It must choose whether to stay shackled by the euro or try to reclaim economic sovereigntyThe possibility of a populist, Eurosceptic government coming to power in Italy has focused investors’ minds like few other events this year. The yield differential, or spread, between Italian and German bonds has widened sharply, indicating that investors view Italy as a riskier bet. And Italian equity prices have fallen – particularly in domestic bank shares, the best proxy of country risk – while insurance premiums against a sovereign default have increased. There are even fears that Italy could trigger another global financial crisis, especially if a fresh election becomes a de facto referendum on the euro.Even before Italy’s March election, in which the populist Five Star Movement (M5S) and the right-wing League party captured a combined parliamentary majority, we warned that the market was being too complacent toward the country. Italy finds itself in more than just a one-off political crisis. It must confront its core national dilemma: whether to remain shackled by the euro or try to reclaim economic, political, and institutional sovereignty.Related: If Brussels doesn’t budge, calamity beckons for Italy – and the EU | Owen Jones Continue reading...

Investors await developments after US imposes steel and aluminium tariffs, while US non-farm payrolls soar; Spain ousts prime minister Rajoy2.54pm BSTInvestors pretty much knew that the US was about to slap steel and aluminium tariffs on the EU, Mexico and Canada, so in true market fashion, it was sell on the rumour and buy on the fact.The EU however said it was pressing ahead with a complaint to the World Trade Organisation about the US move, and had also opened a challenge against China over intellectual property.2.54pm BSTKudlow "I don't think he gave anything away"Question needs to be asked then - would he have tweeted anything if it was a bad report. Think we all know the answer to that question. https://t.co/LZf5u0CQ892.50pm BSTUS factories grew strongly again last month, but slightly more slowly than expected.The final Markit manufacturing PMI came in at 56.4 compared to the intial estimate of 56.6 and April’s figure of 56.5.US Manufacturing PMI (May F) 56.4 versus 56.6 flash/expected

Canada’s prime minister Justin Trudeau says tariffs will harm industries and workers on both sides of the border

The world’s closer to a full-scale trade war than at any time since the 1930s, with the US, China and the EU all involved

Nationwide data shows 0.2% month-on-month decline as buyer slump continuesHouse prices fell in May as a faltering economy, pressure on household budgets and the prospect of interest rate rises dogged the market.

We have come a long way since the Brexit referendum. With Italy in crisis, the EU needs to take a risk on real reformGeorge Soros is not exactly an insurgent leader from central casting, but you certainly can’t fault the billionaire philanthropist for his frankness. “The EU is in an existential crisis,” Soros said in a speech in Paris this week, before adding: “Everything that could go wrong has gone wrong.”With Italy compounding Europe’s woes in the wake of the Brexit vote and the rise of rightwing populism more generally, it takes nerve to choose this of all moments to launch a fightback for Europe. Yet this is precisely what Soros proposes. There’s an audacity about his approach that echoes the French general Ferdinand Foch’s message to his commander-in-chief: “My centre is giving way, my right is retreating, situation excellent, I am attacking.”Related: Italy can't blame Brussels for its descent into the abyss | Phillip Inman Continue reading...

The Fed proposed to ease the Volcker Rule, which bars banks from high-risk activity for their own profit with depositors’ money

With half of Europe’s unemployed at risk of poverty, the eurozone must be modernised to allow for economies to be reflated effectivelyGeorge Soros has made a fortune by exploiting mistakes – even when they are his own. In four decades as a hedge fund manager he averaged a profit of nearly $1bn a year. His success, he said, was that he did not consider errors a source of shame but of pride. “Once we realise that imperfect understanding is the human condition,” he remarked, “there is no shame in being wrong, only in failing to correct our mistakes.” It is in that spirit that Mr Soros suggested to an audience in Paris that there was a way out of the current European crisis, but only if the European Union confronted its miscalculations and blunders. Advice from the uber-wealthy is a mixed blessing for the remain cause. To Mr Soros’s credit he left his business to back with cash the kind of “open societies” he favours, embodied by the EU’s voluntary association of equal states. It has been no quiet retirement: his foundation was chased out of Hungary pursued by antisemitic slurs accusing him of being a malevolent outside meddler.However, the billionaire philanthropist’s analysis is both perspicacious and acute. Mr Soros argues that monetary union radically changed the dynamics of the EU, and the impact of the financial crash brought out into the open hitherto latent governance tensions. The solidarity of nations has been repeatedly tested, and often found wanting. He was right to add that the EU’s self-inflicted “addiction to austerity” has been exploited by populist politicians to build Eurosceptic support. They were also quick to exploit fears after the refugee crisis in 2015, when their warnings of terror threats and a breakdown in local public services seemed plausible to many. Migration also illustrates the absurdity of Britain’s Brexit obsession to Europeans: while the rest of the continent was fixated on mass migration of refugees from outside, Britain was gripped with the idea of controlling free movement within it by EU citizens. Continue reading...

