Shadow chancellor criticises Tory years of failure and says national mission is needed to kickstart economyThe shadow chancellor, Rachel Reeves, has admitted it would take time for a Labour government to turn Britain around, as she accused the Conservatives of vandalising the economy over the past 14 years.Speaking before next week's budget, Reeves said the party that wins the next election would have the worst inheritance of any incoming government since the war and that a national mission was needed to kickstart the economy. Continue reading...
Chancellor should resist temptation to announce unfunded tax cuts in March budget, advises leading thinktankJeremy Hunt's financial planning is dubious" and lacks credibility" and the chancellor should not announce tax cuts in next week's budget if he cannot lay out how he will fund them, an economic thinktank has said.The Institute for Fiscal Studies (IFS) calculates that Hunt would need to find 35bn of cuts from already threadbare public services if he plans to use a Whitehall spending freeze to pay for pre-election giveaways. Continue reading...
Shoppers helped by falling energy costs and supermarket competition as meat, fish and fruit prices dropTumbling energy costs and a price war between Britain's supermarkets have slowed food inflation to its lowest rate for nearly two years in a boost for households trying to cope on stretched budgets.The cost of meat, fish and fruit dipped in February, meaning food prices rose 5% on last year, down from 6.1% in January and the lowest since May 2022, according to the British Retail Consortium (BRC) shop price index. Continue reading...
by Kiran Stacey Political correspondent on (#6JWTS)
Chancellor is considering cutting billions more from public spending to pay for reductions in tax or NIBritain's stretched public services will buckle under the weight of the spending cuts being planned for after the election, economists have warned, as Jeremy Hunt prepares for another round of tax reductions in next week's budget.Experts say the level of public sector spending pencilled in for the next parliament would mean cuts equivalent to those undertaken by David Cameron's government from 2010 to 2015. Some have warned the next government will not be able to implement them, and will be forced either to raise taxes or borrow more to fund emergency spending. Continue reading...
Former shadow chancellor is one of the authors of a new academic paper on how to bridge the regional divideBritain needs a 20-year cross-party consensus to level up the economy and unleash the untapped potential of regions outside London and the south-east, the former Labour shadow chancellor Ed Balls has said.Balls, one of five co-authors of an academic paper on bridging the UK's regional divide, said it was vital that Labour and Conservative politicians put aside their differences in order to embed necessary funding and governance reforms. Continue reading...
As the budget looms, the chancellor has very little scope to deliver the sort of measures that might make people vote ToryFor many of us, the dream is a detached home with a garage and an acre of land, according to the most searched property terms of the last year. The dream is out of reach for most people, and so is another popular item - an annexe - which entered the top four in Rightmove's list for the first time in 2023.This could be one reason why the gambling industry generates annual sales of 15.1bn, and 4.2bn in tax for the exchequer. Continue reading...
Kyiv could require $500bn to get the country back on its feet. But Moscow has so little debt that even sanctions have not done much damage ... yetFactories destroyed. Roads blown to pieces. Power plants put out of action. Steel exports decimated. A flood of refugees out of the country. Ukraine - the poorest country in Europe - has paid a heavy economic price for a two-year war against Russia waged almost entirely on its own soil.The figures are stark. More than 7 million people - about a fifth of the population - have been plunged into poverty. Fifteen years of human development have been lost. In the first year of the war, the economy contracted by 30%. Continue reading...
Beijing must be more ready to support countries facing distress, says deputy chief economistChina holds the key to speeding up debt relief and ending the silent crisis" that is holding back attempts to tackle poverty in the world's poorest countries, a senior World Bank official has said.Ayhan Kose, the Bank's deputy chief economist, said Beijing needed to be more active in negotiations to provide financial support for those countries already in, or close to, debt distress. Continue reading...
