The NICs hike, tariffs and weak consumer spending have hit firms but there are crumbs of comfort for the chancellor

President signs executive order extending deadline for higher tariffs hours before agreement was due to expireDonald Trump has once again delayed implementing sweeping tariffs on China, announcing another 90-day pause just hours before the last agreement between the world's two largest economies was due to expire.On Monday, the US president signed an executive order extending the deadline for higher tariffs on China until 10 November, officials confirmed to Reuters. Continue reading...

The technological and strategic brilliance of its world-class companies are being swamped by macroeconomic troublesProclamations about the inevitability of China's dominance of the global economic system, or the so-called Chinese century, were made long before Donald Trump's attempts to stymie its trade with the US.Common concerns about coercive politics and human rights aside, some notions of China as an unstoppable economic, technological and military behemoth sit alongside others focused more on an increasingly sclerotic, over- centralised political economy, that depends on wasteful economic stimulus, and features poor governance and institutions. The fusion of these notions suggests that we may already have reached peak China". Continue reading...

Harry Melbourne's froggy treat that cost 10p in its 1990s heyday sells for about 30p or even up to 1 nowThe creator of the Freddo chocolate bar would be rolling in his grave if he could see the prices being charged for a treat that cost 10p back in its 1990s heyday, his daughter has said.Leonie Wadin said she once waited impatiently for her father, Harry Melbourne, to come home with boxes of Freddos, but has now vowed never to buy another one. Continue reading...

Economic uncertainty also a factor as bosses stuck in limbo' and drop in recruitment hits young people hardestHiring intentions among Britain's businesses remain at a record low as they grapple with rising employment costs and worry about the economic outlook, with young people hit hardest by the drop in recruitment.Three separate surveys issued on Monday painted a gloomy picture on hiring activity, pay and business confidence, with claims that bosses were stuck in limbo" and waiting for greater clarity in the autumn budget. Continue reading...

Autumn budget must address pain of high inflation on hard-pressed UK households as food prices riseThese prices are disgusting" is the common retort from shoppers browsing the supermarket shelves. To say that the cost of everything from a pint of milk to a loaf of bread has changed beyond recognition in only a few years is an understatement. But it could still get worse.The warning from the Bank of England last week that food prices are stirring the inflation beast that has stalked Britain for the past four years shows that the cost of living crisis is far from over. The headline rate of inflation is expected to hit 4% by September, in a reawakening fed by the soaring cost of things such as butter, chocolate and beef. Continue reading...

Industry experts hope the new subsidy will boost Britain's EV market - but not all models will be eligibleIs it time to go electric? The UK car industry certainly thinks so and is readying for a surge in demand as a new subsidy scheme cuts the price of some electric cars by up to 3,750.With purchase prices - not to mention range anxiety - contributing to weak consumer uptake, the government grants are designed to bring the upfront cost closer to a petrol car. Making them cheaper will also give thousands more drivers access to savings of up to 1,500 a year in fuel and running costs compared to a petrol car", officials say. Continue reading...

Erica Groshen says she's worried about US president bending bureau to his will, but hopes he won't go that far'Donald Trump will need to take more radical action than simply firing the head of the Bureau of Labor Statistics (BLS) if he is determined to cook the books" on jobs figures, the federal agency's former commissioner has said.Erica Groshen, who ran the BLS during Barack Obama's presidency, said meddling with how government statisticians calculate unemployment and labour market trends would require a whole new cadre" of people to be brought in by a new commissioner. It would also provoke upheaval and a likely rash of whistle-blowing among the existing workforce. Continue reading...

Those who insist on spending cuts are those who are never hurt by them. Time to be brave - and take a new tackBritain is in danger of going bankrupt. It may happen slowly or quickly, but since Labour took office this possibility has increasingly been promoted and discussed in the press, by opposition parties and in the City of London.What exact form will this bankruptcy take? The prophets of doom tend to be vague about the timescale, but more certain about the cause of the coming meltdown: the state spending too much, generally on people who have little.Andy Beckett is a Guardian columnist Continue reading...

Exclusive: The Guardian has been told that discussions about increases include a near-certain gambling levyThe chancellor and prime minister will begin to prepare the ground for tax rises and reforms from September as part of a strategy to prepare the country for a difficult budget that could be held in November, the Guardian has been told.Although Treasury sources have insisted Rachel Reeves will stick to her pledge not to raise income tax, national insurance or VAT, senior Whitehall sources said that she and Keir Starmer had begun a series of meetings to thrash out the shape of the budget. Continue reading...

