Policies to shore up the banking system have paid off in the US and the UK, with Europe catching up, but some big risks still remainIn recent weeks, policymakers on both sides of the Atlantic have affirmed that the financial system is sound and stable. The US Federal Reserve announced in June that all US banks passed its latest annual stress test. And the Fed chair, Janet Yellen, has now suggested we might not experience another financial crisis “in our lifetimes”.At the same time, the Financial Stability Board (FSB) – which monitors regulatory practices around the world to ensure that they meet globally agreed standards – has declared, in a letter to G20 leaders, that “toxic forms of shadow banking” are being eliminated.Related: Greek debt: IMF and EU's quick fix isn't enough | Mohamed El-ErianRelated: Why financial regulators are always fighting the last war Continue reading...

It is a bit rich for Facebook’s CEO to back the idea of people living on a meagre state handout while his company does everything it can to minimise its tax bill

Dearer imported ingredients such as Spanish juice, French butter and Danish bacon will raise the price of a family breakfast by £3, says KPMGShoppers would be forced to pay £3 more for a traditional British fry-up if the government fails to secure a trade deal with the EU, piling more pressure on already cash-strapped consumers.A typical basket of ingredients for a family breakfast could rise by almost 13% from £23.59 to £26.61 according to a report by KPMG.Related: German industry warns UK not to expect help in Brexit negotiationsRelated: I'm beginning to think Brexit may never happen, says Vince Cable Continue reading...

It’s been a decade since the Bank last raised borrowing costs but if wages go up and the pound rallies, a hike could be on the agendaThere is more fuel for the raging debate around UK interest rates this week, with official figures on pay growth out on Wednesday. Investors and policymakers alike are looking for any signs that a tight labour market can translate into faster pay growth, a trend that has so far proved elusive this year. If wages do start to get going again, the pound is likely to rally as traders price in a greater chance of a 2017 interest rate rise.This month marks a whole decade since the Bank of England last raised borrowing costs. Since then, the only way has been down and interest rates are currently at a record low of 0.25%. But that could be about to change if the latest noises from Threadneedle Street’s policymakers are anything to go by – with the obvious health warning that previous hints of rate hikes have come to nothing. Continue reading...

Household disposable income is squeezed by cost of living increase, prompting fall of 0.3% in spending in latest quarterHousehold spending has fallen at the fastest rate in almost four years as rising prices have made consumers less willing to splash out on furniture, clothing and trips out.Spending fell by 0.3% between April and June compared with the same period a year earlier, the biggest drop since the third quarter of 2013, according to Visa’s consumer spending index. Continue reading...

Stagnant pay for men over past two decades and fast-rising earnings for women mean families relying on dad’s pay alone are more vulnerable to hardshipFamilies who rely on a fathers’ earnings alone are at greater risk of poverty than other households, with average incomes stagnant for the past 15 years, according to analysis by the Institute for Fiscal Studies.The IFS said that because the father works in most single breadwinner households, those families have not benefited from the relatively large increases in women’s earnings since the mid-1990s. Continue reading...

Britain has deep-seated problems demanding a strong restructuring plan. The only plan so far is patchy and flawedA hung parliament. Inflation going up but growth slowing. A divided nation ill at ease with itself. Welcome back to the 1970s, like now a time when Britain was forced to take a long, painful look at itself.Make no mistake, this is a good thing. Whether you are in favour of hard Brexit, soft Brexit, clean Brexit or no Brexit, it should be clear that there is something fundamentally wrong with the economy. The same old problems keep surfacing: too small an industrial base; too much debt; too great a geographical divide between the rich south and the rest of the country; too many poorly paid low-productivity jobs. Continue reading...

Friday’s jobs figures were impressive, but wages remain low, and the economy appears becalmed. The president might have to get used to sluggish growthJune shone a little brighter for Donald Trump’s plans to Make America Great Again. After several months of disappointing jobs growth, US hiring picked up steam again. But beneath the surface there’s a problem for the president: the US economy appears to be running out of gas.On Friday, the Bureau of Labor Statistics said the US had added 222,000 new jobs in June, comfortably beating expectations. But, once again, most of those jobs were in low-paying industries, and wages are barely keeping pace with inflation. Manufacturing languished while food services and healthcare led the pack.Related: The only good news about Trump's budget? It's unlikely to pass Continue reading...

Borrowing is getting out of control, the pound is weak and wages are likely to grow. But there will be no rise in the cost of credit for a long timeArguments for the Bank of England to raise interest rates are many and growing. It’s why an increasing number of Threadneedle Street policymakers have voted for a rise and even the governor Mark Carney has felt the need to hint that an increase is not too far away.Top of the list is the business cycle. This esoteric term is often used in economic circles to describe the natural lifespan of an economic boom, or at least consistent expansion.The economy is already weakening and the main measure of economic activity, GDP, is likely to slump Continue reading...