Wall Street and Asia fall sharply as investors fear new elections could bring further uncertainty to Italy2.49pm BSTAfter Tuesday’s sharp falls in the wake of the Italian political crisis, most European markets tried their best to regain some of the lost ground.Italy’s FTSE MIB is currently up 1.7%, Germany’s Dax is 0.7% higher, Spain’s Ibex has added 0.4% and the FTSE 100 is up 0.14%. But France’s Cac remains in negative territory, down 0.27%. On Wall Street, the Dow Jones Industrial Average is up 170 points or 0.7%.2.36pm BSTThe European recovery may in some cases be a little tentative, but the Wall Street rally looks a little more substantial.The Dow Jones Industrial Average is up 160 points or 0.66% in early trading, while the S&P 500 has opened up 0.47% and the Nasdaq Composite is 0.43% higher.1.41pm BSTAnother piece of US data to keep away from the president.US GDP grew by less than initially thought in the first quarter. On an annualised basis the economy grew by 2.2%, down from the first estimate of 2.3% and much lower than the fourth quarter’s growth rate of 2.9%.1.27pm BSTDon’t tell Donald Trump, but the latest US private payroll figures have fallen short of forecasts.Ahead of Friday’s non-farm payrolls, the ADP employment report shows an increase of 178,000 private sector jobs in May, compared to expectations of a 190,000 rise.1.22pm BSTThe surge in German inflation complicates the European Central Bank’s life even further, says ING Bank economist Carsten Brzeski:While the Easter Bunny Effect has finally been left behind, German inflation is still heavily affected by seasonal effects. The sharp surge in oil prices in combination with several public holidays and long weekends pushed up energy prices, leisure costs and food prices. Under the surface of (too) many one-off factors, German inflation data still tells a two-sided story: while prices for consumer goods have gradually accelerated in recent months, inflation on services has slowed down and has even been negative for a couple of months for communication and clothing. Where available, core inflation measures at the state levels actually dropped in May.Despite today’s increase in headline inflation, the underlying trend still points to a rather benign picture for inflationary pressure. For the ECB, however, today’s inflation data from Germany gives a foretaste of the increased complications on the road to taper. The still undecided debate on whether the Eurozone economy is in a soft patch or at the start of a protracted downswing, the surge in oil prices and latest political developments in Italy have clearly complicated the ECB’s life. It increasingly looks as if the big question for the ECB is not when to stop QE but rather when to signal an extension of QE. With latest market turmoil and political tensions in Italy, giving some certainty in times of uncertainty could be the ECB’s preferred policy choice. This would be an announcement or at least a very clear hint at QE extension at the June meeting.1.19pm BSTThe cost of buying goods and services in Germany has soared above the European Central Banks target of 2%, according to official figures.Consumer price inflation jumped from 1.4% year on year in April to 2.2% in May, the fastest pace since February 2017 and well above forecasts of a 1.8% rise. The month on month increase was 0.6%, compared to expectations of a figure of 0.3%.1.06pm BSTHere’s our latest report on the day’s political developments in Italy:The head of Italy’s anti-establishment Five Star Movement has rekindled negotiations to form a government, days after a bitter row over the country’s future in the eurozone ended a fledgling deal for populist parties to take power.Luigi Di Maio, the 31-year-old head of the M5S, Italy’s largest party, indicated on Wednesday he was prepared to compromise on his controversial choice of a eurosceptic economist, Paolo Savona, for finance minister. But he insisted that his pick for prime minister remained political newcomer Giuseppe Conte.Related: Head of Italy's M5S rekindles negotiations to form a government12.54pm BSTDespite many markets edging higher, they are nowhere near recovering the Italy-driven losses, and investors have very little appetite for risk at the moment. Craig Erlam, senior market analyst at Oanda, said:It looked as though we were headed for fresh elections as early as July, with negotiations between Five Star Movement and Lega having failed after President Sergio Mattarella vetoed their choice of Finance Minister. Carlo Cottarelli – a former IMF economist - was tasked with forming a temporary government until further elections are called, ideally next year, but that appears to have failed before it got started.While early elections will arguably be very beneficial to the populist parties, who will cite the rejection of its choice of Finance Minister as evidence of Brussels interference and an abuse of the democratic will of the people, it seems one last attempt to form a government is being discussed. The parties seem unwilling to hold an election in July and have no desire to wait until next year.11.57am BSTStock markets keep a mixed feel towards midday: FTSE mildly higher (#GBP just mildly higher helps explain why) #STOXX +0.07%, #DAX +0.5%, France's CAC40 dn 0.2%, #Italy's FTSEMIB +1.5% - biggest index riser - Swiss #SMI dn 0.3%, US stock index futures each up 0.5% 1/ ^KO11.56am BSTOver in Spain, prime minister Rajoy is resisting the idea of stepping down as he prepares to face Friday’s no confidence vote:Spanish Prime Minister Mariano Rajoy rules out quitting ahead of a no-confidence vote in parliament over graft convictions against members of his Popular Party

As much as some want to believe it, the EU has little to do with the country’s failure to put its house in orderAs Italians wrestle with their constitution and possibly head towards another general election, are they victims of a financial swindle perpetrated by the Germans? To read some of the commentary, and hear voices from the streets of Rome and Naples, you would think that they were.The people of Athens accused the Germans and, to a lesser extent, the French, who between them are the main props of the single currency, of being the architects of their impoverishment. It seems many Italians have followed suit.Related: Italy at risk of new financial crisis in wake of coalition's collapseThe mafia, mass early retirement, tax evasion and a low birthrate. These are problems created in ItalyRelated: Italy is facing regime change. The future will be repressive | Antonella Rampino Continue reading...

