MPs will hear assessment this month as new chancellor tries to pin blame on Tories for tough decisions aheadRachel Reeves is to provide an emergency assessment of the government's spending inheritance before MPs leave for their summer break as she attempts to pin the blame for looming tough tax and spending decisions on the defeated Tories.The new chancellor used her first speech since arriving at the Treasury to insist there would be no deviation from Labour's hardline stance on reducing the national debt despite being bequeathed the worst set of circumstances since the second world war". Continue reading...
CBI among a number of organisations to call for tough decisions that help companies to attract investmentThe new Labour government must stay laser-focused" on capitalising on the positive signs in the UK economy and delivering growth, influential business groups have said.In Keir Starmer's first press conference as prime minister on Saturday, he pledged to chair new mission delivery boards" to drive through change" and enact Labour's manifesto commitments, which include stimulating economic growth, investing in clean energy, and improving opportunity through a new skills agenda. Continue reading...
by Pippa Crerar, Jessica Elgot and Severin Carrell on (#6P1XQ)
Chancellor will use first speech to declare national mission' that involves unblocking infrastructure and private investmentRachel Reeves has pledged to fix the foundations" of the British economy, revealing an immediate plan to boost growth by unblocking infrastructure and private investment in her first speech as chancellor.In an address to business leaders, she will say that economic growth for all parts of the country is a national mission" and that she will take tough decisions to deliver on the new government's mandate.A shake-up of planning regulation, including on green belt land, as well as new housing targets.Talks to end the junior doctors' strikes. Wes Streeting will meet the British Medical Association union on Tuesday.A recruitment advert for a new border security commander, which will go live on Monday.A reopening and expansion of the government's teacher recruitment campaign.A pledge to Ukraine that military aid pledged by Rishi Sunak in April is guaranteed", alongside a commitment to boost UK defence spending to 2.5% of GDP. The promises came from the new defence secretary, John Healey, who travelled to meet Ukraine's president, Volodymyr Zelenskiy. Continue reading...
Will the credits roll as Starmer wins big in 2029 or will Reeves be boxed in by her own fiscal rules and leave the economy in a worse state?Just as in the movie Sliding Doors, there are two endings to the story that began on Thursday with Labour's victory in the 2024 election. One is happy, one is sad, and either is possible. What happens to the economy over the next five years will determine which one materialises.Let's start with the happy ending: the one where the credits roll as Keir Starmer wins big for a second time in 2029. The script for that one starts slowly. The scale of Labour's win means it doesn't have to rush things but has time to put in place the supply-side reforms, such as changes to planning rules, that will boost growth. Structural changes don't bear fruit overnight but by the early 2030s it should be possible to notice the difference. Continue reading...
Labour's new prime minister is in a position of strength in relation to Brexit. He must be bold for Britain's sakeThe first moves of a new prime minister can have lasting consequences. When Clement Attlee went from being wartime deputy prime minister to Labour prime minister in 1945, he had little alternative but to offer the nation the peacetime equivalent of Churchill's blood, toil, tears andsweat.The age of austerity was born as the UK rebuilt its wartorn economy. Shortages necessarily involved rationing until a fully fledged peacetime economy could be restored. The contrast with the Conservative-Liberal Democrat policy of austerity from 2010 onwards could hardly have been starker. Continue reading...
The influential policy wonk and new MP for Swansea West sets out how the government can show it means businessChoose your fighter: mission-driven government or radical incrementalism? Evangelical academic or nerdy policy wonk? Economist Mariana Mazzucato's idea of reconceptualising government around a few long-term goals inspired Keir Starmer's five missions". Former chief executive of the Resolution Foundation Torsten Bell suggests a more pragmatic approach, set out in this book, published midway through the election campaign. He has just become MP for Swansea West, and will be a key figure in Labour's Treasury. However, the new government will have to decide - in rhetoric and action - which is more convincing.Bell's case for radical incrementalism" rests on three pillars. First, that the UK is in deep trouble; we've combined abysmal levels of productivity growth, resulting in stagnant real wages and slow growth in living standards, with persistently high levels of inequality and rising levels of severe deprivation. As he notes, this should be enough to put to bed the zombie idea that Britain faces a trade-off between growth and equality: being more normal' means becoming more prosperous and more equal." Continue reading...
by Richard Partington and Kiran Stacey on (#6P13X)
Approach made to Nick Boles as Starmer prepares to announce immediate changes to regulationsLabour has approached a former Conservative minister to help steer through its proposals to bulldoze planning rules, with a flurry of changes expected within days to get Britain building" millions of new homes.Nick Boles, who was a planning minister in David Cameron's coalition government, has been approached for a review of the UK's National Planning Policy Framework, with the aim of making it easier to build homes, laboratories, digital infrastructure and gigafactories. Continue reading...