Readers respond to articles by Yanis Varoufakis, Polly Toynbee and George Monbiot on Labour's economic policiesYanis Varoufakis makes a compelling argument for a more ambitious economic offer from Labour (Why is Labour still using the self-defeating, discredited maxed out credit card' analogy?, 15 February). What makes economic sense to those of us on the left is, in an election year, unlikely to cut through to an electorate of small-c conservatives, backed by a big-c Conservative press.Since Margaret Thatcher erroneously equated a national economy with a household budget, borrowing to invest comes up against the mythical creature of national debt. There is a not unjustified sense in the country that whatever economic policy is enacted, the less well-off will pay for it. I suggest that it is inequality that makes cowards of us all.
Bank's governor predicts Britain's economy will receive a boost when interest rates start to fall later this yearBritain is showing signs of recovery from its mild recession and will receive a boost when interest rates start coming down later this year, the Bank of England governor has said.Andrew Bailey rejected accusations that Threadneedle Street's reluctance to cut borrowing costs despite falling inflation meant it was behind the curve" and made it clear rate cuts were coming. Continue reading...
America's robust economic indicators under the president have not been reflected in opinion polls - but that could be changingJoe Biden has spent most of his presidency insisting to Americans that the economy is on the right track. Poll after poll has shown that most voters do not believe him. That may be changing.After months of resilient hiring, better-than-expected economic growth and a declining rate of inflation, new data shows that Americans are becoming upbeat about the US economy, potentially reversing the deep pessimism Biden has struggled to counter for much of the past three years. Continue reading...
Insecure jobs and high housing costs make it hard to maintain decent living standard, says abrdn Financial Fairness TrustBritain's insecure jobs market and high housing costs are leading to the growth of a precarious middle class struggling to maintain a decent living standard on household incomes as high as 60,000 a year, a report has said.A study released by abrdn Financial Fairness Trust, a research body set up by the fund manager, said the uncertain nature of work meant there was a one in three chance that someone earning a middle income today would not be doing so next year. Continue reading...
by Richard Partington Economics correspondent on (#6JRAY)
TUC call follows admission by CBI president that it is pushing party to soften its plansUnion leaders have warned business groups against pushing Keir Starmer to dilute plans for sweeping reforms of workers' rights and for a ban on zero-hours contracts.As the Labour leader comes under pressure from industry to scale back its shake-up of employment laws, the Trades Union Congress (TUC) said the plans were extremely popular" with voters and good for the economy. Continue reading...
Study shows people in London district made more in 2015-19 than combined populations of Liverpool, Manchester and NewcastlePeople living in Notting Hill, west London, received more in capital gains from 2015 to 2019 than the combined population of Liverpool, Manchester and Newcastle according to an analysis of capital gains tax.Analysis of anonymised personal tax returns found that 97% of the population never receive any capital gain, and those that do are very likely to be among the very richest who benefit from the tax rate being lower than that earned on income from a salary. In fact, half of gains for the entire country go to as many people as could fit in the Albert Hall", researchers said. Continue reading...
by Jessica Murray Midlands correspondent on (#6JR7Z)
Steven Knight, who is building a film studio in Birmingham, says line is catalyst for activity as data shows 10bn boost to regionThe Peaky Blinders creator Steven Knight said HS2 has been a gamechanger for regeneration in the West Midlands, as data revealed the train line has created a 10bn economic boost to the region since it was given the green light.A report by HS2 has found that within three impact zones" close to the new line in the West Midlands, planning applications have increased by 66% since the project was given royal assent in 2017, four times higher than the rate outside the zones. Continue reading...
The European Union to investigate if TikTok breached online content rules aimed at protecting children, as Andy Haldane urges central bank to consider interest-rate cuts
Owner of Nusr-Et steakhouse in London says profits rose 44% in 2022 as sales soared by nearly two-thirdsIt may charge nearly 700 for its most expensive steak but even the flamboyant condiment-sprinkling chef Salt Bae's London restaurant has been forced to turn off the heating amid soaring energy bills.Nusr-Et steakhouse, the outlet at the Park Tower hotel in Knightsbridge known for expensive dishes such as 680 wagyu striploin or 630 giant tomahawk steak, said it had made an effort to cut costs despite recording a jump in profits. Continue reading...
