‘The worst is over’ after eight very difficult years for the country, commissioner saysGreece has turned the page to become “a normal†member of the single currency, European Union authorities in Brussels declared as the country finally exited its eight-year bailout programme.Its three bailouts during the eurozone crisis totalled €288.7bn (£258bn) – the world’s biggest-ever financial rescue. During that time, as the crisis threatened to lead to the nation’s ejection from the single currency – “Grexit†– Greece has had four governments and endured one of the worst recessions in economic history.Related: Greece's bailout is finally at an end – but has been a failure | Larry ElliottYou did it! Congratulations to Greece and its people on ending the programme of financial assistance. With huge efforts and European solidarity you seized the day. Continue reading...
Britain’s growth model is unsustainable, and has created scandalous levels of inequality – we should rely more on production, not consumptionThe British growth model is well and truly broken. If any more evidence for this was needed, it came from figures last month showing that households had become net borrowers for the first time since records began in 1987. They took out almost £80bn in loans last year, the highest amount in 10 years. Only £37bn was deposited in banks. This has echoes of the pre-2008 boom period, and we all know how that ended.The Office for National Statistics also reported that reliance on short-term unsecured loans, such as credit cards and payday loans, had exceeded £200bn: a record high. Nine out of 10 new car purchases are made using hire purchase or some kind of similar arrangement. Rather than serve as a corrective, the financial crisis and its aftermath has just reaffirmed that we remain addicted to this debt-fuelled route to growth.Related: Pay growth slows to weakest in a year despite fall in joblessness Continue reading...
Data shows sector starved of investment and losing ground as Brexit uncertainty persistsBritain’s manufacturing industry has fallen to ninth in the world behind France, reversing a recovery in its performance since the financial crash.The UK’s total manufacturing output stayed ahead of Brazil and Indonesia but slipped below France and remained well adrift of Germany in fourth position and Italy in seventh at the end of 2016.
The strategy of austerity will have long-term consequences throughout EuropeAfter eight years, Greece will on Monday be deemed strong enough to stand on its own feet. The international bailout programme that has provided Athens with emergency financial support will come to an end. Aside from the tough budget rules in place for the next decade or more, Greeks can wave goodbye to the troika – the officials from the International Monetary Fund, the European Central Bank and the European Union – that has in effect been running the country since 2010.Beware the hype that trumpets this as a great success story, a tribute to solidarity and a commonsense approach that has restored economic stability and prevented Greece from being the first country to leave the euro. Nothing could be further from the truth. Continue reading...
Bosses now get paid 300 times what workers do. In the 60s, that ratio was far lower, and growth and investment were higherDefenders of the astronomical amounts routinely being trousered by leading executives have a stock response to critics who say that such rewards are excessive. Chief executives have to be paid the going rate. Without the right incentives, these alpha males (and occasionally alpha females) would take their talents elsewhere and everyone would lose. It’s a global marketplace out there. The market rate for talent has to be paid. Having a pop at these titans of industry over their remuneration packages is simply the politics of envy.Interestingly, the same explanation is used to justify the nugatory pay awards executives hand out to their staff. When it comes to people lower down the pay s cale, the message is that jobs can always be outsourced overseas if the workers get too bolshie about pay. Continue reading...
Fewer children will collect GCSEs in arts subjects this week, as education reforms stifle a sector also hit by petty regulationsThis week thousands of young people will learn how they performed in their GCSEs. One thing we already know is that the number of GCSE music entries is down over the last five years by 8%.Worse, performing and expressive arts entries have slumped by 26% over the period, while the number sitting exams in media, film and TV studies has dropped by 22% and drama entries are down 14%. Continue reading...
