Texas hedge fund Artemis plucks millions from investments designed to benefit from turmoil and volatilityStock markets gyrated wildly this week, and a lot of people lost a lot of money. But Chris Cole, a 38-year-old hedge fund manager from Texas, wasn’t one of them. He made millions from his fund’s bet on a financial apocalypse.From his office overlooking the Colorado river in Austin, Texas, Cole runs Artemis Capital, a hedge fund that, since 2012, has been betting on a repeat of the 1987 Black Monday stock market crash.Related: By betting on calm, did investors worsen the stock market fall? | Nils Pratley Continue reading...

Philip G Cerny and John Airs respond to the Labour peer and former transport secretary’s article denouncing Chris Grayling’s handling of Virgin Trains East CoastAndrew Adonis makes excellent points about rail nationalisation (Grayling’s rail bailout echoes the grave errors of New Labour, 8 February). However, this is not just about outsourcing in general. It is about the longstanding contrast in economic theory between public goods and private goods, as developed by Paul Samuelson in the 1950s, and between specific and non-specific assets, as developed by Oliver Williamson in the 1970s, both leading to Nobel prizes. Public goods and specific assets are inherently indivisible – monopolistic, non-competitive and unprofitable, characterised by structurally determining economies of scale, especially if they cannot exclude particular customers. This is particularly true of what are called “natural monopolies”. Private goods and non-specific assets can be efficiently provided by the market, but public goods cannot. Here the public interest requires regulation and state control. The problem is where to draw the boundary between the two categories, as many sectors are mixed. The answers are found in neither neoliberalism nor socialism as such, but in a well-regulated social capitalism. Privatisation has unfortunately been applied far too often in sectors characterised by public goods and specific assets. Rail is a key example.