The rate setters made clear that above-inflation pay claims would be likely to bring credit loosening to a halt

Monetary Policy Committee has cut UK interest rates today, in a deeply split decision, but City pricing suggests another cut in 2025 is no longer fully priced in

Policymakers cut base rate by quarter-point to 4% amid concern about strength of UK economy

Base rate reduction to 4% will hit some savers, but people with tracker home loans will see immediate benefit Bank cuts interest rate for fifth time in a year

Japanese carmaker cuts operating profit guidance by 16% day after rival Honda reported 50% drop in profits

Quarter-point reduction expected, with City investors predicting a three-way split among rate setters Business live - latest updatesThe Bank of England is poised to cut interest rates on Thursday despite a growing divide between its policymakers over the dangers to the economy from high inflation and rising unemployment.In a development that will ease pressure on households and businesses, City forecasters expect the central bank to announce a quarter-point cut, its fifth rate reduction in a year. Continue reading...

Donald Trump's latest wave of reciprocal' rates were in place as of a minute past midnight Washington time on Thursday

The US president's increased reciprocal' tariffs on dozens of countries came into effect at a minute past midnight Washington time on Thursday

The chancellor and the CBI have plans for reviving the institution. Neither will tackle Britain's pitifully low levels of business investmentWe are, it is admitted, the financial centre of the world," said the chairman of the Union Bank of London in 1903. Back then, the City of London was the world's banker, and its stock exchange was worth as much as the New York and Paris exchanges combined. Today, the stock market is shrinking at its fastest rate since 2010. While the mining company Glencore's recent decision to retain its London listing provided a temporary boost, it won't stem the tide. Companies are increasingly ditching London and moving to Europe and the US.Rachel Reeves hopes to revive the exchange by pushing stock ownership, encouraging people to become their own portfolio managers. The Confederation of British Industry (CBI) has its own proposals, including tax breaks and looser bonus rules. Both of these plans are based on deregulation, and neither addresses the underlying problem: Britain's ailing stock market is both a cause and consequence of stubbornly low business investment and a broken growth model.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

Prime minister defends government's handling of economy but will not give assurances over not raising income tax, employee NI or VATEd Davey, the Liberal Democrat leader, has urged Keir Starmer to call Donald Trump to encourage him to use his influence to block Israel's plans for a full occupation" of Gaza.In a statement, Davey said:[Israeli PM Benjamin] Netanyahu's latest proposals for the occupation of all of Gaza are utterly horrifying.If realised, they will only wreak yet more destruction on Gazans - while gravely endangering the lives of the hostages still held in Hamas' captivity.I see NIESR is talking today about a 41.2bn hole in the UK public financesTwo things are newsworthy: Continue reading...

Britain's building sector records biggest drop in activity since early in Covid-19 pandemic

Overcapacity - from electric vehicles to high-speed rail to housing - is destroying profits as well as GDPChina's astounding technological success in mass-producing quality electric vehicles (EVs) sits alongside a serious flaw in its industrial model: overcapacity.It has the capacity to produce about three times as many units as it can sell at home. The consequences so far have included widespread price cutting, large losses, misallocation of capital, and surging low-cost EV exports leading to trade conflict. Continue reading...

Collapse in housebuilding underscores challenge for government in meeting its target of building 1.5m new homes

Rolling coverage of the latest economic and financial newsBritain's service sector companies were hit by a drop in orders last month, as demand at home and abroad remained sluggish.Service sector growth slowed last month amid a decline in new work, according to the latest survey of purchasing managers from data firm S&P Global.UK service providers recorded a third consecutive monthly rise in business activity, but they were unable to maintain the growth rate achieved in June.Moreover, new business intakes swung back into contraction during July, with the downturn in order books the fastest for just over two-and-a-half years. Risk aversion and low confidence among clients were the main reasons provided for sluggish sales pipelines, alongside an unfavourable global economic backdrop. Continue reading...

Figures add to pressure on Bank of England to cut interest rates when it meets on Thursday

The president has an awful lot to say about tariffs - but what about what he doesn't say?Donald Trump's words and actions rarely align perfectly. If you watch carefully, what he doesn't say can be just as telling as what he does.Starting on day one, we will end inflation and make America affordable again, to bring down the prices of all goods," he told the nation ahead of his re-election. The US president declared that 2 April would forever be remembered as the day American industry was reborn", only to pause tariffs a week later. Continue reading...

