Crashing out of the EU is an extremists’ gamble – not just for the UK but also for Britain’s close neighboursThere is always a sense of “they would say that, wouldn’t they?” when a state-funded global agency that promotes free trade says that a hard Brexit would be bad for everyone.That was the International Monetary Fund’s stance before Britain’s referendum on European Union membership, and in the wake of the vote the Washington-based lender of last resort to near-bankrupt countries (most recently Argentina) has, unsurprisingly, stuck to its line. Continue reading...

The chancellor needs to fill lots of holes in public services – and it will take big moneyPhilip Hammond, under pressure to ease austerity, must spend the summer preparing the ground for sweeping tax rises that catch everyone in their net.A tax on the rich is not going to be enough to meet the demand for £20bn extra on health spending by the end of the parliament, let alone the cost of extra police officers to tackle a significant rise in crime, higher social care funding and a boost to the defence budget. Continue reading...

President indicates readiness to slap tariffs on the entirety of Chinese goods, saying it is ‘the right thing to do for our country’Donald Trump escalated economic global tensions on Friday, lashing out a range of targets that included the European Union, the Federal Reserve and China, indicating that he is prepared to raise tariffs on Chinese imports from $34bn to cover the entire $505bn of Chinese imports.“I’m willing to go to 500,” he said during a taped interview with the business channel CNBC, an escalation he was prepared to make because it “was the right thing to do for our country” and because the rise in stocks – the S&P 500 is up 31% since his election – allowed him to pursue a more aggressive trade policy.Related: The Iowa farmers on the frontline of Trump's trade war with ChinaRelated: ‘It’s pretty lonely out here’: why John Kasich is willing to criticize Trump Continue reading...

US levies on European and Chinese goods may also break WTO rules, says German leaderThe war of words over Donald Trump’s threat to impose wide-ranging tariffs on imports from China and the European Union has intensified after the German chancellor, Angela Merkel, said the levies threatened the incomes of workers across the world.On Friday, Merkel described possible US tariffs on imported cars as a breach of World Trade Organization rules and “a real threat to the prosperity of many in the world” as Trump went on US television to say that he was ready to expand his roster of tariffs on Beijing to $500bn, covering almost every product imported to the US from China.....The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates - Really? Continue reading...

All the day’s economic and financial news, as the US president gives markets something new to worry about

She is the first woman to lead the New York Stock Exchange in its 226 years. Faced with falling sales and government pressure, though, she finds the attention to her gender a distractionThe Fearless Girl is on the move. The bronze sculpture of a little girl defiantly facing off against Wall Street’s Charging Bull launched a million selfies and became an unlikely avatar of the #MeToo movement. Soon it will be transported a few hundred metres down the road in downtown Manhattan to confront another symbol of entrenched masculinity: the New York Stock Exchange (NYSE). Stacey Cunningham says she couldn’t be more delighted.“I think she’s fantastic,” says Cunningham, the 67th president of the NYSE and the first woman to head the male-dominated institution in its 226-year history. “For me, she is a message to individuals, though. I think we need to call ourselves to action, especially as women, not to hold ourselves back.”Whether or not NYSE is sheltering a marketing operation or a vital financial institution is the least of its problems Continue reading...

Smaller reduction in June spending deficit will restrict chancellor’s budget plansWeak economic growth and sluggish tax revenues prevented the government from reducing its spending deficit in June by as much as anticipated, squeezing the chancellor’s ability to revive ailing public services in the autumn budget.City analysts expected the deficit to decline by more than £1bn compared with June 2017, following a steep fall in interest payments on the government’s total debt bill and a cut in EU budget contributions the Treasury sends to Brussels. Continue reading...

All the day’s economic and financial news, as UK retail spending disappoints and the Chinese yuan hits a one-year low

Business group says collapse of power-sharing and Brexit turmoil are taking their tollNorthern Ireland is edging towards recession, the Confederation of British Industry has warned as Theresa May arrives in Belfast for her first visit to the Irish border.The CBI said the political vacuum left by the collapse of power-sharing in Stormont along with Brexit uncertainty were taking their toll in the region, which is already the poorest performing of the 12 UK regions.Related: Varadkar says Ireland is stepping up plans for no-deal Brexit Continue reading...

Growth across Europe forecast to fall if UK adopted WTO rules, with Britain worst affectedBritain crashing out of the EU without a deal would inflict significant economic pain across Europe, leaving the region without any winners, the International Monetary Fund has warned.As the new Brexit secretary, Dominic Raab warned Europe to prepare for a no-deal exit, the IMF said such an outcome would hurt the UK most but would also have damaging economic consequences for Ireland and other EU nations.

World Cup and heatwave boost food and drink purchases but leave other sectors strugglingThe World Cup and the summer heatwave kept British shoppers away from the high street last month, despite encouraging stronger sales of food, drink and barbecues across the country.Revealing a surprise fall in retail sales in June, the Office for National Statistics said clothing stores and other non-food retailers suffered from reduced footfall amid the hot weather and football celebrations.Related: Sports Direct profits plunge by 72% after £85m hit on Debenhams stake Continue reading...

Alex Orr and Anne Loveday say the UK will lag behind, while John Mills says US negotiators will hold the whip handAs the Brexit divisions are laid bare in the House of Commons, with the Conservative party split apart, there was more than a little irony that the EU and Japan signed a huge trade deal this week that cuts or eliminates tariffs on nearly all goods (Report, 18 July).The agreement covers 600 million people and almost a third of the global economy. It will remove tariffs on European exports such as cheese and wine, and Japanese carmakers and electronics firms will face fewer barriers in the EU. Continue reading...

