Centre for Inclusive Trade Policy report finds trade flows have shown no signs of returning to previous levels

Treasury and Bank of England is making bad decisions' amid complaints about quality of official employment dataPolicymakers risk making misinformed" decisions because they are relying on a defective jobs survey that may not be fixed until 2027, the chair of the Treasury select committee has warned.The Office for National StatisticsONS) chief executive, Ian Diamond, wrote to the chair of the cross-party committee of MPs on Tuesday, saying his ambition" is to introduce a new, more accurate data series in 2026, but it may not happen until a year later. Continue reading...

Tax wealth, not work' would be a powerful message for Starmer and Reeves - are they bold enough to pursue it?Now he's retired from casting millions of people into poverty, George Osborne has become another flaunting, flamboyant example of a fast-growing phenomenon: the wealth he was born with sticks to him and accumulates.A windfall" for Osborne, says the Financial Times. He took a share of the 70m profits last week as partner in a boutique financial advisory firm. But windfall isn't quite the word. It's more like a salary, though less taxable: he took his share of 28m last year, 26.5m the year before and so on, alongside a string of other finance jobs, including cryptocurrency.Polly Toynbee is a Guardian columnist Continue reading...

Germany, France, and Italy led slump in European factory output last month - while UK is also weakeningThe eurozone's manufacturing recession has deepened, driven by a sharp slowdown in the region's largest economies.Data provider S&P Global has reported that the euro area's manufacturing sector deteriorated at a faster pace during November.These numbers look terrible. It's like the eurozone's manufacturing recession is never going to end. As new orders fell fast and at an accelerated pace, there's no sign of a recovery anytime soon. According to our nowcast, the manufacturing sector's output is going to decrease by 0.7% in the fourth quarter compared to the previous quarter. This slump is likely going to drag into next year.The downturn is widespread, hitting all of the top three eurozone countries. Germany and France are faring the worst, and Italy is not doing much better. By main industrial grouping, it's the capital goods sector which is taking the biggest hit. In an interesting development, Spain's companies in the capital goods sector were able to show accelerated growth. This might be linked to the heavy floods in Spain, where an estimated 100,000 cars were destroyed and need to be replaced. But this boom most probably won't last. Continue reading...

Institute of Directors says hit to private sector will undermine growth and public financesThe UK government has been accused of undermining the foundations of the economy with its autumn budget, after business confidence plunged to its lowest level since the early months of the Covid-19 pandemic.The Institute of Directors' economic confidence index, which measures business leader optimism in prospects for the UK economy, fell to -65 in November from -52 in October, the fourth monthly fall in a row. Continue reading...

The government has its five missions. But the deeper cause of Britain's malaise is the unhealthy and unhappy nature of the modern economyWe often hear how ministers should be more honest about the state of the economy. How they should signal their intentions and, before announcing a policy shift, have the guts and intellectual heft to debate the expected impact in public, such that when a section of the public dislikes the plan, at least they understand why it has been set in motion.It was a message Rachel Reeves absorbed and used as a defence for her first budget in October, only to come unstuck when she shocked businesses with a previously undiscussed change to the terms of employer national insurance contributions and an ill-considered last-minute grab at farmers' incomes via a rise in inheritance tax. Continue reading...

Our research shows that political breakdown, from the Roman Empire to the Russian revolution, follows a clear pattern: workers' wages stagnate, while elites multiplyIn the days since the sweeping Republican victory in the US election, which gave the party control of the presidency, theSenate and the House, commentators have analysedand dissected the relative merits of themain protagonists - Kamala Harris andDonald Trump - inminute detail. Much has been said about their personalities and the words they havespoken; little about the impersonal social forces that pushcomplex human societies to thebrinkof collapse - and sometimes beyond. That's a mistake: in order to understand the roots of our current crisis, and possible ways out of it, it's precisely these tectonic forces we needto focus on.The research team I lead studies cycles of political integration and disintegration over the past 5,000 years. We have found that societies, organised as states, can experience significant periods of peace and stability lasting, roughly, a century or so. Inevitably, though, they then enter periods of social unrest and political breakdown. Think of the end of the Roman empire, the English civil war orthe Russian Revolution. To date, wehave amassed data on hundreds ofhistorical states as they slid into crisis, and then emerged from it. Continue reading...

