Institute for Fiscal Studies report says interests rate rises have inflicted differing levels of hardshipAs many as 320,000 UK adults have been pushed into poverty by soaring mortgage costs after the sharpest increase in interest rates since the 1980s, a leading thinktank has said.Highlighting the damage caused by Britain's exploding mortgage timebomb, the Institute for Fiscal Studies (IFS) said individuals who needed to renew their home loans or take out new ones in the past two years had experienced a sharp fall in their disposable income. Continue reading...

S&P Global flash composite purchasing managers' index shows July rise for manufacturing and services sectors

The signs are clear that not everything is as rosy in Putin's Soviet-style war economy as Moscow would have us believePresident Vladimir Putin and his authoritarian regime are peddling the false narrative that the Russian economy is strong, and that its war machine is unharmed by western sanctions. This is a lie that must be rebutted. In fact, there are many signs that the Russian war economy is deteriorating. The sanctions and other measures to weaken the Russian economy are effective, but even more can be done. We must continue to increase pressure on Putin's regime and support Ukraine.During the Nato summit in Washington DC, western leaders reaffirmed their commitment to Ukraine's defence. But Russia's war against Ukraine is not only being fought by soldiers on the ground. It is also a war of information, on which the Kremlin spends an estimated $1.5bn (1.2bn) a year, and of economic strength. Putin and his authoritarian regime want us to believe that Russia stands unmoved by sanctions and other efforts made to support Ukraine, freedom and democracy. Thus, it is extremely important that politicians, the media and economic institutions in the west do not take the information coming out of the Kremlin at face value. When taking a closer look at the signals, it becomes clear that everything is not as rosy with the Russian economy as Moscow would have us believe.Elisabeth Svantesson, minister for finance, SwedenStephanie Lose, minister for economic affairs, DenmarkMart Vorklaev, minister of finance, EstoniaRiikka Purra, minister of finance, FinlandArvils Aeradens, minister of finance, LatviaGintar Skaist, minister of finance, LithuaniaEelco Heinen, minister of finance, NetherlandsAndrzej Domaski, minister of finance, Poland

Sales dropped 5.4% last month to a seasonally adjusted annual rate of 3.89m units, the lowest level since DecemberUS existing home sales fell more than expected in June as the median house price set another record high, but improving supply and declining mortgage rates offered hope that activity could rebound in the months ahead.Home sales dropped 5.4% last month to a seasonally adjusted annual rate of 3.89m units, the lowest level since December, the National Association of Realtors said on Tuesday. Economists polled by Reuters had forecast home resales would slip to a rate of 4m units. Continue reading...

The Swedish streaming company said gross margins hit a record high of 29.2% in the second quarter, after cost cuts and growth in subscriptionsThe number of new homes registered to be built across the UK fell by 23% in Q2, compared with the same period last year, the National House Building Council (NHBC) said.The figures are an indication of the stock of houses in the pipeline for construction, since they have to be registered before being built.We know we have a mountain to climb. That is why we're already taking the first steps, starting with an overhaul of our planning system - a reform that will both help build the homes we need and speed up the infrastructure to support them.We are committed not just to an ambitious target for overall housebuilding but the biggest wave of social and affordable housing for a generation. It's a promise that we'll bring back with meaningful housing targets. Continue reading...

With extended life expectancy Britain has wound up an increasingly sick nation - and experts say that this is as bad for GDP as it is for our health

UK business secretary Jonathan Reynolds says it is reasonable" to expect Daniel Kretinsky's 3.6bn takeover of Royal Mail would be subject to government reviewThe UK government will need to raise taxes, increase borrowing or make spending cuts unless it can grow the economy by at least three times this year's expected rate, according to analysis by the International Monetary Fund.Economic growth would need to be around 2.6% in each year of parliament from next April before Labour can claim to have stabilised the public finances.Delivering economic growth will require tough choices and difficult decisions.That is why we have already started to take the action necessary to fix the foundations of our economy, so we can rebuild Britain and make every part of our country better off. Continue reading...