The corruption and poverty that encourage Romanians to migrate leave the country depleted of energy and hopeRomanians are now the second largest group of non-British nationals in the UK, following Poles. More than 400,000 Romanians live in the UK, more than double the number before 2014, when restrictions on the UK labour market lifted (seven years after Romania joined the European Union).Nevertheless, in spite of these numbers, Romanians are not out to “flood” the UK. They are leaving their county in hordes, moving to wherever there is an opportunity. In Italy and Spain (Latin countries with similar languages), Romanians have been the largest group of non-nationals for a while.Related: Romanian is second most common non-British nationality in UKRelated: Romania braced for huge protests over 'big step backwards' on rule of law Continue reading...

Unemployment is set to fall to 40-year low, but economy remains weak, says thinktankUnemployment will drop to its lowest level since 1980 across the world’s richest nations, but global growth remains dependent on cheap borrowing and government spending, the Organisation for Economic Cooperation & Development (OECD) has warned in its latest global economy health check.The rise of tit-for-tat protectionist trade barriers, the return of volatile financial markets, and soaring oil prices also spell trouble for the global economy as it heads towards the 10-year anniversary of the 2008 banking collapse, the OECD said. Continue reading...

The single currency hits a 10-month low as concern about US tariffs on China adds fuel to selloff in stock marketsShares in Asia fell sharply and the euro sank to a 10-month low against the US dollar as concern about the political turmoil in Italy spread through international financial markets on Wednesday.Renewed fears of a trade war between the United States and China also contributed to the negative mood after Donald Trump announced $50bn worth of tariffs on Chinese goods just days after his treasury secretary said the trade war was “on hold”.Related: Italy at risk of new financial crisis in wake of coalition's collapse Continue reading...

When even Marks & Spencer is in trouble, it’s time to reimagine city centres as places where people live, learn and relaxIt seems there’s barely a brand that’s immune from the malaise hanging over the British high street. Marks & Spencer and House of Fraser now look to be in serious trouble. Take a walk through the heart of many towns and cities up and down the country, and you’ll encounter a bleak vista: the all-too-familiar array of pound shops, bookies and boarded-up vacant lots. And things aren’t likely to pick up anytime soon, with the high street recently seeing the biggest year-on-year drop in footfall for nearly a decade.Related: Shoppers desert UK high streets, putting more jobs at risk Continue reading...

A crisis in council funding is forcing domiciliary care firms to cancel contracts, leaving older people without vital supportAlmost 1.2 million people aged over 65 do not receive the support they need with essential daily tasks such as getting washed and dressed or preparing meals, according to Age UK. The perilous state of the domiciliary care sector, which provides support in people’s own homes, is one of the main reasons for this, the charity says.Related: NHS needs £2,000 in tax from every household to stay afloat – reportWe can secure the NHS and social care for the future by asking everyone to contribute a little moreRelated: Stop scrimping, Theresa May – or the NHS’s 70th birthday will be its last | Polly Toynbee Continue reading...

Shares in New York and Asia fall sharply as investors and EU politicians take fright at strengthening mood against euroItaly risks careening into a new financial crisis after the Bank of Italy said the country’s leaders could not “disregard” financial constraints and its commitments to Brussels.Markets around the world were also shaken with the Dow Jones industrial average in New York falling almost 400 points, or 1.58% on Tuesday as investors shifted money into the safe haven of US bonds, putting pressure on bank shares.Related: Markets rattled by Italian and Spanish political turmoil - business live Continue reading...

US to levy duty on $50bn of Chinese goods, claiming misuse of its intellectual propertyThe US government has threatened to impose tariffs on $50bn of imports from China unless Beijing addresses the issue of the theft of American intellectual property, once again raising the prospect of a trade war.The renewed threat of tariffs comes ahead of commerce secretary Wilbur Ross’s visit to Beijing this week when he will try to get China’s agreement to firm numbers for additional US exports to the country. The US had wanted China’s trade surplus with America to shrink by $200bn in two years, a figure seen as fanciful by most economists and trade experts.Related: Trump says China trade deal is 'too hard to get done' Continue reading...

Retailer signs new lease as north London shopping centre plans to double in sizeJohn Lewis will rejuvenate its 40-year-old department store in London’s Brent Cross as part of a £1.4bn redevelopment of the shopping centre. Brent Cross, which opened in north London in 1976, will double in size to include 150 new shops, 50 new restaurants and other leisure businesses including a luxury cinema.John Lewis has signed a new lease as part of the development, which comes despite difficulties on the high street leading to the closure of hundreds of stores as shoppers shift to buying online. A net 1,700 chain stores closed their doors in the top 500 towns and shopping centres last year, according the Local Data Company – the worst figures since 2010. Continue reading...

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Billionaire says holding fresh referendum soon could save UK from ‘immense damage’A campaign to secure a second Brexit referendum within a year and save the UK from “immense damage” is to be launched in days, the philanthropist and financier George Soros has announced.The billionaire founder of the Open Society Foundation said the prospect of the UK’s prolonged divorce from Brussels could help persuade the British public by a “convincing margin” that EU membership was in their interests.Related: Enemy of nationalists: George Soros and his liberal campaignsStaying in the single market and customs union Continue reading...

