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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

High street struggles continue, with 33% of retailers reporting falling salesThe high street has been rocked by a fresh wave of store closures and job losses as household names including Carpetright, Fenwick and Poundworld announced major restructuring programmes.At a meeting in London on Thursday, Carpetright was able to avoid tipping into administration after landlords backed a company voluntary arrangement (CVA) that will allow it to close 92 stores with the loss of 300 jobs. Continue reading...

Hopes of recovery from ‘beast from the east’ dashed after fifth consecutive month of weak salesHopes in the high street of a bounce back from poor weather-affected trading have been dashed after the CBI reported another weak month of sales for retailers.The employers’ organisation blamed the squeeze on consumer incomes and structural change in the sector for a fifth successive month of disappointing sales.Related: High street sales feel chill from 'beast from the east' Continue reading...

Two former members of Bank of England’s interest rate-setting committee discuss a potential rise

Each month we look at key indicators to see what effect the Brexit process has on growth, prosperity and trade in the UK

‘The beast from the east’ blew the UK economy off course, further complicating an already complex picture

For ‘record employment’, read low wages, low productivity, low investment. The idea of happy zero-hours workers is for the birdsGetting on for one million people in Britain wait each day for a text or a phone call to let them know whether an employer has work for them. Twenty years ago few had heard of zero-hour contracts, but the number of workers covered by them has increased more than fourfold since the recession of a decade ago.Related: More than 900,000 UK workers now on zero-hours contractsThe reason for weak consumer spending and the flat housing market is wages not keeping pace with inflationRelated: Record 60% of Britons in poverty are in working families – study Continue reading...

Andy Haldane says early mental health intervention could lead to sixfold return on investmentThe chief economist at the Bank of England has backed the use of counselling services for primary school children, arguing there is a strong economic case for investment in early intervention to improve mental health in later life.Andy Haldane, who is more commonly found grappling with interest rates and quantitative easing, has helped produce a report that suggests early mental health intervention in primary schools could lead to a sixfold return on the investment. Continue reading...

Number of vehicles built in March fell 13%, compared with a year ago, to 141,471Car production in Britain has experienced a double-digit slump amid concern over falling diesel sales and the impact of Brexit on exports.The performance last month, which was partly weather related, prompted the Society of Motor Manufacturers and Traders (SMMT) to repeat its call for continued membership of the EU customs union. Continue reading...

An obsession with maintaining high land and house prices has created a vicious class system, writes DBC Reed; notions of a universal basic income should be dropped for job guarantees, says Mike Ellwood; plus letters from David Murray and Derrick JoadIf there is any connecting theme in the continuous run of current scandals (Turn our anger into action with a summer of solidarity, 24 April), it is the breakdown of the old pre-Thatcher mixed economy, where there was a bipartisan focus on maintaining full employment. Now there is, instead, an obsession with maintaining high land and house prices – what some land economists call homeownerism – which has created a vicious class system, whereby at one end of a Midland village you have young couples paying £800 a month in house rent, and at the other older people profiteering from the rents of six such houses.No movement concerned with social justice can ignore this scam. It is corrupt because people are bribed by continuously rising untaxed capital gains into voting for rightwing parties. It deprives the young of spending power forgone in rents and high mortgages which, as Henry George showed, prevented people from moving where there was new work and affording any more than the basics.

In England’s poorest town, schools are teaching their children to embrace a healthy diet. Our new economics series looks at the lessons from Oldham

President reiterates plan to impose tariffs of up to $100bn more on Chinese goodsDonald Trump has said he is sending treasury secretary Steven Mnuchin to China for talks as the two countries deal with tensions over trade and intellectual property.Trump said during a White House news conference with President Emmanuel Macron of France that the US and China were “very serious” about trade issues and reiterated his plans to impose tariffs of up to $100bn more on Chinese goods.Related: Trump plays down US-China trade war concerns: ‘When you’re $500bn down you can’t lose’ Continue reading...

Chancellor may ease austerity as public sector net borrowing falls to £42.6bn for the last financial yearBritain’s budget deficit has dropped to the lowest level since before the financial crisis, laying the ground for Philip Hammond to raise government spending on public services later this year.The Office for National Statistics said public sector net borrowing, excluding the state-owned banks, dropped by £3.5bn to £42.6bn in the last financial year, cutting the budget deficit to the lowest level since the year ending March 2007.

EY Item Club says uninspiring economy is ‘chugging along’ as inflation continues to dropThe UK economy is set for another year of uninspiring growth in 2018, according to the latest forecasts from the EY Item Club.This week’s first-quarter GDP figures are expected to show growth of just 0.2%-0.3%, according to EY Item Club economists, mainly due to the severe weather the hit the country at the end of February and beginning of March. This compares to quarter-on-quarter growth of 0.4% in the final three months of 2017.Related: Slow UK economic growth is not just a cold weather trend | Larry Elliott Continue reading...

Thinktank warns of a ‘car crash’ as low interest rates mean further cuts to stimulate demand would not be an optionThe Bank of England is “dangerously ill-equipped” to avert the next recession and remains mired fighting the last downturn, according to a report calling for the introduction of radical new policy tools.According to the Institute for Public Policy Research (IPPR), the odds of a recession once every 10 to 15 years mean Threadneedle Street needs additional firepower for when the economy next begins to falter.