Canada's PM to dine with US president-elect at Mar-a-Lago resort, news reports say, days after Trump threatens 25% tariff on Canadian importsThe Canadian prime minister, Justin Trudeau, has arrived in Palm Beach, Florida, ahead of a meeting Donald Trump at his Mar-a-Lago resort, according to media reports, days after the US president-elect threatened the US's neighbour with import tariffs once he takes office.The Canadian prime minister's public itinerary does not list a scheduled visit to Florida. Neither Trudeau's office nor Trump's representatives immediately responded to requests for comment. Continue reading...

Wealth taxes would be more worker-friendly than raising employers' NI contributions, write Anne Gray and Clive Needle, while John Digney advocates taxing land valuesRachel Reeves seems to show an extraordinary lack of imagination with her tax on jobs, raising employers' national insurance (NI) contributions (We had no alternative': Reeves defends her budget to the CBI, 25 November). Several sources have proposed far more worker-friendly and small-business-friendly ways of plugging the Treasury's alleged 22bn hole.For example, the Institute for Fiscal Studies (IFS) has estimated that a wealth tax of merely 0.17% on assets of more than 500,000 would raise 10bn a year. Prem Sikka estimated last year that a larger yield of 22bn could be obtained from a wealth tax of 2% on assets over 10m, which would apply to merely 22,000 people. Researchers at the University of Warwick suggest that 8.6bn could be raised by charging NI on unearned income. Higher contributions will push many people to work off the books", paying no tax at all and losing pension entitlements.

Bank of England says global risks remain high, and the outlook has become more uncertain and riskier

Embattled retailers raise hopes of festive spending spree as sales event coincides with paydayUK shoppers visited websites in droves to snap up Black Friday bargains, raising hopes among struggling retailers that the US-inspired promotional day would finally kickstart a festive spending spree.After a tough October and start to November for UK retailers, the number of transactions made by Nationwide Building Society members was up 12% by 1pm compared with Black Friday last year and was 16% up on 2022. Continue reading...

Country is at risk of fresh turmoil with its government on the brink amid soaring sovereign borrowing costsFrance is at risk of being plunged into fresh political turmoil as its minority government teeters on the brink of collapse amid opposition anger over a planned austerity budget.Reflecting growing unease in financial markets, French sovereign borrowing costs have risen sharply, reaching the highest premium over German bonds since the height of the eurozone debt crisis in 2012. Continue reading...

Fodder for protectionism, protracted trade wars, and the most beautiful word' in Donald Trump's vocabulary - how do tariffs actually work?A tariff is a type of tax imposed on goods when they cross national borders, often used by governments against trading partners they disagree with or to protect local industries.Tariffs slapped on foreign imports make them more expensive, ostensibly providing a price advantage to locally made goods, while also raising revenues for governments. Continue reading...

The party must return to its progressive roots. A new economy is needed with new rules and new rolesAs the shock of Donald Trump's victory sinks in, pundits and politicians are mulling what it means for the future of the US and global politics. Understanding why such a divisive, unqualified figure won again is crucial for the Democrats. Did they go too far left and lose the moderate Americans who make up a majority? Or did centrist neoliberalism - pursued by Democratic presidents since Bill Clinton - fail to deliver, thus creating a demand for change?To me, the answer is clear: 40 years of neoliberalism have left the US with unprecedented inequality, stagnation in the middle of the income spectrum (and worse for those below), and declining average life expectancy (highlighted by mounting deaths of despair"). The American Dream is being killed, and although President Joe Biden and Vice-President Kamala Harris distanced themselves from neoliberalism with their embrace of industrial policies, as representatives of the mainstream establishment, they remained associated with its legacy. Continue reading...

Government faces risk of collapse over planned austerity budget

Rolling coverage of the latest economic and financial news

Under the auspices of holding the president elect to account, there's the usual sucking up to power and moneyI have spent most of the last week on Zoom calls with accountants in New York, trying to figure out the personal finance implications of moving to the UK - lugging dual citizenship behind me. (Short version: they're not good.) Since these conversations deal with economic outcomes it has felt, as a matter of form, necessary to mention that given the US just elected a maniac, at some level - don't we think? - all bets are off. Joking not-joking: we can talk about pensions or college savings until the cows come home but really, why aren't we screaming? A remark that has elicited, to a man, either blank looks or cheerful entreaties not to be so alarmist.It is three weeks since the presidential election and, crazy cabinet picks aside, Americans are in that strange interim period where normality resumes, and it is possible to convince ourselves that actually this might not be so bad. The markets are holding steady, helped by a sensible pick for treasury secretary (unlike other Trump cabinet picks, Scott Bessent, a billionaire hedge fund manager, has - so far as we know - never been accused of sexual assault, had a white nationalist tattoo, or taken part in an exhibition wrestling match). Trump's threats to tear up the script on tariffs and immigration on day one are unnerving, but his follow-through skills can be weak. Technically, he's a lame duck president. And so on. Meanwhile, real life continues.Emma Brockes is a Guardian columnist Continue reading...

