Melvyn Bragg concludes that Theresa May wants to keep referring to 140,000-plus foreign students as immigrants because it suits some scaremongering tactic. Plus letters from Jeremy Cushing, Prof Roger Cullis and Dr Stephen PaceyWith reference to your report on the official figures revealing that fewer than 5,000 students a year stay on after their visa expires (PM under fire as student visa myth exposed, 25 August), I have just retired after 17 years as chancellor of Leeds University and cannot credit that the government has got away with this mule-headed and mendacious policy for so long under Theresa May at the Home Office and now at 10 Downing Street.Like many others in parliament and the universities, I have consistently challenged this policy and been consistently fobbed off with arrogant or feeble responses. I must conclude that Theresa May wants to keep referring to these 140,000-plus students as immigrants because it suits some disgraceful scaremongering tactic. Continue reading...
Portugal’s PR vote system put it on the right path, says Dee Searle; Greece shows that political perspectives alone don’t cut it, says Elspeth Geronimos; the UK economy was recovering under Labour in 2009-10 but Cameron and Osborne blew it, says David Butler; don’t forget Iceland, says John AirsMany of the anti-austerity policies that have led to a revival of Portugal’s economy (The lie is nailed – there is an alternative to austerity, 24 August) did not actually originate from the Socialist government, but from conditions set by radical leftwing and green parties to enable the Socialists to govern after they failed to win a majority in the 2015 national elections.Among demands by the Communists, Left Bloc and Greens were the reversal of privatisation, a swift elimination of salary and pension cuts, and a substantial increase in the national minimum wage. These were mostly accepted by the Socialists, who went on to form a minority administration that relies on support from the radical left in parliament. Continue reading...
Measuring tax paid against share of income earned and wealth owned reveals the US tax system has become less progressive – and in Britain it is a similar pictureDenis Healey never actually said he intended to squeeze the rich until the pips squeaked. The man who would soon be Labour chancellor was referring solely to property speculators when he made the remark during the February 1974 election campaign.But the rich knew full well that Healey was coming for them, too. At the previous year’s Labour party conference, he said: “We shall increase income tax on the better off so that we can help the hundreds of thousands of families now tangled helplessly in the poverty trap, by raising the tax threshold and introducing reduced rates of tax for those at the bottom of the ladder. I warn you, there are going to be howls of anguish from the rich. But before you cheer too loudly, let me warn you that a lot of you will pay extra taxes, too.â€Related: Why wealth is the enemy of the young Continue reading...
Labour has a golden opportunity to capitalise on the strong pro-European feelings of the youngWhen I referred in my last column to Chancellor Philip Hammond as the only grown-up minister in this chaotic cabinet, I was unaware that he had just put his name to a joint article in the pro-Brexit Sunday Telegraph with his arch-foe Liam Fox, making the following statement: “We respect the will of the British people – in March 2019 the United Kingdom will leave the European Union. We will leave the customs union… we will leave the single market… â€True, this was followed by reports that he wanted, in effect, to retain quasi-membership for several years, but the two emphasised that such a precaution “cannot be a back door to staying in the EUâ€. There were also reports that Hammond had in some mysterious way scored a victory, which contrasted vividly with other reports that his attempt at some kind of coup had been foiled. Continue reading...
With a euro now worth 92p compared with 70p before the Brexit vote, holidaymakers are feeling the pinchBritish tourists returning from continental holidays last week arrived at airports in various states of shock. The pound’s slump in value against the euro reached an eight-year low during their trips and many holidaymakers bore tales of the woes they had endured at foreign cash machines.“You do become more aware of it each time you take money out,†said Tom Wake as he and his wife Pip made their way through Stansted airport after a break in Pisa. “The rate shifted quite a bit when we were away, so it became quite noticeable and Brexit is there in the back of your mind. Everyone seems to be talking about it over there – they can’t really understand why we’re doing it.†Continue reading...
Fed chair defends regulations and says policymakers may have forgotten damage inflicted on the economy in 2008Donald Trump has been rebuked by the US central bank chief, Janet Yellen, for planning to scrap tough banking regulations that made the system “substantially safer†and did nothing to restrict growth or lending.Yellen, the Federal Reserve chair, used a speech at the annual meeting of central bankers on Friday in the US ski resort of Jackson Hole to warn that policymakers might have forgotten the terrible damage wreaked on the global economy in 2008 when they seek to lift regulations that prevent risky behaviour.Related: Trump orders Dodd-Frank review in effort to roll back financial regulation Continue reading...
