Consumer prices are at a five-year high – and rising. If you’re young, you may be OK. For the rest of us, it could be a nightmareIn 1972 my father bought a home on the south coast of England for the shockingly high price of £11,500. His mortgage was £8,000, or a little under three times his salary. Within a few years, galloping inflation had sparked the near collapse of the British economy, a run on sterling, and an IMF bailout. Yet by 1980 the ravages of runaway 1970s price rises had somehow left my father, and many like him, a fair bit better off.Related: State pension to rise after UK inflation increases to 3%The governor of the Bank of England, knows a 5% interest rate is medicine that will kill the patient Continue reading...

Thinktank warns Britain must stay close to EU or face long-term decline as it suggests a second pollThe Treasury has flatly rejected calls for a second EU referendum after the west’s leading economic thinktank, the Organisation for Economic Cooperation and Development, said reversing the decision to leave would significantly benefit the economy.“We are leaving the EU and there will not be a second referendum,” the Treasury said in a terse statement that reflected the government’s unhappiness with the OECD’s intervention.

Figure is twice that of pay settlements across the country and comes amid a rise in inflationThe rate of house price growth increased to 5% in August, according to official government figures, pushing homes further out of the reach of aspiring young buyers already squeezed by rising inflation.The average UK house price rose by £1,000 in August to reach £226,000, the Office for National Statistics (ONS) said. The increase took the annualised rate of house price inflation to 5%, up from 4.5% in July and more than double the rate of pay settlements across the country. Continue reading...

Speculation rife Bank of England may raise rate for first time in a decade as governor Mark Carney predicts prices will rise furtherThe prospect of Britain’s first interest rate increase in more than a decade loomed large on Tuesday after inflation hit its highest level since 2012 and the Bank of England governor, Mark Carney, said it had further to rise.Financial markets are now betting strongly on Threadneedle Street’s monetary policy committee reversing the quarter-point cut in borrowing costs made in the aftermath of last year’s Brexit vote after the annual increase in the cost of living edged up from 2.9 to 3%.Inflation is when prices rise. Deflation is the opposite – price decreases over time – but inflation is far more common.Related: UK inflation rate hits five-year high of 3% - business live Continue reading...

Workers in shadow chancellor John McDonnell’s constituency face highest risk of being replaced by robots, says researchWorkers in the constituency of shadow chancellor John McDonnell are at the highest risk of seeing their jobs automated in the looming workplace revolution that will affect at least one in five employees in all parliamentary seats, according to new research.The thinktank Future Advocacy – which specialises in looking at the big 21st century policy changes – said at least one-fifth of jobs in all 650 constituencies were at high risk of being automated, rising to almost 40% in McDonnell’s west London seat of Hayes and Harlington.Related: More than 70% of US fears robots taking over our lives, survey finds Continue reading...

Magical thinking about the future is not confined to the cabinet. Just ask the Office for Budget ResponsibilityPolitics, runs the cliche, is the art of the possible. The compromise. The curbed expectation.Not any more. Not in the age of Brexit and Trump. In 2017, politics is the art of the impossible. Of writing blank cheques and scattering them to the wind. Of peddling fantasies and promising the voters they will be made flesh by tomorrow.Related: Why is Hammond hated? For daring to look at the Brexit small print | Matthew d’AnconaRelated: Only Theresa can clean up the mess left by her Brexit Marx brothers | Hugh Muir Continue reading...

Sharp price rises could cost average household £260 a year if UK leaves EU without a trade deal while richest will be least affectedLeaving the European Union without a trade deal would likely result in a sharp increase in prices for food and other goods, costing the average UK household £260 and hitting low-income families hardest, according to new research.Following Theresa May’s attempt in Brussels on Monday night to unblock Brexit talks, a joint report by the Resolution Foundation thinktank and academics at Sussex University predicted that “just about managing” families in the UK’s poorer regions had most to lose from the negotiations failing.Britain wants to discuss its future trading relationship with the EU because 44% of UK exports go to, and 53% of imports come from, the EU 27 countries. Post-Brexit conditions of trade could, therefore, have a major impact on Britain’s economy.Related: Grayling's claims that UK can grow more food dismissed as 'tripe'Related: The Brexiteers’ trade fantasies are crashing down around their ears | Molly Scott Cato Continue reading...

