The latest UK figures suggest a modest rebalancing of the economy of the kind long wished for by policymakersThe UK economy has settled down into a post EU-referendum pattern. Consumer spending is being constrained by the fall in the value of the pound, which has pushed up inflation by making imports dearer. But manufacturing has started to do better, in part because the weakness of sterling has made exports cheaper.For many years, policymakers have longed wistfully for a rebalancing of the economy towards production rather than consumption. The latest survey of purchasing managers from CIPS/Markit shows that a modest re-adjustment is now under way. Continue reading...

Oil firm joins Goldman Sachs and Shell in declaring big hit in 2017 but admits controversial corporate tax cut will boost future earningsBP has said Donald Trump’s sweeping changes to US taxes will knock about $1.5bn (£1.1bn) off its profits for the end of 2017.The British oil company becomes the latest global firm to report a hit to its earnings from the US corporate tax rate cut, which came into effect at the start of the year after being signed into law in December. Barclays, Shell and Goldman Sachs have made similar statements in recent weeks.Related: Trump tax plan: the key points from the final billRelated: Sanders attacks tax plan as Trump celebrates with friends: 'You all just got a lot richer' Continue reading...

Rising inequality since the 1980s is clearly a serious problem that merits political attention. But focusing solely on trade is not the way to resolve itInequality has become a major political preoccupation in the advanced economies – and for good reason. In the US, according to the recently released World Inequality Report 2018, the share of national income claimed by the top 1% of the population rose from 11% in 1980 to 20% in 2014, compared to just 13% for the entire bottom half of the population. Qualitatively similar, though less pronounced, trends characterise other major countries such as France, Germany, and the UK.Related: Rising inequality? Don't blame the rich Continue reading...

Sector has best three months for growth since 2014 despite slight slip in Markit/Cips PMI figure for DecemberBritain’s manufacturers finished the year on a positive footing, with the strongest three months for growth since 2014 amid resurgent eurozone growth lifting demand for goods.The Markit/Cips UK manufacturing PMI barometer of factory sentiment showed an average of 57 in the three months to December, in the strongest reading since the three months to June 2014. While the gauge dipped to 56.3 last month from 58.2 in November, it remained firmly above the 50 level indicating expansion.Related: Good for factories, bad for shoppers: a Brexit pattern is emerging Continue reading...

Labour frontbencher says millions of families are seeing earnings squeezed so that chancellor can pretend to meet targetsJohn McDonnell has accused the government of relying on millions of British families going further into debt in order to meet Treasury targets.The shadow chancellor said families were set to borrow £445bn by the end of the parliament. He also highlighted official figures showing the ratio between household debt and income had reached a five-year high, with forecasts suggesting it will hit 150% by 2022. Continue reading...

Weak pound will help exports and cheap credit will allow consumers to keep calm and carry on, but it won’t be plain sailingForty years ago, Ian Dury and the Blockheads released Reasons to be Cheerful, Part 3 – listing some of the better things in life as Margaret Thatcher became prime minister in the months following the winter of discontent.Fast forward to the opening days of 2018 and fresh political tumult threatens to cripple Britain once more. There are, however, some reasons to be cheerful about the prospects for the UK economy. Despite the political to-and-fro of the past year, the UK economy enters 2018 in better health than many would have given it credit for.Related: A record-breaking year - the global economy in 10 chartsRelated: Some joy for the business world in 2018: but quite a few fears tooRelated: 2017's top business stories: Whole Foods, hackers and a giant rabbit Continue reading...

Jobs lay at the heart of the president’s campaign but, while employment has continued its Obama-era upward trend, the figures mask lurking structural issuesJobs! Jobs! Jobs! That was Donald Trump’s promise to America when he was elected president last November. So as we approach the end of Trump’s first year in office, how has the job market done?Related: End of the road: will automation put an end to the American trucker? Continue reading...

The powerful forces driving the current nationalist upheaval also present the prospect of a future only previously imagined by Huxley or OrwellMost readers will be familiar with Aldous Huxley’s vision of a dystopian future, Brave New World. Indeed, my contemporaries and I often find ourselves observing that this or that latest invention could have come straight out of Huxley’s nightmare vision.Given the reaction against the ill-effects of globalisation by those who have been left behind – but not left out of electoral and referendum polling booths – it was a clever idea of the British economist Stephen D King to produce a book earlier this year entitled Grave New World. Continue reading...