Number is close to what was expected, as unemployment rate creeps above 4% for first time in two yearsThe labor market started to ease in June, with 206,000 jobs added to the US economy last month, according to new labor data from the Bureau of Labor Statistics (BLS).The number of new jobs is close to what economists had expected for the month. The figures represent a slight cooling compared to May, when the economy added a revised 218,000 jobs. Continue reading...
Brussels move to end tax loophole exploited by China-linked marketplaces could also hit Shein's planned London listingThe EU is moving forward with plans to impose customs duty on cheap goods in a shift that could hit imports from online retailers and harm a hoped-for London listing by the fast-fashion seller Shein.The potential change comes amid growing disquiet among retailers based in mainland Europe, the UK and the US about rising competition from the Chinese-linked marketplaces Shein and Temu, which exploit a loophole that excludes low-value items from import duty. Continue reading...
Handing vital infrastructure to private investment companies will generate windfalls for investors and leave the rest of us worse off. We need a better plan
Simon Roberts says consumer caution not surprising given everything households have been through in the cost of living crisis'Services is estimated to have the highest annual rate in the eurozone in June, of 4.1% - stable compared with May.This is followed by food, alcohol & tobacco at an annual rate of 2.5%, down from 2.6% in May; industrial goods at 0.7%, stable compared with May; and energy at 0.2%, down from May's 0.3% rate. Continue reading...
Economic growth allows the few to grow ever-wealthier. Ending poverty and environmental catastrophe demands fresh thinkingEconomic growth will bring prosperity to all. This is the mantra that guides the decision-making of the vast majority of politicians, economists and even human rights bodies.Yet the reality - as detailed in a report to the United Nations Human Rights Council this month - shows that while poverty eradication has historically been promised through the trickling down" or redistribution" of wealth, economic growth largely gushes up" to a privileged few. Continue reading...
by Richard Partington Economics correspondent on (#6NXSK)
Pressure on household finances eases as shop price rises slow to 0.2% and petrol costs drop for second monthBritain's next government is poised to benefit from easing pressure on household finances after a slowdown in inflation in stores and a fall in fuel prices, but costs remain too expensive" for many families.Figures from the British Retail Consortium (BRC) show that annual UK shop price inflation cooled last month to 0.2%, down from 0.6% in May - the slowest pace since October 2021 - as retailers cut the prices of many of their key products, including butter and coffee. Continue reading...
Pro-business government says measure is needed due to shrinking population and shortage of skilled workersCompanies in countries worldwide may be toying with the idea of implementing shorter working weeks, but in Greece employees have been told that, henceforth, they can put in a sixth day of labour in an unorthodox step aimed at turbocharging productivity.After outpacing other Europeans in terms of economic growth, the nation once at the heart of the continent's worst financial crisis has bucked the trend again, introducing a 48-hour working week. The measure, decried as barbaric" by unions, takes effect from Monday. Continue reading...
Nick Hartley, who has died aged 80, was a respected economist and in the 1990s served as head of energy, economics and statistics at the Department of Trade and Industry.His reputation was made as chief economist at Oftel (the Office of Telecommunications) for six years from 1984. He was then chief economist at the Department of the Environment (1990-94), before becoming head of energy, economics and statistics at the DTI, a post, he liked to point out, once held by Harold Wilson. In 1996, Nick joined the economic consultancy Oxera, from where he was seconded to the Cabinet Office to head up a report on energy policy. Continue reading...
Readers respond to the economist Paul Krugman's article about the effects of the Tories' most defining policy during the coalition yearsPaul Krugman (How the unforced error' of austerity wrecked Britain, 28 June) hits the nail on the head when he says that there was no economic case for the austerity that the coalition government foisted on us in 2010, the effects of which are still with us. It was a political choice on the part of George Osborne and David Cameron to advance their class interest, cleverly camouflaged by stories of Labour profligacy when the economic crisis to which it was the alleged response was caused by a surfeit of financial deregulation advocated by Osborne and Cameron and supinely accepted by Labour.The American political economist Clara E Mattei, in her 2022 book, The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism, showed how similar policies were applied inBritain and Italy after the first world war, essentially to keep workers in their place, and how in Italy they led to the rise of Mussolini and fascism.Let us be warned.
