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

Prime minister Narendra Modi’s policy of stopping issue of higher value banknotes has weakened economy, say expertsIndia has posted its slowest growth rate in two years, ceding its status as the world’s fastest-growing major economy to China, with economists blaming the downturn partly on last year’s shock decision to recall the country’s two highest-value bank notes.Related: India withdraws 500 and 1,000 rupee notes in effort to fight corruptionRelated: India's small businesses facing 'apocalypse' amid biggest financial experiment in historyRelated: India's banknote ban: how Modi botched the policy yet kept his political capital Continue reading...

Drinks industry says 75cl bottle now costs £5.56 with champagne heading £1 higher courtesy of extra duty and rising import cost following Brexit voteWine lovers are suffering a Brexit-related hangover as the price of the average bottle has soared since the referendum to hit an all-time high of £5.56.Prices have risen more in the first three months of the year than in the past two years, according to the drinks industry, which is warning of more increases ahead.Related: Wine: how to beat post-Brexit price rises Continue reading...

Nationwide says average cost of home fell 0.2% last month with price growth slowing further in 2017 as inflation squeezes household incomeHouse prices in Britain have fallen for the third month in a row, for the first time since the height of the financial crisis in 2009.The fall further dragged down the annual growth rate in May, to 2.1%, the lowest in nearly four years, providing further evidence that the housing market is losing steam, according to Nationwide, the UK’s biggest building society. Continue reading...

While the economy needs more borrowing in order to keep growing, personal debt is already at dangerously high levelsAs the election on 8 June nears, the debate has intensified over how much Britain’s frothy cappuccino-drinking economy can cope without endless dollops of interest-free credit.Financial regulators are worried about it. So are the debt charity workers who pick up the pieces when the debt merry-go-round grinds to a halt. And they should be worried. Many of the biggest, shiniest new cars zipping round UK streets would still be sitting on the garage forecourt without ultra cheap credit deals that rival mortgages for their rock-bottom rates. Continue reading...

Latest GDP figures show that Britain lagged behind other advanced economies in the first quarter of this year

Britain’s 0.2% growth rate puts it on a par with Italy, while Canadian economy expanded by 0.9% in first quarterThe UK has slumped to the bottom of the league table of advanced economies after Canada registered stellar growth in the first three months of the year.Canada was the final member of the G7 to report its growth figures, which confirmed the UK as officially the joint worst performing member so far this year. The announcement marked a significant decline for the UK economy, which a year ago was outshining Germany, the US and Japan. In February it was announced that Germany had pipped the UK as the fastest-growing G7 nation during 2016 by 10 basis points. Continue reading...

Free-market economics has undermined the fabric of society and left millions behind – and manifestos across the political spectrum recognise itSomething strange is happening in British politics. I’m not talking about the divisive quagmire of Brexit or the frightening rise of xenophobia. I’m talking about a broad cross-party agreement that the economic model of the last half a century has failed. I’m referring to an (almost) ubiquitous call across the multi-coloured manifestos of the 2017 election to start building “an economy that works” – for everyone.Isn’t it a bit odd to find this exact same turn of phrase across the political spectrum: blue, red, orange, green? (Only Ukip has no truck with an economy that works.) It looks a little bit like someone has been copying someone else’s homework; and it isn’t entirely clear who. When Theresa May first used the phrase, on the steps of Downing Street back in July 2016, she made it sound like her own idea. But in fact she lifted the language – lock, stock and barrel – from a speech Jeremy Corbyn gave at the launch of Labour’s inaugural state of the economy conference. He promised to “create an economy that works for all, not just the few”.Related: Is Finland’s basic universal income a solution to automation, fewer jobs and lower wages? Continue reading...