Readers respond to Britain’s chronic shortage of affordable housing with solutions of their ownLarry Elliott suggests five steps to fix the housing market (Britain’s broken housing market – and how to fix it, 9 October) which include Kate Barker’s idea of “acquiring” large sites abutting urban areas at a modest premium to their existing use. That would effectively part-nationalise development value and might help supply, although the Tories wouldn’t do it because they reversed Labour’s two attempts at taxing development value, the Land Commission Act 1967 and the Community Land Act 1975/Development Land Tax 1976. Increased housing supply doesn’t automatically lead to lower prices of course (unless builders were to build at a rate that forced them to drop their own prices, which they wouldn’t) because, as Elliott says, the housing “market” isn’t a market at all in the traditional supply-and-demand sense.Before more of this crowded country’s open space is concreted over and its amenity value taken from those abutting urban areas, other expedients could be deployed, like penal taxation of empty property and progressive taxation of inherited property wealth, the latter of which continues to snowball for the haves and push prices further beyond the have-nots. Those two measures would do more to bring prices back closer to a manageable multiplier of local earnings and improve the rising generation’s chances of ownership. Whether the banks’ loan books could stand the strain of falling prices – and how hard the Treasury would fight to avoid them – is another question.

European markets move higher but Spain lags on Catalonia independence uncertainty, Chinese inflation jumps and oil climbs on new supply concerns2.23pm BSTOn a quiet day for economic news, stock markets have managed to push higher, helped by a jump in mining shares after positive Chinese data.Oil is also on the rise, fuelled by supply concerns after Iraq moved into oil-rich Kirkuk as a response to the recent Kurdish referendum. Latest reports suggest that Kurdistan has shut down some 350,000 barrels a day of production from its major oil fields following the flare up with central government. There is also the prospect of renewed sanctions on Iran after President Trump hit out at the UN’s nuclear deal with the country. So Brent is currently up 2.2% at $58.43 a barrel.2.01pm BSTStill with the US, and the president’s team has come out to head off claims its proposed tax cuts are just for the rich:The Trump administration said on Monday the average US household will get an estimated $4,000 more a year after corporate tax rates are slashed under its planned tax reforms. Proposing a stunning 5% increase in household income, the claim is likely to be met with skepticism from tax experts and Democratic lawmakers.Pre-empting such opposition, Donald Trump tweeted: “The Democrats only want to increase taxes and obstruct. That’s all they are good at!”Related: Trump team claims US families will receive extra $4,000 a year from tax cuts1.51pm BSTThe pound is slipping back against the dollar following the stronger than expected New York manufacturing survey, as well as reports that the UK expects Brexit talks to break down unless the EU compromises.Sterling, which had been as high as $1.3311, is now down 0.17% at $1.3259. Against the euro the pound is down 0.01% at €1.1236.1.39pm BST1.36pm BSTStrong US Empire number = USD up = GBP down = FTSE up1.34pm BSTMore fuel to the fire that is US interest rate expectations.Most observers believe the Federal Reserve will probably raise rates in December, and the latest New York manufacturing survey backs up that idea with stronger than expected growth.12.32pm BSTAt midnight the UK’s old pound coin ceased to be legal tender.So how easy is it to spend the old coins now the deadline has passed? Our reporters have been finding out:Related: Old £1 coin: relaxed retailers mean round pound will be around for longer12.15pm BSTThe data from China has given a lift to metal prices and miners, with copper crossing the $7,000 a tonne level for the first time in three years.That in turn has pushed shares in mining companies such as Antofagasta up to 3% higher.11.15am BSTWith European markets - apart from Spain - remaining in positive territory, Wall Street is also expected to open higher. Craig Erlam, senior market analyst at Oanda, said:US equity markets are poised to start on a positive note once again, looking to build on the numerous record highs recorded in recent weeks on the prospect of a brighter global economic outlook.With corporate earnings season now underway and the number of companies reporting on the third quarter picking up quickly – 56 S&P 500 companies to release numbers this week – investors will be looking to the figures to add further support to the rally. This is particularly the case given the quieter week we have on economic data side, with predominantly tier two figures scheduled for release.10.45am BSTin a way, now is all about snap elections.