Predictions for the global economy next year are positive, but our writers also foresee a rise in inequality, and some sectors facing significant problemsThe consensus view among economists is that the global economy will put in a strong performance in 2018, carrying on its strong momentum from 2017. However, that does not mean that every sector and every company will have a trouble-free year. Ryanair’s Michael O’Leary will need to repair staff relations, jobs will leave the City of London and inequality will widen. Our financial and economic specialists predict the big stories in 2018. Continue reading...

A stock market boom, a bitcoin bubble, trade indices at recent highs, a low fear factor, even eurozone GDP is rising. But 2017 hasn’t been all good

Brexit talks progress and Trump tax cuts fuel boom as even fears of war in North Korea, upheaval in Europe and bitcoin bubble fail to dampen spiritsGlobal stock markets have ended 2017 on record highs, gaining $9tn (£6.7tn) in value over the year due to a strong worldwide economy, President Donald Trump’s tax cuts and central banks’ go-slow approach to easing financial support.The FTSE 100 hit a new peak in London, with an all-time closing Continue reading...

All the day’s economic and financial news, as investors count their profits on the final trading day of 2017

National Archives: private warning came just five weeks into Major’s premiership and 20 months before Black WednesdayMargaret Thatcher privately warned John Major that he was in danger of making a mistake of Churchillian proportions on exchange rate policy and risked pitching the British economy into recession, the cabinet papers reveal.Her warning to her anointed successor as prime minister came 20 months before “Black Wednesday”, when the pound crashed out of the European exchange rate mechanism in September 1992.Related: 'Oh dear': John Major's mild-mannered notes on briefing papers revealedRelated: For their eyes only: the secret stories ministers don’t want you to read | Richard Norton-Taylor Continue reading...

British workers to be worse off among wealthy nations as Brexit inflation diminishes pay, TUC analysis showBritain is set to have the worst wage growth of any wealthy nation next year, ranking behind Italy, Greece and Hungary, according to analysis by the TUC.The UK is forecast to come bottom from 32 Organisation for Economic Co-operation and Development wealthy nations for wage performance in 2018, according to the study of OECD figures by the unions’ umbrella group. Continue reading...

All the day’s economic and financial news, as South Korea pledges new regulations on cryptocurrency trading

From fears of City exodus to first interest rate rise in a decade, here’s a recap of the key events of 2017It will be remembered as the year Theresa May triggered article 50 and began the official countdown to Britain’s departure from the European Union. It was also the year of two budgets, one general election and the first UK interest rate rise in a decade. The year was littered with resignations, gaffes, boardroom bust-ups and takeovers, and if you had about $15,000 (£11,200) to spare you could buy one whole bitcoin. Take a look back at some of the significant stories of 2017.Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I'll be spending a lot more time there. #Brexit Continue reading...

Machines threaten jobs generating £290bn in wages and could widen inequality gap, according to IPPR

Adzuna study reports modest rise in average salary for job vacancies while CBI survey shows growth in economic outputThe British economy has received a double boost from reports showing signs of modest wage growth and accelerating output from businesses.According to a study by the jobs search engine Adzuna, the average salary for vacancies advertised online in November was 1.2% higher than the same month a year before – the first annual increase recorded by the website since June 2015. Meanwhile, a survey by the business group the CBI found firms reporting a rise in economic output.

All the day’s economic and financial news, as shares in London close at a new peak

Academics Hugh Goodacre and Jeffrey Henderson voice their concern at the dominance of neoclassical theory in modern economics teaching, while Peter Swann and David Redshaw highlight the failures of recent economic models. John Clifford thinks August Strindberg was right all alongMy colleagues at University College London, professors Blundell, Machin, Attanasio and others, are to be congratulated for providing such a succinct outline of the neoclassical school of thought in economics (Letters, 22 December). The ideas and methods of that school of thought, and those currents of research which accept its intellectual hegemony within the economics discipline (behavioural economics, game theory, etc) should undoubtedly be part of any curriculum taught to economics students today.What is objectionable in the standpoint of such adherents of this dominant school of thought, however, is the doctrine that there are “no schools of thought in economics”, by which they mean, of course, that there is no other school of thought apart from their own. This idea – absurd as it appears to anyone who follows discussions on economic issues in the media and public life – has unfortunately become reality in the economics department of UCL and all too many other universities today, due to the ruthless exploitation by the dominant orthodoxy of its freedom to appoint and promote academic staff. Continue reading...