European markets still in the red despite positive start on Wall Street, while UK trade, construction and manufacturing figures present mixed picture2.55pm GMTStock markets are ending the week on another volatile note.After overnight falls on Wall Street and in Asia, European markets headed lower, although the falls were reduced once US markets opened in positive territory.2.32pm GMTAfter the latest plunge in US markets drove them into correction territory, Wall Street has got off to a better start, as indicated by the futures earlier.The Dow Jones Industrial Average is currently up 310 points (although not all the constituents are trading yet), while the S&P 500 opened up 1% and the Nasdaq Composite added 1.1%.1.55pm GMTIt may be too early to buy the dips, and more wild swings are possible, sayd Jasper Lawler, head of research at London Capital Group:US benchmark share indices falling into correction territory (down over 10% from record highs) has ignited concern the bull market has ended. There has been a spike in volatility, which has resulted in a blow-up in low-volatility strategies and a sharp dive in negatively correlated US index ETFs. The question is whether this is the technical trigger for wider market contagion or just a long overdue “healthy” pullback for an over-extended market.We would make the point that the stock market can deviate massively from economic fundamentals in the short term. Fear of rising bond yields can easily produce a bear market (down 20% from 52-week highs) despite a healthy global economy. In fact, that is usually how it happens because the stock market is a future-discounting mechanism. Another argument for a bigger move lower is that much of what has helped keep the stock market moving higher is momentum, which is now reversing. We would liken the outlook for the US stock market to making a tackle in sports, “the bigger they are the harder they fall.”1.47pm GMTHere’s a reminder of the falls we’ve seen through the bull market, from analyst Barry Ritholtz:Memory is famously short during bull markets. There have been a bunch of corrections in this one https://t.co/u7YxBFEvhs via @gadfly pic.twitter.com/beKn1Kh2TJ1.26pm GMTThis market fall is a dose of reality after “greed ran unchecked”, says Mark Dowding, co-head of investment grade at BlueBay Asset Management:The equity market reversal this week, may well serve to be a healthy event. Greed was running unchecked in January and so markets were due a dose of reality, or else the party risked getting out of hand.. this is no bad thing at all and may well serve to make life easier for investors over time.1.09pm GMTThere could be worse to come for the pound following today’s falls, suggests Jeremy Cook, chief economist at WorldFirst:Every single bit of optimism afforded to the pound on the back of Governor Carney’s comments on interest rate increases and upgraded growth and wage forecasts has been lost this morning following the comments from Michel Barnier that the transitional period is ‘not a given’. For sterling, nothing is more important in the short term than a transitional deal that extends the UK’s membership of the Single Market and Customs Union. The CBI has been vocal on the need for clarity for its members and small and medium sized businesses who we speak to every day have echoed those sentiments.So far, the broad swings in equity and volatility markets that have made headlines this week have not been felt in currency markets but if they do there are a fair many more currencies that would be seen as a ‘safer’ bet than sterling given the political atmosphere.12.49pm GMTThe market falls appear to be getting worse in Europe, as the Dow futures lose much of their earlier gains.The FTSE 100 is now down 61 points or 0.86%, while Germany’s Dax has dropped 1.7% and France’s Cac 1.6%.12.36pm GMTThe pound is coming under pressure on the latest Brexit developments.A post-Brexit transition deal is not a given, according to the EU’s chief negotiator Michel Barnier after the latest set of talks.If these differences persist, a transition is not a given. If these disagreements were to persist there would undoubtedly be a problem. I hope we will be able to resolve these disagreements in the next round.The sooner the UK makes its choices, the better.12.17pm GMTBut economies and markets do not necessarily go hand in hand, says Justin Urquart-Stewart of Seven Investment Management:Fundamentally the market jet stream has changed. Thus get used to more weather fronts buffeting the indices. Underlying economies still fine. Economies & Markets do not usually walk in step12.07pm GMTThe UK economy grew by 0.5% in the three months to January, according to the National Institute of Economic and Social Research.The think tank said this was the same as the official figures for the final quarter of 2017. Up until now surveys had suggested a slowdown at the start of the year.We estimate that economic growth was steady at 0.5 per cent in the 3 months to January. Activity picked up in the second half of 2017 after a period of subdued growth in the first half of the year. The recovery was driven by both the manufacturing and the service sectors, supported by a buoyant global economy, while construction output continued to lag.We are forecasting GDP growth of close to 2 per cent this year assuming a soft Brexit scenario. At this speed the economy could start to overheat unless the Bank of England withdraws some of the stimulus that it has injected by raising the policy rate. Our forecast assumes a 25 basis point increase in May and then every 6 months until Bank Rate reaches 2 per cent by mid-2021. If instead, Brexit talks fail, the UK economy will in our view suffer a marked slowdown with damaging longer term consequences.11.38am GMTThe Dow futures are off their best but are still indicating a higher open on Wall Street after the latest plunge. But the futures have not been the best guide to what happens. Craig Erlam, senior market analyst at Oanda, said:US futures are trading slightly in the green ahead of the open on Friday, a day after stock markets once again tumbled leaving indices in correction territory.As we saw on Thursday, this isn’t necessarily indicative of calm returning to the markets. The Dow recorded declines of more than 1,000 points for the second time this week, having never done so before, despite futures prior to the open being relatively unchanged on the previous days close.Markets haven’t been too concerned about the prospect of a shutdown since the start of the year despite two having now taken place so I don’t expect to see any boost now that a deal has been reached. This is merely just another self-inflicted risk that’s been temporarily averted.10.46am GMTBank of England deputy governor Ben Broadbent seems relatively relaxed about the recent stock market falls.In his tour of BBC studios, he told the Today programme:Equity markets go up and down, you have a correction of this size roughly every 18 months on average, so it’s not terrifically unusual....If you’re suggesting that this is somehow parallel to what happened in 2007, then I would say no.I think there are some very big differences and as I pointed out, the equity markets, particularly in the US, have risen a lot over the last 12 months and indeed, even today, we are roughly back where we were a couple of months ago.10.29am GMTHere’s a useful chart of the UK trade figures:Trying to figure out the #trade figs is a messy business - but hopefully this chart helps! Substantial net imports of erratic components meant net trade in goods dragged on GDP in Q4. Excluding oil and erratics, net trade in goods prvided a boost to GDP. pic.twitter.com/Cso31JnZHm10.22am GMTEuropean markets remain fairly calm, although of course that may all change once Wall Street reopens. David Madden, market analyst at CMC Markets UK, said:European stocks are lower this morning, but are holding up relatively well when you consider the magnitude of the declines in Asia overnight and in the US last night. Investor are clearly nervous in this part of the world, and there are still concerns things could turn sour again. The erratic moves that have taken place in the US are unsettling investors here, and the sentiment in Europe could change when trading in New York resumes.10.14am GMTHere’s the British Chambers of Commerce on the day’s UK data. Its head of economics Suren Thiru said:The sharp deterioration in the UK’s net trade position in December was disappointing and means that trade is likely to have been a drag on UK growth in the final quarter of the year. This deterioration reflects a significant increase in imports in the quarter, more than offsetting the rise in exports.Although there was a surprise pick-up in construction output, the sector remains a concern and together with the widening in the UK’s trade deficit and weakening industrial output indicates that economic conditions are becoming more sluggish. While many exporters are benefiting from stronger growth in key trading markets, imports continue to grow at a solid pace with businesses continuing to report little in the way of import substitution despite their high cost. If this trend continues as we expect, the contribution of net trade to UK GDP growth over the near term is likely to be limited at best.10.07am GMTThe UK data has been little help to the pound:#GBPUSD was already off $1.40 before Dec factory data. Actually bounced as high as $1.3987 ahead of release. Now tests $1.3914/393 support that was formerly resistance ^KO pic.twitter.com/UX4Hh0pUN99.57am GMTBack with the UK data, and economist James Knightley at ING Bank says the latest figures suggest fourth quarter growth could be revised downwards:Softer December trade and production data coupled with downward revisions suggest the potential for fourth quarter GDP growth to be revised down to 0.4% quarter on quarter [from 0.5%]UK industrial production fell 1.3% month on month in December, worse than the 0.9% consensus while there was a 0.1 percentage point downward revision to November. The December softness relates to the shutdown of the North Sea Forties pipeline for unplanned maintenance (oil and gas output fell 24.2% month on month) and should rebound in January, but it does suggest the risk of a very modest downward revision to fourth quarter GDP.9.52am GMTHere’s the latest view from Chris Iggo, chief investment officer fixed income at AXA Investment Managers, on the current markets:Volatility is back and those that bet on it never coming back have had a tough week. Why is it back? It’s back because the macro fundamentals are evolving in a way that many of us have expected but some have denied. Growth is strong, inflation is not dead and interest rates are rising. This is spooking the bond market and the bond market spooks everyone else.The veracity of the moves in equities are explained by the existence of structured trades, algorithms and leverage, but the reason that valuations are being challenged is because the discount rate is rising and is not going back down any time soon. Bond investors might start to be tempted to buy US Treasuries as we approach a 3% yield but the cat is out of the bag – we are in a higher yield environment than we have been for the last three years and that is a bit of a problem – not a terminal problem – but a bit of a problem for equities.