All the day’s economic and financial news, as the EC fines Google for competition breaches

The economy is being buffeted by growing concerns over the US president’s trade warHow does the current global economic outlook compare to that of a year ago? In 2017, the world economy was undergoing a synchronised expansion, with growth accelerating both in advanced economies and emerging markets. Moreover, despite stronger growth, inflation was tame – if not falling – even in economies such as the United States, where goods and labour markets were tightening.Stronger growth with inflation still below target allowed unconventional monetary policies either to remain in full force, as in the eurozone and Japan, or to be rolled back very gradually, as in the US. The combination of strong growth, low inflation and easy money implied that market volatility was low. And with the yields on government bonds also very low, investors’ animal spirits were running high, boosting the price of many risky assets.Related: IMF warns Trump trade war could cost global economy $430bnThe combination of a stronger dollar, higher interest rates​ and less liquidity does not bode well for emerging markets Continue reading...

Slowing house price rises and summer clothing sales dampen predicted leapThe chances of a rise in interest rates in August have dipped after British inflation remained at a one-year low last month, triggered by the summer sales.Confounding expectations for the return of higher rates of inflation in June fuelled by the rising price of petrol, the Office for National Statistics said the consumer price index remained unchanged at 2.4% from the previous month.Related: Google to appeal after EC fines it €4.34bn over Android competition breach - business live Continue reading...

The latest in our new economics series looks at how one university’s decision to bring cleaning staff in-house changed working lives and transformed a community for the betterA queue was already forming by the time Isaac Oti turned up for work before dawn that May morning. He came back a couple of hours later and – “boom!” People were spilling out of Queen Mary college, past the gates, past the engineering faculty. They were standing out on the road three or four deep, almost reaching the tube station.“It was crazy.” Even 10 years later, Oti’s eyes shine at the memory. “CRAZY!”Related: Some call it outsourcing. I call it spivvery | Aditya ChakraborttyThrough outsourcing, university managers routinely allow low-paid workers to be treated disgustinglyRelated: Want to save your job and make more money? Buy out your boss | Aditya ChakraborttyRelated: The tiny union beating the gig economy giants Continue reading...