Eurozone crisis rears its head again with prospect of new elections in Italy and vote of no confidence in Spain2.51pm BSTThe turmoil over the failed Italian coalition, with the prospect of new elections in the autumn, has revived memories of the crisis which engulfed the eurozone over Greece. Investors have taken fright that Italy might effectively vote to leave the euro, sending markets and bond prices tumbling.And on top of that, there is concern over Spain, where the government faces a no confidence vote on Friday.2.43pm BSTCould this be a slap on the wrist from the President of the European Council for some of the earlier comments from the ECB and EU?My appeal to all EU institutions: please respect the voters. We are there to serve them, not to lecture them. #Italy @dwnews2.35pm BSTThe global market slump in the wake of Italy’s latest political problems has spread to the US, with Wall Street opening sharply lower.The Dow Jones Industrial Average is down 190 points or 0.7% while the S&P 500 fell 0.6% at the start of trading and the Nasdaq Composite losing 0.4%. US Treasury bonds, one of the perceived havens for investors in times of turmoil, have moved higher, with the 10 year yield conversely at the lowest level since April.1.40pm BSTIt’s not just Italy causing concern of course:#Spain's yield spread widening to German #bunds may not be as fast as #Italy, but still takes 10-year Spanish Bono yield to 1.662, up about 470 basis points since end March 1/ ^KO1.00pm BSTAt times like this it is worth looking at the VIX index - the so-called fear index which shows investors’ expectations of near term market volatility.So far today it has jumped 17% to 15.49, the highest level since the beginning of May.12.43pm BSTUnless there is something lost in the translation here, this appears to be another unhelpful comment, this time from EU commissioner Günther Oettinger:'The markets will teach the Italians to vote for the right thing', told me #EU commissioner #Oettinger in an exclusive interview in Strasbourg. More on @dwnews (full interview tonight at 21.00 DW/German) pic.twitter.com/oVPOPIMBUd12.28pm BSTAs the Italian crisis continues, billionaire financier George Soros is in a negative mood about the EU in a speech today:Another "major" financial crisis may be looming and the EU faces an imminent existential threat, George Soros says https://t.co/Jkw1Rhq6Tk pic.twitter.com/TgzF12JRu912.07pm BSTAs the Italian crisis grips investors, markets had become complacent in the wake of the QE support programmes from the world’s leading central banks, says Premier Asset Management’s Jake Robbins:The Presidential rejection of a democratically elected coalition government has thrown Italy into a constitutional crisis, one made worse given it was because of the coalition’s anti EU beliefs. In echoes of the euro crisis earlier this decade, these events could ultimately threaten the future of the EU, or at the very least, question it in its current form.Whilst it is no surprise that Italian yields have soared and equities plunged as investors reprice the actual risk of holding Italian assets, this crisis has been on the cards for some time and shows how complacent financial markets have become in the era of quantitative easing. At the same time there has been a noticeable slowdown in growth across the EU this year which will also continue to weigh on sentiment towards both Italian and EU wide assets. Throw in heightened geopolitical risks in other parts of the world such as the US and Asia, rising interest rates and the reduction in central bank support through quantitative easing, then the outlook for financial markets is far less certain than over the past few years.11.35am BSTHere’s Reuters’ latest report on the volatility in the markets:A deepening political crisis in Italy, the euro zone’s third biggest economy, fuelled a heavy selloff in Italian assets and the euro reminiscent of the euro zone debt crisis of 2010-2012.Short-term Italian bond yields, which move inversely to price, were set for their biggest one-day jump since 1992, while Italian and wider euro zone banking stocks were set to suffer their worst day since August 2016.11.29am BSTEarlier Italy sold €5.5bn worth of six month bonds, but at the highest yield for more than five years.Amid the turmoil surrounding the country’s political future, it sold the expected amount of bonds but at a yield or interest rate of an average 1.213%. At the previous auction for this maturity the yield was negative at -0.421%.11.09am BSTUS markets are expected to open lower in the wake of the European declines, with the Dow Jones Industrial Average forecast to lose around 190 points at the start of trading.11.03am BSTNot sure this is an entirely helpful remark from the European Central Bank’s Vitor Constancio. When asked about any ECB help for Italy he is quoted as saying: “Italy knows the rules. They might want to read them again.”Reuters reports:Any intervention by the European Central Bank to help Italy in the event of liquidity problems must meet the bank’s mandate and “certain conditions”, its outgoing Vice-President was quoted as saying on Tuesday.“Italy knows the rules. They might want to read them again,” Vitor Constancio told Spiegel magazine in an interview, according to a pre-release, when asked if the central bank would intervene if needed and rescue Italy from insolvency.10.37am BSTBack with the markets, and analyst Joshua Mahony at IG, says:With markets transfixed on affairs in Italy and Spain (amid a vote of no confidence for Rajoy), we are seeing a sharp shift into safe haven assets, driving the Japanese yen and gold prices higher in recent days. FTSE 100-listed gold producers Fresnillo and Randgold are the best performers in the bluechip index in early trade amid a shift into gold. We often see stocks benefit when currencies come under pressure, but the flight to safety this morning means the euro and the pound are also getting another pounding alongside the stock market declines.10.21am BSTAway from markets for a moment, and some good news for Pret A Manger employees after the takeover deal, as tweeted by the chain’s chief executive:Today is a big day for @Pret. As we welcome JAB, we’ll be thanking the people who really matter by giving each of our 12,000 employees £1,000 when the deal completes10.09am BSTMoody’s, which recently put Italy’s Baa2 credit rating on review for a downgrade, has commented on the latest developments.It said Italy was likely to be downgraded if the next government pursued fiscal policies which were not sufficient to place the public debt ratio on a sustainable downward trajectory in the coming years.Moody’s: We will conclude the review when we will have better visibility on the policy direction of the country, which means that the time frame for the review may exceed the typical period of up to three months.10.04am BSTNot even during the 2010-2012 Eurozone crisis did Italian yields rise so rapidly in just a few hours of trading. pic.twitter.com/yV884hZZ6A10.02am