Thatcher and Reagan’s neoliberalism orthodoxy is rightly being challenged. The new consensus must lead to a more active and effective role for the stateFree-market capitalism is on trial. In the UK, Labour party leader Jeremy Corbyn accuses neoliberalism of increasing homelessness, throwing children into poverty, and causing wages to fall below subsistence level. For the defence, the Conservative prime minister, Theresa May, cites the immense potential of an open, innovative, free-market economy. Similar “proceedings” are taking place around the world.Just a quarter-century ago, the debate about economic systems – state-managed socialism or liberal democracy and capitalism – seemed to have been settled. With the Soviet Union’s collapse, the case was closed – or so it seemed.

FCA boss raises alarm over growing debt burden of young people in UK as number of insolvent 18- to 34-year-olds in the UK jumps by a thirdThe head of Britain’s financial regulator has warned that a growing number of young people are having to borrow to cover basic living costs.Andrew Bailey, the chief executive of the Financial Conduct Authority, told the BBC that while it had not yet reached crisis levels, it was worrying that debt among young people was growing. He talked about a shift in the generational pattern of wealth and income.Related: Business Today: sign up for a morning shot of financial newsRelated: The UK's debt crisis – in figures Continue reading...

Experts predict figure of 3% for September, adding to pressure on Bank of England to hike rates for first time in decadeUK inflation is expected to hit a five-year high this week, outstripping growth in pay packets and putting renewed pressure on the Bank of England to raise interest rates.City economists forecast that the consumer price index (CPI) will be shown to have risen to 3% in September, up from 2.9% a month earlier, its highest level since 2012.Related: UK has highest inflation rate among world’s top economies, says OECDRelated: UK cost-of-living crisis grows as dearer imports push inflation to 2.9%Related: Why central banks are not hitting their 2% inflation target | Nouriel Roubini Continue reading...

David Winnick says substantial regeneration work in Blakenall and surrounding areas was carried out a few years ago as a result of Labour’s New Deal, and Roy Boffy calls for massive investment in productive industriesGiles Fraser (Loose canon, 13 October) refers to the deprivation he found in parts of Blakenall, Walsall, where some time ago he was temporarily a priest. It is indeed the case that far too many try to manage on a totally inadequate income. As for people spending all day in their dressing gowns, which he mentions, I would simply point out that when unemployment was even higher there than nationally in the Thatcher years, whenever job vacancies were advertised locally the numbers who applied were far in excess of those needed. Substantial regeneration work in Blakenall and the surrounding areas was carried out a few years ago as a result of Labour’s New Deal for Communities programme.As for the present, a Church of England primary school within walking distance of Blakenall was the subject of a Commons debate I initiated in April last year. The school, built in 1862, is damp throughout, full of holes and in some classrooms it is not possible to even open the windows. When the schools minister visited the school, at my invitation, he was heard by local reporters to say “Awful, awful”. Yet once again an application for substantial work to be undertaken has been turned down by the Education Funding Agency. Continue reading...

High court may ask five former Lloyds directors to explain circumstances of rescue at height of financial crisisA £600m case is due to begin in the high court this week which is expected to lead to five former directors of Lloyds Banking Group being asked to explain the circumstances that led to the rescue of HBOS during the height of the financial crisis.The bank’s former chair Sir Victor Blank and former chief executive Eric Daniels are among those named in the case brought by Lloyds shareholders who argue they would not have voted through the takeover of HBOS if they had been given the true picture of its financial health. Continue reading...