Trump trade tariffs and higher borrowing costs are causing problems from Turkey to ChinaDonald Trump’s trade tariffs are causing tremors in global markets. Emerging economies from Turkey to China are finding it more expensive to export to the US. Investors who put their money in safe havens after the 2012 Greek crisis are nervous again. The FTSE Emerging Index of stocks in the developing world tumbled last week, taking the decline in its value since the beginning of the year to more than 20%.It is not only the US president troubling investors though. The country’s central bank, the Federal Reserve, has quadrupled interest rates in the last couple of years. Countries that borrowed heavily in dollars to fund their growth face the prospect of paying a heavy price in extra interest payments. It is a crippling bill that has already forced Argentina to seek help from the International Monetary Fund. Others could follow: Continue reading...
This week’s currency crisis has prompted a flood of overseas buyers seeking bargainsProperty investors have been flocking to Turkey this week in a bid to grab houses and apartments that have in some cases dropped from £55,000 a month ago to below £37,000 now.The highly-publicised collapse in the Turkish lira may have been a disaster for the country – and any British expat who bought there in the last two years – but it has been described as a bonanza for those holding US dollars, pounds or euros. Continue reading...
By rejecting the conventional approach, Erdoğan risks greater trouble – and not just for TurkeyWhether by accident or design, Turkey is trying to rewrite the chapter on crisis management in the emerging-market playbook. Rather than opting for interest-rate hikes and an external funding anchor to support domestic policy adjustments, the government has adopted a mix of less direct and more partial measures – and this at a time when Turkey is in the midst of an escalating tariff tit-for-tat with the US, as well as operating in a more fluid global economy. How all this plays out is important not only for Turkey, but also for other emerging economies that already have had to cope with waves of financial contagion.The initial phases of Turkey’s crisis were a replay of past emerging-market currency crises. A mix of domestic and external events – an over-stretched credit-led growth strategy; concerns about the central bank’s policy autonomy and effectiveness; and a less hospitable global liquidity environment, owing in part to rising US interest rates – destabilised the foreign-exchange market.Related: Turkey buys time before day of IMF reckoning Continue reading...
Beleaguered high streets cheered by rise but long-term trend spells more shop closures and job lossesEngland’s extended World Cup run and the summer sunshine gave an unexpected lift to retail sales in July as consumers spent heavily on supermarket food and drink.Heavy discounting by clothing stores also brought shoppers back to the high street to reverse a decline in sales in June.Maplin, Toys R Us and Jacques Vert have all collapsed in recent months, but a raft of retailers and restaurant groups are facing financial problems and are trying to close stores or negotiate rent cuts. Continue reading...
Main elements of crisis remain unaddressed, with eventual bailout most probable outcomeUntil reports came on Thursday night that the US was preparing to impose more sanctions, the Turkish government had had a decent few days. The currency crisis, which threatened to become chaotic on Monday, had improved. The lira had almost returned to its level of a week ago. During that time, the country had increased liquidity in its banking system, unveiled $15bn (£11.8bn) of direct investment from Qatar, announced a clampdown on short-sellers and on Thursday its finance minister, Berat Albayrak, talked the language of fiscal discipline on a phone call with investors. There have been worse fightbacks.Yet there is a big difference between buying time and turning a corner. Turkey has merely achieved the former. All the main elements of the crisis remain unaddressed. The Qatari money was pledged at impressive speed but the external funding requirement is enormous – about $220bn during the next 12 months, economists estimate.Related: Lira rallies as Turkey pledges spending cuts to avoid IMF bailout Continue reading...
Finance minister out to convince investors but threat of fresh US sanctions loomsTurkey’s finance minister sparked a recovery in the lira after he addressed thousands of international investors, pledging to protect beleaguered local banks and cut public spending to prevent the country defaulting on its loans.Berat Albayrak, who has faced criticism for failing to tackle the country’s growing financial crisis, spoke to around 6,000 investors on a conference call to rebuff concerns that a funding squeeze on Turkey’s banks and a damaging trade war with the US would force him to seek a rescue bailout from the International Monetary Fund (IMF).