Unemployment remains at 4.2% and wage growth slips back to 2.5%; Mark Carney tells MPs that no deal Brexit would have big economic consequences2.42pm BSTBank of England governor Mark Carney has told MPs that a no-deal Brexit would have “big” economic consequences and could prompt a review of interest rates.The Bank is widely expected to raise rates early next month, although it is by no means a certainty. The latest UK data shows unemployment steady at 4.2% but wage growth slipping back to 2.5%. While it is still above the latest 2.4% inflation rate, that could change tomorrow if - as expected - the year on year June figure rises to 2.6%.2.37pm BSTUS markets have slipped back at the start of the day’s trading.The Dow Jones Industrial Average is down 0.14%, while the S&P 500 opened 0.32% lower and the Nasdaq Composite fell 0.7%, as the disappointing Netflix update weighed on the market and sent the streaming service’s shares down around 14%.2.34pm BSTHere’s Investec’s chief economist on the pound:Brexit dynamics undermining sterling right now – Eurosceptic rebels out in force last night in the Commons, remainers probably this evening. And parliament unlikely to vote to bring recess forward by 5 days to Thursday. End result, the pound falls v USD and EUR. pic.twitter.com/BlipU81agx2.03pm BSTThe latest Brexit uncertainties have sent the pound to its lowest levels of the day.Against the dollar it is down around 0.7% at $1.3146 while against the euro it has fallen 0.43% to €1.1245.Looking messy for $GBP now. #GBPUSD down to 1.3150 & #EURGBP could test 0.89. This is markets bracing themselves for a 'no idea' Brexit & a possible leadership challenge to May. Govt defeat tonight will be a reality check of crisis. Near-term outlook for $GBP looking negative https://t.co/lvH7rvxOIV1.53pm BSTOver in New York, Goldman Sachs has confirmed that Lloyd Blankfein will step down as chairman and chief executive, the positions he has held since 2006.He will be replaced in both roles by co-chief operating officer David Solomon, who has a sideline as DJ D-Sol, spinning dance music at nightclubs.12.41pm BSTBank of England governor Mark Carney has said a no-deal Brexit would have big economic consequences and prompt a review of interest rates, as well as leaving many bankers idle, reports Reuters:“Our job is to make sure we are as prepared as possible,” Carney told lawmakers at a parliamentary hearing held at an air show in Farnborough, southern England.Crashing out would prompt the BoE’s monetary policy committee to reassess the economic outlook and interest rates.#CARNEY swoops at @FIAFarnborough #airshow. Tone of comments isn't new. But a reminder that EU crash-out w. no deal could trigger rates rethink: "Would be a material event. I wouldn't prejudge in which direction, though" At worst, fragile #GBPUSD eyes $1.3092-31 range again ^KO pic.twitter.com/S7qqVTR9gz11.35am BSTHere’s our story on the day’s UK data:The rate of pay growth for British workers has fallen to the lowest level in six months, despite record numbers of people in work across the country, official figures show.Heaping renewed pressure on the Bank of England to delay raising interest rates from as early as August, the latest snapshot for the British labour market showed workers are still unable to demand higher pay despite the lowest unemployment levels since the mid-1970s. High rates of employment and low levels of unemployment usually signal rising wages.Related: UK wage growth slides to lowest rate in six months11.33am BSTThe pound is now virtually flat against the dollar, and the FTSE 100 has dipped just 0.15% in the wake of the latest UK data. Connor Campbell, financial analyst at Spreadex, said:The UK jobs report failed to move the needle on Tuesday, with investors seemingly waiting for Wednesday’s inflation reading before making a call on what the Bank of England might do in August.For the quarter to the end of May wage growth including bonuses came in at 2.5%, down on the 2.6% seen for the previous 3 months; remove bonuses and wages still saw a similar decline, from 2.8% to 2.7%. Though a smidge higher than the 2.4% inflation reading seen for the same period, real wages are hardly healthy at the moment, especially with the UK CPI set to jump back to 2.6% in June.10.46am BSTElsewhere the UK Office for Budget Responsibility has warned on the state of the country’s finances. Reuters reports:Britain’s budget watchdog on Tuesday outlined a gloomier picture for the government’s finances in the long term, reflecting recent pledges to increase health spending without tax hikes or spending cuts to pay for it.The Office for Budget Responsibility (OBR) stuck to its view that the public finances are likely to come under significant pressure from an aging population.From the @OBR_UK's fiscal sustainability report (https://t.co/ggZCvgaw71) - what happens when immigration falls: pic.twitter.com/EAKQ5yjvcP10.35am BSTEven if the Bank of England does raise rates in August, the Brexit uncertainty casts some doubt on further increases, reckons economist James Smith at ING Bank:For the Bank of England, rising wage growth is a key pillar of its rate hike rationale. So at face value, the latest slip in average earnings (ex bonuses) to 2.7% may appear disappointing.However, it’s worth noting that, like last month’s fall, this is mainly a function of base effects. Wage growth was particularly weak in early 2017, but began to recover from the second quarter – meaning the year-on-year growth rates are beginning to ease. Admittedly the recent momentum has slipped a little too. But with Bank of England Agents still pointing to skill shortages resulting in more rapid pay increases, we doubt the recent figures will lead to any kind of rethink amongst the committee on the overall trend for wages.10.20am BSTOn interest rates, Bank of England governor Mark Carney said at Farnborough a no-deal Brexit would be a material event for borrowing costs. Reuters reports:Bank of England Governor Mark Carney said on Tuesday it would be a “material event” for interest rates if Britain leaves the European Union next year without a deal to smooth its departure.“Our job is to make sure we are as prepared as possible,” Carney told lawmakers at a parliamentary hearing held at an air show in Farnborough, southern England.10.01am BSTWith the slip in wage growth to 2.5%, any increase in inflation tomorrow could see real incomes squeezed again. Analysts are forecasting inflation could rise from 2.4% to 2.6%. Ed Monk, associate director for Personal Investing at Fidelity International said:While today’s figures may put wage growth above last month’s CPI inflation reading for May, any reason for British households to cheer could be short lived as there is a possibility that we could see inflation jump back up and over take wage growth when June’s CPI figure is released tomorrow.If inflation does jump back up after this weakening in pay growth, then it adds to the conundrum for the Bank of England’s Monetary Policy Committee who are desperate to deliver a rate hike in August’s MPC meeting. Higher inflation would support that position but an absence of sustained real wage growth as well as ongoing fears about the impact that Brexit will have on the UK economy means that we could see the ‘unreliable boyfriend’ make an appearance again if Mark Carney and the central bank is forced to make another U-turn come August.9.56am BSTAt the Treasury committee meeting, Bank of England governor Mark Carney says he is concerned the European Union has not yet indicated its solution to continuity in derivatives contracts after Brexit.He said that a no-deal Brexit would have big economic consequences. But he said it was possible that an increase in financial services business from emerging markets could make up for any loss of EU activity.9.52am BSTThey have given up trying to stream the Treasury Select committee from Farnborough:Livestream of Mark Carney at Treasury Select Committee at Farnborough now shut down because of "connectivity issues"9.48am BSTNot everyone believes an August rate rise is a done deal, however. Ben Brettell, senior economist at Hargreaves Lansdown, says:Today’s numbers showed wage growth dipped slightly in the three months to May, to 2.7% excluding bonuses and 2.5% including them. Unemployment held steady at an ultra-low 4.2%, but the claimant count – the number of people claiming out-of-work benefits rose unexpectedly by almost 8,000. In a quirk of the data this number is a month more recent than the rest of the report, so could spell tougher times ahead.Both sterling and the FTSE were little changed after the data was released.9.46am BSTThe jobs and wages figures will probably not deter the Bank of England from raising interest rates in August, says Jeremy Thomson-Cook, chief economist at WorldFirst:At least one part of the UK economy is showing strength with employment hitting fresh 47 year highs in May. Slowing wage growth is unlikely to shade expectations that the Bank of England will raise interest rates on August 2nd although tomorrow’s inflation numbers are expected to show that the real wage gains that consumers have been receiving for a few months now may peter out soon courtesy of higher oil prices and a weaker pound.9.44am BSTHere is a chart showing the slip in wages growth:9.33am BSTWhile the stream is down from Farnborough, over to the day’s big UK data release.Wages growth slipped to its weakest level in six months, rising by 2.5% in the three months to May compared to a 2.6% increase in the previous three months. Pay excluding bonuses came in at 2.7%. These were in line with analyst forecasts, and are above the inflation rate of 2.4%.9.28am BSTTreasury Select Committee hearing on financial stability with BoE taking place at Farnborough Air Show. Judging by Twitter comments the poor signal that plagues the air show is also stopping the live streaming of the session for those who aren't here. pic.twitter.com/1OimL2HHtD9.27am BSTNicky Morgan now moves on to Brexit and derivatives, but the answers are impossible to hear. And the live stream has now died......9.21am BSTHilarious. Mark Carney and Bank bigwigs rabbiting on about technological resilience at Treasury Select Committee. We''re hearing about one sentence in five because the sound keeps cutting out on the livestream from Farnborough9.16am BSTAnd we’re off (with a rather poor audio signal from Farnborough). Chair Nicky Morgan asks about cyber attacks on the financial system as well as internal bank problems such as TSB and VIsa experienced.However the signal keeps cutting out making the answers difficult to get...Ooops. Treasury Select Cee at Farnborough, showingcasing all that's best in technnology. Livestream is audio only and keeps cutting out"Two things. Cyber secur.... (buffering) .... which is why banks .... (buffering).. Two points (buffering) ... operational resilience ... (buffering)"9.07am BSTMassive tension as hordes of YouTubers await the BoE hearing before Treasury Committee pic.twitter.com/ywWehoejAl9.02am BSTThe session with the Bank will be streamed live here.8.59am BSTThe Bank of England’s financial stability report for June - which is what Carney and Co will be talking about shortly - warned that the EU was not doing enough to prevent disrupution to the financial system after Brexit. It said material risks remained to trillions of pounds worth of contracts.8.31am BSTIs the pound likely to take more notice of the economic data, or the current political uncertainty? Kit Juckes at Societe Generale says:The contrast between the economy, which fully justifies the market’s belief that rates will rise in August, the politics, which is a shambles, is ever more striking. The Prime Minister has sacrificed aspect of her ‘soft Brexit’ strategy to get legislation through parliament, relying on Brexiteer Labour MPs in the process and damaging her own support in the process. Labour strategists are dreaming that she’ll make the Conservatives unelectable for a decade or more. But does it matter for the pound? In the short run, the data probably matter more. In the long run, it just keeps sterling anchored near historic trade-weighted lows.8.19am BSTInvestors are clearly taking a back seat as trading begins in Europe.Markets have made an unconvincing start, with the FTSE 100 losing 0.07%, Germany’s Dax up 0.05%, France’s Cac down 0.1% and Spain’s Ibex 0.03% lower.8.01am BSTMore on the forthcoming UK data. Jasper Lawler, head of research at London Capital Group, said:Brexit woes continue to keep the pound range bound, with too may uncertainties still unresolved regarding Brexit; deal or no deal and even over whether Theresa May will be able to cling onto power through the week. However, the UK economic calendar provides at least some distraction from Brexit concerns, this week, although it may not all be good news.UK data out today is not expected to do much to support the downbeat pound, with the employment report forecast to paint a mixed picture of the labour market... UK unemployment is expected to remain constant at 4.2%, and 115k jobs are expected to have been created in the three months to May. Wage growth is expected to remain constant and earnings including bonuses is forecast to have slipped to 2.7% from 2.8% in April.7.57am BSTGood morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.With Brexit concerns continuing, the latest comments from Bank of England governor Mark Carney will be monitored carefully this morning.The Bank of England will get a final look at how well the UK economy is doing this week starting today with the latest unemployment and wages data. Since the Bank of England deferred a decision on raising rates in May the UK economy has rebounded strongly from the slowdown seen in Q1 with a strong performance seen across all the major sectors, raising expectations that the monetary policy committee may coalesce around a majority decision to raise rates in just over a couple of weeks’ time.This week’s data could go some further in raising these expectations or dash them completely, unless Bank of England governor Mark Carney performs another one of his reverse ferrets this morning and pours cold water on the prospect when he speaks in Farnborough today, just prior to the release of this morning’s data. Continue reading...