Six Tory MPs from across the party divide are running for chair of the powerful Treasury select committee. What are their chances?A hotly contested race for one of Westminster’s most coveted jobs enters its final stages this weekend as six Conservatives battle to run the powerful Treasury select committee.Once seen as a consolation prize for MPs passed over for a cabinet seat, since the financial crisis of 2008 the occupant has become better known – and arguably more influential – than many ministers. Continue reading...

EU threatens ‘counter-measures’ if Trump takes action to protect the US steel industry – and one of the targets could be bourbon whiskey from KentuckyThe US bourbon industry has warned that its business and consumers around the world will be harmed if the European Union acts on a retaliatory threat to target American whiskey exports.At the G20 summit in Hamburg on Friday, the European commission president, Jean-Claude Juncker, said that if the US took measures against Germany and China’s steel industries, the EU would “react with counter-measures” within a few days.Related: 'Battle mood' EU threatens bourbon whiskey in US steel trade row Continue reading...

Politicians must face up to the costs of public sector pay rises, reversing welfare cuts and boosting governance, says Resolution FoundationPhilip Hammond will have to rip up the government’s deficit reduction plan or increase taxes for most of the population if he decides to end seven years of austerity by sanctioning higher public sector pay, reversing welfare cuts and providing extra cash for Whitehall departments, a thinktank has said.The Resolution Foundation said it was possible for the chancellor to do a U-turn in his autumn budget, but only if he was prepared to increase borrowing by more than £100bn over the next four years or to make individuals and companies pay more tax.Related: Boris Johnson: lift 1% ceiling on public sector pay increasesRelated: Even the IMF says austerity doesn’t work. It’s the zombie idea that will not die | Phil McDuff Continue reading...

Chancellor welcomes business leaders’ call for indefinite delay to leaving single market as Liam Fox appears to challenge his stancePhilip Hammond has welcomed an intervention by business leaders who called for an indefinite delay in Britain’s departure from the European single market and customs union and said that people wanted to see a “sensible Brexit”.The chancellor insisted he was happy to see the CBI making its voice heard, but his stance was apparently challenged by the trade secretary, Liam Fox, who said it would not be possible to indulge a “perpetual transitional period”.

Jeremy’s advice column in Guardian Money has been vital to navigating the modern workplace, say Richard Gilyead and Jane PotterI was very sorry to learn that Jeremy Bullmore’s workplace advice column (Dear Jeremy, 1 July) is coming to an end. Anyone who wants to understand what it is like to work in a late-capitalist, neoliberal world, and why British productivity is so poor, could do worse than read the endless complaints of frustrated careers and incompetent management that he has handled with such gentle wisdom. Perhaps his columns should be donated to a leading business school as a research archive?

Britain’s trade gap widened in May, and industrial output misses forecasts after a drop in manufacturing output

Drop in manufacturing, construction slowdown and widening of trade deficit knock pound lower against dollar euroA drop in manufacturing output, a slowdown for the construction industry and a widening in Britain’s trade deficit have doused expectations that the Bank of England will raise interest rates over the coming months.

Jean-Claude Juncker says EU would react with countermeasures within days to any action by Donald TrumpThe European Union is prepared to impose countermeasures within days if Donald Trump takes action to protect the US steel industry, the European commission president has said.

The Save Our Schools campaign is just one example, but all across the UK an ever-increasing range of people are being driven to protest

Politicians say that it’s sound finance, when in fact it’s a tool used to demonise immigrants and profit from ‘working-class concerns’

It was the international trade secretary’s moment in the spotlight. He’d dressed for the occasion – but he hadn’t done much elseSome might say that Liam Fox has landed his ideal job. As international trade secretary, his mission is to jet around the world doing a bit of meet-and-greet over dinner. Indeed, as no trade deals can be signed before Britain leaves the EU, and only the vaguest expressions of future interest can be made so long as the terms of the divorce remain unknown, the Flying Fox is rather obliged to do the bare minimum. And with lengthy transitional arrangements looking increasingly likely, the minister’s time in office could well develop into an extended sabbatical.To his credit, the Flying Fox made little effort to imply he was finding his responsibilities in any way onerous in his first departmental questions of the new parliament. He spoke lyrically about how he had met 20 trade ministers in order to deepen relations before doing any actual work, and how he was now flat-out busy preparing for the Commonwealth summit. Choosing the wine, working out the seating plan and ordering the flowers.Related: Liam Fox: BBC would rather see Britain fail than Brexit succeedRelated: Wimbledon strawberries to stay British after Brexit – probably Continue reading...