Rouble hit 110 against the dollar after US introduced sanctions against Gazprombank, Russia's third-largest bankRussia's rouble has plunged to its lowest rate against the dollar since the early weeks of the full-scale invasion of Ukraine in the wake of new western sanctions and growing geopolitical tensions.The rouble on Wednesday hit 110 against the dollar for the first time since 16 March 2022. Before launching its war on Ukraine in February 2022, the Russian currency traded at around 75-80 against the US dollar. Continue reading...

US manufacturers are bracing for disruption and sounding the alarm that customers will be hit by price increases

Food store employees grapple with fewer hours and inflation - and sound alarm at merger of two largest chains

Trump is now laying ground for a trade war with the country's largest trading partners

Trump intends to hit Canada, Mexico and China with tariffs, which experts say will risk retaliation and a damaging economic warDonald Trump's threat to impose steep tariffs on goods imported into the US has set the stage for a bitter global trade war, according to trade experts and economists, with consumers and companies warned to brace for steep costs.The president-elect announced on Monday night that he intended to hit Canada, Mexico and China with tariffs on all their exports to the US - until they reduce migration and the flow of drugs into the country. Continue reading...

The chief executive of Aware Super, one of the biggest funds down under, is briefing Keir Starmer on pension reformsDeanne Stewart is in demand. The boss of one of Australia's biggest pension funds, Aware Super, is just off the plane from Sydney when we meet, and has an appointment with Keir Starmer to discuss the merits of the Australian pension system.Stewart holds up the country's pension saving as a model for the UK. Starmer and Rachel Reeves evidently agree, judging by the chancellor's Mansion House speech, in which she revealed plans to emulate Australia and Canada's pension system by launching eight megafunds". Continue reading...

Exclusive: a Harris poll raises questions about the popularity of one of Trump's key economic policy platforms

Tariffs on Mexican, Canadian and Chinese goods threaten not just those nations but global economic growth

The man Trump has tapped as US treasury secretary was only recently derided by Elon Musk as the business-as-usual choice'Will anything stop Trump?He's got control over both chambers of Congress, a tractable supreme court, a political base of fiercely loyal Magas, a media ecosystem that amplifies his lies (now including Musk's horrific X as well as Rupert Murdoch's reliably mendacious Fox News) and a thin majority of voters in the 2024 election. Continue reading...

British Retail Consortium figures come alongside data showing a fall in household disposable incomeShoppers' ability to afford Christmas treats has been put under threat as retailers warned November could mark a turning point for inflation, with the recent fall in prices slowing amid increased fresh produce costs and fewer discounts on the shelves.Shop prices fell by 0.6% in November, compared with a fall of 0.8% in October, according to the latest report from the British Retail Consortium (BRC) and research firm NielsenIQ. The slowdown in deflation was driven by non-food goods and a slight increase in fresh food prices, including seafood. Continue reading...

Figure costed for three multinationals repatriating to US after nomination for commerce secretary hits out at Ireland's tax regimeIreland's prime minister has said the country could lose 10bn (8.35bn) in corporate tax if just three US multinationals were repatriated to America under a hostile Donald Trump administration.His remarks come just days after Trump nominated the Wall Street investor Howard Lutnick to lead the Department of Commerce with direct responsibility for trade. Continue reading...

Rachel Reeves discusses her tax-raising budget at the Confederation of British Industry annual conference in Westminster. Reeves said she faced a massive hole in the public finances and added that in the last parliament, people saw what happened when the government did not address that

Chancellor tells business leaders she stands by tax rises and points to Labour's pro-growth policies

Rolling coverage of the latest economic and financial newsNewsflash: A deputy governor at the Bank of England has warned that it is too early to declare victory" in the fight against inflation.Clare Lombardelli has told a conference at the Bank this morning that inflation has fallen steeply over the past two years. But, she is concerned that there are signs that the process of wage disinflation" may be slowing, which would keep the cost of living rising faster than the Bank's target.The outlook for wages and services prices is unclear from here.We need to see more evidence that wage growth and services inflation will continue their journey down to target-consistent rates.The UK economy has made good progress on disinflation. The shocks that drove inflation up have dissipated and inflation has returned to around target.But the more persistent components of inflation and uncertainties around how the labour market will evolve are cause for concern. So we need careful observation of all the relevant economic data and intelligence as we seek to gradually reduce policy restriction. Continue reading...