Currency rises from record low against US dollar but investors remain anxious at lack of interest rate riseTurkey’s lira continued its recovery on Thursday, ahead of a crucial conference call between the country’s finance minister and international investors.It rose 2.5% in early trading, with one dollar buying 5.8 lira. A diplomatic spat with the US helped send the lira into a tailspin last week and it hit a record low of 7.2 to the dollar on Monday, sending tremors through emerging markets. However, the lira remains about 20% below where it was a month ago.Related: Turkish financial crisis: Lira recovers as Ankara tries to calm markets - live updates Continue reading...
New round of talks to take place in Washington ahead of threatened $200bn worth of tariffs on Chinese goodsA Chinese trade delegation will visit the US this month to kick off a new round of talks, the first since negotiations broke down two months ago.China’s ministry of commerce said the US had invited a delegation, led by vice-commerce minister Wang Shouwen, to meet a group led by US Treasury undersecretary, David Malpass.Related: Turkish financial crisis: Lira recovers as Ankara tries to calm markets - live updatesOur Country was built on Tariffs, and Tariffs are now leading us to great new Trade Deals - as opposed to the horrible and unfair Trade Deals that I inherited as your President. Other Countries should not be allowed to come in and steal the wealth of our great U.S.A. No longer! Continue reading...
Anglo-Saxon capitalism’s drive to maximise profits in the short term won’t save the planet. Perhaps the Chinese model can?This summer’s heatwave has provided a glimpse of the future, and it is not a pretty one. On current trends, the years to come will see rising temperatures, droughts, a fight to feed a growing population, and a race against time to reduce dependency on fossil fuels.The struggle to combat climate change brings out the best and worst of capitalism. Decarbonisation of the economy requires alternatives for coal and cars that run on diesel, and that plays to capitalism’s strengths. Innovation is what capitalism is all about, and there has been staggeringly rapid progress in developing clean alternatives to coal, oil and gas. The cost of producing solar- and wind-powered electricity has collapsed. Great advances are also being made in battery technology, which is vital for the new generation of electricity-powered vehicles. Humans are endlessly creative. In the end, they will crack climate change.Related: Extreme temperatures 'especially likely for next four years'Related: Climate change denial won’t even benefit oil companies soon | Phil McDuff Continue reading...
Accountable Capitalism Act would bring about ‘fundamental change’, redistribute wealth and give more power to workersElizabeth Warren, the Massachusetts senator tipped as a Democratic presidential candidate in 2020, has unveiled new plans for legislation aimed at reining in big corporations, redistributing wealth, and giving workers and local communities a bigger say.Related: 'We made history': Vermont Democrats nominate US's first transgender candidate for governorOver the last year, corporate profits have soared while average wages for Americans haven’t budged. It’s been the same sad story for decades. Today I’m introducing a new bill to help return to the time when American companies & workers did well together: https://t.co/9isNoIyzoW Continue reading...
Higher costs at the pump add to squeeze on household incomes after months of falling wages growthHigher fuel prices in July pushed up the rate of inflation for the first time this year to put an extra squeeze on household incomes following several months of falling wages growth.The consumer prices index (CPI) rose at an annual rate of 2.5% last month after holding at 2.4% in the previous three months, following a steep rise in annual energy price growth from 8.7% in June to 9.3%. Continue reading...
Call for freeze on train fare increases after year of mass cancellations and strikesRail fares will increase by up to another 3.2% in January, the government has confirmed, with the cost of some season tickets to rise by hundreds of pounds.The figure is below the 3.6% increase to regulated fares in January this year, the steepest in five years, but continues the trend of fare increases far outstripping average wage rises.Related: Fare rises enrage rail commuters 'in this terrible mess'Studies have repeatedly found weekday commuter fares to be significantly higher in Britain than elsewhere in Europe.Related: Top pay in UK up by 11% as workers’ wages fail to match inflation Continue reading...