Live, rolling coverage of business, economics and financial markets as Unite suspends Tata Steel strike and Marine Le Pen's National Rally set to be largest party in FranceUK mortgage approvals dipped slightly in May, but were right in line with expectations, according to new data from the Bank of England.Net mortgage approvals for house purchases fell from 60,800 in April to 60,000 in May, while approvals for remortgaging decreased slightly from 29,900 to 29,600 over the same period, the Bank said.Gridlock: The most likely outcome remains a hung parliament in which neither the far right nor the united left nor the Macron's centrists can muster a majority. In this case, any (new) government would not get much done.Worse than gridlock: Although the united left and RN are polar opposites on issues of migration, culture and identity, they have all opposed Macron's pro-growth reforms. As a result, we see a risk that Le Pen's party and parts of the left may still join forces in a hung parliament on a few select issues to soften Macron's pension reform and enhance the purchasing power" of citizens, for instance through lower VAT on energy products or via additional subsidies.Marine Meloni: With a significantly lower probability than the first two scenarios, Le Pen's party may still win a majority of seats and install RN boss Jordan Bardella as prime minister. If so, she would probably focus on winning the 2027 presidential election, staying on the more moderate track which she has signalled during the campaign. She may concentrate on some signature policies (e.g. being tough on immigration) rather than on expensive or disruptive fiscal promises. Put differently, Le Pen may try to largely follow the example of Italy's prime minister Giorgia Meloni. To do so, she may possibly explain to RN voters after a lengthy fiscal review that most of her original fiscal ideas could only be implemented slowly over time - or only if she became president in 2027. Continue reading...
by Kalyeena Makortoff Banking correspondent on (#6NX2W)
Exclusive: Rise in dealmaking likely to be reflected in spring bonus season as interest rate hike cycle endsLondon's investment bankers are expected to rake in bigger bonuses this financial year, as the City begins to recover from a two-year slump in deals caused by surging interest rates.Demand for investment banking services - such as facilitating mergers and acquisitions, advising companies and governments on fundraising, and underwriting new stock and bonds - was hit by a sharp increase in borrowing rates after the pandemic, as central banks acted to tame runaway inflation. Jobs and pay were cut as investment banks sought to reduce costs. Continue reading...
Agustin Carstens says world economy on course for smooth landing' after inflation but political turmoil poses riskRising government debt levels could disturb global financial markets, the head of the body that advises central banks said on Sunday before France's high-stakes parliamentary elections.Agustin Carstens, the general manager of the Bank for International Settlements (BIS), said the world economy was on course for a smooth landing" from the inflation crisis, but he warned that policymakers, especially politicians, needed to be careful. Continue reading...
Some look beyond typical metrics like GDP and job data, but these alternatives shouldn't be taken seriouslyIs the country heading towards a recession? Ask 10 economists and you'll likely get 10 different answers. Which is why some people have given up on the traditional data - GDP, jobs, etc - and have instead recently been tinkering with more unusual economic indicators to help them guide their companies. Here are a few that I've seen. Continue reading...
Rachel Reeves will be the beneficiary of UK growth but faces a world still trying to shake off the 15-year Great StagnationDown the years the Conservative party has taken some heavy election beatings but the one in prospect this week could be of a different order of magnitude.Assuming the polls are right - and they have been consistent since the start of the campaign - the Tories will do worse even than in 1906, their previous nadir. Back then, the Conservatives and their Liberal Unionist allies won just 156 seats, a repeat of which on Thursday would now be considered a good result. Continue reading...
Costs, the climate crisis and choice are all factors in a demographic revolution presenting huge challenges for government The falling birthrate threatens a disaster so costly no politician dares think about itHaving children has become an unaffordable luxury for many of her generation, says Vanessa, a 35-year-old project manager living in Brighton.My friends who managed to start a family, without exception, all received large sums of money from their parents to get on the property ladder. For those of us not fortunate enough, we are trapped in the rental market, largely with insecure, poorly paid employment." Continue reading...