If Donald Trump imposes tariffs on EU imports the eurozone is likely to take a hit, causing euro to slide furtherThe euro risks falling to parity with the US dollar for the first time since late 2022 if a new transatlantic trade war weakens the already struggling eurozone economy, analysts have warned.The euro sank below $1.04 against the dollar, the weakest level since November 2022, last Friday after a survey of European purchasing managers showed eurozone private sector output has fallen this month. Continue reading...

A late Black Friday and a mild October mean seasonal sales have got off to a slow start, and hopes are not highShoppers may be preparing to swoop for Black Friday bargains this week, but retailers are expecting a cautious Christmas", with households concerned about high energy and housing costs, as well as the potential impact of the recent budget.Trade has been slow in the run-up to the US-inspired promotional spree, which is a week later than last year, as shoppers held off buying presents in the hope they can snap up a bargain. Continue reading...

The government's pact with voters relies on it delivering on its promise of growth but the early omens are unsettlingStarmer the farmer harmer": the placards sported by the army of angry landowners who rolled into Westminster last Tuesday sent a clear message to the prime minister, albeit while he was out of the country.By Thursday, the Treasury was hinting at a retreat, albeit a very modest one, on its plans to levy inheritance tax on larger estates, mooting a transitional regime for the oldest farmers, who may not have time to organise their affairs. Continue reading...

Stronger ties with the single market is the only way to stop the president-elect from having the last laughAs democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last, and the White House will be occupied by a downright fool and complete narcissistic moron."Those were the words of the great American journalist HL Mencken (in the Baltimore Evening Sun, 26 July 1920). The impending arrival back at the White House surely fulfils hisprophecy. Continue reading...

The shadow banking sector is trying its hand at trading in debt-based products such as collateralised loan obligationsWhen Margot Robbie made a surprise cameo in the 2015 film adaptation of Michael Lewis's book The Big Short, she did more to educate the general population about the risks of securitisation than most financial experts.The Australian actor's brief monologue, notoriously delivered from a champagne bubble bath, explained how banks were bundling up their growing cache of risky sub-prime mortgages into investable bonds, before slicing them up and selling them off for profit. Continue reading...

Traders at a big machinery show say inheritance tax changes affecting the rural economy have had an immediate impact on businessA shiny new tractor is pulling a huge orange trailer, while a commentator explains how best to manoeuvre it to tip grain, watched by a group of farmers wrapped up warmly in wellies, coats and bobble hats, some holding spaniels on leads.Others are checking out the latest models of combine harvesters and crop sprayers, parked on snowy ground at the Midlands Machinery Show, but few seem to be buying, and the changes to inheritance tax for agricultural properties announced in Rachel Reeves's October budget are never far from anyone's lips. Continue reading...

The government claims to be fixing the economy but households may face more pressure in the months aheadLabour swept to power in the wake of a cost of living crisis that hit households hard, with the price of food and energy rocketing alongside the impact of Liz Truss's disastrous mini-budget on mortgage rates.At 2.3%, inflation is nowhere the 10% peak after Russia's invasion of Ukraine, but it is creeping up, and could hit 3% in 2025, say forecasters. Continue reading...

New regulations could add up to 200 Chinese chip companies to a trade restriction list, according to emailThe Biden administration is set to unveil new export restrictions on China as soon as next week, the US Chamber of Commerce told members in a Thursday email.The new regulations could add up to 200 Chinese chip companies to a trade restriction list that bars most US suppliers from shipping goods to the targeted firms, the email from the powerful Washington-based lobbying group said, according to an excerpt seen by Reuters on Friday. Continue reading...

Rolling coverage of the latest economic and financial news

It is often said the tycoons know how to put America's fiscal house in order - but the smart money says that's not the caseWhen the US presidential election was called for Donald Trump, the yield on 10-year US government bonds increased from 4.3% to 4.4%, and the 30-year bond yield rose from 4.5% to 4.6%, with both remaining at those levels 10 days later.As the bond market declined - higher yields mean lower prices - the stock market rose. Clearly, investors expect the next Trump administration to produce higher government budget deficits and more debt. Continue reading...