Economic insecurity means that real unemployment is double that which is officially recorded. A new institutional framework to deliver and maintain full employment is neededBritain’s employment problem would on the surface appear to have been solved. Officially just one in 25 Britons are now unemployed, the lowest rate since the winter of 1974-75. Younger workers look to be finding jobs more easily than ever. Older workers are staying in employment for longer. Although the economy has created over 1m jobs since 2010, real wage growth remains flat. Britain is a jobs factory but for insecure, low-paid work. More people are employed, but on static real – that is, inflation-adjusted – wages. Real wage growth averaged 2.9% in the 1970s and 1980s, 1.5% in the 1990s, 1.2% in the 2000s. It is zero today. This is not normal, yet the authorities are determined to believe it is so.The Bank of England is in denial. Wage growth is the clearest signal as to whether monetary policy is tighter or looser than the economy can sustain. Instead of focusing on that, the Bank concentrated on the record low employment and raised interest rates this month, putting pressure on indebted households. The Bank has been criticised for “clear signs of ‘groupthink’ among its leadershipâ€. It seems to be still suffering from it. But the Bank is not to blame. The guilty are in power. The Conservative party’s achievement has been to strip away bargaining power from employees and have them work on the terms offered by employers. The result has been widespread use of zero-hours contracts, self-employment and other forms of underemployment. Continue reading...
Fears over emerging markets’ currencies ease slightly amid financial crisis in TurkeyThe Turkish lira recovered some of its losses on Tuesday, with the country’s finance minister pledging to take steps to support the under-pressure currency.There was some respite for the lira after days of heavy losses. The currency rose 5% to about 6.5 to the dollar on Tuesday afternoon, after slumping 20% in the past four working days. The country’s central bank stepped in on Monday by pledging to provide liquidity to its banking sector.
Jobless rate declines to 4% in the three months to June, the lowest since the winter of 1975Pay growth in Britain has slowed to its weakest in almost a year despite a fall in the jobless rate to a fresh 43-year low and the biggest annual drop in workers from the EU since modern records began more than two decades ago.Figures from the Office for National Statistics (ONS) showed wage inflation cooling in the second quarter of 2018 even though unemployment fell from 4.2% to 4.0% – its lowest level since the winter of 1974-5.Related: High street job losses mount with Homebase next in line for closures Continue reading...
Germany beats forecasts in the second quarter, outpacing the UK and FranceThe eurozone economy has shrugged off growing trade tensions to grow faster than previously estimated in the three months to the end of June, as Germany and the Netherlands beat expectations.GDP growth in the eurozone was revised higher from 0.3% to 0.4% between April and June, matching the rate in the first quarter, said Eurostat, the EU’s statistical office. GDP was also up 0.4% in the 28 EU countries. Continue reading...
Peso and rand are knock-on casualties of currency slide after lira falls 8% against dollarA fresh plunge in the Turkish lira sent tremors through global currency markets on Monday, amid fears that the failure of Recep Tayyip ErdoÄŸan’s government to tackle its worsening financial crisis would have a domino effect on other vulnerable countries.Argentina’s central bank raised its key interest rate by five percentage points to 45% after a fall in the peso and the South African rand was also hit in a day of turbulence that saw the lira fall 8% against the Âdollar.
Refusing standard monetary medicine means following Argentina is logical conclusionThere is not an easy way for Turkey to escape its financial crisis but three measures that might contain the coming pain would be these. First, raise interest rates to try to put a floor under the plunging lira. Second, tone down the bellicose rhetoric and certainly don’t pick new fights with the US. Third, call the International Monetary Fund.None of those actions arrived on Monday. The central bank lowered reserve requirements for banks, which may improve liquidity in the financial system for a short period but it kept the official interest rate at 17.5%. International investors knew how to read that decision. With inflation heading rapidly towards 20%-plus, it was a signal that Turkey is still refusing standard monetary medicine.Related: Lira crisis: action by Turkey's central bank fails to quell contagion fearsRelated: How serious is Turkey's lira crisis and what are the implications?Bain, you would think, would want to keep Wood in harness in some role Continue reading...