December figures ‘pretty poor’ given weakness of pound since Brexit vote, City analysts saysBritain’s trade position with the rest of the world worsened in December as rising global oil prices pushed up the cost of importing fuel, while the continuing weak pound failed to lift sales of UK-made goods abroad.The difference between the total value of goods and services imported to Britain and sold overseas widened by £1.2bn from November to £4.9bn in December, according to the Office for National Statistics. While there was an increase in goods export volumes, it came at less than half the pace of imports. Continue reading...

Another day of wild swings in the financial markets saw a loss for the day of over 4%Wall Street was on Thursday heading for its toughest week in more than two years after fears of higher interest rates led to a fresh plunge in New York stocks.Another day of wild swings in the financial markets saw more than 1,000 points wiped off the Dow Jones industrial average – a loss for the day of over 4%. It was the third drop of more than 500 points for the Dow in the last five days and the Dow is now down 10% from its peak on 26 January, a fall known as a “correction”.1,175.21, 5 February 2018

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The government should shed its Brexit paralysis and stem the escalating crisis. Reform of council funding must come quicklyThe wonder is that it’s taken so long for councils to tumble over the cliff. This is their eighth year of brutal cuts, while the cost of caring for frail elderly people and needy children sky-rockets.The Daily Mail’s front page on Thursday blasts away at councils for a “thumping rise in council tax” of 6%, with nine out of 10 councils set to burst their budgets. They quote the TaxPayers’ Alliance calling for councils to “step up a war on wasteful spending”. The real war has been central versus local government.Related: Council tax rises on the way as local authorities try to stay afloatTake the cap off council tax for higher-value properties, which have not been revalued since 1991Related: Northamptonshire’s cash crisis is a taste of things to come for councils | Patrick Butler Continue reading...

