needs to be done to put them right. But as an economist, I’m always aware that reducing the unimaginable complexity and diversity of the economy to a single number – or even a series of numbers – can dehumanise or even misrepresent what is really happening in people’s lives.Related: Facebook, Google and Amazon could pay 'fair' tax under EU plans Continue reading...

Experts from IBM are trying to fix the problems that have dogged TSB’s internet banking service, but it could take several days

Michel Barnier torpedoes Theresa May’s hopes of a gold-plated deal for UK financial servicesThe EU does not need the City of London, and Theresa May’s “pleading” for a special deal for the UK’s financial services sector will not be rewarded, the EU’s chief negotiator, Michel Barnier, has said.