The institutions should match fine words about eradicating poverty with action to help one of the world’s most fragile statesIt is fair to say that Somalia was not top of the agenda at this year’s annual meetings of the International Monetary Fund and World Bank. Finance ministers and central bank governors were too busy chewing the fat over the state of the global economy and the threat posed by cybercrime to pay much attention to a poor country with a population of 14 million people in the Horn of Africa. Or, indeed, pay it any attention at all.Yet the decisions the IMF and World Bank make – or don’t make – about Somalia matter. They obviously matter to the 400,000 Somali children with acute malnutrition and 3 million people living in crisis or emergency food security conditions. They also matter in a wider sense, because both institutions are keen to demonstrate that they are now truly progressive and dedicated to the elimination of poverty and tackling inequality. Somalia is a good test of whether the grand plans and the lofty rhetoric actually amount to anything, because this is a country that needs help – and it needs it now.Related: Somaliland's hunger crisis: ‘The world doesn't respond until children are dying'Related: Globalisation: the rise and fall of an idea that swept the world Continue reading...

The IMF has finally departed from 40 years of orthodoxy on taxation and economic growth, but it’s unlikely to persuade anyone in the US governmentThe International Monetary Fund has been on quite a journey from the days when it was seen as the provisional wing of the Washington consensus. These days the IMF is less likely to harp on about the joys of liberalised capital flows than it is to warn of the dangers of ever-greater inequality.The fund’s latest foray into the realms of progressive economics came last week when it used its half-yearly fiscal monitor – normally a dry-as-dust publication – to make the case for higher taxes on the super-rich. Continue reading...

But Mark Carney should still be on his guard when he goes before the revamped Treasury committee and new chair Nicky MorganMark Carney faces a revamped Treasury committee on Tuesday. The Bank of England governor will no doubt be relieved by the departure of Jacob Rees-Mogg, who criticised the Bank’s comments during the Brexit referendum campaign, to Carney’s evident irritation.Labour’s ultra-direct John Mann is still there but former chairman Andrew Tyrie, who stood down as an MP in June, has been replaced by Nicky Morgan. The Conservative former education secretary has big shoes to fill – Tyrie built a reputation as a forensic, independent inquisitor. Continue reading...

David Davis and Liam Fox were adamant leaving the EU would be easy. But with talks deadlocked, a no-deal scenario is horribly likelyA little over a year ago, David Davis was confident that Brexit Britain would soon strike new trade deals across the world. They could be negotiated and agreed without the difficulties and delays of which Remainers warned. All parts of the global trade jigsaw would fall quickly and neatly into place. “So be under no doubt,” the Brexit secretary wrote in an article for the ConservativeHome website in July 2016, “we can do deals with our trading partners, and we can do them quickly... I would expect that the negotiation phase of most of them to be concluded within between 12 and 24 months. Trade deals with the US and China alone will give us a trade area almost twice the size of the EU, and of course we will also be seeking deals with Hong Kong, Canada, Australia, India, Japan, the UAE, Indonesia – and many others.”Around the same time, international trade secretary Liam Fox predicted that a free-trade deal with the EU, giving us continued access to EU markets after Brexit, “should be one of the easiest in human history”. His fellow Tory, the hardline Eurosceptic John Redwood, also saw no problems in realising this great reconfiguration of British interests around the world. “Getting out of the EU can be quick and easy – the UK holds most of the cards in any negotiation,” he declared. Continue reading...

The state-sponsored pension rescue fund is creaking under the weight of final-salary schemes whose sponsoring companies can no longer support themPensions are the tail wagging the economic dog – sometimes in the strangest ways. Take the high-profile collapse at Monarch Airlines. It’s a sorry story of corporate raiders facing accusations of asset-stripping one of the country’s largest holiday airline businesses and leaving taxpayers to pick up the tab. The once strong, if slightly dated, brand was taken over by private equity financiers to try to make it into another Ryanair.When that failed, it appears the owners could still walk away with a profit, following a sophisticated offloading of the debts, including the ailing pension fund – once a major creditor to the business. The fund, which is in the state-sponsored Pension Protection Fund (PPF), may have been left short when it first collapsed in 2014. Continue reading...