BSTNeil Wilson, chief market analyst for Markets.com, says:We’ve seen a steep selloff in risk assets as the Italian political troubles deepen, with investors seemingly dumping their exposure to Italy. Whilst a lot has already been written on the topic, the moves this morning warrant attention as we are seeing some incredible price action in Italian bonds with the market moving at speeds not seen since the worst of the Eurozone debt crisis.The big question is whether this is just an Italian problem or one that risks significant spill-over into the rest of Europe. The one thing that has become apparent is that markets treated the election result with excessive calm and has been jolted by the populists’ success in agreeing terms...9.59am BSTThe head of Italy’s central bank has said the country’s economy is recovering and growth is increasingly self sustained, but said any move to weaken the country’s public finances could undermine confidence and years of valuable reforms.Ignazio Visco, speaking to the bank’s annual meeting, made the comments amid the political turmoil which is likely to lead to a new election, with euro membership likely to be among the main issues for voters.9.51am BSTThe market rout is intensifying, in the wake of the Italian political crisis.The FTSE 100 is now down nearly 120 points or 1.5%, Germany’s Dax is down 1.6% and France’s Cac has fallen 1.87%.Ooft. Italian 2-year yield up 126 bps today, blowing away even the biggest increases at the height of the 2011-12 euro debt crisis. This is on course for the biggest one-day rise since Sept 1992. pic.twitter.com/Eh7e37QNmG9.10am BSTIt may not have taken in the latest developments, but the recent political uncertainty in Italy has hit consumer confidence.The confidence index fell to 113.7 in May, the lowest since August last year and below the 116.5 level expected by analysts. The April figure came in at 116.9.9.03am BSTOops! #Italexit back in the spotlight. #Italy's likelihood of leaving the Euro more than tripled from 3.6% to 11.3%. So, the troublesome calm in the euro zone is a thing of the past, Sentix says. pic.twitter.com/lPLDim3sXT8.47am BSTTime to call this a crisis, says Kit Juckes of Societe Generale:Having rejected the NL/5-star leaders’ nomination of Paolo Savona as [Italian] Economy Minister, President Mattarella has called on Carlo Cottarelli to form an interim administration.His chances of succeeding are slim and elections are likely in September. Which leaves us 3-4 months of uncertainty ahead of a vote that may be seen as a referendum on Euro-membership. The threat of further rating downgrades hangs over the BTP [Italian bond] market (and is largely priced-in), and the European Central Bank’s plans for providing forward guidance on policy normalisation are up in the air. Which means that the risk of EUR/USD reaching 1.10 by the end of the summer is significantly higher than the possibility of a recovery to 1.20.8.25am BSTAs expected the threat of a new eurozone crisis - this time involving Italy and/or Spain rather than Greece - has sent markets sharply lower in early trading.The FTSE 100 is down 0.78% at 7670, while Germany’s Dax has dropped 0.6% and France’s Cac 0.69%.8.13am BSTMore on the sale of ubiquitous sandwich chain Pret A Manger:Pret a Manger, the British sandwich shop chain, is being taken over by the German-controlled company behind Krispy Kreme donuts and Kenco coffee in a deal worth more than £1.5bn.Bridgepoint, the UK-based private equity firm, has agreed to sell Pret to the investment group JAB Holdings, which has been rapidly acquiring companies linked to the coffee market in recent years.Related: Pret a Manger sold for more than £1.5bn to Krispy Kreme owner8.10am BSTBack with Italy, and bond yields are continuing to leap higher:#Italy this morning. 2y government bond yield at almost 2%. Was -0.19% at the start of the year. Increased a full percentage point in one night. pic.twitter.com/DTrqr1b3U98.06am BSTThe unscheduled trading statement from Dixons Carphone shows it now expects profits of around £300m in its next financial year, well below the £387m expected by analysts.It forecast the UK electrical market would contract, and new broom chief executive Alex Baldock - eight weeks in the job - seemed to take a swipe at previous management when he said:We will correct recent underinvestment in both our colleague and customer proposition. In the coming year we expect to make a cost investment of around £30m in these areas across the UK and Ireland, giving our colleagues the right tools and the customer an improved experience.The share price of Dixons Carphone has been recovering strongly since new CEO Alex Baldock took over, on the back of vibes about strong trading ahead of the World Cup. But, out of the blue, the company has come out with a profit warning today! The issue appears to be that although headline of PBT of £382m for y/e April will hit City expectations that will be only down to an odd one-off £25m systems implementation benefit, given gross margin pressures in Q4. And the company has come out with detailed guidance for the year that has just started, y/e April 2019, warning of a fall back to headline PBT of £300m! That is partly because of the impact of one-off items, but also reflects continued problems in the mobile phone business (despite the much-vaunted talks with the networks about better terms) and, amazingly, a £30m hit to “correct recent underinvestment in both our colleague and customer proposition”. After all that, investors may not be in much of a mood to listen to the new CEO’s assertion that “though there’s plenty to fix, it’s all fixable”...7.53am BSTItalian bond yields have jumped on the political turmoil engulfing the country, with the two year yields rising above 1% for the first time since 2014.7.49am BSTThe euro continues to come under pressure, falling to its lowest level since November 2017 against the dollar.It is down 4% so far this month at $1.159, and is also at a new six and a half month low against the Swiss franc. It has fallen 0.1% against the pound.7.43am BSTGood morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.It’s been a little while, but the eurozone looks like it could be heading towards another period of turmoil. And it is not Greece this time.Related: Italian president names interim prime minister until fresh electionsThe overriding problem for investors is that these are two of the largest, most important economies in the eurozone. Euro traders are aware that the potential fallout from Italy mainly, but also this Spanish headache, dwarfs the fallout which could have been following the Greek debt saga and as a result the euro has fallen heavily out of favour and has continued to decline overnight. With potential elections just around the corner in both Spain and Italy, a summer of volatility now seems almost a given.European Opening Calls (with FTSE revised):#FTSE 7692 -0.50%#DAX 12811 -0.41%#CAC 5492 -0.31%#MIB 21809 -0.56%#IBEX 9732 -0.33% Continue reading...