Bank is one of many financial institutions around the world facing writedowns due to biggest changes to US tax code since 1980sBarclays has said Donald Trump’s US tax changes will knock about £1bn off its profits.The bank said the bill, which was signed into law last week, would make it harder for it to deduct past losses from future tax bills. Continue reading...

Survey by uSwitch finds that half of people worry they will still be trying to clear the debt by next DecemberThe Christmas spending hangover means that Britons who splurged on plastic will start 2018 owing an average of more than £450 on their credit cards – with many fearful the debt will still be haunting them by next Christmas.Nearly £8.5bn has been loaded on to cards to cover the cost of gifts and entertaining, according to research by the price comparison service uSwitch, which found nearly a fifth of consumers had exceeded their Christmas budget as they grappled with rising living costs. Continue reading...

Harvard Business School finds that people are four times more likely to quit a line if there is no-one else waiting behind themNo-one relishes the moment. You are stuck at the back of a queue and as those in other lines sail past and get served, the time to decide arrives. Do you hold your nerve and stay put, switch to another line in the hope it moves faster, or give up altogether?The pressing question has now been tackled by research at Harvard Business School. It found that when a person finds themselves at the end of a queue, they can make decisions that swiftly backfire. And it is all down to our aversion to being last.

Labour MPs write to chancellor saying public have right to see documents examining range of outcomes of BrexitPhilip Hammond has come under pressure to publish another set of hidden documents relating to how a series of possible Brexit outcomes, including no deal, will impact on the economy.

Online discounts and rising prices fail to deter enthusiastic shoppers – but crowd numbers are down on Christmas 2016, analysts sayMillions of Britons have enjoyed a last hurrah in the Boxing Day sales with determined shoppers camping out in the early hours to secure the best bargains although crowds were smaller than in previous years.Shoppers started queuing outside branches of high street chain Next at 12.30am while on Oxford Street, in London a crowd started forming outside Selfridges at 2.30am. However, retail experts said that overall shopper numbers were significantly down on 2016.Related: Black Friday lifts UK retail sales despite income squeezeRelated: Boom time on Irish border as shoppers take advantage of weak pound Continue reading...

An idea whose time has come: Over the holiday season the Guardian is examining themes that have emerged to give shape to 2018. Today we look at intangible economiesNo country is governed by a Capitalist party, although there is no shortage of capitalism on the planet. There have been Socialist parties for socialism, Liberal parties for liberalism and Communist parties for communism. Yet acolytes of the most powerful model of all are reluctant to brand themselves with its name. One reason is that the word “capitalism” was popularised by its critics. The most common usage is pejorative, denoting a system characterised by exploitation of workers by bosses. Another reason is that there are too many kinds of capitalism in practice for any single party to claim ownership of the idea. In the west the pendulum swung between more liberal and dirigiste modes, while the underlying structure stayed remarkably stable. But that doesn’t make it permanent. Already a digital revolution has transformed the way business is done. What if it is changing the nature of capitalism itself?The rise of a handful of vast corporate powerhouses whose business models have no instructive precedent from the analogue-era forces a reappraisal of the way capitalist economies work. The top seven highest valued companies in the world are all in the technology sector. Titans such as Alphabet (which owns Google) and Facebook specialise in products that do not exist in three-dimensional space. Apple and Amazon sell real-world objects as well as concepts, but their fortunes and market dominance have been built on nebulous concepts – models, brands and algorithms. Continue reading...