Experts say 5.5% pay increase for public sector not consistent' with spending plans that rule out tax risesLabour is fast approaching a moment of truth over its election pledges on tax and spending, experts have warned, after Rachel Reeves indicated the government could agree above-inflation pay rises for public sector staff.The chancellor promised a full statement on pay board recommendations that teachers and NHS workers should receive 5.5% pay awards, ahead of an autumn budget that is set to be one of the most difficult economic balancing acts in years. Continue reading...

Spending on health and education being cut as nearly half of budgets are used to pay creditors, campaigners sayDeveloping countries are facing the worst debt crisis in history with almost half their budgets being spent on paying back their creditors, a study has found.The report, by the campaign group Debt Relief International for Norwegian Church Aid, says more than 100 countries are struggling to service their debts, resulting in them cutting back on investment in health, education, social protection and climate change measures. Continue reading...

High interest rates are needed to reduce wage inflation but productivity improvements are harder to chisel outI'm due a haircut and in the past week received a message from my barber containing the news that the price will be 10% higher than the last time I went for a trim.If I call in for a coffee on my way to work it will be a similar story. After recent price rises, I can expect to pay the thick end of 4 for a flat white. Continue reading...

The new government has promised things will be different: but when it comes to spending, we seem stuck on old Tory policiesThe election campaign mantra of change, change, change" reminded me of those people down on their luck who approach you in the street and ask got any change, guv?"Until this month's welcome result in the polling booths, the Labour party had certainly been down on its luck. From the moment in 2010 when the new chancellor, George Osborne, capitalised on departing Labour chief secretary Liam Byrne's joke that there's no money left", Labour was fighting an uphill battle. Continue reading...

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Treasury says it has received worst postwar inheritance as figures reveal 14.5bn deficit in June

Alan Wenban-Smith on the intersection between wealth creation and making money and Jennifer Highwood on politicians buying seatsTwo excellent articles this week - by Nesrine Malik (Hidden behind the celebration of Labour's landslide' win is a depressing disfranchisement, 15 July) and by George Monbiot (Labour can end austerity at a stroke - by taxing the rich and taxing them hard, 14 July). But while they tease out the dire societal consequences of the economic assumption that making money and creating wealth are mutually supportive, they don't nail this as the original crime. This is ironic since both articles demonstrate the effect of normalising such an assumption: its use in rightwing media to further vested interests, and being baked into public and political discourse.Wealth creation is a broad concept: delivery of the things we need, want or enjoy. It includes things such as a healthy environment and secure social fabric, as well as goods and services. Making money is about establishing a personal claim on marketed wealth, whether produced by ourselves or others. Draw a Venn diagram of the activities in these two categories and it becomes clear that, while there is an overlap, it is very far from being an identity. A current example is provided by the water industry: lots of money is being made, but wealth less so.

Lib Dem leader had declined meeting with campaigner in May 2010, saying I do not believe it would serve any useful purpose'McFadden also told the Horizon IT inquiry of course I wish I had done more" to question the Post Office over its Horizon IT system.In his witness statement, the Labour MP and Cabinet minister said:The Post Office's insistence that the Horizon system was robust and reliable was proven over time to be wrong, with terrible human consequences. Their reliance on court judgments to back up that position was also to be proven wrong in the subsequent court actions that were pursued over the years in order to overturn earlier verdicts.Rereading this correspondence now, and knowing the injustice done to so many subpostmasters, of course I wish I had done more to ask the Post Office if they were really sure their IT system was as robust as they suggested.At the root of all this was the Post Office's insistence that its IT system was robust and not to blame for accounting errors and their willingness to bring prosecutions through the courts over many years.This resulted in many innocent people being convicted or being held liable for debts they did not owe in the civil courts. Continue reading...

Interest rate cut hangs in balance after ONS figures show annual pay growth eased to 5.7% in three months to May

Europe is overrepresented while China is underrepresented, and the US will need to give up its vetoIn July 1944, exactly 80 years ago, representatives of 44 countries met in an obscure New Hampshire village to negotiate the Bretton Woods Agreement establishing the International Monetary Fund. For many, reaching the ripe old age of 80 would be cause for celebration. For the IMF, the anniversary only highlights the urgency of reform.Some necessary reforms are straightforward and widely agreed, raising the question of why they haven't been adopted. First, the IMF should provide its members with regular annual allocations of its in-house financial instrument, special drawing rights. This would provide an alternative to the US dollar as a source of global liquidity while also addressing the problem of chronic global imbalances. Continue reading...