Each month we look at key indicators to see what effect the Brexit process has on growth, prosperity and trade• ‘Brexit is a disaster’ – experts debate the latest economic data

Two former members of Bank of England’s interest rate-setting committee examine why UK growth lags its EU rivals• UK economy feels chill from spectre of disorderly Brexit

Business activity fails to recover as much as forecast from ‘beast from the east’• ‘Brexit is a disaster’ – experts debate the latest economic data

Wider use of unmanned aerial vehicles will create jobs and boost GDP by 2%, says reportUsing drones to transform working practices could boost Britain’s economy by £42bn by 2030, research claims.Increased use of drones, in sectors from construction or defence to energy or logistics, will employ hundreds of thousands of people and lift GDP by almost 2%, according to a report by accountants PwC.Related: Vodafone pilots new software to thwart rogue drones Continue reading...

Sergio Mattarella asks former IMF economist Carlo Cottarelli to try to form a governmentItaly’s president has formally asked Carlo Cottarelli to try to form a government after quashing the hopes of the Five Star Movement and Lega to form western Europe’s first populist government.Sergio Mattarella turned to the former International Monetary Fund economist to run a technocratic government until a fresh election can be held. The president’s office announced that he had given a mandate to Cottarelli to try to form a government after about an hour of talks on Monday morning. Continue reading...

The Labour party should be congratulated for its progressive economic ideas. But as Tory MPs prepare to drop austerity and start spending, the opposition needs to be bolderThe Labour party has long attempted to remodel society under the banner of equality. In that sense, the party’s current leadership is no different from earlier incarnations. Jeremy Corbyn and his shadow chancellor, John McDonnell, offered a bold manifesto at last year’s election, one which made it clear that they are agreed, in ambition if nothing else, with their nemesis Margaret Thatcher that “economics are the method; the object is to change the soul”. Since then Mr Corbyn and Mr McDonnell have sketched out, admittedly in dry policy documents, a number of instruments of their revolution. But they have shied away from making a coherent public case for notions of progressive values, radical democracy and collective action. That is a mistake, not least because a programme that seeks to transform Britain must conquer minds as well as spirits.It has been left to others to make the argument. Last week in Renewal, an academic journal, two leftwing thinkers – Martin O’Neill and Joe Guinan – outlined the size and scope of Corbynomics. They credit Karl Polanyi, an Austrian economic sociologist, for inspiring Mr Corbyn’s policies. Polanyi warned that capitalist systems quickly become dominated by markets, where values are framed by cash. The result is the “annihilation (of) the natural substance of society”. He argued, perceptively, instead that cooperation was more important to humans than competition. If reciprocity was considered, then the notion of what was valuable could be broadened to better represent society’s health. Continue reading...

A boomtown of the Industrial Revolution, it now uses machine learning to gauge the residents’ emotional stateWhen Rochdale is in the news it tends to be for the wrong reasons, such as associations with child sex exploitation and urban decay. Yet, in its heyday, Rochdale was one of the most prosperous places on earth. The town hall – a magnificent example of Victorian gothic – exudes civic pride. But it was built a long time ago, when Britain was the workshop of the world, cotton was king and the north of England was more prosperous than the south.Related: Nottingham has lowest household disposable income in UK Continue reading...

Mark Carney’s recent warning about a Leave-affected economy is being ignored. That is unfortunate, because it’s importantOne of the features of the Brexit vote is that it shows economics doesn’t matter very much. At least not to the 52% who voted to leave the European Union, and who the pollsters tell us still largely feel as they did on 23 June 2016.That seems strange when the debate about Scottish independence focused for much of the time on the possible economic gains and losses. But there was no doubting, when the Brexit votes were counted, that George Osborne’s Project Fear had been smashed on the rocks of public indifference. Continue reading...