Extra health funding for an ageing population will add to deficit, watchdog forecastsExtra health spending and a population that is ageing faster than previously expected will add to the burden of spending over the next 50 years, according to the Treasury’s independent forecaster.The £20bn boost to the health budget by 2021-22 promised by Theresa May, coupled with falling immigration – which will cut the number of young and working-age people – will increase the public deficit unless the government moves to increase taxes or take other measures to reduce spending, the Office for Budget Responsibility (OBR) said.Related: May close to lifting fuel duty freeze to help meet NHS promises Continue reading...

Workers unable to demand higher pay despite lowest unemployment since 1970sThe rate of pay growth for British workers has fallen to the lowest level in six months, despite record numbers of people in work across the country, official figures show.Heaping pressure on the Bank of England to delay raising interest rates from as early as August, the latest snapshot for the British labour market showed the lowest level of unemployment since the mid-1970s was yet to help workers demand higher rates of pay. High rates of employment and low levels of unemployment usually signal rising wages. Continue reading...

The government and the Equality and Human Rights Commission criticised by MPsGovernment ministers and Britain’s equalities watchdog are failing to save more than a million older workers from discrimination, bias and outdated employment practices, according to a group of MPs.In a highly critical report for the government, the women and equalities committee said the talents of older workers were going to waste because too little was being done to enforce discrimination law.