Remix by anti-austerity band Captain Ska mocking May’s claims of ‘strong and stable leadership’ tops Amazon UK downloads

Finance minister insists Athens isn’t planning to waive its next loan, as he pushes creditors for debt relief

The spread of zero-hour contracts and a weak pound mean many employees are worse off than they were before Brexit vote, warns Standard & Poor’sRising prices on the back of the Brexit vote and the trend towards more insecure work will rob British workers of any growth in real wages this year, with repercussions for the wider economy, a new report has warned.With just over a week to go until a snap general election largely focused on looming Brexit negotiations, economists at the ratings agency Standard & Poor’s are the latest to highlight the blow to living standards from last year’s vote to leave the EU. Continue reading...

State subsidies to promote home ownership is not always a good thing – it hikes public debt, cuts labour mobility and often boosts prices not ownership levelsAt the end of the first quarter, according to the Federal Reserve Bank of New York, American consumer debt for the first time exceeded its previous peak (in dollars), reached in the third quarter of 2008, just as the global financial crisis erupted. Although car loans and student debt have been rising especially rapidly, housing debt remains more than two-thirds of the $12.7tn total.As a share of income, household debt is nothing like the threat to the national economy that it was 10 years ago. But the new statistic is a reminder that American households don’t save enough.Related: Can Donald Trump better renegotiate Nafta? Yes, by bringing back TPP Continue reading...

Readers respond to the Institute of Fiscal Studies’ criticisms of the parties’ general election manifestosLike a lot of people, I was very interested in the Institute for Fiscal Studies’ criticisms of the parties’ policy proposals – given that the latter would no more than somewhat ease the position of our severely cash-strapped health and social care services (Report, 27 May). Could the IFS now do us all a favour before this election gets underway and tell us once and for all what they think it would cost to “fully meet our public care needs” (viz, the figure which would meet all major needs, fully cover ongoing costs, and ultimately repay borrowing for associated capital expenditure) – as, for example, “a percentage increase on existing direct tax rates”. Would, say, another 10% in all rates (2p on the 20% rate, 4p on 40% and 4.5p on the 45% rate) meet the bill? Or would the figure be more like 20% on all rates? Or some yet higher figure?At least we would then reach square one in deciding what we should do to fully sort this out, at and beyond this election: pay the estimated direct tax increases; find other ways of raising revenue; get people to take out more private insurance; or contemplate continued strain on our ill and our frail old people till kingdom come?. I’m surprised that none of the reporters at the IFS presentation actually raised this. Come to think of it, the Guardian’s own economic commentators may have their own estimates. In any event could someone, somewhere please enlighten us, preferably before we take to the booths?

Action group has told members it has accepted 82p share offer, presented hours before high court case was due to beginThousands of private investors who claim they were misled by Royal Bank of Scotland and its former chief executive Fred Goodwin into investing in the bank before it was rescued by the taxpayer are being urged to settle their legal case.An action group representing investors involved in the long-running legal battle has told its members it has decided to accept the 82p-a-share offer, which RBS presented to them just hours before the case was due to begin last Monday.Related: RBS shareholders refuse to settle in effort to force Goodwin to take stand Continue reading...

The progress of the past 50 years has stalled, and the government has stopped listening – that’s why we’re holding Tuesday’s disability hustingsNext year I’ll be leaving school and I don’t know what that will mean for my life. Obviously a lot of 18 year olds feel this way, but for me it’s different. I have profound physical disabilities and a learning disability.This is my first time voting and I know that, as a disabled person, my future will be greatly shaped by the next government.Related: Limited life chances of disabled people in Britain revealed by damning reportRelated: 'I’m angry': voter confronts Theresa May over disability benefit cuts Continue reading...

Project by Independent Food Aid Network finds at least 2,000 food banks giving out parcels, with demand continuing to growThere are at least 2,000 food banks operating in the UK, giving out emergency food parcels on a weekly basis to people in hardship, according to research that shines fresh light on the rapid growth of charity food provision in austerity Britain.The research complements established information on UK food bank use compiled by the Trussell Trust, Britain’s biggest food bank network, which collects extensive data from its members and recently reported that it gave out a record 1.2m food parcels to families and individuals in need in 2016-17, the ninth successive year in which demand had risen.Related: Tory Dominic Raab jeered over food bank commentsRelated: Less than 1% of surplus food from farms and manufacturers used to feed hungry Continue reading...