Yves Mersch joins growing list of experts calling for restrictions on cryptocurrencies• What the experts have said about bitcoin

Grounds are being laid to end the flow of easy money sooner than expected

Decision to hold rates now came with heavy caveats that a rise is likely in May to tackle inflation

FTSE gained nearly 2% but Dow Jones recovery failed to last with index falling back by close to end more than 19 points downEuropean stock markets have rallied after sharp losses earlier in the week, with London’s leading share index gaining almost 2%.The FTSE 100 index of the most valuable companies listed in London rose 138 points to 7,279 on Wednesday, still well below its all-time closing high of 7,779 on 12 January.Related: Dow recovers from early falls as European shares rebound - as it happened Continue reading...

Leave-voting heartlands of north-east and West Midlands would be worst hit, report findsA no-deal Brexit would blow an £80bn hole in the public finances, with the leave-voting heartlands of north-east England and West Midlands worst affected, according to new detail from the government’s own secret economic analysis.The Guardian has learned that the secret papers, which assess the economic impact of leaving the bloc, predict that if there is no deal, the government will need to borrow £120bn more over the next 15 years. Continue reading...

Hanna Chalmers from Ipsos Mori responds to Liza Featherstone’s article which claimed that focus groups are ineffectiveAs someone who has spent nearly 20 years observing, leading and analysing focus groups, I found Liza Featherstone’s crushing take on the traditional focus group (The long read, 6 February) to be completely at odds with the world I inhabit. She makes it clear she views the “culture of consultation”, or to put it another way, asking how people feel about things, to be a bad thing. But how can that be? Is it better not to ask? Of course, market research is concerned with increasing the bottom line, reshaping brands and launching new ones. But in my experience, clients are highly receptive to understanding flaws in the service or products that audiences alert them to – not resistant, as Featherstone asserts.There remains an important role for the traditional focus group in enabling companies, politicians or service providers to observe and listen to the attitudes of the very people they wish to understand better. But let’s not forget focus groups also sit alongside a wealth of other valuable techniques such as ethnography and passive metering which enable us to understand how people behave. Continue reading...

President reminisces about the good ‘old days’ after Dow Jones industrial average lost 1,175 points on MondayThe stock market is making a “big mistake”, Donald Trump said on Thursday, days after a record-breaking sell-off on the US exchanges.“In the ‘old days,’ when good news was reported, the Stock Market would go up. Today, when good news is reported, the Stock Market goes down. Big mistake, and we have so much good (great) news about the economy!” Trump wrote on Twitter in his first public comment on the sell-off.Why are stock markets falling?Dow, S&P 500 and Nasdaq all finished the day at new RECORD HIGHS! pic.twitter.com/wJyB9d00hh Continue reading...

Forecaster says strength of world economy and weak pound will help offset effect of Brexit vote

The Dow Jones has surged by 567 points as the US stock market roared back from its slump on Monday, but European stocks had a bad day

Analysts are still attempting to explain the mood swing that caused Monday’s dramatic slide. We look at five key factors

Britain’s industrial base has been whittled away because the country has been in ideological hock to the City – whose bankers, lawyers and accountants rake in huge fees in takeover battlesIn 2016 Theresa May launched her campaign to become Conservative party leader and Britain’s prime minister with a speech that promised to do “something radical” about corporate takeovers. She warned that “transient shareholders … are not the only people with an interest when firms are sold or close. Workers have a stake, local communities have a stake, and often the whole country has a stake.” Fast forward 18 months and Mrs May, drained of authority, has no proper industrial strategy.Yet a real test of her words has emerged in the City, where a £7bn hostile battle appears to pit financial engineering against real engineering. Melrose, whose holding company is staffed by about 50 executives skilled in the arts of law and finance, has launched a corporate raid for GKN, a British manufacturing giant employing 56,000 people and a world leader in automotive and aircraft technology. Melrose wants to purchase GKN by borrowing £1.4bn and offering that as a sop to shareholders. If successful, that loan will be added to GKN’s debt, diverting cash away from useful investment and obligations to its 32,000 pensioners. This doesn’t seem to trouble Melrose’s top four bosses. They plan to split up and sell parts of the industrially vital business, no doubt minimising taxes and cutting costs, within five years. If successful, the bosses could share an absurd £285m in bonuses. Continue reading...