There is to be action but not a tax-and-spend splurge - just patient changes that will take time to pay offThe message from the king's speech was clear. After 14 years in opposition, Labour is back with a plan to get the economy moving. The brakes on growth are coming off, says the prime minister.In a way, the measures outlined to achieve the government's mission" hark back to Labour governments of the past. There is to be more nationalisation, more centralised control of planning, more power for workers, an industrial strategy council and a national wealth fund to boost investment in infrastructure projects. Economic policy under Keir Starmer will become more interventionist and have a discernible social-democratic tinge to it. Continue reading...

While interest rates may have peaked, the labour market is fragile and the economy is set to slow even further

Some economists believe the UK leg of Taylor Swift's Eras tour led to higher prices in June - but the full picture is more complicated

Taylor Swift effect' on hotel prices partly blamed for UK inflation defying forecast drop

Live, rolling coverage of business economics and financial markets as Kantar data shows pressure easing on UK shoppers, and the Fed hints at nearer term rate cutsCineworld has reportedly launched talks with its commercial landlords, including Landsec and Legal & General, about plans to cut a quarter of its cinemas in Britain as part of a restructure plan.Sky News is reporting that the property owners, which together own about 30 of its multiplexes, are in active discussions with Cineworld ahead of a hearing about its restructuring. Continue reading...

Warning comes as Bank of England policymakers say price growth in service sector could become embedded

Sales at supermarkets rise as consumer confidence improves, only slightly dampened by wet weather

After years of austerity, the government's plans imply another reduction in funding that public services simply cannot takeThe Resolution Foundation has estimated that Labour's spending plans commit the party to around 18bn of annual budget cuts over the next parliament. As they stand, these would affect unprotected" areas of government such as the Department for Work and Pensions, the Ministry of Justice, local councils and higher education - and a funding shortfall for a depleted NHS. Ahead of this week's king's speech, when the new government will lay out its legislative agenda, five public sector workers give their verdict on Labour's approach.Emma Vincent Miller is a solicitor at Osbornes Law Continue reading...

Swati Dhingra says Bank of England's monetary policy committee should lower interest rates in August

Trump says he has plan to immediately lower inflation. Economists predict high tariffs and tax cuts would raise it

Families cannot afford to wait until UK government says there is money to spare to make such a decisionThe first real test of Labour's hardline approach to public spending has surfaced within a week of the party taking office - and it is a big one.The issue is child poverty and in particular the two-child benefit limit introduced by the Conservatives in April 2017. This prevents households from claiming universal credit or child tax credit for a third or any subsequent child born after this date. Continue reading...

The focus on growth to ease the UK's economic ills will not be nearly enough, but there is a way to raise the sums neededNever let your opponents define the terms of a debate. All too often, Labour has allowed the Conservatives and the billionaire press to demonise the notion of tax and spend". It went to great lengths before the election to assure voters it had no such intention. Now it drives home the message: instead, our needs will be met by growth, growth, growth". But tax and spend is the foundation of a civilised society.Few of the changes this country requires can be achieved while adhering to the tough spending rules" the new government has imposed on itself. We urgently need massive public investment in the NHS, social care, schools, environmental protection, social housing, local authorities, water, railways, the justice system and virtually all functions of government. We need a genuine levelling up, across regions and across classes. The austerity inflicted on us by the Conservatives was unnecessary and self-defeating and Labour has no good reason to sustain it. Continue reading...

In the rush for growth, the cabinet has hit the ground running; but a temporary boost to public borrowing may be the only way to get quick resultsFor a chancellor targeting a decade in power, Rachel Reeves is in a hurry. After 14 years in the wilderness for Labour, and several centuries of Britain awaiting its first female chancellor, it's not surprising she is keen to get on with the job.So far, two ideas have predominated: blaming the Conservatives for the worst economic inheritance since the second world war, and laying the foundations for national renewal at breakneck speed. Continue reading...