It’s easy to see the return of two-party politics as a return to the 1980s, but new problems need new solutions

Real disposable income per head fell 2% in first quarter of 2017 from year earlier, the steepest decline since end of 2011Rising prices in the wake of the Brexit vote have put the tightest squeeze on household incomes for more than five years, according to official figures on Britons’ economic wellbeing.

Joseph Rowntree Foundation says inflation and benefit cuts are pushing decent standard of living further out of reachRising inflation and less generous state benefits have made it harder over the past year for families on tight budgets to enjoy what the public considers a decent standard of living, according to one of Britain’s leading thinktanks.The Joseph Rowntree Foundation (JRF) said that despite an above-inflation increase in the “national living wage”, low-income families were falling further behind a minimum income standard.Related: Consumer confidence is lowest since Brexit vote aftermath, survey findsRelated: Public sector pay cap is matter for future budgets, says Grayling Continue reading...

Shinzo Abe to meet Donald Tusk and Jean-Claude Juncker in Brussels – but UK exporters likely to see no gain due to BrexitThe European Union and Japan are on course to sign a trade deal on Thursday, after talks gained impetus in the wake of Donald Trump’s threat to put up barriers to international commerce.Cecilia Malmström, the European trade commissioner, announced she had reached a political agreement with the Japanese foreign minister, Fumio Kishida: “We ironed out the few remaining differences in the EU-Japan trade negotiations,” she tweeted. “We now recommend to leaders to confirm this at summit.”Related: Japan seeks early free trade talks with UK amid Brexit fearsRelated: Records come round again: Sony to open vinyl factory in Japan Continue reading...

Narrowly pursuing national interests could damage all countries, lender says before Hamburg meeting on FridayThe International Monetary Fund has warned leaders in the run-up to the G20 summit in Hamburg that they are putting at risk a recovery in global growth by pursuing national policies at the expense of internationally agreed rules on trade and climate change.Related: Hamburg braces for G20 violence as tensions rise over police tacticsRelated: Are you protesting at the G20 summit in Hamburg? Tell us why Continue reading...

Easing of austerity policies aimed at reducing deficit would lead to Greek-style economic collapse, claims the PMTheresa May raised the spectre of a Greek-style economic collapse if Britain fails to press ahead with tackling the deficit on Wednesday, as she was challenged repeatedly by Jeremy Corbyn over the public sector pay cap.With intense political pressure on the prime minister – including from her own cabinet colleagues – to ease the strain for cash-strapped public servants, including nurses and teachers, she warned MPs about the risks of loosening the purse strings.Related: PMQs verdict: Corbyn goes on offensive as May channels Osborne Continue reading...

Heather Stewart is joined by Rafael Behr, Polly Toynbee and Sam Hall to discuss the Tory wobbles on the public sector pay cap. Plus: Labour’s Baroness Smith on how Brexit bills will fare in the Lords and Cathy O’Neil on regulating big dataAs public sector pay becomes the latest political battleground, cabinet splits surface as Downing Street struggles to keep control. Are key Tories softening their stance on austerity – or is it just the early pangs of the race to succeed Theresa May?Joining Heather Stewart to discuss it all are Guardian columnists Rafael Behr and Polly Toynbee, plus Sam Hall of the Conservative think tank Bright Blue. Continue reading...

Business optimism hits second-lowest level since 2011, as service sector firms are buffeted by Brexit-related worries

Demand cools after strong first half in latest sign consumers are becoming reluctant to commit to major spending decisionsNew car sales in the UK went into reverse for a third month in June in the latest sign that consumers are becoming increasingly reluctant to commit to major spending decisions.Sales fell by 4.8% year on year last month to 243,454, following an 8.5% drop in May and a 19.8% slide in April, according to the Society of Motor Manufacturers and Traders (SMMT). In the first half of the year overall, new car sales fell by 1.3% to 1.4m vehicles, which was still the second biggest first half on record.Related: All Volvo cars to be electric or hybrid from 2019 Continue reading...