All the day’s economic and financial news, including new growth figures from China and the IMF’s latest World Economic Outlook

Richard Stallman on passing laws making it a crime for local property to be owned by secretive foreign owners, David Murray on John Cleese moving to Nevis, and Chris Baker is reminded of San SerriffeOn reading your article about disguising owners of wealth through opaque corporations in Nevis (‘A bright light needs to be shone on this cockroach’, The long read, 12 July), I thought of a possible approach for correcting the problem, one that was not considered in the article.Other countries can pass laws making it a crime for local property (including local corporations) to be owned by secretive foreign owners. If a disguised Nevis corporation (or any disguised corporation) is used in that way, the country where the property is located could prosecute it. Continue reading...

US could find itself ‘focus of global retaliation’ in tariff dispute, says WEO reportRising trade tensions between the United States and the rest of the world could cost the global economy $430bn (£324bn), with America “especially vulnerable” to an escalating tariff war, the International Monetary Fund has warned.Delivering a sharp rebuke for Donald Trump, the Washington-based organisation said the current threats made by the US and its trading partners risked lowering global growth by as much as 0.5% by 2020, or about $430bn in lost GDP worldwide. Continue reading...

Move comes less than a week after US president escalated trade dispute with new threatsChina has filed a complaint against the US at the World Trade Organization after Donald Trump’s threats to place tariffs on an additional $200bn (£150bn) worth of Chinese goods.The one-sentence announcement by the ministry of commerce comes less than a week after the US president called for a second round of tariffs on China, in retaliation for Chinese tariffs placed on American goods.Related: China files WTO challenge over US tariffs, as its economy slows – business live Continue reading...

Victorian concept of the ‘industrial district’ could protect the UK from the worst of BrexitThere are tourists punting on the river and cyclists thronging the street. On this summer day, many of the trains have been cancelled or face severe delays. It’s more than a century since the Victorian economist Alfred Marshall taught at Cambridge University – where the economics library still bears his name – yet he would still recognise plenty of things about the city today.More than a century ago, the mentor to John Maynard Keynes developed the idea of the “industrial district” to explain how bringing jobs and businesses together in specific locations can help improve the productivity of work. There are advantages in huddling together; of encouraging technical dynamism in particular places. Knowledge can spread more quickly, often by accident. People with similar skills are drawn together to pursue careers in the same field.

China may have underestimated the president’s determination, and the global fallout from any US ‘victory’ will come laterWhen Donald Trump’s chief trade adviser went to Beijing in May with proposals to open up China’s vast domestic market to American goods – and thereby reduce a ballooning trade deficit with China – the mission was declared a failure.Before Robert Lighthizer set off, the veteran rightwing economist told Congress: “It is not my objective to change the Chinese system. It seems to work for them … But I have to be in a position where the US can deal with it, where the US isn’t the victim of it. And that’s where our role is.” Continue reading...

Lord Carrington and the other foreign secretaries who resigned on matters of principle contrast starkly with today’s populistsThe resignation of Alexander (“Boris”) Johnson from the prestigious post of foreign secretary in Her Majesty’s government came on the very same day that his illustrious predecessor Lord Carrington died at the wonderful old age of 99.Johnson becomes the fourth foreign secretary to have resigned since the war – all of them since the arrival of Margaret Thatcher’s revolutionary government on the British political scene in 1979, and three of them Tories – after all, Conservative foreign secretaries have had more chance to resign, since their party has been in office during 26 of those 39 years.Johnson did not expect to win, and was really a Remainer, but tried to outflank David Cameron and become leader Continue reading...

June figures risk further escalation of bitter trade dispute with WashingtonChina’s trade surplus with the US widened to a record in June, risking further escalation of a a bitter trade dispute with Washington.Related: Global investors rattled as all-out trade war moves step closer Continue reading...

Jon Cunliffe signals he will vote against increase amid lack of strong wages growthA Bank of England deputy governor has signalled he is unlikely to vote for an interest rate rise while wage increases remain more subdued than the Bank’s forecasts.In a speech in Cumbria, Jon Cunliffe said the lack of strong wages growth meant there was a case for “stodginess” or caution before raising interest rates, leaving him isolated on the nine-strong monetary policy committee. Continue reading...

George Soros responds to a Guardian article about him by Daniel BessnerDaniel Bessner has written a thorough and insightful examination of my philosophy and actions over a lifetime (How George Soros thinks, The long read, 6 July) but his assessment itself suffers from a fatal flaw – a set of mistaken assumptions about the beliefs and convictions underpinning that philosophy and those actions.Bessner says I believe “in a necessary connection between capitalism and cosmopolitanism” and that I believe “a free society depends on free (albeit regulated) markets”. He further asserts that my “class position made [me] unable to advocate the root-and-branch reforms necessary to bring about the world [I desire]”. Continue reading...