It could be a better year in Britain’s dysfunctional housing market for first-time buyers and tenants1. Interest rates will stay low

Fear of interest rate rise and Brexit expected to either halt house price growth or result in a small below-inflation riseHouse price growth looks set to judder to a halt in 2018 or at best manage a small below-inflation rise, as the twin spectres of Brexit and rising interest rates put the brakes on the property market.Following what some have called a lacklustre year, homeowners and those looking to sell in the coming months have been told to expect an underwhelming and subdued 2018, with a number of leading commentators predicting UK house prices will either stay flat next year or perhaps rise by 1% or so.

It was a tale of two years – the best of times and the worst of times. But not everything went wrong – from Mata’s 1% to orangutans, we look at the goodHow was it for you? A bit grim? Many people will be eager to see the back of 2017, the year of Trump, Twitter, terrorism, Yemen, Libya and the plight of the Rohingya, as well as environmental degradation and almost daily doomsday warnings about the multiplying threats to sustainable life on earth.But the big, bold headlines tell only half the story – perhaps not even that much. Away from the hysteria of daily news, it is possible to discern progress, joy, breakthroughs and that rarest commodity of all: optimism.Related: Alyssa Milano on the #MeToo movement: 'We're not going to stand for it any more' Continue reading...

Our 20 favourite pieces of the yearEvery year, it seems like the world gets even worse and the Guardian publishes a hundred long reads about it. But this is only an illusion. In fact, we publish 150 long reads each year – there are three every single week! – and most of them are not about the failures of globalisation or the ecological devastation caused by mankind.Catching up with all of our stories from this year would take about 36 hours, if you finished each one in 15 minutes and didn’t take any breaks. But for those of you who can’t spare that kind of time, we have chosen our 20 best articles of 2017 – designed to provide you with at least a few hours of excellent holiday reading. Continue reading...

With superstar backers and sponsorship from mainstream brands, competitive video gaming is hitting the big timeIf there are any doubts that computer games can become a mainstream spectator sport, then Jennifer Lopez and Stan Kroenke are not listening.The superstar singer and Arsenal’s majority shareholder have both put money into eSports teams, as the gaming competitions with millions of followers worldwide aim for even greater public appeal. Lopez has bought into a team franchise for the new Overwatch League, in which teams from cities such as Seoul, San Francisco and London play Overwatch, a mass-participation shooting game. The global competition for the game, which launches in January, also includes the LA Gladiators, run by Kroenke, a serial sports entrepreneur.Related: eSports are real sports. It’s time for the Olympic video games | Tauriq MoosaRelated: The rise of eSports: are addiction and corruption the price of its success? Continue reading...

Funding for public parks is being cut off just when they are needed more than ever to combat the stress of surviving in austerity Britain, says the Parks AgencyThe quietly announced news that the Heritage Lottery Fund is closing its Parks for People funding programme comes as a shock. It should be a matter of huge concern, not only to the 90% of families with children who visit their local park at least once a month, but to all who care about the wellbeing of our towns and cities. Since it was set up in 1996, the programme has transformed hundreds of urban parks from no-go areas to thriving community assets, paying not just for repairs to bandstands, lakes, paths, gates and other features but also for new cafes, toilets, play areas and funding for new staff.Austerity has hit parks departments particularly hard. As a non-statutory service, parks have been in the frontline of the cuts since 2010, with budgets falling on average by 40% – and in some cases by far more. Newcastle upon Tyne has seen a 90% fall, resulting in unprecedented plans to transfer the city’s parks to a charitable trust. Elsewhere, councils such as Knowsley are selling parks for development to fund future maintenance. Users have seen the impact in terms of loss of staff, reduced tidiness and increases in antisocial behaviour. Politicians, of course, have not. Continue reading...

Vacant storefronts are becoming more noticeable in the capital of consumption, as small retailers are being pushed out by wealthy investorsWalk down almost any major New York street – say Fifth Avenue near Trump Tower, or Madison Avenue from midtown to the Upper East Side. Perhaps venture down Canal Street, or into the West Village around Bleecker, and some of the most expensive retail areas in the world are blitzed with vacant storefronts.The famed Lincoln Plaza Cinemas on the Upper West Side announced earlier this week that it is closing next month. A blow to the city’s cinephiles, certainly, but also a sign of the effects that rapid gentrification, coupled with technological innovation, are having on the city.Related: 'For too long, they have generated harm': the fight to remove offensive monuments in New YorkRelated: Hard times for Whole Foods: 'People say it's for pretentious people. I can see why' Continue reading...