Rolling coverage of the latest economic and financial news, as shares in Lloyds and Close Brothers jump

Agreement is said to dampen the mood', with the US viewed as the winner at the expense of the eurozoneInvestor confidence in the EU has fallen sharply after Donald Trump's trade agreement with Brussels, amid mounting concern about the economic hit from the US president's tariff war.The latest snapshot from the Sentix index showed that investor sentiment fell significantly at the start of the month after the deal last week between Trump and the European Commission president, Ursula von der Leyen. Continue reading...

Ex-PM's criticism follows Tory leader's article comparing Labour policy to Truss's disastrous mini-budgetThe Conservative leader, Kemi Badenoch, is not telling the truth about the real failures of 14 years of Conservative government", the former Conservative prime minister Liz Truss has said.Writing in the Telegraph, Truss said: In a recent speech Kemi said: From now on, we are going to be telling the British people the truth even when it is difficult to hear.' If she's not willing to tell the truth to her own supporters, the Conservative party is in serious trouble." Continue reading...

Pippa Crerar and Kiran Stacey sit down in a special episode with peer Catherine Ashton to hear from the former EU commissioner and trade negotiator on what she makes of an increasingly unstable world. Find out what it's like to be in a room with world leaders including Benjamin Netanyahu, Xi Jinping and Vladimir Putin ... Continue reading...

Thanks to stockpiling, neither the markets nor consumers have been as badly affected by the trade wars as feared. But signs of trouble are loomingChaotic and unpredictable, keeping up with Donald Trump's volatile trade war - never mind his presidency - can be tough.Back in April after his Liberation Day" tariff announcement, the talk was of the president crashing the global economy. Then, after a Wall Street backlash, the world learned the acronym Taco", which stands for Trump Always Chickens Out". Now, things are heating up again. Continue reading...

City predicts quarter-point drop to 4% when MPC meets on ThursdayBank of England policymakers are widely expected to cut interest rates this week to prevent the economy sliding backwards amid rising unemployment and the hit to global trade from Donald Trump's fresh round of import tariffs.City traders are betting that the Bank's nine-member monetary policy committee (MPC) will reduce the headline rate on Thursday by 0.25 percentage points to 4%, marking the fifth cut since last August and taking interest rates back to where they were in March 2023. Continue reading...

Despite president's claims of an economic boom, picture is chaotic - healthy GDP growth but weak jobs figuresAccording to Donald Trump's White House, the US economy is booming, inflation is dead and jobs are surging. A blizzard of economic reports has cast a pall on such claims in recent days.This week's data on Trump's early economic record was mixed - good, mad and ugly - with jobs numbers so weak he reached for the catchphrase he once used to build himself into a reality TV star: you're fired. Continue reading...

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US president called on top Fed officials to seize control from chair Jerome Powell if he fails to cut interest ratesDonald Trump called on top Federal Reserve officials to seize control from its chair, Jerome Powell, if he fails to cut interest rates, stepping up his extraordinary attacks on the central bank's independence.The US president called Powell a stubborn MORON" in a series of critical social media posts on Friday, days after the Fed held rates steady for the fifth consecutive time. Continue reading...

US president accused of firing the messenger' as he makes claims without evidence about Erika McEntarferDonald Trump fired the federal government official in charge of labor statistics, hours after data revealed jobs growth stalled this summer, prompting accusations that he is firing the messenger".The US president claimed that Erika McEntarfer, commissioner of labor statistics, had faked" employment figures in the run-up to last year's election, in an effort to boost Kamala Harris's chances of victory. Continue reading...

Just 73,000 jobs created in July, and employment in May and June was 258,000 lower than previously reported

Markets tumble as US president unleashes global chaos with rates from 10- to 50% due to take effect next weekLeaders of more than 60 countries have been plunged into a fresh race to secure trade deals with the US after Donald Trump unleashed global chaos with sweeping new tariff rates.Trump's latest blitz triggered a wave of market jitters and fears for jobs in some of the poorest countries, as tariff rates were signed off ranging from 50% to 10%. Continue reading...

Chancellor says the government has got to get the balance right on taxation' after call by Anneliese DoddsA new civil service internship scheme will be open only to working-class students as part of a drive to make Whitehall better reflect the country, the government has said.The programme will give students from lower-income backgrounds the chance to apply for paid government placements. The definition of working class will be based on what jobs applicants' parents held when they were 14 and replaces an existing programme open to all. Continue reading...