By harnessing the power of pension funds, it truly can become the party of growthSince its foundation in 1900, the Labour party has had a Janus-headed attitude to capitalism. It needs capitalism to be successful, dynamic and job creating, even while it instinctively distrusts capitalism, with its capacity to generate extreme inequality, invest too little, cut corners and treat workers exploitatively. But its past efforts at improving things - nationalisation, top-down planning, championing strong trade unions or simply (as New Labour did) largely giving capitalism its head - have not been notably successful. It has been a standoff that the Conservative party has ruthlessly exploited.The seismic importance of 4 July is that Conservatism's approach to wealth generation - trying to shrink the state whose size and excess taxes supposedly crowds out" suppressed investment and enterprise - is exposed as a dead end of stagnant living standards and eviscerated public services. Keir Starmer, boxed in by this dreadful legacy, has declared that Labour will become the party of growth and wealth generation. Only thus can sustained tax revenues be generated to repair the ravages of the past 14 years. My bet is that he has a better than even chance of pulling it off - and transforming Labour into Britain's natural party ofgovernment. Continue reading...
A Conservative campaign video mocks Angela Rayner for wanting a European model of employment. But it's just what British workers needTo the stirring strains of the Marseillaise, a monochrome Angela Rayner reels off her plans for workers' rights, as a red beret and a Gallic moustache jiggle around her head. Angela Rayner's Britain?" demands the title, alongside a tiny tricolour.Tory messaging has become ever more bizarre as this gaffe-strewn campaign lurches towards a close, but Thursday's example, warning that Labour may make the UK's labour market un peu French, hit new heights of weirdness. Continue reading...
UK GDP rose by 0.7% in January-March, according to the latest quarterly national accounts which show the state of the UK economyKathleen Brooks, research director at XTB, has spotted good news on the economy in today's GDP report:Within the service sector, the highest rate of growth was for the professional, scientific and technical activities sectors, which rose by 1.8%.This was driven by a 7.2% increase in research and development and a 3.3% increase in legal activities. These are high value activities for the UK economy, and growth in this area bodes well for the future of the UK. This may go some way to mitigating the decline in business investment last quarter.The latest UK GDP data shows that Britain's economy grew quicker than expected in the first quarter of the year, expanding by 0.7% from the previous quarter. This shows that the UK economy still showed slow growth, rather than the most timely monthly estimate that showed no growth in April 2024.Particularly, services grew by 0.8% on the quarter with widespread growth across the sector; elsewhere the production sector grew by 0.6% while the construction sector fell by 0.6%. Continue reading...
The Tories' cuts were an obvious economic blunder, but their disastrous consequences are still piling up - and there is little hope Labour will reverse the damageUnless the polls are wildly inaccurate, the Conservative party is heading towards a catastrophic defeat in the coming election.All across the rich world, voters are angry at their governments - they blame politicians for a burst of inflation that happened almost everywhere and is now subsiding almost everywhere, including in the UK. But the Conservatives deserve defeat more than most: they took power 14 years ago promising to deliver responsible policies and economic success. Instead they have presided over economic stagnation and a collapse in public services. Continue reading...
Shadow business secretary says trying to rejoin single market or customs union would cause more difficulties'Labour would rather have stability in the UK's relationship with Europe than try to seek accelerated economic growth by rejoining the EU's single market or customs union, the shadow business secretary has said.Addressing the British Chambers of Commerce (BCC) conference on Thursday, Jonathan Reynolds acknowledged that Brexit had been very difficult for businesses" because it had erected trade barriers, but said reopening the debate would be worse. Continue reading...
The party's roadmap must favour comprehensive reforms, carried out at the same time, and sooner rather than laterAs in many other developed countries lately, the two major political parties in the UK have embraced economic growth as their top policy priority. After the volatile 49-day experience of Liz Truss's government and its dash for growth" in 2022, however, both parties emphasise that there are no financial shortcuts. The focus, instead, is on devising measures to boost productivity, resource allocation, and growth over the long term. In this respect, the opposition Labour party is ahead of the ruling Conservatives, though both are still working out the details of actual implementation.Buoyant, durable, sustainable and inclusive growth is essential for a country where the older generations risk seeing their children end up worse off than they are. That has not happened in many decades. Only growth can deliver the resources needed to enhance living standards, improve public services, support sustainable energy initiatives, limit the scale of generalised tax increases, and combat inequality of wealth, income and opportunity. Continue reading...