Investors fear the era of cheap money is coming to an end, but shares are likely to bounce back

Statistics show that UK economy entered new year on a downbeat noteBritain’s retailers battled through “tough” trading conditions in January as consumers preserved their cash for essential food shopping and shunned big ticket purchases.Non-food sales declined by 1.2% in the three months to the end of January with furniture sellers, shoe shops and high street clothing retailers recording their worst performance since 2009, according to British Retail Consortium (BRC) and KPMG data.Related: UK services sector growth falls to 16-month low Continue reading...

Focus groups make us feel our views matter – but no one with power cares what we think. By Liza FeatherstoneIn the early 1950s, the Betty Crocker company had a problem: American housewives liked the idea of cake mix, but they weren’t actually buying it. And so the company approached Ernest Dichter, a Viennese psychologist who had pioneered a new kind of market research, and asked him to find out why.At the same time, the relatively new processed-food industry was determined to push ready-made food. Frozen foods had enjoyed a boost during the war because of tin rationing, and the first frozen ready meals were launched in 1952. More women were working outside the home, making the convenience of these meals especially appealing. Incomes were rising, too, during this postwar period, which gave families more money to spend on convenience items, and on trying out new dishes. Not all such products were new – cake mix, after all, had been around for decades – but in this postwar climate, the food industry assumed there would be a much larger market for them. And yet, cake mix sales were slow.Related: From inboxing to thought showers: how business bullshit took over Continue reading...

The Dow Jones industrial average dropped 4.6% as investors fled amid fears of rising interest rates: ‘This was volatility unleashed’

Fears of interest rate rises in the US aimed at taming inflation are making markets nervous

When it comes to the end of work as we know it, ableism is surely at the core of this flawed perspective, writes Bella Milroy. Plus Patrick O’Sullivan says local communities must become self-reliantWant to radically rethink the concept of work? Start talking to disabled people. As vitally important as the case for a universal basic income is, as Larry Elliott observes (Robots will take our jobs. We’d better plan now, before it’s too late, 1 February), a debate that focuses solely on the concept of paid work will only take us so far, and fails to acknowledge the millions of disabled people, as well as millions of carers, who go unpaid for the work they do every day.When it comes to the end of work as we know it, ableism is surely at the core of this flawed perspective. Disabled people have been redefining the idea of what it means to work, to create, to find purpose and to contribute to society since the dawn of time, the majority of which goes unpaid. Continue reading...

Demand weakens for services such as restaurants and hotels amid ongoing Brexit uncertaintyThe UK services sector grew at its slowest pace in January since the aftermath of the EU referendum as the economy got off to a sluggish start in 2018.The latest health check of a sector that includes hotels, restaurants, transport and the City from IHS Markit and the Chartered Institute of Procurement and Supply (CIPS) found that a loss of clients and lingering Brexit uncertainty had led to a dip in activity. Continue reading...

The 30% of Bradfordians under 20 face a perfect storm of problems, from youth unemployment to racial tension. But many of them insist it’s not all doom and gloomWhen it comes to grim urban statistics in Britain, the city of Bradford tops many lists. Police statistics name Bradford as having the highest crime rates in West Yorkshire, while a 2014 YouGov poll named it Britain’s “most dangerous city”. Bradford also has one of the highest levels of youth unemployment in the UK: 26% of young people were out of work in 2015, up from 11.3% in 2004.