Deferred appointments could see MPC voting on interest rates with seven instead of nine members for the first time since 2006The Bank of England’s rate-setting team could be reduced to seven members for the first time in nearly 11 years as election “purdah” rules will delay appointments until at least next month.The Bank’s monetary policy committee (MPC) has eight members from the usual nine after deputy governor Charlotte Hogg was forced to resign in March for failing to declare her brother works for Barclays. Continue reading...

Labour has won the battle of the manifestos with policies that can deliver better growth whereas the PM’s offering more of the same: cutsHad Theresa May come back from her Easter walking holiday and decided against holding a general election, few would have blamed her. Going to the country on 8 June was always a gamble, as has become evident the longer the campaign has gone on.Consider the reasons for caution. It is mid-term when governments tend to be unpopular. The public is sick of politics after the 2014 Scottish referendum, the 2015 general election and last year’s EU referendum. May had a workable majority and had vowed to go the distance.Related: Is Labour's manifesto living in fantasy land? Quite the opposite | Larry ElliottRelated: Falling real pay shows the British economy is still struggling | Larry ElliottRelated: Tory nerves fray as Jeremy Corbyn narrows Theresa May’s lead in new poll Continue reading...

Residents of the Congress Heights section of Washington DC tell of the devastating impact the president’s plan to cut food stamps would have on their familiesWendell Britt does not know where he will sleep tonight. It might be a park bench, a pavement, a shelter – “You go to a shelter and they take your fucking phone” – or, if he’s lucky, a friend’s house. “Wherever I lay my head,” he says, wearing a Chicago Bulls cap.The 55-year-old also does not know where his next meal is coming from either – but he does have a lifeline. “Food stamps help me get food in my stomach,” he said this week. “They help a lot of people.”Related: The only good news about Trump's budget? It's unlikely to pass Continue reading...

The African investment firm has its AGM this week. And Diamond’s new goatee could be tellingCity types have often debated whether Bob Diamond’s impressively dark locks would retain their hue should he be caught in a heavy rain shower. But, as a City figure, Bob the Banker has been remarkably enduring.He is back in action this week with the annual general meeting of Atlas Mara, the London-listed African investment vehicle he founded after being ousted from Barclays in 2012 over the Libor rate-rigging scandal – which has proved a total disaster. Continue reading...

We take the temperature of five of Europe’s key economies now that political threats appear to have diminishedWhat a difference a few months make. As 2017 opened, eurozone politicians still raw from the shock of the Brexit vote and Donald Trump’s presidential triumph were nervously awaiting elections in the Netherlands and France.They feared that discontent would propel the populist wave into the heart of Europe and usher in far-right, anti-euro leaders. In the event, the predicted surge for Dutch populist Geert Wilders failed to materialise and in France, Front National candidate Marine Le Pen was decisively beaten by pro-EU centrist Emmanuel Macron. Continue reading...

The great leftwing election victories in British politics have nearly all occurred at times of national optimism. This is not one of those timesIt seems crazy to argue that the election will be determined by the economy when events have focused the electorate’s attention on national security and the judgment of the main political leaders.Last year’s Brexit vote illustrated many things, among them the propensity of voters to disregard short-term effects on their personal finances in favour of high ideals for a better world, whatever they felt that to be. Continue reading...

Labour leader put under pressure about the IRA and his comments on the Manchester attack

Stock market booms as poll putting Labour just 5 points behind Conservatives boosts value of big UK firms with major overseas earningsShares in Britain’s biggest companies reached record levels on Friday as a slump in the pound boosted the value of firms with overseas earnings.The FTSE 100 jumped 63 points to close the day at 7,547, closely followed by the FTSE 250, seen as a better barometer of the health of UK business, which also reached an all-time closing high, rising 57 points to 20,024.Related: FTSE 100 hits record high as election jitters drive pound down – business live Continue reading...