Traders await developments in US-China dispute, while Trump’s talk of no UK-US trade deal hits sterling2.56pm BSTMarkets are ending the week on a - marginally - positive note.Earlier this week, news of further tariffs to be imposed by the US on Chinese imports had left shares floundering, but there was a minor recovery today, mainly due to the lack of any further developments.2.43pm BSTThe lack of any new trade tensions between the US and China is giving some support to Wall Street, but mixed results from three big banks have limited the gains.JP Morgan Chase beat expectations, but Wells Fargo disappointed and Citigroup shares were under pressure despite the bank reporting better than forecast profits.2.19pm BSTThe pound has recovered some ground as President Trump and Theresa May give their joint press conference, with Trump seeming to backtrack on the “no-trade deal” rhetoric of earlier.Sterling, having fallen as low as $1.3104 against the dollar, is now down 0.3% at $1.3162.2.14pm BSTGoldman Sachs economists have said there is a 60% chance that the US would go ahead with the extra $200bn tariffs on Chinese goods announced this week. They said:While very uncertain, we would expect the tariffs could be imposed as soon as late September but possibly not until after the election.12.58pm BSTBank of England deputy governor Jon Cunliffe said there was a case for caution in raising interest rates.Speaking in Kendal, he quoted advice given in 1999 by US economist Alan Blinder, who said: “In my view both as a citizen and as a policymaker, a little stodginess at the central bank is entirely appropriate.”Looking to the medium term, there remains a case for a little ‘stodginess’ yet.12.28pm BSTJP Morgan Chase has turned in better than expected results, as Wall Street’s earning season kicks off.The bank reported second quarter income of $8.32bn, up from $7.03bn this time last year, helped by higher than forecast trading revenue and increased demand for loans.We see good global economic growth, particularly in the US where consumer and business sentiment is high.12.16pm BSTWall Street is expected to open marginally lower after Thursday’s gains.The Dow Jones Industrial Average, which closed up 224 points or 0.9%, is forecast to dip by around 10 points at the open, according to IG.11.58am BSTPresident Trump has said the relationship between the US and the UK is “very, very strong” - despite his earlier comments to the Sun.Speaking to reporters at Chequers ahead of talks with Theresa May, he said they would be talking about trade among other things. But given he seemed to rule out a trade deal between the two countries because of May’s Brexit strategy, it remains to be seen how this turns out.11.26am BSTMore on the record Chinese trade surplus with the US. David Cheetham, chief market analyst at XTB, said:Trade remains one of the key topics for investors at present, with China announcing a record surplus with the US for the month of June. In Trump’s simplistic view of trade, the president views a deficit as a loss to the US, and therefore he will clearly be unhappy with the record high $29B shown against China for last month. The recently announced tariffs should see this fall in the present month, but it is unlikely to contribute to a major decline immediately with the tariffs themselves still only representing a fairly small portion of overall trade.Another development that will likely attract the ire of Trump is the ongoing depreciation of the Chinese yuan, which is on course for its fifth consecutive week of losses against the US dollar - its longest weekly losing streak in two years.10.36am BSTHere’s more apparent fallout from the trade tensions between the US and China, courtesy of Reuters:A hotel in the southern Chinese city of Shenzhen on Friday denied a report that it would charge U.S. guests an extra 25 percent amid an escalating trade war between Washington and Beijing.However, three staff members who declined to be identified told Reuters that a discriminatory rate policy had indeed been posted at the hotel as of Thursday but had since been removed.9.48am BSTThe pound continues to slip against the dollar as investors weigh up Donald Trump’s inflammatory comments about Theresa May’s Brexit proposals meaning no UK-US trade deal. It is currently down 0.64% at $1.3119, after hitting a low for the week of $1.3117.Fiona Cincotta, senior market analyst at City Index, said:US President Trump has put his counterpart Teresa May in a difficult position this morning saying that a soft Brexit would mean no trade deal between the UK and US. This comes a day after May released a white paper on the UK-Europe relationship after Brexit, offering a softer stance ahead of next week’s vote on a Brexit trade bill.The UK can’t afford to alienate either the US or the EU, its two largest foreign trade partners, and will not be able to choose an “either-or” solution. Trump’s comments come at a particularly bad time for May who is facing bigger problems as her government is in a precarious balance after the resignations of David Davis and Boris Johnson earlier this week. The pound dropped 0.6% against the dollar following Trump’s remarks.9.00am BSTConnor Campbell, financial analyst at Spreadex, said:For the second day in a row the markets ignored Donald Trump’s aggressive posturing to rebound, climbing back towards the levels abandoned at the start of the week. Not that there wasn’t at least one casualty of the President’s big mouth...The FTSE led the way after the bell, the UK index adding another 60 points to re-cross 7700. That’s put the FTSE back in the ballpark of Monday and Tuesday’s 3 and a half week highs, showing the extent to which investors are trying to ignore the ongoing trade war between the US and China unless they specifically have a new threat to deal with.8.19am BSTOnly three fallers in the FTSE 100: Randgold Resources as the gold price dips, credit specialist Experian following a trading update and Sky, as investors take some profits after Thursday’s rise on the back of the bid battle between Rupert Murdoch and Comcast for the satellite broadcaster.8.18am BSTAs expected, investors continue to push the markets higher as European trading begins.The FTSE 100 is up 0.68% at 7704, Germany’s Dax has risen 0.45% , France’s Cac has climbed 0.41% while Italy’s FTSE MIB is 0.43% better.8.03am BSTMichael van Dulken at Accendo Markets said the Chinese trade figures were a double edged sword:[They are] supportive of global growth but backing up Trump’s trade grievances.7.51am BSTMore on China’s trade figures, and more fuel for Donald Trump’s dispute with the country. The latest figures show a record trade surplus with the US as Chinese exporters rushed to sell goods to America ahead of the imposition of Trump’s tariffs. Reuters reports:China’s trade surplus with the United States swelled to a record in June as its overall exports remained solid, a result that could further inflame a bitter trade dispute with Washington.The data came after the administration of U.S. President Donald Trump raised the stakes in its trade row with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports, including numerous consumer items.7.32am BSTGood morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.With Donald Trump focussed on the Nato budget, Brexit and bigging up Boris Johnson, investors have managed to put fears of an escalating trade war behind them for the moment.The absence of harsh words from the US and China encouraged traders to step into the market and snap up stocks. Investors are getting used to the pattern, whereby equity markets can recover after a big sell-off that was triggered on account of trade tensions. In keeping with recent trends, the US indices held up better than their European counterparts. The S&P 500 hit its highest level since early March and the NASDAQ 100 hit an all-time high. Dealers believe the US is in a stronger position to weather the storm than the rest of the world, and that is why the US equity benchmarks are outperforming.Steven Mnuchin, the US secretary of the Treasury, revealed that many of the trade talks with China have broken down, however, he confirmed that China is very important in cooperation with North Korea. These remarks suggest the US doesn’t want to be too aggressive with Beijing, which is also giving investors hope.European Opening Calls:#FTSE 7692 +0.54%#DAX 12549 +0.45%#CAC 5431 +0.46%#MIB 21902 +0.51%#IBEX 9812 +0.46%It is impressive that exports topped forecasts given that US tariffs on Chinese steel and aluminium kicked in last month. The massive trade surplus that China has with the US is one of the reasons that President Trump instigated the trade spat, and dealers will be keeping an eye on developments.Trump’s declaration that this softer version of Brexit would mean that a trade deal with the US was “probably” off the table, was a blow to both host Theresa May and the pound, sending sterling tumbling overnight. Let’s not forget that the hope of a quick trade deal with the US was a significant factor in Theresa May’s decision to invite Trump in the first place. Another embarrassment that May could have done without.Trump’s words of no deal have confirmed the fears of Brexiteers and will have stoked the fire in the hard Brexit camp, making Theresa May’s future in charge look doubtful once more. This fear was reflected in the pound as it dropped sharply in late night trading. With no high impact UK economic data due for release today, pound traders will continue to watch political developments. Trump and May are expected to hold a joint press conference after lunch where they will both be pressed for trade comments. In the absence of any encouraging trade comments, gains in the pound going forward could be limited, and a meaningful move over $1.32 could be doubtful.Related: Trump trashes May's Brexit plans and hails Boris Johnson as future PM - live Continue reading...