Weak dollar, rising inflation, recession memories fading, new hand at the Fed … and meltdown?It is August 1987 and the US economy is humming along. Memories of the deep recession earlier in the decade are fading fast. Tom Wolfe is about to publish The Bonfire of the Vanities, which captures perfectly Wall Street’s greedy bullishness.The financial markets have Paul Volcker to thank for rising share prices. As chairman of America’s central bank, the Federal Reserve, Volcker had given the US economy shock treatment to rid it of its inflationary excesses. Record-high interest rates triggered the worst recession in the US since the 1930s, but once inflation started to come down borrowing costs were cut sharply and the economy recovered. Continue reading...

Renewed interest in philosopher fires celebrations of 200 years since his birth on 5 May 1818A spectre is haunting Europe in 2018 – to borrow from one of his catchier one-liners – the spectre of Karl Marx himself.Two hundred years after the philosopher’s birth, a small industry is gathering pace, from plans for major events in Trier, the city on the Moselle where he was born, to a new tour of the Manchester streets that he and Friedrich Engels walked as they discussed the condition of the city’s emerging working class. The bicentenary on 5 May will be marked with exhibitions, lectures, conferences, histories and novels. Continue reading...

Britain’s reluctance to invest in national improvement is just one consequence of this seemingly endless era of austerityThere are measures of how broke the UK has become wherever you look. And it’s not just the public sector that is showing the strain.The vast sums needed to keep up with 21st century developments are also absent from a private sector that has become reluctant to take any big bets without a large slug of government support behind it.The UK is expert at boxing clever to give a show of modernity without spending vast sums of money Continue reading...

If you’re planning to remortgage, do it now – a little-known change could push up ratesThere’s going to be an interest rate rise on 28 February. In just a few weeks you are going to see about 0.25% added to mortgage and savings rates. But you won’t see a press release from the Bank of England that the base rate has gone up. Instead, for the first time in years, banks are going to be scrambling to offer savers better rates – and the losers will be anyone taking out a new mortgage.So what’s happening? On 28 February an extraordinary financial measure, put in place in the days after the Brexit vote, will end. Continue reading...

Worries over rising bond yields and inflationary pressures have hit shares this week.

Apple, Visa and Exxon among biggest fallers as American and European stock markets tumble from record highsWall Street ended its worst week in two years on Friday with another sharp fall as markets in Europe also continued to tumble from the record-high levels reached less than a month ago.Investors headed for the exits amid growing fears over a bond market rout, triggered by early signs of inflation in the US as economic growth accelerates and wages appear to finally be rising after years of stagnation. US government bond yields, which rise as prices fall, hit the highest level since January 2014. Continue reading...

Construction activity falls for first time since immediately after EU referendum following company’s liquidationThe collapse of Carillion has dragged the British construction industry to the brink of stagnation, as housebuilding activity fell last month for the first time since immediately after the EU referendum.The slowdown in home construction is likely to embarrass the chancellor, Philip Hammond, after he unveiled tax cuts for first-time buyers and extra support for housebuilding at the budget in November.Carillion relies on major contracts, some of which have proved much less lucrative than it thought. Continue reading...

Monthly jobs update suggests gains for those in more senior positions were far greater than for those without a college degreeIt’s been a long, slow recovery for US workers but wages finally appear to be growing again, according to the latest jobs report released on Friday. But behind the headline rate the figures show – once more – that inequality is on the rise.On Friday the labor department released its latest monthly jobs update. The US added 200,000 new positions in January, higher than expected, but the real surprise was in wage growth. Hourly earnings rose 0.3% in January, enough to lift the annual rate up to 2.9%.Related: Donald Trump's tariffs on panels will cost US solar industry thousands of jobs Continue reading...

Nouriel Roubini calls cryptocurrency the ‘mother of all bubbles’ as it falls below $8,000The economist credited with predicting the 2008 global financial crisis said a 12% fall in the value of bitcoin on Friday was the latest proof that the cryptocurrency was the biggest bubble in history and destined for a crash.Nouriel Roubini, professor of economics at New York University, said bitcoin was “the mother of all bubbles” favoured by “charlatans and swindlers” as it fell below $8,000 (£5,600) early on Friday, marking a 30% drop since the beginning of the week as investors became increasingly twitchy about a clampdown on cryptocurrencies by regulators. Later it rallied, climbing back over $8,600 by 3pm (GMT).Bitcoin is the first, and the biggest, "cryptocurrency" – a decentralised tradable digital asset. Whether it is a bad investment is the big question. Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption – or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is hard (but not impossible) to trace a bitcoin transaction back to a physical person. Continue reading...