Dr Jon Mulberg on why GDP isn't the best gauge of economic healthThe use of alternative metrics to GDP has a long history within the environmental movement (Housework to green energy: the new markers of growth in rival metric to GDP, 19 November).GDP was never meant to be a measure of national or even of economic wellbeing. It simply measures sales, and is always the same figure as national expenditure. The person who invented the measure - SimonKuznets - called it national income, which it also mirrors. Continue reading...

UK records the second highest October borrowing since 1993, while crypto-friendly Trump pushes up bitcoinThe jump in UK borrowing last month (see opening post) makes it hard for Rachel Reeves to reverse any of the unpopular tax decisions in last month's budget, says Sandra Horsfield, economist at Investec:Certainly, the pressure on public finances looks here to stay, unless the Chancellor receives unexpectedly good news on growth and therefore tax revenues in future.Tempting though it may be politically to reverse some of the more unpopular decisions taken in the Budget, Labour's hands to do so, without offsetting other unpalatable choices, look tied for now.After a good start to the period, helped by strong back-to-school sales, we saw increased trading volatility in October, particularly in North America and the UK, reflecting elevated promotional activity and mild weather.Against this backdrop, we maintained our commercial discipline, improving gross margin by 0.3%pts while still delivering 5.4% organic sales growth. In addition, we made further, strong progress on our long-term growth strategy including opening 79 new JD stores across the world. Continue reading...

Debt interest payments push public finances deeper into the red in fresh blow to Rachel ReevesThe UK government borrowed more than expected in October as debt interest payments pushed the public finances deeper into the red, piling pressure on Rachel Reeves as she attempts to grow the economy.Borrowing rose to 17.4bn last month, the second highest October figure since monthly records began in 1993 and despite a rise in inheritance tax receipts.

Figure is above Bank of England target after energy bills push up pricesInflation could rise above 3% next year after it increased to 2.3% in October, heaping pressure on the Bank of England to delay further interest rate cuts until the spring.Figures released by the Office for National Statistics (ONS) on Wednesday showed that a rise in energy bills pushed up the consumer prices index (CPI), reversing a downward trend this year in inflation, which was 1.7% in September. Continue reading...

US carmaker to lay off 14% of its European workforceSterling rose after the higher-than-expected inflation figures were released, as did the yield - or interest rate - on government bonds.The pound rose as much as 0.25%, and is now marginally higher at $1.2687.With inflation rising again, we need some serious action to tackle the root causes of the cost-of-living crisis.For a start, that means taking on the profiteers who have driven sky high prices and bringing the energy system back into public hands. Continue reading...

Rate cut unlikely until 2025 as energy prices blamed for stronger-than-expected inflation of 2.3%

Some experts liken tariffs to a game of whack-a-mole, with trade flows simply rerouted if the potential rewards are big enoughBusinesses are bracing for the economic impact of a second Trump presidency, which, if his campaign promises are to be believed, will mean tariffs across nearly all imports to the US, especially those from China.But amid the gloom over the spectre of a renewed global trade war, some manufacturers may be looking to those who already have a playbook on dealing with aggressive US levies, such as China's solar companies. Continue reading...

A letter by 79 firms voicing significant concerns' over the budget is likely to do little more than irritate Rachel ReevesWhile the farmers took to the streets of Westminster, the shopkeepers protested in the old-fashioned way. They wrote a polite letter to the chancellor voicing their significant concerns" over the sheer scale" of budget measures that, they say, will push up their industry's costs by 7bn next year and make job losses inevitable and higher prices a certainty". A total of 79 firms signed, including all the FTSE 100 crew - Tesco, Sainsbury's, Next, Marks & Spencer, B&Q owner Kingfisher, JD Sports and the AB Foods-owned Primark.This display of unity will irritate the Treasury but, almost certainly, will not cause Rachel Reeves to rethink. The chancellor has already told firms how to deal with the rise in employer national insurance contributions (NICs), the most contentious measure and one that comprises 2.33bn of the 7bn. They should absorb it through lower profits or perhaps through lower wage growth", she has said. Continue reading...

Increase in national insurance contributions and national living wage will add to costs, says BRC