Austerity has starved their families of help. There are now 72,000 children are in care, and we don’t know what to doThe number of children being taken into care in England has risen every year since the financial crash of 2008. The figure now stands at 72,000. As failures of progress go, I can’t think of anything else that’s quite so singularly bleak as this steady, inexorable rise in childhood misery, pain and trauma.Related: Austerity policy blamed for record numbers of children taken into care Continue reading...

Chancellor backtracks after saying Conservatives should stop fighting and focus on ‘opponents’ on other side of tableThe chancellor has backtracked on his description of the EU’s Brexit negotiators as “the enemy” after he tried to portray the feuding UK cabinet as united against Brussels.Philip Hammond, a leading remainer in the cabinet and one of the most vocal advocates for a soft Brexit, said the Conservatives should stop fighting among themselves and concentrate on the other side of the Brexit table.In an interview today I was making the point that we are united at home. I regret I used a poor choice of words (1/2).We will work with our friends and partners in the EU on a mutually beneficial Brexit deal #noenemieshere (2/2). Continue reading...

All the day’s economic and financial news, as new Chinese trade figures beat expectations

This muddled government insisted it was pro-apprenticeships, then made it harder for businesses to employ them. How will they fix this mess?Somewhere in my attic there is a fading, yellowing scroll with a candle-wax seal handed to me for signature in 1982. It detailed a bargain between me and South Essex Recorders, part of Home Counties Newspapers, trading in this instance as the Newham Recorder in east London. I’m still not sure who got the best of the deal: for five years they couldn’t sack me – unless in extremis – and I couldn’t leave.Like many journalists of my generation, I was an apprentice. I didn’t go to university – I had the grades, I just didn’t want to study any more. I did a year at college and then learned from a roomful of brilliant, crazy, boozy, massively supportive older journalists. I’m for everyone who wants to go to university. Journalism now is full of those who did so. But I’m also for apprenticeships.Related: UK apprenticeship funding changes attacked by Labour Continue reading...

The president, true to form, has been teasing the public about the identity of the next Fed chair, and Wall Street is watching with interest – and some anxietyThe Federal Reserve chair, Janet Yellen, will end her term in February, and Donald Trump has yet to say if he will follow tradition and renominate the Obama-appointed incumbent to a second term – or nominate someone of his own choosing.Related: The great unwinding: Fed begins slow demise of its post-crash stimulus Continue reading...

The Reagan-Thatcher revolution changed society’s beliefs about taxes for the worse. It’s a good thing the IMF agrees with Labour that we need a rethink if we want economic growth shared fairlyThe International Monetary Fund has been on quite a journey from the days when it was seen as the provisional wing of the Washington consensus, an ideology that promoted the false idea that growth was turbo-charged by scrapping welfare policies and pursuing privatisations. These days the IMF is less likely to harp on about the joys of liberalised capital flows than it is to warn of the dangers of ever-greater inequality. The Fund’s latest – and welcome – foray into the realms of progressive economics came this week when it used its half-yearly fiscal monitor – normally a dry-as-dust publication – to make the case for higher taxes on the super-rich. Make no mistake, this is a significant moment.For almost 40 years, since the arrival of Margaret Thatcher in Downing Street and Ronald Reagan in the White House, the economic orthodoxy on taxation has been that higher taxes for the 1% are self-defeating. Soaking the rich, it was said, would punish initiative and lead to lower levels of innovation, less investment, weaker growth and, therefore, reduced revenue for the state. As last week’s Conservative party conference showed, this line of argument is still popular. Minister after minister took to the stage to warn that Jeremy Corbyn’s tax plans would lead to a 1970s-style brain drain. Continue reading...