We need employers to actively retain, retrain and recruit older workers, writes Patrick Thomson of the Centre for Ageing BetterAs your article highlights (Retirement age of 70 needed to avert pensions crisis, says WEF, 26 May), the demographic shift that we are currently facing may put financial strains on the economy unless changes to both employment and recruitment practices towards older workers are addressed. However, our increasing longevity needs to be seen as an opportunity, not a financial burden.The fact we are living longer means we can enjoy longer careers, and it is estimated that extending the average working life by just one year could increase GDP by 1%, or £20bn by 2023. Our research has shown that people derive benefits from working in later life, as long as that work is fulfilling. Continue reading...

Respected thinktank says neither Conservatives nor Labour are being entirely honest about how they will fund and deliver their different visions for the UKA plague on both your houses. That, put simply, is the considered view of the Institute for Fiscal Studies on the tax and spending pledges made by the Conservative and Labour parties in their election manifestos.There was, the IFS noted, a real choice for voters on 8 June, marking quite a change from recent elections. But it was a choice between the undeliverable on the part of the Tories and the unworkable from Labour. Even by the IFS’s exacting standards, it was a withering assessment.Related: IFS makes damning assessment of Tory and Labour manifestos Continue reading...

Heather Stewart is joined by the Guardian’s home affairs editor Alan Travis to discuss the government’s response to the Manchester attack and how the main parties differ in their approach to tackling terrorism. Plus: Larry Elliott and Stephen King on the retreat of globalisationBritain’s terrorism threat level was raised to critical after the attack in Manchester this week and soldiers were placed under the command of police on Britain’s streets. With less than two weeks of the election campaign remaining, security and counter-terrorism have risen to the top of the political agenda.Joining Heather Stewart is the Guardian’s home affairs editor, Alan Travis, who has been through the party manifestos to compare how each would tackle terrorism.

Neither party’s general election manifesto sets out an honest set of choices, says leading thinktankNeither of the two main parties “has set out an honest set of choices” to the public over their tax and spending plans, the Institute of Fiscal Studies has said.

Paul Romer asked research staff to cut use of the word ‘and’ in reports or emails and write more succinctly and clearly

ONS revises GDP growth figure to 0.2% for first quarter as post-Brexit vote rise in prices puts pressure on household budgetsThe UK economy slowed even more sharply than first thought in the opening months of this year as rising prices in the wake of the Brexit vote took their toll on consumer spending.The Office for National Statistics said GDP grew just 0.2% in the first quarter of 2017, a marked change of pace from the 0.7% growth in the final three months of 2016. Statisticians had previously estimated the economy grew 0.3% in the first quarter.Related: UK growth unexpectedly revised down to just 0.2% as inflation bites - business live Continue reading...

Britain’s economy grew even slower than first expected in the first three months of 2017

How has the economy reacted to the vote to leave the EU on 23 June? Each month we look at key indicators to see what effect the Brexit process has on growth, prosperity and trade in the UK Continue reading...

The latest monthly Guardian analysis finds consumers facing Brexit-related inflation pressures as the general election loomsThe Brexit squeeze on household budgets has intensified over the past month, but companies and investors remain cautiously optimistic about the economic outlook in the run-up to the election, a Guardian analysis shows.With a fortnight to go until the general election, the Guardian’s monthly tracker of economic news paints a mixed picture. Living standards are again falling, but while the economy has slowed markedly, as the latest GDP update showed, it continues to defy the gloomy forecasts of a Brexit recession made by some commentators this time last year.Related: 'Workers are being punished by Brexit' - experts debate the dataRelated: How has the Brexit vote affected the UK economy? May verdict Continue reading...