It managed to escape a deep crisis after oil prices plummeted – but prospects don’t look as promising as they did five years agoWhen the Russian president, Vladimir Putin, meets his US counterpart, Donald Trump, at this week’s G20 summit in Hamburg, he will not be doing so from a position of economic strength. To be sure, despite the steep drop in oil prices that began three years ago, Russia has managed to escape a deep financial crisis. But while the economy is enjoying a modest rebound after two years of deep recession, the future no longer seems as promising as its leadership thought just five years ago. Barring serious economic and political reform, that bodes ill for Putin’s ability to realise his strategic ambitions for Russia.Back in 2012, when Putin appeared onstage with the Nobel laureate economist Paul Krugman at a Moscow bank conference, Russia’s 1998 economic crisis seemed a distant memory. With oil prices well over $100 a barrel, the government’s coffers were bursting. So Putin could proudly contrast Russia’s government budget surplus with the large recession-driven deficits across the west. He surely delighted in having Russian audiences hear Krugman’s view that western democracies had come up badly short in handling the global financial crisis.Related: First meeting for Trump and Putin: what will the power dynamics reveal? Continue reading...

The decade-long flatlining of Britain’s economy has hit living standards – firms have to be weaned off plentiful, low-skill labour to invest in new kitBritain’s economy has moved sideways over the past decade. That’s the main message from the latest set of official figures for productivity which, once again, are dismal.It is not just that the performance in the first three months of 2017 was poor. The 0.5% quarterly drop in output per hour worked meant productivity fell back below where it was in the last quarter of 2007, the period immediately before the economy nosedived into recession.Related: UK service sector growth hits four-month low as political uncertainty bites - business live Continue reading...

Slump in June completes ‘triple whammy’ of weak data, reflecting a lack of consumer confidence and political uncertaintySlowing growth across Britain’s services companies in June completed a “triple whammy” of disappointing economic news this week that also saw growth in the construction and manufacturing industries fade in response to Brexit uncertainty and weak consumer confidence.Activity in the services industry, which accounts for almost 80% of economic activity, fell to a four-month low in June, dragging down the all-sector IHS Markit/CIPS purchasing managers index (PMI) from 54.5 in May to 53.9 in June, the lowest since February.Related: Bank of England's Michael Saunders: 'Prepare for higher interest rates' Continue reading...

Consumers who put £1,000 cash in a savings account in 2007 will now have £878 in real terms, say expertsIt has been a difficult decade for savers. For 10 years they have suffered falling or ultra-low interest rates, leaving them in the red on their deposit accounts when they might reasonably have expected a modest gain.The last time the Bank of England put up interest rates was on 5 July 2007. But the financial crash put paid to further rises. In the next 20 months it tumbled to 0.5% and then further in the wake of last year’s Brexit vote to 0.25%. Continue reading...

Laura Pidcock, the new Labour MP for North West Durham, criticises the ‘archaic’ parliamentary system and calls for an end to the indignity caused by austerity, in her maiden parliamentary speech

Transport secretary says decision will be taken in the autumn, despite senior Tories’ calls for quicker easing of controlsChris Grayling, the transport secretary, has dampened hopes of an imminent lifting of the 1% public sector pay cap for teachers, police and prison officers, saying the issue was a matter for future budgets.He said a decision on the future of the cap would be taken collectively by the cabinet at the next budget in the autumn, despite signals from some senior Tories – including Michael Gove, Boris Johnson, Justine Greening and Jeremy Hunt – that they would like to see a quicker easing of the controls. Continue reading...

Thinktank says replacing maintenance grants in England hits students from lower-income households hardest

The MPC member on why he voted for a rise – and why policymakers should not hold fire during Brexit talksHouseholds should prepare for interest rates to rise as the Bank of England withdraws some of the emergency support it injected into the economy in the wake of last year’s Brexit vote, a top policymaker has warned.Michael Saunders used a Guardian interview to explain why he had voted for a rate rise last month and to emphasise that it was no longer necessary for Threadneedle Street to keep its foot to the floor with record low borrowing costs.Related: Bank of England edges closer to increasing UK interest rates Continue reading...

Threadneedle Street tells credit card and personal loan providers to stick to their terms and conditionsThe Bank of England is stepping up its scrutiny of banks and other lenders on credit cards, personal loans and car purchases amid fears that growing consumer debt could rebound on the banking system.Threadneedle Street is writing to the firms it regulates after reviewing the consumer credit sector, where lending is growing at 10.3% a year – outpacing the 2.3% rise in household income.Related: Bank of England tackles consumer credit problems, as construction growth slows - business liveRelated: Business Today: sign up for a morning shot of financial news Continue reading...

Former British PM says ministers calling for public sector pay cap to be lifted wanted to spend money they might need in futureDavid Cameron has described critics of austerity as “selfish”, saying their calls to boost spending and raise public sector pay may appear compassionate but would simply saddle future generations with debt.The comments triggered a furious response from Labour and the Lib Dems, who described the former prime minister as totally out of touch, claiming it was astonishing he could make the argument when nurses were turning to food banks to get by.Related: The Guardian view on public sector pay: Hammond stares into the abyss | EditorialRelated: Martin Rowson on the Conservatives and public sector pay – cartoon Continue reading...