Deputy prime minister fears piracy of protected foods such as Parmigiano-ReggianoItaly will not ratify the EU’s free trade agreement with Canada, the Italian deputy prime minister has said, potentially scuppering the bloc’s biggest deal in years.

As with Brexit, the economic effects of uncertainty over tariffs will take time to appearDonald Trump’s phony, blowhard’s trade war just got real.The steel and aluminium tariffs that the Trump administration imposed at the beginning of June were important mainly for their symbolic value, not for their real economic impact. While the tariffs signified that the US was no longer playing by the rules of the world trading system, they targeted just $45bn of imports, less than 0.25% of GDP in an $18.5tn US economy.Related: Will Trump's tariff war alter the balance of economic power? | Mohamed El-Erian Continue reading...

Number of people starting an apprenticeship fell by 34% in first three terms of 2017-18The government has come under pressure to revamp its apprenticeship scheme after figures showed the number of training places slumped by a third over the last nine months.In the first three terms of the 2017-18 academic year, the number of people starting an apprenticeship fell to 290,500, a 34% reduction on the 440,300 during the same nine-month period in the previous year. It is also nearly 25% down on the 384,500 apprenticeships started in the equivalent period in 2015-16.Related: It’s not wage rises that are a problem for the economy – it’s the lack of them | Thomas Frank Continue reading...

‘No winners, only casualties’ if US imposes further tariffs, European commission warnsThe European commission has cut its growth forecasts for the UK and Europe this year, blaming the threat of a trade war with the US, which it warned would produce “no winners, only casualties”.Britain will slump to the bottom of the EU league table for growth in 2018, the commission said, as it is “particularly exposed” to an escalation of trade tensions and while Brexit uncertainty persists.Related: EC cuts growth forecasts as trade war looms; US inflation hits six year high - as it happened Continue reading...

All the day’s economic and financial news, as escalating trade tensions between China and Washington worry investors

Furniture retailers buck a trend that boosted sales for many high street outletsBritain’s heatwave has hit sales at the homeware retailers DFS Furniture and Dunelm, compounding difficult conditions on the high street and forcing both companies to warn profits this year would be below expectations.Shares in DFS tumbled 10% in early trading after it blamed the long hot spell for a big fall in orders and told the City that earnings in the current financial year would be lower than in 2017 – its second profit warning in just over a year. Dunelm cut its forecast further after issuing a profit warning in May. Continue reading...

OECD says UK’s lack of investment since 2008 is drag on economic growthThe Organisation for Economic Cooperation and Development (OECD) has urged the British government to dramatically increase public spending on rail, green energy and digital infrastructure to support the economy’s long-term future, saying that ministers could treble their investment over the longer term.The Paris-based thinktank, which has 34 of the richest countries as members, said the UK’s lack of public investment since the financial crash in 2008 was a drag on economic growth.Related: Warm weather and royal wedding help UK return to GDP growth Continue reading...