SMMT says slowdown in manufacturing echoes 20% drop in new car sales, but overall outlook is positiveBritish car manufacturing went into reverse in April, with production falling at the fastest rate in more than two and a half years.A total of 122,116 cars rolled off UK production lines last month, 18% fewer than in April 2016, according to the Society of Motor Manufacturers and Traders (SMMT).Related: Aston Martin speeds back into profit as DB11 revs up sales Continue reading...

Beijing has hit back after being downgraded by Moody’s for the first time since the Tiananmen Square protests

Moody’s lowers country’s rating for first time since 1989 to reflect concerns over rising debtChina’s credit rating has been downgraded by Moody’s for the first time in almost 30 years over fears that slowing growth and rising debts will weaken the world’s second largest economy.The agency lowered China’s sovereign rating by one notch to A1 from Aa3, putting it in the same category as countries such as Japan and Israel. The outlook was raised to stable from negative.Related: China downgraded by Moody's for first time since 1989 – business live Continue reading...

Mark Carney, who apparently believed he was talking with Anthony Habgood, chair of the Bank’s court, refused to accept sexist commentsThe Bank of England governor, Mark Carney, has fallen victim to an online prankster who got him to joke about one of his predecessor’s supposed drinking habits.Carney was caught out by the same hoaxer who tricked the Barclays boss, Jes Staley, this month.Bank of England Governor, Mark Carney. Apparently is not up for the type of party I like to throw. pic.twitter.com/6Iam49A5rAApparently her face resembles that of someone who’s had a ‘bracing martini’.I’d prefer a large Scotch myself.I will drink the martini and order another two. Apparently that was Eddie George’s daily in take...before lunch Continue reading...

ONS regional breakdown of taxes and spending highlights Brexit threat – and clouds case for Scottish independenceIt hardly counts as news that the UK is really two economies but here are the hard numbers to demonstrate the point. London, the south-east and the east of England recorded net fiscal surpluses in 2016 – in order words, tax receipts exceeded public spending on a per-head basis. The rest of the UK was in deficit, says the Office for National Statistics in its first such regional breakdown.Some differences were substantial. At one end of the scale, London showed a surplus of just over £3,000 per person – the difference between revenues of £15,756 per head and spending of £12,686. Northern Ireland had the biggest deficit – about £5,400 per person – and Wales was next at £4,500.Related: London economy subsidises rest of UK, new ONS figures show Continue reading...

Breakdown of public finances shows how taxes and public spending are used to narrow north-south divideLondon’s thriving economy generates a £26.5bn surplus that is recycled by the government to provide financial help to Britain’s less well-off regions, according to an official breakdown of the public finances.The first attempt by the Office for National Statistics to break down the UK’s budget deficit by region has demonstrated the importance of the capital and highlighted how taxes and public spending are used to narrow the north-south divide.

Consumers are reluctant to spend because of new technologies that could eventually replace many or most of their jobsSince the “Great Recession” of 2007-09, the world’s major central banks have kept short-term interest rates at near-zero levels. In the United States, even after the Federal Reserve’s recent increases, short-term rates remain below 1%, and long-term interest rates on major government bonds are similarly low. Moreover, major central banks have supported markets at a record level by buying up huge amounts of debt and holding it.Why is all this economic life support necessary, and why for so long?Related: US ‘fear index’ shows stock markets eerily calm in stormy times Continue reading...

The French leader’s desire to advance political and fiscal union should be applauded. After Brexit, he should push for EU military forcesEmmanuel Macron’s victory in the French presidential election sent a wave of relief and euphoria across Europe. But now a reality check is in order, because we do not yet know how the president intends to restore the French economy. The country has an unemployment rate of nearly 10% and its manufacturing sector is 12% below the level before the 2008 global financial crisis.Macron has indicated that he does not want to increase the retirement age, change the 35-hour working week or make it easier for companies to dismiss workers. At the same time, he wants northern eurozone countries to send money to southern countries to protect French financial and economic markets in these regions.Related: Why the EU must be generous to the UK over Brexit | Hans-Werner Sinn Continue reading...