As the year draws to an end, the Dow and FTSE 100 are close to record highs – but there could be some volatility aheadIt’s a tradition of stock markets that December usually sees a Santa rally. This year, though, we’ve had a tax rally, thanks to Donald Trump’s business-friendly fiscal reforms, which finally made their tortuous way through the US legislative process.With just a few days left until the end of the year, US and UK markets are close to their record highs, with the FTSE 100 hitting a new peak a couple of days ago. Despite this belated achievement, the UK index has lagged others throughout the year, and even though European markets have fallen back recently on political concerns – German uncertainty and the latest Catalan election result – they have still outpaced UK shares thanks to Brexit worries and a recovering pound. Continue reading...

Outside Brexit Britain, the view looks rosy and borrowing is being pushed to new highs. What could go wrong? Almost everythingThere is a complacency in the air as we stumble into 2018. Global economic forecasts are coated with sugar. Stock markets keep heading skywards and borrowing is at an all-time high. Brexit may be a brick through the window of the UK’s economic outlook, but for the rest of the developed world, the view is decidedly rosy.Such is the exuberance among those with plenty of spare cash that there is a return of borrowing with the sole purpose of betting on stock market gains. To this end, investors are using any asset to hand – their house, their pension or their deposit savings – to get a boost from the alpha funds that promise stellar returns. Bitcoin is another feature of this relaxed attitude to risk. Who needs safety nets when there is no prospect of a fall? It’s not hard to see why the picture looks so rosy and why it is likely to conclude with an ugly denouement. Continue reading...

The value of some houses owned by non-residents is nearly 50% higher than those owned by residents in Toronto, analysis revealsForeign buyers are driving up the prices of homes in Canada’s two largest housing markets, according to research which will intensify the debate around overseas property ownership in the expensive cities of Vancouver and Toronto.

ONS figures show spend in third quarter of 2017 rose 1% on year before as impact of higher inflation hit living standardsSpending by UK households slowed to its lowest level in almost six years during 2017 as the impact of higher inflation hit living standards and forced people to prioritise their basic needs.The latest official figures show that consumers spent less on restaurants and hotels in the three months ending in September, but more on food, rent, fuel bills and transport.

The Green party co-leader Jonathan Bartley and others extol a universal basic income; academics including Orazio Attanasio defend economics and its models; the Adam Smith Institute’s Tim Worstall writes on the value of household labour; and William Sharp recalls the subtitle of Small is BeautifulIn decrying a universal basic income, Sonia Sodha has set up a straw man argument (Money for nothing is no panacea, 18 December). No serious proponent of UBI that I work with believes it is a silver bullet. Nor do we believe that it will suddenly fix the modern economy. It’s clear to all that the current economic system is broken. Inequality is rising, as are rates of depression, self-harm, isolation and loneliness, and our planet is being ruined by a system that values growth at all costs. We know that radical changes are also needed to our tax system, to employment rights, and to working practices. But UBI is part of changing the agenda. It turns on its head the way we view work and welfare, and it is one response to the important question we should all be asking: who is the economy for?Business as usual – whether that be the welfare state designed for a different age, or exploitative, endless work – should not be the only option. A basic income would provide everyone with basic security, but also choice. It would give them the freedom to explore life outside of work, taking the strain off both individual workers and our planet. It is a revolutionary idea that would invigorate communities and individual wellbeing.

Net borrowing at £8.7bn in November but chancellor warned improvement in public finances likely to be cut short in new yearPhilip Hammond has been handed an early Christmas present after government borrowing dipped in November, beating City expectations that the UK’s slowing economic growth would send the public finances deeper into the red.Figures from the Office for National Statistics (ONS) show public sector net borrowing, excluding state-owned banks, fell to £8.7bn in November, down £200m on the same month last year.