Readers respond to Brexit minister Steve Baker’s assertion that Whitehall economic forecasts are always wrongIn a way Steve Baker is right (Backlash over minister’s claim that government forecasts are never right, 31 January), because it is nigh impossible to predict with precision a particular outcome in a world characterised by lots of unknowns. The Bank of England, among others, has long recognised this and provided a measure of uncertainty around its forecasts. In the case of Brexit, however, economic studies are not attempting to predict a final outcome but what will happen under different assumptions about the form of Brexit. The actual behaviour of the economy will not only reflect these assumptions but also other factors, such as growth in the US and other economies.So it will not be possible to judge the quality of the economic analysis of Brexit from what actually happens in the economy. Actual growth in the future will be a mixture of Brexit- and non-Brexit-related influences. In order to evaluate the analysis of Brexit after the event it would be necessary to isolate the influence of the non-Brexit factors. In that sense, economic forecasts can neither be proved right nor wrong in terms of Brexit since any forecast errors might be put down to non-Brexit reasons. The importance of economic analysis of Brexit is in the assessed contribution of the Brexit effects to any future development of the UK economy. So after Brexit, only time and serious analysis can reveal whether the economic models were right or not.

Orders, goods and jobs growing at record rate since the creation of the single currencyEurozone factories are boosting production at one of the fastest rates recorded since the launch of the single currency as the result of booming global demand and the pro-growth approach adopted by the European Central Bank.The latest snapshot of manufacturing in the 19-nation zone shows that orders, output and employment were all growing strongly last month. Continue reading...

Rising raw material costs dent factory resurgence with output down to seven-month lowBritain’s manufacturers showed signs of a slowdown at the start of the year amid rising costs for raw materials, sending factory output to a seven-month low.The Markit/Cips UK manufacturing PMI index showed activity fell to 55.3 last month from 56.2 in December, missing City forecasts of a further acceleration in growth. However, the PMI remained well above its long-run average of 51.7 and above the 50 mark which separates expansion from contraction.Inflation is when prices rise. Deflation is the opposite – price decreases over time – but inflation is far more common. Continue reading...

All the day’s economic and financial news, including a health check on the world’s manufacturing companies

Data has become the world’s most important resource. Now Silicon Valley giants want to keep government from standing in the way of profitsOne hundred and sixty years ago, the first transatlantic telegram traveled from Britain to the United States along a rickety undersea wire. It consisted of 21 words – and took seventeen hours to arrive.Today, the same trip takes as little as 60 milliseconds. A dense mesh of fiber-optic cables girdles the world, pumping vast quantities of information across the planet. The McKinsey Global Institute estimates that 543 terabits of data are flowing across borders every second. That’s the equivalent of roughly 13 million copies of the complete works of Shakespeare.Related: Data will change the world, and we must get its governance rightData is nothing less than the lifeblood of global capitalismRelated: The new cold war: how our focus on Russia obscures social media's real threat Continue reading...

In the first episode of our new mini-series, Aditya Chakrabortty speaks to Preston city councillor Matthew Brown about his alternative approach to keeping wealth in the local economySubscribe and review on Apple Podcasts, Soundcloud, Audioboom, Mixcloud and Acast, and join the discussion on Facebook and TwitterA new podcast that showcases the people and ideas in Aditya Chakrabortty’s new fortnightly column The Alternatives. Every two weeks, we’ll bring the characters – and the places in which they live – to life as we hear their alternative approaches for making the economy work for everyone. Continue reading...

In a new series looking at how to make the economy work for everyone, Guardian columnist Aditya Chakrabortty finds out how Preston turned its fortunes around by spending locallyThe city of Preston in Lancashire dates back to Roman times. It is listed in the Domesday book as Prestune. It’s where inventor Richard Arkwright kickstarted the cotton trade. Yet ask local people to tell you its history and they jump straight to 2011. That was Preston’s year zero, when the grand schemes for the city fell apart. For more than a decade the council had bet everything on a massive shopping mall. The Tithebarn would sprawl over the city centre, cost £700m and be built by two of the biggest developers on the planet. It was going to have a Marks & Sparks, a multiplex and a huge John Lewis store. It was the lottery ticket, said the council leader. The lifeline, the turnaround, the magic bullet.Related: The Alternatives: how Preston took back control – podcastHas you or your community come up with answers to doing things differently? If so we'd like to hear from you. Share your stories via this form and we'll be in touch.

All the day’s economic and financial news, including new eurozone growth figures

The Fed chair has set the bar high for her successor, a tenure defined by five major achievementsJanet Yellen, the Federal Reserve chair, begins her final rate-setting meeting at the helm of the US central bank on Tuesday, before she is replaced by Donald Trump’s chosen successor, Jerome Powell.The first woman to lead the Fed arrived in February 2014 at a time when the money-printing machine of quantitative easing was whirring at full-tilt under her predecessor, Ben Bernanke. QE, which involved the Fed buying bonds from financial institutions, pumped billions of dollars into the US economy to keep it afloat after the financial crisis. Continue reading...

Readers suggest boosting provincial centres, controlling rents, greater regulation of landlords, and minimum incomesAnn Pettifor (Journal, 27 January) identifies several important strategies for solving London’s crisis of “unreal estate”, but omits one that is vital: developing regional economies. By the standards of most European nations, Britain’s economy is incredibly concentrated in a single conurbation. Today’s online technologies should make it possible for every business with a huge London office to have regional offices all over the country.There are plenty of provincial centres with large enough resident populations – let’s say of 250,000 people – to build a wider commuter belt around. Even counties remote from the other metropolitan areas have such population centres. Along the west coast mainline Milton Keynes and Stoke fill gaps. In the east Midlands most of the counties’ eponymous towns are now big cities. Along the south coast Sussex has Brighton, Hampshire and Dorset Southampton, and Devon and Cornwall Plymouth. Even the gap between London and Bristol now has Swindon. Continue reading...

US currency regains some ground after being hit by fears of trade war, while sterling hit by renewed political uncertainty2.40pm GMTWith the dollar recovering from its recent weakness, and continuing uncertainty over Brexit, the pound has come under pressure today and is currently 0.63% lower at $1.4080.Meanwhile bonds prices are falling and yields rising, as central banks increasingly look to move away from their low interest rate and QE programmes which have supported markets for several years now. German and US yields in particular have move sharply higher.2.36pm GMTWith the recovery in the dollar, a decline in bond prices and a busy week ahead, US markets have slipped back from their record levels.As well as the Federal Reserve’s latest interest rate setting meeting, there is the State of the Union address and a host of results from the likes of Apple, Alphabet, Facebook, Microsoft and Amazon.2.20pm GMTHere’s our full report on the EU’s warning to Donald Trump over trade. Daniel Boffey writes:Brussels has warned that it stands ready to retaliate and potentially open up a transatlantic trade war if the US delivers on apparent threats to restrict European imports.The US president, Donald Trump, claimed in an interview with ITV broadcast on Sunday that the EU had been “very unfair” on American exporters, and that it would “morph into something very big” that would “turn out to be very much to [the EU’s] detriment”.Related: Brussels prepared for trade war with US if it restricts EU imports1.58pm GMTSaving down, consumption and sentiment up -- another sign we are approaching the latter stages of the expansion. pic.twitter.com/LQUK10VKBW1.36pm GMTThe latest set of US inflation figures have risen in December in line with forecasts.The personal consumption expenditures price index - it may be a mouthful but it is the Federal Reserve’s preferred measure of inflation - climbed from 0.1% in November to 0.2% last month. On an annual basis it rose 1.5%, the same as in November. It is still below the Fed’s 2% target.1.02pm GMTA surge higher in yields on government #bonds is among the notable moves in financial #markets so far this morning.

Northern Europe needs its neighbours to pay back its debts soon … before its baby boomers retireTen years after the Great Recession plumbed economic depths unseen since the Great Depression, it is necessary to step back from quotidian politics to get a glimpse of the bigger picture. Europeans need to ask themselves where they have been, and where they are headed next on their journey.