Britain’s stock market has closed at a new high tonight, as fears over a hard Brexit weigh on sterling

Christine Lagarde says quicker progress is needed in talks over Britain’s EU exit and people must be put before businessChristine Lagarde, the managing director of the International Monetary Fund , has said it is unimaginable that Britain would leave the EU without a deal in March 2019, as she called for faster progress in the slow-moving Brexit talks.Speaking in Washington on Thursday to mark the start of the IMF’s annual meeting, Lagarde said negotiators had to put the interests of people before those of business, and that there was a need to end uncertainty.Related: Brexit talks in 'disturbing deadlock' over divorce bill, says EU negotiatorRelated: The eurozone strikes back – why Europe is booming again Continue reading...

Lib Dems say board is ‘job-creation scheme’ for international trade secretary after it emerges he is sole official memberA new board of trade unveiled by the government has been met with derision after it was revealed that the international trade secretary, Liam Fox, is the only official member.Announcing the board on Thursday, the Department for International Trade said it would “ensure the benefits of free trade are spread throughout the UK”, naming more than a dozen advisers to the body including former ministers and business leaders. Continue reading...

This potential Tory leader needs to know why a policy that has devastated the lives of millions – a policy he still champions – causes such outrageA week ago I confronted Jacob Rees-Mogg with other protesters at a public meeting in Manchester, as part of the People’s Assembly Against Austerity’s week of action against the Tories. He is an up-and-coming figure in the Conservative party with support to be the next leader, so I am proud that I was able to convey directly to him the message of 50,000 people who had marched through Manchester the day before.I am proud that I was able to convey directly to him the message of 50,000 people who marched through ManchesterRelated: Why Jacob Rees-Mogg for Tory leader is no laughing matter | Michael Segalov Continue reading...

Economic body’s Fiscal Monitor shows Australia’s 30-year inequality growth is similar to the US, India, China and the UKAustralia is among countries with the highest growth in income inequality in the world over the past 30 years, according to the International Monetary Fund.Vitor Gaspar, the IMF’s director of fiscal affairs, has told an audience at the launch of the IMF’s latest Fiscal Monitor that Australia’s income inequality growth has been similar to the US, South Africa, India, China, Spain and the UK since the 1980s.Related: IMF tackles stalled wages growth with unusually radical thinking | Greg JerichoRelated: Income inequality in Australia: see how much the 1% earn in your area Continue reading...

While they have never been bedfellows, the IMF’s recent report supporting higher taxes for the rich will feel like an endorsement for John McDonnellTo put it mildly, the Labour party’s relationship with the International Monetary Fund has not always been a happy one.Memories of 1976, when an IMF team forced Jim Callaghan’s government to cut public spending in return for an emergency loan, are powerful to this day.Related: IMF: higher taxes for rich will cut inequality without hitting growth Continue reading...

The MSCI All-Country index is at a new peak, as Spain’s IBEX rebounds and Japan’s Nikkei hits its highest level since 1996

London and Brussels press ahead with proposal already rejected by US and other World Trade Organisation membersBritain and the EU have formally informed members of the World Trade Organisation how they plan to split up the EU’s tariff quotas and farm subsidies after Brexit in a plan already rejected by the White House.

Analysis supports tax strategy of Jeremy Corbyn’s Labour in UK – and undermines that of Donald Trump in USHigher income tax rates for the rich would help reduce inequality without having an adverse impact on growth, the International Monetary Fund has said.The Washington-based IMF used its influential half-yearly fiscal monitor to demolish the argument that economic growth would suffer if governments in advanced Western countries forced the top 1% of earners to pay more tax.

The US academic’s behavioural research shows how to focus economics more decisively on real and important problems• What is behavioural economics? The winner of this year’s Nobel prize in economics, Richard Thaler of the University of Chicago, is a controversial choice. Thaler is known for his lifelong pursuit of behavioural economics (and its subfield, behavioural finance), which is the study of economics (and finance) from a psychological perspective. For some in the profession, the idea that psychological research should even be part of economics has generated hostility for years.Not from me. I find it wonderful that the Nobel Foundation chose Thaler. The economics Nobel has already been awarded to a number of people who can be classified as behavioural economists, including George Akerlof, Robert Fogel, Daniel Kahneman, Elinor Ostrom, and me. With the addition of Thaler, we now account for approximately 6% of all Nobel economics prizes ever awarded.Related: What is behavioural economics? Continue reading...