Thatcherite ideology, incompetence and the abolition of the Audit Commission have all contributed to local government failures, readers suggest. But there’s good news from the London borough of HaringeyAditya Chakrabortty’s excellent piece (The councils that embraced austerity will cost us all dear, 13 August) builds on an earlier one by Patrick Butler, who pointed out in 2012: “Outsourcing a local authority in its entirety is a long-held Tory municipal fantasy, first articulated by Margaret Thatcher’s local government minister Nick Ridley in the late 1980s.†Large Tory-run authorities in Cornwall, Suffolk and Barnet had “embarked on their own high-profile versions of the Ridley model, claiming that impoverishment gave them no choice but to pursue large-scale privatisationâ€.However, the idea of smashing up and reshaping the public sector had its roots in Tory thinking well before Cameron and May or even the late 1980s. Ridley, appointed by Thatcher “to head a policy group on the nationalised industries†in 1975, had chaired a similar group under Ted Heath in the late 1960s which concluded that there was “a very strong case for embarking on a course of gradually dismantling the public sectorâ€.
Interest rates | Poetry in newspapers | Minister spotting | Cat namesSome 35 years ago I was a researcher at London Business School, sharing our sole computer with the renowned (or infamous) Economic Forecasting Unit, led by Terry, later Lord, Burns, before he was appropriated by Margaret Thatcher to advise the government. I well recall the announcement (though not the reason for it) by an EFU colleague: “We will never see single interest rates again.†If there is one observation I have made since, it is that all worldly things are subject to sudden, radical upheaval (Interest rate ‘will remain low for next 20 years’, 10 August).
The options as the country’s economic growth displays the classic signs of overheatingBad and getting worse by the day. Over the past five years, Turkey’s growth has been virtually keeping pace with that of China and India but it is now displaying the classic signs of overheating: a large trade deficit, a construction boom and soaring debt. Financial markets have taken fright at inflation, rising at an annual rate of more than 15%, and have been selling the Turkish lira, which is down by 45% against the US dollar since the start of the year.Related: Lira crisis: action by Turkey's central bank fails to quell contagion fears Continue reading...
As Brexit talks continue, we answer the key questions on the free flow of goodsAs concerns over Donald Trump’s import tariffs intensify and ministers renegotiate Britain’s trading relationship with Europe, the postwar consensus towards ever-closer economic cooperation between wealthy nations is being unpicked. Continue reading...
Analysis by New Economics Foundation says lost jobs are a £1.5bn cost to GDPThe DIY chain Homebase is expected to reveal the closure of up to 80 stores this week as job losses from Britain’s high streets total more than 30,000.
Rise in hotels and restaurants is more than offset by falls elsewhere, says VisaSpending in the shops fell in July according to Visa, in another blow for Britain’s struggling high streets.The credit card company, which accounts for £1 in every £3 spent in the UK, said that despite hopes that the heatwave could lift retailers, spending was down 0.9% in July compared with the same month a year ago.Related: UK retailers benefit from England World Cup run and heatwave Continue reading...
Erdoğan accuses foreign interests of waging trade war after lira goes into freefallGlobal markets are braced for another hectic day of trading amid Turkey’s unfolding economic crisis after the country’s currency, the lira, continued its fall on Monday.Related: Turkey financial crisis: lira plunges again amid contagion fearsRelated: Turkey's economic crisis deepens as Trump doubles tariffsRelated: Erdoğan gets backing to strengthen his autocratic grip on Turkey Continue reading...
As the currency plunges holidays in Turkey get cheaper but markets fear contagionTurkey’s currency is in freefall, its exports face US sanctions, inflation is rising but its president is defiant. So what’s going on in the country with 80 million inhabitants that is a key Nato ally?What has happened to the currency? The lira fell by one fifth against the dollar last week alone. But even before the current crisis, the lira was the world’s worst performing currency, dropping by almost 50% against the dollar in the past 12 months.Related: Global markets braced for hectic trading as Turkish crisis unfoldsRelated: Turkey's crisis could widen, and its options are running out Continue reading...