Some Legal & General Investment Management funds will divest from Glencore Plc on concerns about its production of the most polluting fuel.Investment management giant Legal & General's ESG (environmental, social and governance) funds, and some of its pension funds, are to divest from Glencore due to concerns over its coal production.LGIM warns this morning that it believes companies need to do more to play their part in efforts to mitigate climate change risks.LGIM remains concerned that Glencore has not disclosed plans for thermal coal production that are aligned with a net zero pathway." Continue reading...
Hollywood group says 200-hectare site will be based around popular film and games franchises and open 365 days a yearThe movies group Universal has said a Hollywood theme park it plans to build in Bedfordshire, England, will be open 365 days a year and will boost the UK economy by nearly 50bn.Universal Destinations & Experiences, which is owned by the US telecoms group Comcast, the parent company of Sky, plans to build on a 192-hectare site (476 acres) in Kempston Hardwick near Bedford. The company has an option to buy a further 25 hectares. Continue reading...
Boom in air cargo due to shoppers' expectations of speedy delivery and shift in post-pandemic economy, researchers sayAir freight operators have increased their greenhouse gas emissions by 25% compared with 2019, analysis has found.In 2023, air freight operators ran about 300,000 more flights than in 2019, an increase in flight volume of almost 30%. The US accounted for more than 40% of global air freight emissions, according to the report by campaign group Stand.earth. Continue reading...
Global demand for renewable energy is surging so why make solar panels, wind turbines and EVs dearer for western consumers?With historic heatwaves sweeping across the US and other parts of the northern hemisphere, June is expected to be the 13th consecutive month of record-breaking global temperatures. The primary cause, of course, is the enormous amount of greenhouse gases in the atmosphere. Despite the existential threat posed by rising atmospheric concentrations of greenhouse gases, emissions continue to increase at a faster pace than previously anticipated.On one front, however, progress in the fight against the climate crisis has exceeded expectations. Amid the global shift from internal combustion engines to electric vehicles and the accelerated adoption of solar and wind power, demand for renewable energy is rapidly rising in the US and the EU. Continue reading...
Government policies should be judged by their effect on the life satisfaction of the population, not by economic growth alone, says Prof Richard Layard. Plus letters from Sarah Davidson and Ethan OshokoYour editorial rightly points out that GDP is not a good measure of how people are faring (19 June). As an alternative, you offer the UN's human development index. But we already have a better British alternative - the measure of life satisfaction in the Office for National Statistics' annual population survey.The question asked is: Overall, how satisfied are you with your life these days (0: not at all satisfied, 10: completely)?" The results are published every quarter. That is an excellent measure of the nation's success. It provides a good account of how we are doing on average and of the degree of fundamental inequality in our society. Continue reading...
Nvidia shares rise in early trading after sliding 13% over last three sessions, wiping out half a trillion dollars of valueAirbus's woes have hit UK aerospace manufacturers.Rolls-Royce, which makes and maintains jet engines, are down 3.3% in London, while Melrose, which produces engine components, are down 3.7%.In commercial aircraft, Airbus is facing persistent specific supply chain issues mainly in engines, aerostructures and cabin equipment.These are mainly related to updated assumptions on schedules, workload, sourcing, risks and costs over the lifetime of certain telecommunications, navigation and observation programmes. Continue reading...
Institute of Fiscal Studies also dismissive of plans by Lib Dems, Greens and - in particular - Reform UKBritain's public finances are in a mess. Difficult decisions loom once the election is over. But the public is being kept in the dark about what might happen.That, put briefly, was the gist of what the Institute for Fiscal Studies had to say about the Conservative and Labour party manifestos. The thinktank was also pretty dismissive about the plans of the smaller parties: the Liberal Democrats, the Greens and - in particular - Reform UK. Continue reading...
Thinktank's director Paul Johnson says pressures on spending would be too powerful for party to make cutsA Labour government would raise taxes or soften debt rules rather than cut spending in the event that stronger growth fails to rescue it from tough post-election choices, the head of a leading thinktank has said.Paul Johnson, the director of the Institute for Fiscal Studies, said the pressures on spending - including from public sector pay - were so powerful that he couldn't envisage a Labour chancellor making cuts to balance the books. Continue reading...