July jobs growth slowed amid rising signs that Trump's tariffs are weighing on trade, prices and hiring

High levies affecting some of world's poorest countries are to go into effect in seven days, while Mexico granted 90-day extension

The August deadline has come, but the dangers to international relations and to world trade are both as real as everDonald Trump's 1 August tariffs deadline did what it was always intended to do. It kept the markets and the nations guessing amid last-minute uncertainty. It attempted to reassert the global heft of the United States economy to take on and master all comers. And it placed President Trump at the centre of the media story, where he always insists on being.In the event, there were some last-minute agreements struck this week, few of them fair or rational in trade terms, most of them motivated by the desire to generate some commercial order. Some conflicts are still in the balance. There were 11th-hour court challenges too, disputing the president's very right to play the trade war game in this way.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

Anneliese Dodds urges government not to duck big decisions' in autumn budgetThe Treasury should consider a wealth tax to close the growing gap in the public finances, according to a Labour former shadow chancellor.Anneliese Dodds, who held the role under Keir Starmer in opposition, said ministers must have a full and frank discussion" with the public about the really big decisions" they had to take at this autumn's budget. Continue reading...

Lobby group says shops have already had to put up prices and new increases would leave households strugglingRachel Reeves has been warned by Britain's biggest retailers that tax rises in her autumn budget could trigger higher shop prices, hitting household incomes and the economy.With high street chains closing stores and cutting jobs, the British Retail Consortium (BRC) said two-thirds of finance directors predicted there would be further price increases over the next year, even before any rise in tax in the autumn budget. Continue reading...

Two Federal Reserve governors vote against decision as US GDP grows at an annual rate of 3% in second quarterThe US Federal Reserve left its benchmark interest rate unchanged on Wednesday, even amid intense pressure from Donald Trump to lower rates.Despite an onslaught of attacks from the White House against the Fed, officials at the central bank said that economic uncertainty" remains too high to lower rates. Continue reading...

Live, rolling coverage of business, economics and financial markets as world's biggest economy grows at 3% annualised rate in data distorted by trade warsBritain's clean energy future risks creating winners and losers" if lower-income households are not shielded from the costs added to energy bills to pay for it, the head of the energy regulator has said.Jonathan Brearley, Ofgem's chief executive, said a systematic approach" to sharing the rising costs of the government's green power ambitions was needed to avoid poorer households facing soaring monthly payments.The safety of our customers remains our highest priority - this principle has consistently guided our approach, and we have increased our cladding fire safety provision to reflect findings from updated fire risk assessments and investigations in the first half. Continue reading...

Trump will need to approve pause, say US representatives after negotiations end with sides failing to break deadlock on trade termsUS and Chinese negotiators have agreed in principle to push back the deadline for escalating tariffs, although America's representatives said any extension would need Donald Trump's approval.Officials from both sides said after two days of talks in Stockholm that while had failed to find a resolution across the many areas of dispute they had agreed to extend a pause due to run out on 12 August. Continue reading...

One hopes cogs are turning in Westminster after Pascal Soriot's affectionate talk of US at pharmaceutical giant's half-year resultsIt was an opportunity for Sir Pascal Soriot, as chief executive of AstraZeneca, the UK's finest pharmaceutical firm, to kill the story stone dead if he wished. Does he want to move the company's stock market listing to the US, as reported by the Times a few weeks ago? He declined to answer. Then he did something else: he turned his press conference after Tuesday's half-year numbers into a declaration of love, more or less, for all things American.The US is the country in our industry where innovation is taking place," he said, noting that half the group's sales will be in the US by 2030. The new multibillion-dollar manufacturing facility in Virginia - part of a $50bn investment in the US over the next five years - had progressed to signoff in 33 days. The US administration is considering AstraZeneca's proposals for reducing medicine prices for Americans. We are a very American company," said the French-Australian Soriot at one point, name-checking his various American senior colleagues. Continue reading...

Live, rolling coverage of business, economics and financial markets as economists say risks to the global economy remain firmly to the downside' amid Donald Trump's trade warDonald Trump is in the UK, and by the looks of it he has been talking to someone with an interest in the oil industry: he has said the UK's taxes on North Sea oil make no sense".The US president wrote on the social network he owns, Truth Social, that the UK should incentivize the drillers" and that there was A VAST FORTUNE TO BE MADE for the UK, and far lower energy costs for the people". Continue reading...

Despite reduced tensions and EU trade deal, US policies are highly uncertain', says Washington-based organisationGlobal growth will be stronger than previously expected this year after Donald Trump scaled back his most extreme tariff threats, the International Monetary Fund said as it upgraded the economic outlook for 2025.The Washington-based organisation said a de-escalation in tariffs" by the White House had spurred a recovery in global trade and a broader economic expansion, though US policies remain highly uncertain" and risks to growth firmly on the downside". Continue reading...