Final €15bn loan brings new era, says Tsipras, though IMF views GDP growth forecasts as ‘very ambitious’After nearly nine crisis-filled years, relentless austerity and four governments, Greece will next week exit its third bailout programme – in contrast to the economic crisis enveloping Turkey.On 20 August, at midnight, Athens will reclaim its sovereignty in what the prime minister, Alexis Tsipras, has called a transcendent moment for the debt-stricken nation.Related: Greece relaxes capital controls to prove worst of turmoil is overLast year, 135,000 people filed court papers handing over real estate to the stateRelated: Creditors agree terms to disburse Greece's €8.5bn bailout funds Continue reading...
Erdoğan or the central bank have days to prevent a tsunami of selling and a collapse of the liraThe financial crisis a decade ago struck at the very heart of the global economy – the strategically important banks in the United States and Europe. But it took time to arrive. The “big one†of 2008 followed a series of mini-crises elsewhere in the world.Over a 15-year period, problems in the emerging markets worked their way to the heart of the international system. Mexico, Thailand, Indonesia, South Korea, Brazil, Russia and Argentina were all warning signs that unchaining global finance would eventually prove costly to the rich developed countries as well. Unfortunately, the warning signs were ignored. Continue reading...
Having complained that no one took no-deal seriously, the ideologues now seem unhappy that it is getting close scrutinyIt couldn’t happen to a nicer bunch of fantasists. Worried that the government was not making enough preparations for the possibility of no deal being reached in the “negotiations†with the other 27 members of the EU, the voluble Brexiters within and without the cabinet called for evidence.They have got it, in spades. The so-called impact assessments for no deal are, quite simply, horrifying. They were underlined recently by the Bank of England governor, Mark Carney, who rightly drew attention to the messages coming through loud and clear from business, trade unions, the City and, not least, food suppliers, road hauliers, ports and airports.My suspicion is that the MPC only raised interest rates the other week to give it scope to lower them again Continue reading...
The banking crisis prompted talk of economic reform, shared prosperity and a ‘march of the makers’. None of it has happenedA decade ago, Britain was in the early stages of what would turn out to be the deepest recession of recent times. It has never really recovered.Only twice in the past 10 years has the economy broken out of its post-crisis torpor. The first time was in late 2009 and early 2010, when the country was jolted back into life by the monetary and fiscal stimulus provided by the Bank of England. That rally was killed off by George Osborne’s ill-timed austerity and by the protracted troubles of the eurozone. Continue reading...
Figures for wages, inflation and consumer spending, due this week, are likely to reinforce the view that the British economy is far from boomingThe ability of the British economy to improve the living standards of workers will come back under the microscope this week, when the latest figures for wages, employment and inflation are revealed by government statisticians.The Bank of England reckons higher wages are just around the corner, helped by the lowest rate of unemployment since the mid-1970s, yet economists are doubtful there will be much positive news just yet. While the economy has gathered pace in recent months, helped by the warmer weather, the royal wedding and the World Cup, there has been little evidence so far of the spoils being shared through pay increases. Continue reading...
Ghost broking, gross written premiums and capex, not to mention the wonderful world of opexThe world of finance and business and, by extension, the City pages of newspapers, continues to be a bewildering place. Last week, there was mention of ghost broking and gross written premiums, while another report had the following gem: “Given that guidance was reiterated 10 weeks ago, operations have clearly taken a marked turn for the worse and the lack of new guidance indicates that management is currently unable to forecast its own business.†Reading between the lines, I suspect this means that the high-ups haven’t a bloody clue what they are doing and need a big kick up the backside.Elsewhere, reporting on Blackstone, a $43bn investment giant, we had: “When companies’ earnings are up, they tend to be more inclined to hire. They tend to be more inclined to capex [capital investment].†Thank heavens for the explanation in square brackets, though I do feel that the above was a bit stating the bleeding obvious. And I’m giving Jonathan Gray, Blackstone’s chief operating officer, the benefit of the doubt that he is using capex as a noun and not a verb, but given the looseness of language use of executive types, I still harbour doubts. And I think we’ll leave opex for another day. Continue reading...