Voting to impoverish public servants is bad enough, laughing about it is contemptuous and cold-hearted. They don’t deserve their power

The Bank of England has given lenders a deadline to prove they are adequately protected against credit risks

Wages are falling in real terms thanks to Conservatives’ 1% pay cap amid rising inflation, official figures showWhen Theresa May took the stage at the Conservative party conference last autumn she reprised her pledge for a fairer economy. Specifically, she homed in on pay growth, or the lack of it.“Our economy should work for everyone, but if your pay has stagnated for several years in a row and fixed items of spending keep going up, it doesn’t feel like it’s working for you,” the prime minister declared. Continue reading...

Public servants’ pay continues to plummet in real terms, but the consensus is growing that they should receive a rise. The government must listenAlthough it seems longer, it was just three weeks ago that Conservative MPs returned from the election with tales of lost votes from nurses and teachers – and the unfairness of artificial public sector pay caps exploded into the mainstream of political debate. Today there is yet further evidence that solving the public sector staffing crisis is urgent: for every five new nurses and midwives joining the NHS, six experienced staff leave.It should have been no surprise that the government artificially holding down pay for 5.5 million workers was an election issue. Not when midwives are down over £3,000 a year in real terms, and nurses, teachers and firefighters are all down over £2,000.Related: Applauding a public sector pay cap? Tories are cheering their own demise | Polly ToynbeeEveryone in the public sector has seen their real pay fall year on year since 2010 Continue reading...

All the day’s economic and financial news, including new manufacturing reports from around the world

Reforms are building a safer, simpler and fairer financial system, FSB chairman and Bank of England governor tells G20 leadersFundamental reforms undertaken since the US sub-prime mortgage market triggered the deepest global recession since the second world war have created a safer, simpler and fairer financial system, Mark Carney has said.With the 10th anniversary of the financial crisis next month, Carney said the world’s biggest banks were stronger, misconduct was being tackled, and the toxic forms of shadow banking were no longer a threat.Related: Business Today: sign up for a morning shot of financial news Continue reading...

Open University says firms pay extra for recruitment, temps and inflating salaries and advises them to train their staffSkills shortages in Britain are costing businesses more than £2bn a year in higher salaries, recruitment costs and temporary staffing bills, according to research by the Open University.Its survey of 400 firms found 90% had faced difficulties recruiting workers with the required skills in the last 12 months. The findings will add to concerns that employers are already struggling to fill key jobs even before a potential clampdown on immigration once Britain leaves the EU.Related: Almost half of highly skilled EU workers 'could leave UK within five years' Continue reading...

A new global report is putting pressure on publicly listed companies to disclose their risk to climate changeSome of Australia’s largest listed companies, including Woodside, Rio Tinto and Santos, are likely to face sweeping changes to the way in which they model, plan for and disclose risk from climate change to investors. How they respond will affect their ability to attract funding from lenders, insurers and superannuation funds who are under pressure to stress-test investments for a carbon-constrained future.The release last week of a report by the Financial Stability Board’s taskforce on climate-related financial disclosures is expected to add pressure on publicly listed companies to formalise their climate risk disclosure practices – particularly through scenario analysis – or risk investors pulling finance and rating agencies making assumptions about their risk profile.Related: No more business as usual: the corporates stepping up to save the planetRelated: Business is leading the transition to renewables while politicians dither Continue reading...

Foreign secretary becomes latest frontbencher to demand change of direction on austerityBoris Johnson has waded into the escalating cabinet row over public-sector pay, throwing his weight behind calls for the 1% ceiling on wage rises to be lifted for austerity-weary workers including nurses and teachers.The chancellor, Philip Hammond, has come under increasing pressure to ease spending constraints in several areas since the general election deprived Theresa May of her majority. Johnson is the latest cabinet heavyweight to demand a change of direction. Continue reading...

Years after the event, the bank is due in court on Monday for a hearing into the fundraising it conducted in the maelstrom of the financial crsisWestminster magistrates court will be the venue on Monday for the opening chapter in what is expected to be a landmark case arising from the 2008 financial crash. The former Barclays chief executive John Varley and three of his former colleagues – Roger Jenkins, Tom Kalaris and Richard Boath – are the first senior bankers to face criminal charges arising out of the crisis, and are due to appear in court in the afternoon.The four are charged with offences following a five-year investigation into the events surrounding the £11.8bn emergency fundraising conducted by the bank in 2008 that allowed it to avoid a bailout by the taxpayer. Continue reading...