Two priorities are tackling entrenched inequalities and - the biggest challenge - addressing the climate crisisBritain's economy is in a deep rut. After news confirming the country fell into recession late last year, most experts agree the downturn is likely to be shortlived and shallow. Few, though, are betting on a strong recovery from the toughest period for living standards in almost 70 years.In most of the economic cycles of the past century, robust growth has typically followed each period of recession, as households and businesses get back on their feet after each setback. But as highlighted by Matt Whittaker of the Pro Bono Economics thinktank, the past two decades have been different. Gross domestic product per capita has either fallen or flatlined for the past seven quarters, and it is now 16 years since the last sustained uptick came to an end. Continue reading...
Pre-election giveaways funded by yet more austerity will push the welfare state the opposition created towards ruinAs a longstanding observer of the British economy, I sympathise with the general reader trying to make sense of recent reports on what is happening to it.One week he or she is told that inflation is falling; another week that it isn't. One week we are reliably informed that interest rates are going to be reduced; the next that they are not. One week there is no danger of falling into recession. The next week we are informed that we are already in one. Continue reading...
Years of austerity, followed by Covid, have left Britain with unhealthy workers and businesses struggling to recruit, but the road to recovery, of all kinds, will be longBritain has a sick economy and it is getting sicker. The clear message from last week's raft of economic data is that the UK is being held back by the growing number of people not able to work because of long-term illness.There are many theories about why the trend is worsening. Possible factors include long Covid, delays in NHS treatment as waiting lists grow longer, poor workplace practices, stress and the impact of austerity. Continue reading...
Organized labor across the country is now setting its sights on housing costs as rents and mortgages continue to soarAs housing has become a top issue in strikes and protests in recent months, US unions are pushing for change and backing innovative solutions for the housing affordability crisis.With US house prices and rents rising in recent years, and high interest rates and inflation taking their toll, housing affordability has become a major issue at the bargaining table for US labor unions. Many workers are facing 60-, 90-, even 120-minute commutes to work because they cannott afford to live near their jobs. Continue reading...
The Conservatives have presided over a shrunken British economy, and Rishi Sunak does not have a clue how to make it grow againWe're on the up!" claimed the Daily Express about the British economy on Thursday . Sorry, loyal Conservative cheerleaders, but exactly the reverse is true. Instead of being on the up, we're on the slide. On Thursday, the Office for National Statistics announced that the UK is in fact in recession, with a 0.3% drop in gross domestic product for the last quarter of 2023 to follow a 0.1% drop in the third quarter. The economyis therefore getting smaller. This is a recession. It is a huge national blow, both economically and politically.It is true that the slide into recession has been a gentle one. Few economists believe that the announcement portends a downward lurch to compare with the recession of 1980 or the one after the financial crisis in 2009, when GDP fell by more than 4%. Do not, though, be misled by talk of a technical" recession. An economy is either growing or it is not. Ours is not growing. It is shrinking. Continue reading...
From unfreezing tax thresholds to boosting social housing, solutions to the UK's problems don't have to trigger the return of inflationThe UK economy needs a lift after it sank into recession in the second half of 2023.It's not an easy task when so many of the problems are longstanding and the measures needed for a cure could take years to have an effect. Continue reading...
Shadow chancellor's No 10-style press conference given extra credence by decision to drop 28bn green pledge, Labour sources say UK politics live - latest updatesAs she stood beside two union flags in a wood-panelled room, it looked as if Rachel Reeves had stepped into Rishi Sunak's own press conference room in Downing Street - a deliberate move.The shadow chancellor had been preparing for this moment for months, warning of the heightened risk of recession ever since the last quarter's GDP figures showed negative growth. Continue reading...