Following IMF’s World Economic Outlook, here are three scenarios for global economy in medium termFor the past few years, the global economy has been oscillating between periods of acceleration (when growth is positive and strengthening) and periods of deceleration (when growth is positive but weakening). After more than a year of acceleration, is the world heading towards another slowdown, or will the recovery persist?The current upswing in growth and equity markets has been going strong since the summer of 2016. Despite a brief hiccup after the Brexit vote, the acceleration endured not only Donald Trump’s election as US president but the heightening policy uncertainty and geopolitical chaos that he has generated. In response to this apparent resilience, the International Monetary Fund, which in recent years had characterised global growth as the “new mediocre”, upgraded its World Economic Outlook in July.Related: Won't get fooled again: IMF warning shows it's learned from past errors Continue reading...

The rupture of 2008 presents a chance to throw out our iniquitous system that busts the planet – here are some ideasWe are still living in the long 20th century. We are stuck with its redundant technologies: the internal combustion engine, thermal power plants, factory farms. We are stuck with its redundant politics: unfair electoral systems, their capture by funders and lobbyists, the failure to temper representation with real participation.And we are stuck with its redundant economics: neoliberalism, and the Keynesianism still proposed by its opponents. While the latter system worked very well for 30 years or more, it is hard to see how it can take us through this century, not least because the growth it seeks to sustain smacks headlong into the environmental crisis.Related: It's time to revive public ownership and the common good | Anne KarpfLand value tax and community right to buy help to create what I call a politics of belongingRelated: Norway’s $885bn-nil advantage in Britain’s sea of social troubles Continue reading...

‘Universal basic services’ costing about £42bn could be funded through higher taxes, say Jonathan Portes and academicsFree housing, food, transport and access to the internet should be given to British citizens in a massive expansion of the welfare state, according to a report warning the rapid advance of technology will lead to job losses.Former senior government official Jonathan Portes and Professor Henrietta Moore, director of University College London’s Institute for Global Prosperity make the call for a raft of new “universal basic services” using the same principles as the NHS. They estimate it would cost about £42bn, which could be funded by changes to the tax system.Related: OBR has finally admitted the UK's productivity hasn't bounced back | Phillip Inman Continue reading...

Fund’s latest World Economic Outlook also cautions global economic recovery may stall because of poor wages growthThe International Monetary Fund has warned the world’s richest nations to have a greater sense of urgency about climate change, a day after the former Australian prime minister, Tony Abbott, delivered a bizarre speech to a London-based thinktank claiming climate change was “probably doing good”.The IMF’s latest World Economic Outlook (WEO), released overnight, has dedicated an entire chapter to the impact of weather shocks and climate change on global economic activity.Related: Global economic recovery may not last, warns IMFRelated: Won't get fooled again: IMF warning shows it's learned from past errors | Larry Elliott Continue reading...

Mixed news for economy with trade gap biggest in 11 months but manufacturing and construction activity increasesThe UK’s trade position with the rest of the world worsened in August, as the weak pound failed to lift sales of goods abroad.The overall trade deficit widened to £5.6bn in August from £4.2bn in July, for the biggest gap between imports and exports in 11 months, according to the Office for National Statistics (ONS).Related: UK productivity estimates must be 'significantly' lowered, admits OBR Continue reading...

The big economic question now is whether capitalism in the UK is capable of generating enough gains from growthProductivity isn’t everything, observed the Nobel laureate Paul Krugman, but in the long run it is almost everything. For Britons, the worrying news is that the growth in productivity – the amount of stuff we produce every hour – has slowed to a snail’s pace. The Office for Budget Responsibility, after maintaining a sunny disposition in the face of ever darkening clouds of data, now accepts that we are unlikely to return to pre-crash levels of productivity growth. Below the OBR’s seemingly innocuous statement is the “everything” that Mr Krugman alludes to. Before the crash, we would have expected living standards to double every 40 years.If we were to carry on in the current manner, it would take more than two centuries to do so. Unless something drastic happens we face not just losing a decade, but a future.