Ross McEwan faces some hard questions at the bank’s AGM this week. At least he has some good news to fall back onIt is unlikely Royal Bank of Scotland chief executive Ross McEwan expected the positive results announced in April to quell anger among a significant body of his shareholders.That anger is anticipated to become clear on Wednesday at the company’s annual meeting in Edinburgh, when a vote is expected on setting up a new shareholder committee that would give investors power over the pay levels of senior executives. Continue reading...

Many economists believe life in the developing world is improving fast. It certainly isn’t in the sub-Saharan regionThere is a comforting mainstream narrative which tells us that African nations, like the rest of the developing world, are doing just fine. Look past the terrorist incidents, the latest Ebola outbreak and areas of drought, and you will find that poverty is being alleviated and diseases confined to isolated pockets. A combination of western aid, Chinese investment and the rejuvenating application of neoliberal economic medicine in the guise of free trade has come to the rescue, this narrative runs, improving matters by measurable degrees.This draws on figures from the World Bank showing that in 1981 around 42% of the world’s population was extremely poor, using $1.90 a day in 2011 prices as a yardstick. By 2013, that figure had fallen to 10.7%. An estimate by the bank suggests it fell further, to 9.1%, in 2016. Likewise, polio and other major diseases are in full retreat.Totting up the net outflow of funds since 1980 delivers the alarming figure of $16.3tn Continue reading...

Clothing sales to fall for second consecutive year after shift to ‘experience economy’Fashion sales are in retreat across the UK as clothing purchases come under pressure from tight household finances and the lure of the gym, restaurants and entertainment.The volume of clothing sold is expected to fall for the second successive year, declining by 0.5% in 2018 after a fall of 0.8% the year before, as the recent woes of Marks & Spencer are reflected across the high street.Related: High street gloom: which chains are feeling the pain? Continue reading...

Readers respond to a report that British households will need to pay an extra £2,000 a year in tax to help the NHS cope with the demands of an ageing populationNobody now disputes the need for a significant and sustained increase in revenue for the NHS and social care (Household tax bills ‘must rise by £2,000 to fix crisis in NHS’, 24 May). Rather, there are two political battles to be settled: how significant an increase the country feels it can afford, and from whom it wishes the additional revenue to be raised.The first question can only be answered through an ongoing “strategic welfare review”, conducted by the government along the lines of the present strategic defence review. Regular official long-term projections are required so that the country can be presented with a range of funding scenarios, based on different levels of service and accompanying outcomes it might expect from health and social care. Continue reading...

Economists warn that Britain’s economy is losing momentum after growth almost stalled in the first three months of the year

Growth slumps to 0.1% on weak business investment and household spendingThe weakest household spending for three years and falling levels of business investment dragged the economy to the worst quarter for five years, official statisticians have said.The Office for National Statistics confirmed its previous estimate that GDP growth slumped to 0.1% in the first quarter, while sticking to its view that the “beast from the east” had little impact.

The NHS needs £2000 more per household to survive. But as long as they’re ahead in the polls, the Tories don’t seem to careThis is it. The bailiffs are at the door waving the red-ink bill. Pay up or else. For eight years the government has stuck the NHS bill behind the clock but now the crunch has come. Will July’s NHS 70th birthday be a celebration or a funeral? The Institute for Fiscal Studies (IFS), grand truth-teller of fiscal facts, alongside the Health Foundation, an NHS pulse-taker, declare the service needs – absolutely, unequivocally needs – funds that add another £2000 a year per household in tax over the next 15 years.Related: NHS needs £2,000 in tax from every household to stay afloat – reportIn polls, people swear they would pay more for the NHS. But politicians fear tax-raisers get punished on election day Continue reading...

Take-home pay is one-fifth of the disposable income enjoyed by people in west LondonNottingham is the city with the lowest incomes in the UK, where residents’ take-home pay is only one-fifth of the disposable income enjoyed by people in west London.The average household income, once taxes and benefits are taken into account, is only £12,232 in Nottingham, compared to £58,816 in Kensington and Chelsea, and Hammersmith and Fulham in west London.

UK’s former chief EU diplomat Sir Ivan Rogers takes aim at PM’s Brexit strategy in speechBritain must face reality on post-Brexit trade rather than continue the “buccaneering blather” of hard Brexiters, the UK’s former chief EU diplomat Sir Ivan Rogers has said.Rogers, the former chief Brussels adviser to both David Cameron and Theresa May, took aim at the prime minister’s Brexit strategy in a forensic speech on Wednesday, but also criticised the plans of both hardline remainers and leavers, calling them “bluntly, delusional”.A customs union is an agreement by a group of countries, such as the EU, to all apply the same tariffs on imported goods from the rest of the world and, typically, eliminate them entirely for trade within the group. By doing this, they can help avoid the need for costly and time-consuming customs checks during trade between members of the union. Asian shipping containers arriving at Felixstowe or Rotterdam, for example, need only pass through customs once before their contents head to markets all over Europe. Lorries passing between Dover and Calais avoid delay entirely. Continue reading...