The number of cars made in UK factories fell 2% in the first 11 months of the year, putting the industry on course for its first annual fall in production since 2009, when Britain was in the depths of the financial crisis

What caused the slowdown and what’s in store for 2018? Two former MPC members discuss the economic indicatorsProfessor of economics at Dartmouth College, New Hampshire, and member of the Bank of England’s monetary policy committee from June 2006 to May 2009Related: Brexit economy: a turbulent year ends on steadier groundRelated: How has the Brexit vote affected the economy? December verdict Continue reading...

Each month we look at key indicators to see what effect the Brexit process has on growth, prosperity and trade in the UKRelated: Brexit economy: a turbulent year ends on steadier ground Continue reading...

Households appear to defy cost of living squeeze and markets seem more confident now Brexit talks have moved on to tradeBritain’s economy is closing a turbulent year on steadier ground, as households defy the biggest squeeze on disposable income in living memory, a Guardian analysis of economic news over the past month shows.In a period in which Theresa May won a deal with Brussels to move the Brexit talks forward to focus on trade, the Guardian’s monthly tracker found pockets of strength in the economy – even as businesses express increasing concerns over the size of the challenge to come.Staying in the single market and customs unionRelated: How has the Brexit vote affected the economy? December verdict Continue reading...

Two young men have had the terrible ordeal of being wrongfully charged for one of the worst of crimes. But this is a failing of process. It must not be an excuse to fan the flame of misogynyThe Metropolitan police are reviewing 30 pending rape prosecutions in London after two cases collapsed because of a failure to disclose evidence that would have helped the defence in a timely manner. On Tuesday, the case against 25-year-old Isaac Itiary, charged with the rape of a child under 16, collapsed. A week ago, all charges against 22-year-old Liam Allan were dropped. He had been on bail for two years facing a dozen charges of rape and sexual assault. Both young men have endured the life-changing experience of being charged with a terrible crime that they did not commit, that carried the threat of a long prison sentence.Neither of these cases should ever have happened. In July, at just the time Mr Itiary was charged, a joint review by the inspectorates of the Crown Prosecution Service and the police issued the bluntest of warnings: both process and culture relating to disclosure were so severely flawed as to jeopardise the likelihood of a fair trial. In other words, a disaster was waiting to happen. Now it has. Continue reading...

Bank of England governor Mark Carney up before Treasury committee

Fund trims growth forecast as Christine Lagarde strongly defends pre-referendum prediction of slowdown from leave voteThe International Monetary Fund has strongly defended its gloomy forecasts for the UK after Brexit, saying pre-referendum warnings of slower growth were coming true.Christine Lagarde, the fund’s managing director, said the vote to leave the EU in June 2016 was already having an impact and Britain’s weaker growth this year was in contrast to accelerating activity in the rest of the world.Related: IMF welcomes Brexit progress but cautions timeframe is ambitious – business live Continue reading...

Snow and consumer spending squeeze affect number of shoppers on high street, while Toys R Us may enter administrationNearly 45,000 retailers are in financial distress this Christmas as a snowy weekend and the squeeze on consumer spending power hit sales after the Black Friday rush.While Toys R Us faces potential administration on Thursday if a deal cannot be struck with the pensions lifeboat, there has been a 22% increase in the number of retailers, nearly 8,000 more, facing “significant financial distress”, according to a survey by the insolvency advisory company Begbies Traynor. Continue reading...

Donald Trump has said his first major legislative victory would be a ‘big, beautiful Christmas present’ for Americans

Clergy members, emergency staff and police officers among those hardest hit by inflation outstripping wage risesMany of those working on Christmas Day, including members of the clergy and the emergency services, will be paid less than a decade ago, with little sign that the earnings squeeze will fade in the new year, according to analysis.Real wages for the most-worked jobs on 25 December, barring kitchen staff, have fallen since 2007 due to rising inflation and meagre increases in pay, a TUC study has found. Continue reading...

Areas in Midlands and north of England, where support for leaving EU was high, have most exposure to trade consequencesThe UK regions that voted to leave the EU are more economically exposed to the effects of Brexit than anywhere else in Europe, research suggests.A University of Birmingham study examined the degree to which EU regions were exposed to the possible negative trade-related consequences of Britain’s departure and found areas in the Midlands and north of England, many of which voted for Brexit, had the greatest exposure. Continue reading...