The $99bn figure comes as data shows exports growing at fastest rate in 15 months while imports fellChina posted a record $99bn (76.4bn) trade surplus last month amid signs of importers bringing forward orders to beat higher tariffs on goods from the world's second biggest economy.The latest official figures from Beijing showed exports growing at their fastest rate in 15 months, while the weakness of China's domestic economy resulted in falling imports. Continue reading...

Exclusive: Chancellor is making appointments for new body that will help guide Labour's national mission' of economic renewalRachel Reeves is poised to announce the creation of a new council of economic advisers to help guide Labour's number one national mission" of expanding the economy.After last week's general election landslide, the chancellor of the exchequer has lined up the appointment of a leading academic from the London School of Economics (LSE) to chair the council, which will help to inform the government's growth policies. Continue reading...

Joe Biden says in statement that falling prices and rising wages are thanks to my economic plan'Prices unexpectedly fell in the US last month, lifting hopes that the Federal Reserve is on the verge of cutting interest rates.As inflation fell 0.1% on a monthly basis in June, having been unchanged in May, the consumer price index's annual increase was also the smallest in a year. Continue reading...

ONS figures show gross domestic product rising faster than predicted after flatlining in April

Huw Pill says he is uncomfortable with persistence of inflationHouseholds' hopes of a cut in interest rates have received a setback after the chief economist of the Bank of England warned that key measures of inflation remained uncomfortably high".Huw Pill, one of the nine members of Threadneedle Street's monetary policy committee (MPC), strongly hinted he would vote to keep official borrowing costs at 5.25% when he said wage growth and inflation in the services sector were proving persistent. Continue reading...

The markets haven't imploded, sterling is solid, and there is no flight of investors. Given the circumstances, the only way is up

A key pledge in the Labour manifesto, the fund was launched by the new chancellor, Rachel Reeves

Chancellor says government aims to attract billions of pounds of private cash for big infrastructure projects

Jerome Powell tells senators in congressional hearing elevated inflation is not the only risk we face'Holding interest rates too high for too long would threaten economic growth and jobs, the US Federal Reserve chair, Jerome Powell, warned Congress on Tuesday. Elevated inflation is not the only risk we face," said Powell.During a congressional hearing, Powell signaled that while suppressing inflation remains a priority, policymakers at the Fed are now concentrating on when they choose to cut rates. Continue reading...

Jonathan Haskel says tight jobs market means inflation is likely to be higher than 2% target for quite some time'A senior Bank of England policymaker has said Britain's battle against inflation remains incomplete, requiring interest rates to be kept at elevated levels for longer than expected in financial markets.Pouring cold water on City predictions for a cut in rates in August, Jonathan Haskel said inflation was on course to return above the government's 2% target. Continue reading...

Live coverage of business, economics and markets as Jonathan Haskel says UK inflation will remain above target for quite some time'Rachel Reeves has pledged to get Britain building again" after saying the government will introduce mandatory housing targets in her first major speech as UK chancellor.Local authorities will retain the power to decide on planning applications in the first instance", but can be overruled nationally if they fail to meet their targets. The answer cannot always be no'," said Reeves, who is the first woman to be chancellor in the UK.The deputy prime minister will take an interventionist approach to make sure we've got the housing that we need.There is no time to waste. We will end the prevarication, and make the necessary choices to fix the foundations. Continue reading...

MPs will hear assessment this month as new chancellor tries to pin blame on Tories for tough decisions aheadRachel Reeves is to provide an emergency assessment of the government's spending inheritance before MPs leave for their summer break as she attempts to pin the blame for looming tough tax and spending decisions on the defeated Tories.The new chancellor used her first speech since arriving at the Treasury to insist there would be no deviation from Labour's hardline stance on reducing the national debt despite being bequeathed the worst set of circumstances since the second world war". Continue reading...

CBI among a number of organisations to call for tough decisions that help companies to attract investmentThe new Labour government must stay laser-focused" on capitalising on the positive signs in the UK economy and delivering growth, influential business groups have said.In Keir Starmer's first press conference as prime minister on Saturday, he pledged to chair new mission delivery boards" to drive through change" and enact Labour's manifesto commitments, which include stimulating economic growth, investing in clean energy, and improving opportunity through a new skills agenda. Continue reading...