The president is threatening to erect new trade barriers against China just when he needs its aid to rein in the Kim regimeFor years, Americans have misunderstood the nuclear threat from North Korea, misjudging how to address it. They have also misunderstood the bilateral trade deficits with China, overestimating their importance. Today, as President Donald Trump threatens new trade barriers against China, on which the United States must depend to help rein in an increasingly dangerous North Korea, these two issues have become closely connected. Yet US officials seem no closer to figuring them out.The stakes obviously are much higher regarding North Korea, with US-South Korean joint military exercises this week aggravating already-high tensions. If the US and North Korea do get into a military confrontation, there is a real risk that nuclear weapons will be used. Even a conventional war would likely be catastrophic.Related: Living on the edge of oblivion: life along the North Korean border Continue reading...
Gary Cohn is the most senior administration official to condemn the president over his initial failure to condemn neo-Nazi and white supremacist groupsGary Cohn, Donald Trump’s chief economic adviser, has become the most senior administration official to criticize the president over his initial failure to condemn neo-Nazi and white supremacist groups, following the clashes in Charlottesville earlier this month that left one woman dead and dozens injured.Related: Divided states of America: 62% say Trump is driving people apart, poll findsRelated: Republicans on Charlottesville: who's with Trump and who's against him? Continue reading...
Special report: India and China are shifting away from coal imports and coal-fired power while a mega-mine is planned for Queensland. Where does this leave coal in Australia?
Sterling’s slide should have improved net trade – but Britain’s manufacturing base is now too small to take advantageThe downside to a weak pound is immediately apparent because imports get dearer and foreign holidays get more expensive. With sterling at its lowest level for eight years, there have been plenty of horror stories of travellers from the UK being gouged by foreign exchange bureaux.The benefits of a weaker currency tend to be less obvious but are potentially significant nonetheless. Exports become cheaper and the UK becomes a more attractive destination for overseas tourists. This leads to an improvement in the balance of payments, something that is sorely needed in Britain’s case.Related: UK consumer spending growing at weakest rate in nearly three years Continue reading...
A Federal Reserve official has spoken out against the Trump administration’s reform plans. It is important to hold a debateSince a revolving door was installed at the entrance to the West Wing of the White House, it has been difficult to keep track of the comings and goings in America’s corridors of power. Anything written about the Trump administration’s personnel and policies may be invalid before it is published.At least for the time being, however, the key economic policy actors remain in place. Steven Mnuchin is still treasury secretary and has not been mentioned in dispatches during the latest power struggles. Gary Cohn continues to chair the National Economic Council, though he is reported to be unhappy about some of the president’s statements on non-economic issues. And of course Janet Yellen is still at the helm at the Federal Reserve, at least until February next year.Related: Neoliberalism: the idea that swallowed the world Continue reading...
Concerns over inpact of incomes squeeze as business investment shows no growth in second quarterSpending by British consumers is growing at the weakest rate in almost three years, as households squeezed by rising prices tighten their belts.Household spending growth slowed to 0.1% in the three months to June, the Office for National Statistics said, the slowest rate of quarterly growth since the final three months of 2014. Business investment in the British economy showed no growth at all in the second quarter.Related: Big UK firms face 2018 slowdown amid Brexit uncertainty, study finds Continue reading...
Workers in the midwest cite trade as a top reason they supported Donald Trump’s candidacy. Here’s what he can do to listen to their concernsSunday signaled the completion of a major milestone: the end of the first round of negotiations to modernize the North American Free Trade Agreement (Nafta). Canada, Mexico and the US are set to meet over multiple rounds in the coming months.Too frequently I have heard the mantra “do no harm†from industry leaders as they encourage Donald Trump’s negotiations. I take a different stand, as I have since Nafta was signed into law 23 years ago. This is an opportunity to do right by workers across the continent. This moment must not be squandered by pandering to transnational special interests. Some of us in Congress, and many workers throughout our heartland, have been waiting for this moment for years.Related: Canada v Mexico: Trump seeks to divide and conquer in Nafta negotiations Continue reading...
For years we’ve been told that only deep cuts can save our economy. Portugal’s socialist-led government has proved the oppositeEver since the banks plunged the western world into economic chaos, we have been told that only cuts offer economic salvation. When the Conservatives and the Lib Dems formed their austerity coalition in 2010, they told the electorate – in apocalyptic tones – that without George Osborne’s scalpel, Britain would go the way of Greece. The economically illiterate metaphor of a household budget was relentlessly deployed – you shouldn’t spend more if you’re personally in debt, so why should the nation? – to popularise an ideologically driven fallacy.Related: Greek debt crisis: ‘People can’t see any light at the end of any tunnel’In 2016 – a year after taking power – the government could boast of a 13% jump in corporate investmentRelated: Jacques Delors foresaw the perils of austerity. How we need his wisdom now | Mark Seddon Continue reading...