Turkey’s currency has plummeted as relations with the US have worsenedThe Turkish president, Recep Tayyip ErdoÄŸan, has repeated a call for Turks to sell dollars and euros to support the national currency, which has been in freefall over concerns about the economy and deteriorating ties with the US.On Saturday, ErdoÄŸan urged Turks to help support the lira to win what he described as a “war of independenceâ€.Related: Turkey's economic crisis deepens as Trump doubles tariffs Continue reading...
Recep Tayyip Erdoğan tried to restore confidence in the Turkish lira after it plunged by more than 20% against the dollar on Friday. The sudden drop came when Donald Trump announced on Twitter he was doubling US import tariffs on Turkish steel and aluminium.The Turkish president called on Turks to exchange dollars, euros and gold for Turkish lira. He said this would be Turkey’s response ‘to those who wage economic war against us’.The lira has been under sustained pressure on foreign exchanges, dropping by almost 50% against the dollar in the past 12 months.
by Richard Partington Economics correspondent on (#3WJDR)
US president has tweeted that ‘our relations with Turkey are not good at this time!’Turkey’s unfolding economic crisis has deepened further after Donald Trump announced he was doubling US import tariffs on Turkish steel and aluminium, stoking the country’s currency freefall and rattling financial markets.The Turkish lira plunged by more than 20% against the dollar after the president announced the move, amid a widening dispute between Washington and Ankara over the imprisonment of the US pastor Andrew Brunson.I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!What is the IMF? Continue reading...
by Richard Partington Economics correspondent on (#3WJ2F)
Warmer weather helps British economy grow by 0.4% but factory orders drop againWarmer weather helped the British economy grow at a faster pace in the three months to the end of June, despite official figures showing the manufacturing sector slumped into recession for the first time since the Brexit vote.The Office for National Statistics (ONS) said GDP increased by 0.4% in the second quarter from a rate of 0.2% in the previous three months, helped by stronger retail sales and good weather, which enabled the construction industry to make up lost ground from heavy snow earlier this year.Gross domestic product (GDP) is a key government statistic and provides a measure of the UK's total economic activity. Continue reading...
Outgoing MPC member Ian McCafferty predicts rates below 5% and wages up 4%The era of low interest rates will last for at least another 20 years, despite gently rising official borrowing costs in the coming years, one of the Bank of England’s leading policymakers has forecast.In a valedictory interview before leaving Threadneedle Street’s monetary policy committee (MPC) at the end of the month, Ian McCafferty said structural changes in the global economy meant UK borrowers and savers should get used to interest rates being “significantly†below the 5% average in the 10 years leading up to the financial crisis. Continue reading...
At local level Conservatives can see the harm wrought by austerity, but that insight has not reached the party’s upper echelonsThe Conservatives often seem unsure whether to present budget cuts as painful but necessary or painless and desirable. Tory ideologues see state spending as inimical to enterprise and corrosive of personal freedom, but pragmatists recognise that public service users do not feel austerity as a kind of liberation.To reconcile the two positions, David Cameron invented the “big society†– the idea that voluntary work could fill gaps in government provision of services. But piecemeal good work done under the “big society†banner could never soften blows from the chancellor’s axe. Continue reading...
The ‘whole month approach’ to changes of circumstances will create problems for universal credit recipients, says Fran Bennett; Sarah Sheils says parliament’s failure to tackle child food poverty has a long historyYour report (Households left in debt by flaws in design of universal credit system, 6 August) rightly focuses on the rigidity of the monthly assessment for universal credit when it comes to the different ways in which people are paid. But the report from the Child Poverty Action Group published that day also highlighted the “whole-month approach†to changes of circumstances, which will create additional problems. So, for example, if you move to a flat with a lower rent in the middle of the month, that is the rent you are assumed to have paid for the whole month when your universal credit is worked out – leaving you with a shortfall. And if your daughter moves out the day before your assessment date, you will get no universal credit for having fed her for the whole of that month. So your universal credit may go up and down in an arbitrary way in relation to your needs, depending on when things happen. Yet you are expected to be learning to budget on a monthly basis. You couldn’t make it up.