Chancellor will use first speech to declare national mission' that involves unblocking infrastructure and private investmentRachel Reeves has pledged to fix the foundations" of the British economy, revealing an immediate plan to boost growth by unblocking infrastructure and private investment in her first speech as chancellor.In an address to business leaders, she will say that economic growth for all parts of the country is a national mission" and that she will take tough decisions to deliver on the new government's mandate.A shake-up of planning regulation, including on green belt land, as well as new housing targets.Talks to end the junior doctors' strikes. Wes Streeting will meet the British Medical Association union on Tuesday.A recruitment advert for a new border security commander, which will go live on Monday.A reopening and expansion of the government's teacher recruitment campaign.A pledge to Ukraine that military aid pledged by Rishi Sunak in April is guaranteed", alongside a commitment to boost UK defence spending to 2.5% of GDP. The promises came from the new defence secretary, John Healey, who travelled to meet Ukraine's president, Volodymyr Zelenskiy. Continue reading...

Will the credits roll as Starmer wins big in 2029 or will Reeves be boxed in by her own fiscal rules and leave the economy in a worse state?Just as in the movie Sliding Doors, there are two endings to the story that began on Thursday with Labour's victory in the 2024 election. One is happy, one is sad, and either is possible. What happens to the economy over the next five years will determine which one materialises.Let's start with the happy ending: the one where the credits roll as Keir Starmer wins big for a second time in 2029. The script for that one starts slowly. The scale of Labour's win means it doesn't have to rush things but has time to put in place the supply-side reforms, such as changes to planning rules, that will boost growth. Structural changes don't bear fruit overnight but by the early 2030s it should be possible to notice the difference. Continue reading...

Labour's new prime minister is in a position of strength in relation to Brexit. He must be bold for Britain's sakeThe first moves of a new prime minister can have lasting consequences. When Clement Attlee went from being wartime deputy prime minister to Labour prime minister in 1945, he had little alternative but to offer the nation the peacetime equivalent of Churchill's blood, toil, tears andsweat.The age of austerity was born as the UK rebuilt its wartorn economy. Shortages necessarily involved rationing until a fully fledged peacetime economy could be restored. The contrast with the Conservative-Liberal Democrat policy of austerity from 2010 onwards could hardly have been starker. Continue reading...

The influential policy wonk and new MP for Swansea West sets out how the government can show it means businessChoose your fighter: mission-driven government or radical incrementalism? Evangelical academic or nerdy policy wonk? Economist Mariana Mazzucato's idea of reconceptualising government around a few long-term goals inspired Keir Starmer's five missions". Former chief executive of the Resolution Foundation Torsten Bell suggests a more pragmatic approach, set out in this book, published midway through the election campaign. He has just become MP for Swansea West, and will be a key figure in Labour's Treasury. However, the new government will have to decide - in rhetoric and action - which is more convincing.Bell's case for radical incrementalism" rests on three pillars. First, that the UK is in deep trouble; we've combined abysmal levels of productivity growth, resulting in stagnant real wages and slow growth in living standards, with persistently high levels of inequality and rising levels of severe deprivation. As he notes, this should be enough to put to bed the zombie idea that Britain faces a trade-off between growth and equality: being more normal' means becoming more prosperous and more equal." Continue reading...

Approach made to Nick Boles as Starmer prepares to announce immediate changes to regulationsLabour has approached a former Conservative minister to help steer through its proposals to bulldoze planning rules, with a flurry of changes expected within days to get Britain building" millions of new homes.Nick Boles, who was a planning minister in David Cameron's coalition government, has been approached for a review of the UK's National Planning Policy Framework, with the aim of making it easier to build homes, laboratories, digital infrastructure and gigafactories. Continue reading...

Figures from across industry on the challenges Keir Starmer must tackle, from strikes to post-Brexit trade

Number is close to what was expected, as unemployment rate creeps above 4% for first time in two yearsThe labor market started to ease in June, with 206,000 jobs added to the US economy last month, according to new labor data from the Bureau of Labor Statistics (BLS).The number of new jobs is close to what economists had expected for the month. The figures represent a slight cooling compared to May, when the economy added a revised 218,000 jobs. Continue reading...