It is one thing to U-turn on a modest green transition programme. It is another to do so using mendacious Tory economic paradigmsRarely has a lacklustre policy been abandoned for a reason so bad that it threatens to inflict long-term damage on a society. Independently of whether the 28bn green investment programme was the right policy for the next Labour government to commit to, Rachel Reeves's reasons for ditching it were an undeserved gift to the Tories and a partial vindication of their disgraceful flirtations with an austerian, anti-green political narrative.Speaking on BBC Radio 4's Today shortly after her U-turn on Labour's headline 28bn green transition programme, the shadow chancellor explained her decision by claiming that, under Jeremy Hunt, the Treasury is planning on maxing out the credit card", adding for good effect that the Tories are maxing out the headroom ahead of the next general election" thus limiting what an incoming Labour government will be able to achieve". By comparing the state's coffers to an overladen credit card, Reeves endorsed an insidious fallacy. Continue reading...
by Justin McCurry in Tokyo and agencies on (#6JMYX)
Fall in rank below Germany has been attributed to a weak yen and country's ageing, shrinking populationJapan has been eclipsed by Germany as the world's third-biggest economy and has slipped into recession, according to data released Thursday, as the country battles a weak yen and an ageing, shrinking population.Japan's economy, now the world's fourth-biggest, grew 1.9% in 2023 in nominal terms - meaning it is not adjusted for inflation - but in dollar terms its gross domestic product (GDP) stood at $4.2tn compared with $4.5tn for Germany. Continue reading...
Thorsten Wulff looks for laughter amid the bleakness, while Carola Gartner is concerned about poverty and drug usePeter Kuras's analysis of the rather dire situation Germany faces right now is spot-on (Tractor chaos, neo-Nazis and a flatlining economy: why has Germany lost the plot?, 6 February). Back are the dreaded times of the sick man of Europe, only stopped 20 years ago by the Agenda 2010 reform package of the social democratic chancellor Gerhard Schroder. Who is an outcast not only in his party these days, being Vladimir Putin's friend. Endless rows of tractors from the Brandenburg Gate to the Siegessaule, where Barack Obama spoke to the masses in a much brighter 2008, are the solidified image of the muck the country is stuck in.And then there is the stiff seriousness of German politics. In August 1919, the Berliner Illustrirte Zeitung, successful precursor of magazines like Life, published a funny image of President Friedrich Ebert and his defence secretary, Gustav Noske, in trunks on the beach. The scoop made the front page; the young republic was outraged. Lloyd George must have felt the hypocritical quake in Downing Street. Continue reading...
While inflation has fallen sharply since peaking above 9% in June 2022, many are still feeling the pinch of high pricesInflation was hotter than expected across the US last month as it continues to fall back from its highest levels in a generation.Price growth dropped to an annual rate of 3.1% in January, according to official data; above economists' expectations of 2.9%. In December, the consumer price index stood at 3.4%. Continue reading...
Rachel Reeves has ruled out a wealth tax, but she'll need to raise revenue somehow - and there are still good options availableThe prime minister's tax return crept out with the house in recess. But the front page of the Financial Times splashed a blunt warning: Sunak makes 1.8m capital gains as he struggles to engage with hard-up voters." Does it matter when the Tory frontbench has always been packed with the enormously rich? After all, politicians are paid beyond most people's wildest expectations, with the average UK worker earning less than half their MP's annual salary.Forelock-tugging Britain, which has elected five rich Etonian PMs since the second world war, may be undergoing a sea change in attitudes. A multimillionaire chancellor and a PM richer than the king are proving a political problem on the doorstep. In Wellingborough, participants in a More in Common focus group with 2019 Tory voters said the prime minister was financially on another planet" and abandoning hard-working people". Continue reading...
Goldman Sachs Doppelganger' analysis suggests UK real GDP has unperformed by 5% since 2016 vote, while Body Shop's owners have filed the intention to appoint administrators.