Fund cuts UK and US growth forecasts, and also tells governments not to get complacent in its latest World Economic OutlookThe International Monetary Fund has said the global economy’s recent recovery may not last, despite a pickup in activity in all western countries except the UK.Marking the 10th anniversary of the onset of the financial crisis, the IMF said in its World Economic Outlook (WEO) there was a risk that governments could be lulled into a false sense of security by booming markets and policymakers needed to guard against complacency.Related: Won't get fooled again: IMF warning shows it's learned from past errors Continue reading...

Government’s independent forecaster says average 0.2% growth in productivity over past five years is more accurate than 1.6%The government’s independent economic forecaster has admitted it will need to “significantly” lower its estimates for the productivity of UK workers after a decade of stagnant growth since the financial crisis.

Britain imported more from the rest of the world than ever before in August, but managed to export more to Europe

A new study by neuroeconomists suggesting that women’s biology could make them a soft touch covers overly familiar gendered groundRichard Thaler has just won the Nobel prize for economics for his work explaining how human choice can be influenced. The insight that people make decisions for all sorts of reasons, not all of them based on a cool assessment of the consequences, led Professor Thaler to global acclaim as the slayer of homo economicus. Homo economicus was an entirely fictional character who decided whose turn it was to put the bin out on rational grounds. Thaler was, among his lesser achievements, David Cameron’s favourite economist, his nudge theory credited with encouraging people to stop smoking and eat more healthily.What Professor Thaler, in his moment of glory, may not yet realise is that his insights may already be on their way to extinction, just like homo economicus. He is being nudged out of the future by biology: to be precise, by neuroeconomics, which like his is an interdisciplinary science but one that studies brain activity, or the lack of it, to draw conclusions about why people behave as they do.Related: Stereotype that women are kinder and less selfish is true, claim neuroscientistsRelated: Why don't women win Nobel science prizes? | Hannah Devlin Continue reading...

The forecaster’s wishful thinking has led to an £18bn shortfall in Philip Hammond’s funds to soften the Brexit transitionThere is a moment when gamblers realise that betting on the same horse after a string of losses is hopeless.That moment has arrived at the Office for Budget Responsibility (OBR) after officials at the government’s economic forecaster finally gave up betting that Britain’s labour productivity was about to race to the head of the international pack.Related: UK productivity estimates must be 'significantly' lowered, admits OBR Continue reading...

Fund failed to foresee 2007 financial crisis, but this time around, it is determined not to miss signs of trouble in global economyThe International Monetary Fund’s World Economic Outlook (WEO) runs to almost 300 pages, but it could be summed up by the title of the song with which the Who always brought their gigs to an end: Won’t Get Fooled Again.In 2007, the IMF ended up with its reputation severely tarnished after failing to notice that the global economy was about to suffer its biggest recession since the 1930s Great Depression.Related: Global economic recovery may not last, warns IMF Continue reading...

America’s 2 million truckers have long been mythologised in popular culture. But self-driving trucks are set to lay waste to one of the country’s most beloved jobs – and the fallout could be hugeJeff Baxter’s sunflower-yellow Kenworth truck shines as bright and almost as big as the sun. Four men clean the glistening cab in the hangar-like truck wash at Iowa 80, the world’s largest truck stop.Baxter has made a pitstop at Iowa 80 before picking up a 116ft-long wind turbine blade that he’s driving down to Texas, 900 miles away.Related: More than 70% of US fears robots taking over our lives, survey findsRelated: 'From heroes to villains': tech industry faces bipartisan backlash in WashingtonRelated: Rise of the robocar: are connected cars safer, or a target for hackers? Continue reading...

Economists say mistake helps support case for monetary policy committee to raise rates as early as next monthThe UK’s official statistics agency has added to the pressure on the Bank of England over whether to raise interest rates as soon as next month after admitting it underestimated the pace of rising labour costs.