Brexit warnings from trade bodies come as businesses across UK struggle to recruit skilled labourThe food and drink industry has issued a warning of significant disruption and economic damage if the government fails to stem the flow of EU nationals leaving the UK.Nearly a third of British food and drink businesses have had non-UK EU workers leave their employment since last summer’s Brexit vote, according to a survey of more than 600 businesses representing nearly a quarter of the food chain’s 4 million workforce. Almost half said more planned to leave because of uncertainty about their future.Related: UK 'sleepwalking' into food insecurity after Brexit, academics say Continue reading...
While the eurozone is looking healthy, inflation remains subdued – and warning signs remain over the global economyThere was little in Mario Draghi’s comments in Germany on Wednesday to indicate that the European Central Bank plans to stop pumping cheap money in to the eurozone anytime soon.Some expected him to use the platform of a speech to a gathering of Nobel economics laureates and students to say that a long period of growth across the 19-member currency bloc warranted a reduction in the ECB’s quantitative easing stimulus programme. Continue reading...
As Andy Burnham, the Greater Manchester mayor, convenes a northern council in Leeds, Theresa May heads to Teesside. It looks as if the battle for northern England has begunTheresa May sped to Teesside on Wednesday afternoon to launch the South Tees Development Corporation, a 25-year regeneration project backed by Ben Houchen, the new Conservative mayor of Tees Valley. It cannot have been coincidence that hours earlier in Leeds there was a gathering of an embryonic northern council of regional politicians and business interests, angered by the government downgrade of the electrification of the Leeds-Manchester line announced last month. Called the northern transport summit, in fact its ambitions were much wider: to coordinate and amplify a regional identity. As Andy Burnham, Greater Manchester’s mayor, said earlier this week, unless the north finds its political voice, “we will be waiting for ever for a powerhouseâ€.What had turbocharged the sense of grievance over the delay to the trans-Pennine electrification, and to other out-of-London rail improvements, was the confirmation that came only days later of government backing for Crossrail 2, the £31bn north-south London rail route. Transport for London had been in a standoff over who would pay, with the transport secretary, Chris Grayling, whose disastrous cost-cutting when he was justice secretary has now largely been reversed. The tension over the London-centric investment of scarce infrastructure spending was worsened by the publication of the thinktank IPPR North’s now annual estimate of relative funding between the south-east and the north, which showed that parity funding over the past 10 years would have meant £59bn more in investment for the north. The government angrily disputed the figures, as it does every year, claiming that the IPPR does not take into account infrastructure investment in one region that benefits a much wider area, like the improvements to the A14 linking the Midlands to the East Anglian port of Felixstowe. The IPPR points out that it assigns regional spending according to official Treasury figures. Continue reading...
Ian Sinclair takes issue with the idea that the 2001 invasion was legal. Plus Dr Richard Lawson suggests that the west buy Afghan farmers’ opium crop, medicalise it, and use it medicinally in AfricaWas the 2001 US-led invasion and subsequent ongoing occupation of Afghanistan “never an illegal warâ€, as the Guardian asserts (Editorial, 23 August)?Written in 2010, the official House of Commons Library briefing paper on the subject makes interesting reading: “The military campaign in Afghanistan was not specifically mandated by the UN, but was widely (although not universally) perceived to be a legitimate form of self-defence under the UN charter.†Continue reading...
Profit growth at largest companies is expected to decline as some put plans on hold or move operations elsewhere in EUThe long-term effects of the Brexit vote on the economy will become clear next year when profit growth at some of the UK’s largest companies is expected to drop considerably, according to a new study.
by Seán Clarke and Richard Partington on (#301G3)
How has the economy reacted to the vote to leave the EU? 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...
Two former members of Bank of England’s interest rate-setting committee find consumers continuing to face a squeezeProfessor 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: signs of stability but threat of stormy times aheadRelated: How has the Brexit vote affected the UK economy? August verdict Continue reading...