IMF and eurozone states fail to bridge divide over Greek debt relief raising prospect of a summer crisis for the single currency if Athens misses repaymentEurozone finance ministers have failed to agree a debt relief plan for Greece, raising the prospect of a summer crisis for the single currency bloc if Athens misses a loan repayment.A meeting of the eurozone’s 19 finance ministers broke up late on Monday night, amid a row with the International Monetary Fund about Greece’s debt burden. Continue reading...

Case will see disgraced former boss Fred Goodwin forced to defend accusations investors were misled into buying sharesA £520m case is scheduled to begin in the high court on Monday that will scrutinise the months leading up to Royal Bank of Scotland’s £45bn bailout at the height of the financial crisis.

Economists expect Office for National Statistics to confirm that first quarter growth fell to 0.3% from 0.7%Consumers failed to propel the UK economy in the first quarter as rising prices dampened appetite for spending, official figures will show this week.City economists believe the Office for National Statistics will confirm on Thursday that economic growth more than halved to 0.3% in the first three months of the year from 0.7% in the previous quarter.Related: UK inflation jump means the 2017 voter is getting poorer | Larry Elliott Continue reading...

In or out of the EU, the focus should be on be boosting skills and productivity in the north to match those in the south-eastRoll the clock back a year and Britain was in the middle of the EU referendum battle. The remain side was warning about the economic consequences of Brexit; the leave side was extolling the benefits of taking back control. Leave won decisively but narrowly enough to give the remainers hope that the public would rethink its decision.The general election campaign has exposed that hope as a fantasy. Brexit is accepted as a political given by both the Conservatives and Labour. The Liberal Democrats have struggled despite promising to hold a second referendum. Britain will indeed “take back control” in early 2019. And then what?Related: How Britain can build a successful, lasting industrial strategy Continue reading...

Talks in Hanoi are focused on salvaging the free trade deal agreed between 12 nations before Donald Trump pulled the US outAustralia is leading the charge to save the controversial Trans-Pacific Partnership free trade deal thrown into doubt by Donald Trump’s decision to pull America out of the pact.As fears rumble of a new global era of protectionism, Asia Pacific trade ministers gathered in Vietnam on Sunday with Australia, Japan and New Zealand at the forefront of efforts to save the deal.Related: Trade war: is it time to collect canned food and build a bunker? | Greg JerichoRelated: Trump could end global trade and force choice between US and China, says economist Continue reading...

Nothing – not even policies for which Labour was excoriated two years ago – is too much to swallow for a party, and a leader, determined to rise above the frayJeremy Corbyn may score badly with the wider public, but for as long as I can remember the press have given even the most admired Labour leaders a hard time during election campaigns. A recent exception was Tony Blair, who – for a time – achieved rock star status with the media.Many reports have suggested that when presented with individual Labour policies – in what one might call a “blind tasting” – respondents have been much more enthusiastic than when the names of Corbyn and some of his colleagues come up. Continue reading...

Weakened pound pushes Swedish furniture chain to look at making and sourcing more than the odd mattress or sofa in UKIkea is considering making more products in the UK as the Swedish furniture chain bids to fend off Brexit-led price rises.The retailer already makes some sofas and mattresses in Britain, but UK boss Gillian Drakeford said it was actively examining how it might increase that work while looking at other products that can be sourced domestically.Related: Ikea to create 1,300 UK jobs in three new stores Continue reading...

Institute for Fiscal Studies warns of less generous system, as Labour says ‘savage attack’ on pensioners could sway electionTheresa May’s flagship manifesto proposal to shake up the funding of social care for older people has come under fire from the independent Institute for Fiscal Studies and opposition parties.The IFS warned on Friday that the complex new system outlined in the Conservative party’s manifesto, which would force more elderly people to pay for their own care, “makes no attempt to deal with the fundamental challenge of social care funding”.Related: Social care funding: what are the Conservatives proposing?Related: Tory manifesto: more elderly people will have to pay for own social care Continue reading...