Commerce department to investigate whether imports threaten US industry, as foreign automakers criticize effortThe Trump administration has launched a national security investigation into car and truck imports that could lead to new US tariffs similar to those imposed on imported steel and aluminum in March.The commerce department said the investigation under Section 232 of the Trade Expansion Act of 1962 would investigate whether vehicle and parts imports were threatening the industry’s health and ability to research and develop new, advanced technologies.Related: Trump says China trade deal is 'too hard to get done' Continue reading...

Politicians of all stripes have for too long avoided confronting hard truths about rising demand for health services and how to meet the costThere isn’t much about last year’s general election that Theresa May is in a hurry to revisit, least of all the plan to reform social care by a mechanism that came to be known as the “dementia tax”. The pitch was poor, but the concept deserved a fairer hearing. Outside the partisan frenzy of a campaign, it might have started a necessary conversation about long-term funding to meet the costs of an ageing population.New research published today lays bare the challenge. A model developed by the Health Foundation, a charity, and the Institute for Fiscal Studies anticipates demand for spending on adult social care to rise by 3.9% a year over the next 15 years. Over the same period, the population over the age of 65 is expected to increase by 4.4 million; and the number over 85 by 1.3 million. Continue reading...

Cheaper airfares helped to pull Britain’s inflation rate down to 2.4% last month

The duchess wants to champion female empowerment. Letting women participate fully in the workforce would be a good startThere’s nothing quite like a royal wedding to get the British to part with their cash, so in one respect the idea that the new Duchess of Sussex could be good news for the economy is a statement of the blindingly obvious. Retailers have had a tough time recently, and a bit of Meghanmania was just what they needed to get the tills ringing.Interest in the newest member of the royal family will linger longer than the feelgood factor. People are clearly fascinated by her backstory and take notice of what she thinks. Role models are important, and just as it matters that Christine Lagarde sees fighting for women’s rights as a vital part of her job as head of the International Monetary Fund, so it matters that the Duchess of Sussex calls herself a feminist and wants to champion female empowerment. Feminism is an economic issue.Related: 'I'm proud to be a feminist': Meghan Markle makes online debut as Duchess of SussexRelated: Will women be equal to men in 100 years? | Margaret Atwood, Lola Okolosie, Polly Toynbee, Athene Donald and Julie Bindel Continue reading...

Lower airfares helped bring down consumer price index to 2.4% in April, says ONSUK inflation unexpectedly fell further last month to the lowest level in more than a year as lower airfares provided some relief for cash-strapped Britons.Triggering a sell-off in the pound to the lowest levels seen this year, the consumer price index dropped from 2.5% in March to 2.4%, according to the Office for National Statistics (ONS). Economists had expected the annual rate of growth in prices to remain unchanged.Related: UK inflation falls to 13-month low, sending pound sliding – business live Continue reading...

Bill partially lifts restrictions enacted after 2008 financial crash as Republicans tell banking sector ‘help is on the way’The US Congress on Tuesday passed a partial rollback of banking rules put in place to prevent a repeat of the 2008 financial crisis, sending the bill for Donald Trump’s signature, in what amounts to a major step in the administration’s plan to return to a more deregulated banking system.

Bank of England governor’s comments risk renewed confrontation with BrexitersBritish households are more than £900 worse off after the vote to leave the EU, according to the governor of the Bank of England, in comments that risk a renewed confrontation with senior Brexit supporters in the government.

Jeremy Wright wants high court to unfreeze National Fund to help pay national debtThe attorney general has applied to the high court to release at least £400m from a fund that has in effect been frozen, in order to reduce the UK’s massive national debt.The legal manoeuvre was launched by Jeremy Wright QC following criticism over delays about what to do with the National Fund, which was established in 1928 with the aim of paying off the country’s accumulated financial liabilities.Related: UK debt is explosive – and it only needs a spark to light the fuse | Larry Elliott Continue reading...

Poll of CEOs finds backlash from political populism among leading concernsBusiness leaders around the globe have said the rise of economic nationalism triggered by Brexit, Donald Trump and populist politics poses the greatest threat to their growth.According to a survey of 1,300 chief executives from some of the world’s biggest companies, carried out by the accountancy company KPMG, British business leaders are notably more pessimistic than their peers.Related: Italian markets in turmoil as political novice emerges as frontrunner to be PM Continue reading...

Exclusive: Agreement could rebuild trust in trade liberalisation, thinktanks argue• Sign up to receive the top stories from Guardian Australia every morningAustralia and the United Kingdom have been urged to negotiate a high-quality free-trade agreement to help rebuild public trust in trade liberalisation.The agreement should include labour and environmental standards but not a controversial investor dispute settlement clause, says new research from two progressive thinktanks, the McKell Institute in Australia and Demos in the UK.Related: Life on the breadline: It’s a relentless daily struggle to not feel bad about yourself | Nijole NaujokasRelated: Trump trade tariffs: what they mean for Australia and what happens next Continue reading...

UK stock market hits new peak after US Treasury secretary Mnuchin says the trade war with China is ‘on hold’

Markets rose after US said it reached an agreement with China to ease trade imbalances between the world’s two largest economiesUS stocks surged on Monday after the treasury secretary, Steve Mnuchin, said the prospect of a trade war was “on hold” following an agreement to suspend tariff threats.Related: US and China put trade war 'on hold' Continue reading...