The latest monthly Guardian analysis finds better news after a volatile start to the year, but potential hazards in the EU exit talksMinisters are preparing for crucial Brexit talks this autumn against a backdrop of better news on jobs, inflation and the public finances as the UK economy displays signs of stability after a volatile start to the year, a Guardian analysis shows.The Guardian’s monthly tracker of economic news shows inflation coming close to its peak and the lowest levels of unemployment since the mid-1970s. However, the ever-present threat that rocky negotiations could knock business confidence, derailing the economy, remains.
Discount stores are upping their game. They have learned that price isn’t everythingBritish supermarkets were once an established social ecosystem: Waitrose and Marks & Spencer catered for the wealthy, Asda for the hard up, and Tesco and Sainsbury’s for everyone in between. Then a foreign species disturbed it. In the early 1990s, German discount stores Lidl and Aldi arrived in Britain, catering mostly for those who couldn’t afford to go anywhere else. Now they respectively make up 5.2% and 7% of the market, and are stuffed with middle-class shoppers, who shun Sainsbury’s Pimm’s for “Jeevesâ€, Lidl’s own brand version. On Tuesday Lidl overtook Waitrose to become Britain’s seventh largest grocer. It now has plans to open 60 new UK shops a year.The success of these budget shops can be partly explained by a decade of stagnant incomes and government austerity. The depth of the recession, and now rising food price inflation, encouraged people to hunt down the cheap deals (one survey claims Lidl beats other stores on price by some 15%). It is also down to altered social trends. When faith in the banks took a hit in 2008, loyalty to other institutions, including large superstores, did too. Shopping habits became more fragmentary: people carrying their designer handbags would also wear socks from Primark (the effect is known as “Primarniâ€). If you bought your avocados in Waitrose, you might also buy your milk from Morrisons or Aldi. And as more young people head online for their groceries, supermarkets are competing over a population of ageing shoppers who have the time to look around for the cheapest option. Continue reading...
Repairing the hole in the public finances after the financial crash is taking a lot longer than it did after previous recessionsThe government was in the happy – and unusual – position of being in the black in July. To the surprise of the City, tax receipts were higher than public spending. Not by much, but a surplus is still a surplus even if in the context of a £1.8tn economy it is small change.This, though, was a classic case of one swallow not making a summer. For a start, the deficit in the first four months of the financial year – a much better guide to the trend than a single month’s figures – was higher this year than last.Related: UK public finances notch up first July surplus since 2002Related: Former Lloyds boss Eric Daniels sues bank for withheld bonuses Continue reading...
Public sector net borrowing in that month returns to the black for first time in 15 years, bolstered by self-assessed tax receiptsThe government ran the first July budget surplus in more than a decade last month, as Britain’s public finances recorded an unexpected leap back into the black with help from an increase in self-assessed tax payments.Related: UK public finances see first July surplus since 2002 – business live Continue reading...
The market town stood shoulder-to-shoulder with the north-west’s mighty industrial cities – until a football stadium relocation and rival shopping centres gutted its historic centre. Is the fightback coming too late?The final day of 2016 was a Saturday. In the centre of Bolton, Lancashire, the streets should have been crowded with shoppers at the sales. A few shops were doing decent trade, but it was hardly thronging. Those with Christmas money still in their pockets might have been attracted to the grand-looking jewellery shop with the large “sale†posters in the window. But this was no regular post-Christmas sale. After 145 years of business, Prestons of Bolton was closing for good.As staff at “the diamond centre of the north†sold off the last few rings, five miles north Bolton Wanderers were preparing to face Scunthorpe United at the Macron Stadium, the club’s gleaming, out-of-town base. They went on to win their top-of-the-table clash 2-1, in front of a crowd of 17,000 fans. Nearby, many thousands more people shopped at Middlebrook, the adjacent mall.Somebody described Bolton to me as being a doughnut – the centre’s goneDecline is a polite word for what's happening in BoltonThe figures are showing positive things. The private sector is voting with its cheque bookRelated: Bournville again: can a new Birmingham hospital recreate the Cadbury effect? Continue reading...
Ex-Treasury mandarin Lord Macpherson is right to compare QE to heroin – it required ever bigger doses to get a highThings have moved on in the civil service since the days of Yes Minister. Back then senior civil servants remained the soul of discretion even after retirement. When Sir Arnold Robinson has advice to give to his successor, Sir Humphrey Appleby, he does it over lunch at a Pall Mall club.Lord Macpherson, until recently the Treasury’s top mandarin, has some advice for the current government: it’s time to move on from quantitative easing, the scheme that has been pumping electronic money into the economy since early 2009. Continue reading...
Nick Macpherson says it’s ