Former chancellor admits government lost control for a few days 10 years ago and says people have felt ‘badly treated’ sinceThe UK would not have voted for Brexit had it not been for the banking crisis that began 10 years ago with the run on Northern Rock, according to the former chancellor Alistair Darling.Lord Darling admitted the Labour government “lost control” for a few days around this time 10 years ago when customers were queuing outside branches of the lender to withdraw their cash, and said the consequences were still being felt today.Related: UK's high street banks are accident waiting to happen, says report Continue reading...

Britain’s unemployment rate has hit a new 42-year low, but economists are worried that wages are still failing to keep up with inflation

Study predicts huge and growing gulf between white US households and everyone else could be disastrous for future of America’s middle classGrowing up in the projects of Baltimore in the 1980s, things like savings accounts, stocks and bonds were completely foreign to Mysia Hamilton. Asked if her parents could have passed along some money to help her buy a car, go to school or put into a house, she can’t help but chuckle.“No, that wasn’t there. There was no wealth. My mother was working, she was providing – we weren’t on the street begging – but there was no money in terms of ‘here you go’. No money to pass down.”Three years from now, white US households are projected to own 86 times more wealth than black householdsAfrican-American households are making ​​‘middle-income money’ – but have the wealth of a white high-school dropoutRelated: TV made America's bail system famous. Now reformers want to end it Continue reading...

Workers see real-terms fall in living standards as rise in self-employment pushes unemployment to 4.3%Wage rises in Britain have failed to keep pace with inflation, according to the latest official figures, despite a buoyant labour market that saw unemployment fall to its lowest level since 1975.Average earnings increased by 2.1% in the three months to July compared with a 2.6% increase in inflation in July that left workers suffering a 0.4% real-terms fall in the value of their pay packets.Related: UK households 'at breaking point' as real wages continue to fall - business live Continue reading...

The perpetual quest for growth drives our economics. That’s why our environment and financial system lurch from crisis to crisis

Bank of England’s stress tests are not gruelling enough, says report to mark 10 years since run on Northern RockThe UK’s high street banks are an accident waiting to happen and could struggle in another financial crisis, according to a report published on Wednesday to mark the 10th anniversary of the run on Northern Rock.The report criticises the annual health checks – stress tests – that have been conducted by the Bank of England since the crisis and concludes that the methodology used by Threadneedle Street is flawed and the tests not gruelling enough. Continue reading...

The chancellor insisted police and prison officers’ rises will come from existing budgets – and they are well below inflationPhilip Hammond’s re-emergence as a power in the cabinet can be seen clearly as the battle rages inside government over the thorny question of public sector pay.There may have been a green light from No 10 to rip up the current cap and give the police and prison officers a 1% rise plus a 1% bonus for 2017-18, but the Treasury has made sure the bonus is not part of workers’ consolidated, pensionable pay and is funded from within existing budgets.Related: Public sector pay cap to be lifted next year, No 10 says Continue reading...

Graduates do not get as good a return on their investment in English system as in other OECD countries, says Andreas SchleicherA leading global education expert has intervened in the row over student tuition fees in England, warning about value for money as earnings for graduates become more volatile.Andreas Schleicher, the education director of the Organisation for Economic Co-operation and Development (OECD), endorsed the English system in which students pay annual tuition fees of £9,000 through loans, saying it had provided sustainability to the sector which had been able to expand as a result.Related: Coming soon, a university where students could set their own tuition fees Continue reading...

The 2016 census report underlines the strength of the economic recovery Obama oversaw after the worst recession in living memoryAmerican incomes rose significantly for a second year in a row in 2016, bouncing back after the lost decade that followed the last recession.The census report covers 2016, the last year of the Obama administration, and underlines the strength of the economic recovery he oversaw after the worst recession in living memory.Related: Obama's labour market report card: not bad, could have done better Continue reading...

British households face a cost of living squeeze after inflation jumped in August, driven by more expensive clothing

More expensive petrol, clothing and food fuel rise in CPI as unions call for pay rises and end to public sector pay capThe squeeze on Britain’s living standards worsened last month after the increased cost of importing fuel, clothes and food pushed inflation back up to 2.9%, from 2.6% in July.Women’s clothes were among the items to jump in price in August as the low value of the pound earlier this year pushed up the prices in sectors heavily dependent on imported goods.Related: Public sector pay cap to be lifted next year, No 10 saysInflation is when prices rise. Deflation is the opposite - price decreases over time - but inflation is far more common. Continue reading...

The chancellor may continue to predict the long-term direction of the public finances as if Brexit were not happening – but it is unsustainable and harms democracy

The stock market may care only about the growth rate, but most Americans should worry about how growth is achievedDonald Trump has boasted that his policies will produce sustained 3%-4% growth for many years to come. His prediction flies in the face of the judgment of many professional forecasters, including on Wall Street and at the Federal Reserve, who expect that the US will be lucky to achieve even 2% growth.

With a dynamic new leader in France and a fresh mandate in Germany, there would be a chance to correct monetary union’s flawsWith Emmanuel Macron’s victory in the French presidential election and Angela Merkel’s Christian Democratic Union enjoying a comfortable lead in opinion polls ahead of Germany’s federal election on 24 September, a window has opened for eurozone reform. The euro has always been a Franco-German project. With a dynamic new leader in one country and a fresh popular mandate in the other, there would be an opportunity for France and Germany to correct their creation’s worst flaws.But the two sides remain deeply divided. Macron, in longstanding French tradition, insists that the monetary union suffers from too little centralisation. The eurozone, he argues, needs its own finance minister and parliament. It requires a budget in the hundreds of billions of euros to underwrite investment projects and augment spending in countries with high unemployment, Macron insists.Related: UK economy 'treading water' as eurozone stretches ahead, says BCC Continue reading...

Transport costs drive rising inflation as petrol and diesel prices increase but wages fail to keep apaceBritain’s cost of living squeeze shows no sign of easingwith new figures showing that prices are still rising faster than wages.Inflation is when prices rise. Deflation is the opposite - price decreases over time - but inflation is far more common.Related: To understand the UK's low-pay crisis, Mark Carney needs to get out more | Phillip Inman Continue reading...

The IPPR should be thanked for identifying our failures as an economy on the cusp of a ‘decade of disruption’. While the scale of the analysis is to be praised, the thinktank is yet to outline the scale of the solutionThe report released last week by the centre-left thinktank IPPR commission on economic justice comes not a moment too soon. In hosting a commission bringing together public intellectuals, representatives of industry, finance and tech, the IPPR seeks to publicise our failures as an economy on the cusp of a “decade of disruption”. The topography of the economy features some very low valleys: as a nation, the UK is not generating rising prosperity for a majority; a high employment rate masks an increasingly insecure “casualised” labour force; and Britain remains a pretty unequal place. The UK is damned as a low productivity economy, investing less than our rivals, with an overall current account deficit that ranks the largest of all the G7 countries.While a picture can be painted that Britain is doing all right, this does not reflect many people’s experience. Although GDP has risen about 10% since the crisis, disposable income per person has been roughly flat. For some, hope is draining away: a survey by the Resolution Foundation found that 48% of respondents think millennials will have a worse standard of life than their parents. Continue reading...

The Bank of England enforced a 1% rise on striking staff yet its fantasy forecasts claim a 3% rise for the UK as a whole is just around the corner. Really? How?The Bank of England governor, Mark Carney, needs to look no further than the pay of his own staff to figure out why – when he believes we’re on the verge of a pay boom – most people’s wage rises are stuck in first gear.

Shadow health secretary calls on Tory MPs to back motion to lift ‘unfair’ cap as opposition seeks to pressure PM to actLabour is to force a Commons vote on scrapping the 1% public sector pay cap.

Michel Barnier did not say we needed to be taught a lesson. We are not being blackmailed or fined. We are simply unwilling to accept our obligations‘Sometimes you get the impression that the British are talking to themselves,” said the outgoing French ambassador, Sylvie Bermann, on the Today programme last week.There have been suggestions that the French are rubbing their hands and doing their best to lure as much business as they can from the City of London to Paris. Continue reading...

The case for reform is plain to see but it won’t happen because too many at the top have stakes in the old orderIt was a glorious September morning. But I was in a ruminative mood, walking towards Westminster’s Church House for the unveiling of another damning account of Britain’s economy. It was the launch of the interim report from the Institute of Public Policy’s (IPPR) economic commission. Time for Change is one of the best I’ve read and yet I was wondering how its unanswerable assessment of our economy and the need for systemic reform has so little purchase on the national debate.I made similar arguments in my book The State We’re In 20 years ago and have attended many such launches ever since, often graced by bishops and some daring business executives prepared to break cover and speak out. It’s the same story of underinvestment; a woeful track record on R&D; overemphasis on high, short-term profits; an incredibly poor record on productivity and stagnating real wages. On almost every international comparison, Britain fares badly, with a desperately weak export sector overfocused on financial services and a few manufacturing industries. Continue reading...

IMF study finds that the type of tax cuts introduced last year are too weak to raise the welfare of most of the population and never pay for themselvesA new study by the IMF examining the impacts of tax cuts has found that while lowering tax rates for the rich will stimulate the economy, it does so at the great cost of increased inequality.Most damningly, it finds the benefits of tax cuts targeted at the wealthiest 25% – such as the one the Turnbull government brought in last year – are far too weak to raise the welfare of the majority of the population and also never pay for themselves.Related: Beware tax cuts for 'Middle Australia'. Above-average earners benefit mostRelated: Company tax cut cost reaches $65.4bn over 10 yearsRelated: Is it time to make the Medicare levy progressive? High income earners can afford it | Greg Jericho Continue reading...

The chancellor’s options in the autumn budget to allay voters’ frustrations over austerity are diminishing by the dayIn the weeks that followed their disastrous election result, a delegation of Tory MPs marched to Downing Street with a clear message for the prime minister and her team. After years of austerity, voters’ patience was running out, and some positivity was needed.The MPs went away from the meeting convinced they had secured an end to the public sector pay cap that would mark a loosening of spending cuts that they could use to show their constituents that the government was listening.NHS Providers sai the service was on course for disaster unless an extra £350m was found for beds and staffIt all adds up to a very long queue outside the chancellor’s door Continue reading...

Farmers, hoteliers and caterers say leaked proposals to limit free movement would spell catastrophe – but what would they really mean?A previously muted British business establishment is now in full cry over Brexit. The leak last week of proposals to restrict the ability of European Union nationals to live and work in the UK were described as “catastrophic” by one employers’ group. Voices from housebuilding to aerospace, farming and hotels raised concerns over the plans, which signalled a hard Brexit is very much on the cards.The warning of catastrophe came from the British Hospitality Association, while the National Farmers Union said the draft Home Office plans would cause “massive disruption to the entire food supply chain”. The reaction was also fuelled by the government’s refusal to disown the plans, alongside its apparent support of a hard Brexit agenda. We answer the key questions raised by the leak, including the potential consequences for the UK economy. Continue reading...

Margaret Thatcher | George Osborne | British Virgin Islands | The Fife | Racing tips | Walter BeckerPerhaps there was no room for M Thatcher, MA Oxon (Letters, 7 September). She had at least half a dozen failings: Proposed withdrawal of HMS Endurance from the South Atlantic, precipitating invasion of the Falkland Islands; squandering North Sea oil and gas revenues; premature closure of coal pits; refusing EEC matching funding for regional aid; refusing to renew social housing; imposition of the poll tax first on Scotland, undermining the union…

Exports of British-made goods to EU increase by £1.3bn, underlining country’s reliance on trade with continental EuropeBritain’s efforts to expand trade in goods beyond the European Union’s border took a knock in July after official figures showed the UK’s deficit with the rest of the world widened following a drop in exports.The deficit in the trade in goods with non-EU countries widened by £2.4bn while exports to the EU grew to cut the trade gap by £1.3bn.Related: UK economy 'treading water' as eurozone stretches ahead, says BCC Continue reading...

The pound has risen above $1.32 for the first time in five weeks after UK manufacturing output rose for the first time in 2017 in July

We should have learned the lessons of Hurricanes Katrina and Sandy – we need political action to help prevent disastersTropical Storm Harvey has left in its wake upended lives and enormous property damage, estimated by some at $150-$180bn. But the storm that pummelled the Texas coast for the better part of a week also raises deep questions about the United States’ economic system and politics.It is ironic, of course, that an event so related to climate change would occur in a state that is home to so many climate-change deniers – and where the economy depends so heavily on the fossil fuels that drive global warming. Of course, no particular climate event can be directly related to the increase in greenhouse gases in the atmosphere. But scientists have long predicted that such increases would boost not only average temperatures, but also weather variability – and especially the occurrence of extreme events such as Harvey. As the Intergovernmental Panel on Climate Change concluded several years ago, “There is evidence that some extremes have changed as a result of anthropogenic influences, including increases in atmospheric concentrations of greenhouse gases.” Astrophysicist Adam Frank succinctly explained: “Greater warmth means more moisture in the air which means stronger precipitation.”Related: After the storm: how should cities rebuild post hurricanes like Harvey and Irma? Continue reading...

British Chambers of Commerce cuts growth forecasts blaming squeeze on household budgets and failure of exporters to capitalise on low poundBritain is locked into a “low growth trajectory” that will see GDP growth dip next year while the eurozone shrugs off Brexit uncertainty to stretch ahead, according to a leading business group.The British Chambers of Commerce said a squeeze on household budgets and the failure of exporters to capitalise on the low pound meant the UK was “treading water”. Continue reading...

All the day’s economic and financial news, including rolling coverage of a crucial European Central Bank meeting.

David Reed says deterring EU migrants could benefit British workers but devastate the economy; Emma Gee says the contribution of non-EU immigrants to the UK coffers should not be overlooked; while Stephen Games writes that morally it is low-skilled foreign workers whom the UK should encourage to comeThe immigration strategy discussed in the leaked Home Office document could be as beneficial to British workers as the Black Death (Revealed: Tories’ Brexit plan to deter EU migrants from Britain, 6 September). My limited historical knowledge tells me that when the working population was decimated as the bubonic plague spread throughout Britain (and Europe), employers suddenly had to start treating the people working for them decently, even paying them enough to live on.Of course, the document fails to address the impact their proposals will have on every area of economic activity across the whole country: no more cheap crop harvesters, nurses, carers, shop assistants, road cleaners, office workers, taxi and bus drivers etc. Nor does it even think about the massive impact that having to pay people real wages will have on business finances across the whole economy. Continue reading...

John Cryan says bubbles are emerging in parts of market ahead of European Central Bank monetary policy meetingIt is time to start raising interest rates, the chief executive of Deutsche Bank has said, warning that bubbles are emerging in parts of the market.Speaking in Frankfurt, John Cryan said: “The era of cheap money in Europe should come to an end, despite the strong euro.”Related: Business Today: sign up for a morning shot of financial newsRelated: Deutsche Bank boss says 'big number' of staff will lose jobs to automation Continue reading...

Bit by bit, the abuse of disabled people in the UK is being normalised. Talk of a human catastrophe in this country is in no way exaggeratedIt’s often said that the mark of a civilised society is how it treats its most vulnerable citizens in times of austerity. And in the past week, Britain has had not one but two damning judgments – the first from a committee room in Geneva, the second in a courtroom in London.Last Thursday a United Nations inquiry into disability rights in the UK ruled that the government is failing in its duties in everything from education, work and housing to health, transport and social security. Presented with overwhelming evidence of a range of regressive policies and multibillion-pound cuts to disability services, it described the treatment of disabled people in this country as a “human catastrophe”. Continue reading...

South Korean president tells Russian leader that situation risks becoming uncontrollableThe South Korean president, Moon Jae-in, has warned that the crisis on the Korean peninsula risks becoming “uncontrollable” as he sought Russian cooperation in a meeting with Vladimir Putin.

All the day’s economic and financial news, as the Bank of Canada and Stanley Fischer both surprise the markets

Industry leaders urge open approach to hiring from EU after proposals for post-Brexit policy are revealedBritain’s blueprint for a post-Brexit immigration policy, outlined in leaked Home Office documents, would be “catastrophic” for some industries, employers have warned.Corporate chiefs and industry leaders in sectors including housebuilding, aerospace, farming and hotels said the tighter controls could lead to labour shortages and damage the economy, as one of their biggest fears about Brexit shows signs of becoming a reality.Related: Home Office leak shows unpicking of EU nationals' family reunion rightsRelated: Government asks big companies to sign letter backing Brexit strategyRelated: Leaked document reveals UK Brexit plan to deter EU immigrantsRelated: MPs react strongly after post-Brexit immigration plans leaked Continue reading...

Report backed by business leaders says gains from growth are going largely into profits for corporations rather than wagesBritain’s economic model is broken and produces widespread inequality, the Archbishop of Canterbury has warned in a report backed by business leaders.Justin Welby said the UK needed to make fundamental choices about the direction of its economy, in a study that found the gains from growth are being diverted into profits rather than wages.Related: Britain’s economy is broken. We desperately need new ideas | Tom Kibasi Continue reading...

Analysts voice concerns that UK economy is being held back, blaming Brexit uncertainty and weak poundBusiness leaders have blamed the uncertainty created by Britain’s vote to leave the European Union for the slowest pace of output growth in the services sector for almost a year.Financial data provider Markit said Brexit uncertainty and higher import costs arising from the slump in the pound were behind the stumbling performance of the UK’s largest business sector last month.Related: UK construction 'flirting with recession' as Brexit uncertainty bites Continue reading...

Weakness in sterling having positive effect on manufacturers as goods made in Britain become cheaper for buyers overseasBritish manufacturers and retailers are reporting an upswing in sales, despite fears Brexit could hamper future growth, as the weak pound bolsters exports abroad and consumer spending at home.Retail sales increased by 1.3% on a like-for-like basis last month from August 2016, when they fell 0.9%, according to the British Retail Consortium. Meanwhile the EEF manufacturers’ organisation said there was rising demand for goods made in Britain from Europe and the rest of the world.Related: UK construction 'flirting with recession' as Brexit uncertainty bites Continue reading...

A £50bn-a-year green infrastructure quantitative easing programme is feasible, say Prof Richard Murphy and Colin HinesZoe Williams is right: another credit crunch-induced “crash” is likely and the only affordable rescue package will be some form of quantitative easing (With Britain’s addition to debt, another crash is certain, 4 September). This time it must generate jobs for the “left behind” and others, rather than today’s beneficiaries – the property- and share-owning rich. The Green New Deal group showed the potential of such an approach in its proposal for a £50bn-a-year green infrastructure QE programme.This would pay to make the UK’s 28m dwellings and 2m commercial and public sector buildings super energy efficient, dramatically reducing energy bills, fuel poverty and greenhouse gas emissions. It could also tackle the housing crisis by building affordable, highly insulated homes, predominantly on brownfield sites. This form of QE would provide job security and local business opportunities in every constituency, since its infrastructure improvements would take place across the UK. Continue reading...

Proposed cuts to federal agency budgets and changes to employment law benefit only the US president and his cronies

All the day’s economic and financial news, as British builders are hit by concerns over the economic outlook

The word has become a rhetorical weapon, but it properly names the reigning ideology of our era – one that venerates the logic of the market and strips away the things that make us human• Read the text version hereSubscribe via Audioboom, Apple Podcasts, Soundcloud, Mixcloud, Acast &Sticherand join the discussion on Facebook and Twitter Continue reading...

Growth slows to one-year low with analysts as Brexit delays investment plans and saps demand for new office spaceBritain’s construction industry is taking on fewer workers amid a slowdown in commercial work, as economic uncertainty puts projects on hold.Growth in the construction sector fell unexpectedly to a one-year low in August, the closely watched Markit/Cips purchasing managers’ index for the industry showed on Monday.Related: UK construction growth hits one-year low as Brexit worries build - business live Continue reading...

Survey by Lloyds Bank finds people’s confidence in Britain’s financial situation has worsened amid rising pricesWorries about rising inflation among UK consumers are at their greatest in three and a half years, while people’s confidence in Britain’s financial situation has worsened, according to a survey.A monthly poll by Lloyds Bank found that 65% of people felt negative about levels of inflation in July, up from 60% in June and the highest level since January 2014. Continue reading...