Business chiefs moan about vacant jobs going unfilled and how it threatens the economy – so why don’t they just pay more?In recent weeks media outlets in the US have been fretting over what would ordinarily be considered good news – the roaring American economy, which has brought low unemployment and, in some places, a labour shortage. Owners and managers have complained about their problems in finding people to fill low-wage positions. “Nobody wants to do manual labour any more,” as one trade association grandee told the Baltimore Sun, and so the manual labour simply goes undone.Company bosses talk about the things they have done to fix the situation: the ads they’ve published; the guest-worker visas for which they’ve applied; how they are going into schools to encourage kids to learn construction skills or to drive trucks. The Wall Street Journal reports on the amazing perks that plumbing companies are now offering new hires: quiet rooms, jetski trips, pottery classes, free breakfast, free beer.Related: Pay rises faster for top 1% of earners in developed world – reportAll the free beer in the world can’t drown out what’s comingRelated: Don’t wait for worried workers to call the shots on wages Continue reading...

Despite UK ‘turmoil’, sterling has never been more stable against the euroThe UK is, President Trump kindly informs us, in turmoil. In Westminster, there is feverish talk of a leadership challenge. The economy is in a state of peak Brexit uncertainty. The trade deficit has worsened yet again. An increasingly bitter trade war is battering Britain’s FTSE-quoted commodity giants.In the past, sterling, as the barometer of the nation’s international standing, would have collapsed in value in such a crisis. Yet for the last year the pound-euro rate has never been more stable. Continue reading...

Beijing vows countermeasures if Trump administration acts on latest threat of tariffsGlobal investors have been rattled after a threat by the Trump administration to impose 10% duties on $200bn (£151bn) of imports prompted protests from Beijing and brought an all-out trade war a step closer.

Donald Trump’s latest round of import restrictions affect a wide range of items including human hair and lithographsThe latest round of US tariffs imposed on $200bn (£151bn) of Chinese imports by Donald Trump will affect 6,000 more products, including everyday consumer goods such as deodorants, shampoo and food.

Bank of England says England win can help Britain recover from Brexit-induced slowdownEngland’s World Cup success combined with the heatwave is helping the UK economy recover from the slowdown triggered by the Brexit vote and heavy snowfall earlier this year, according to economists.

All the day’s economic and financial news, as Britain publishes monthly estimates of economic growth for the first time

Shoppers returned to high street in May but factory output continued to shrinkThe start of the summer heatwave has helped the British economy recover ground after grinding to a halt earlier this year, despite a severe downturn for the manufacturing industry in the three months to May.

Cuts and closures underline the flaws of a system dominated by Westminster’s power. From health to schools to housing, we need an urgent rethink‘We cannot survive as we are beyond this next financial year. There is no money. I am not crying wolf. I never cry wolf.” So says the Conservative leader of Torbay council, in Devon: a local authority that delivers the full range of services but can no longer function at even the most basic level.After years of bone-crunching austerity, by 2020 it will be faced with another £12m of cuts – so the most obvious option is to downgrade itself to a district council, hand over its most essential work to the bigger Devon county council, and hope for the best. Whether this will improve anything is an interesting question: since 2010, in real terms, Devon’s funding from government has been cut by 76%.Related: How can we protect our libraries from closure when the council ignores us?Related: Council cuts are putting the vulnerable at risk, Tory peer says Continue reading...

While it has sizeable risks, the US battle with China could open the door to a new eraThe latest round of tit-for-tat tariffs by the United States and China has intensified the global debate about whether the world is facing a mere trade skirmish or heading rapidly toward a full-blown trade war. But what is really at stake may be even more fundamental. Either accidentally or by design, Donald Trump’s administration may have paved the way for a “Reagan moment” for the international trade regime.In the 1980s, Ronald Reagan initiated a military spending race with the Soviet Union that ended up altering the global balance of power in ways that affected many countries worldwide. Today, Trump has launched a tariff race with China, an economic superpower, perhaps with similarly far-reaching potential consequences. Like under Reagan, the US is better placed to win the current competition with China – but the risks are sizeable.Related: Trump’s trade war: what is it and which products are affected?The Trump administration will need to avoid actually pushing other countries (especially China) too hard too soonRelated: Why America’s cheese capital is at the center of Trump’s trade war Continue reading...

Philips CEO says cost of exported products could increase if UK leaves single customs unionThe Dutch electronics firm Philips has warned it may shift production out of Britain in the event of a “hard” Brexit, saying it was “deeply concerned about competitiveness” of its operations there.The Amsterdam-based group employs about 1,500 people in Britain, most notably at its factory at Glemsford in Suffolk making baby care products for export. Continue reading...

New model from ONS should improve the economic growth picture for policymakersBritain will this week become one of the first major developed economies in the world to publish economic growth figures on a monthly basis.Starting from Tuesday, the Office for National Statistics will produce estimates for the monthly growth in gross domestic product (GDP) alongside a range of other statistical indicators for the health of the British economy.

Bank of England – set for August rise – has been consistently wrong about labour marketThe message from the Bank of England has been clear: get ready for an August increase in interest rates. Modestly higher official borrowing costs are needed to prevent the economy from overheating.This, of course, is exactly what Threadneedle Street was saying three months ago. Back then it had convinced the City that a May rate increase was pretty much a done deal but then got cold feet as weak economic data from the first three months of 2018 poured in.Related: Bank of England expert: World Cup feelgood factor backs case for rate rise“It is our contention that the natural rate of unemployment in most advanced countries is well below 4% and perhaps even below 3%.Employment rates and participation rates can rise, and unemployment rates can fall and by a lot. Globalisation has weakened workers’ bargaining power. Migrant flows may have put downward pressure on wages and greased the wheels of the labour market as their presence increased mobility. The decline in the home ownership, which slows job creation and increases unemployment, has helped mobility and lowered the natural rate.” Continue reading...