Ten years ago the culprit was sub-prime mortgages. Personal credit is out of control in Britain now. We seem to have learned absolutely nothingWhen Provident Financial lost £1.7bn in share value a little over a week ago, a handful of people asked whether this was a Northern Rock moment. The Provident extends high-interest loans to low-income people, and as such could be seen as a bellwether in the manner of a sub-prime mortgage company, the first to go under when debt becomes unbearable, the signal that credit is, once again, about to crunch.Related: Doorstep lender Morses swipes customers from troubled rival ProvidentThere is something obscurely insulting about being warned about household debt by the Bank of EnglandRelated: Drive carefully – I can see a credit car crash up ahead | Phillip Inman Continue reading...

Far from David Cameron’s vision of a strident UK distancing itself from a failing union, Brexit may deliver the oppositeWhen David Cameron set out to create a “two-speed Europe” , the former prime minister did so with the words of the Eurosceptic Tory right ringing in his ears.Europe was doomed. Mounting problems for Greece and rising numbers of immigrants showed that Britain must cut itself free from a failing union. Far from prospering from our membership of the world’s largest economy, the EU was hindering mighty Britannia. Take back control. Let Brussels sink.Related: Slowdown in consumer credit growth spells trouble for UK economy | Phillip InmanRelated: The EU is not the enemy of the state. Time to think again on BrexitRelated: British tourists tell of misery abroad with pound at eight-year lowRelated: We have the power to create the economy we want – let’s use it | Tom Kibasi Continue reading...

This week, the IPPR Commission on Economic Justice delivers a new vision for the UK economy, one that joins prosperity with justice and builds the common goodToday, the unclear prospects of Brexit loom large over our economy and our politics. The vote to leave was, by definition, a vote against the status quo. A majority of British people felt they had little to lose and perhaps something to gain from a radical shake-up of the economy. “Take back control” resonated because it was an expression of a feeling of powerlessness in the globalised economy.The general election that was ostensibly called on the question of Brexit rapidly focused on the state of the country at home – schools funding, NHS deficits, public sector pay, reductions in police numbers. And the increase in voting by people in their 20s and 30s revealed the depth of frustration among younger generations, so many of whom are unable to access decent housing and are weighed down by mounting student debt. This generation expect that they will be poorer than their parents because they will be. Continue reading...

So far this year, at least 140 million people across 37 countries have been left in need of humanitarian aid. But most of them will not get itFor tens of millions of people around the world, 2017 has been a year of disasters. The latest in a long list of catastrophes, natural and manmade, has left more than 40 million in India, Pakistan, Bangladesh and Nepal struggling with extreme monsoon flooding. Many of those affected are the least able to cope – subsistence farmers and the urban poor who can expect little help from their governments. In a world inundated by emergencies, they may be left, literally, to sink or swim. Continue reading...

However confident the Fed is of recovery, there is growing evidence of a slide into outright deflationHurricane Harvey was such a distraction last week that Donald Trump forgot to tweet about his country’s return to 3% GDP growth. When the news came that US second-quarter GDP, when extrapolated over a year, showed the country growing at the fastest rate in the G7, he was busy flying down to Texas to support the relief effort.Trump and his Treasury secretary Steve Mnuchin have promised to deliver 3%-plus growth and here was the first indication that the president’s arrival in the White House had made a difference. In a way, it is just as well he missed the opportunity to brag. The headline figures may look good, but a peek under the bonnet of the US economy makes for disturbing reading. In a report last week a senior City analyst, Albert Edwards, showed that the Trump effect is quite the opposite and much of the life has been sucked out of the American economic juggernaut in the last six months.Related: Trump vows to 'bring back Main Street' by cutting business tax to 15%Related: The president tweeted it – but is the US economy really great again? Continue reading...

A BBC Radio 4 programme examines why experts often get predictions wrong – and meets the people who get them rightWhile accepting the Nobel prize for economics, Friedrich Hayek made an astonishing admission. Not only were economists unsure about their predictions, he noted, but their tendency to present their findings with the certainty of the language of science was misleading and “may have deplorable effects”.This revelation, made about 40 years ago, is a crucial one and yet it has been largely forgotten or ignored. One of the most striking comments before the EU referendum was from Michael Gove. He claimed people in Britain had had enough of experts. This has since become something of a mantra, and polling does indeed suggest that most people place little trust in expert predictions and pronouncements. Continue reading...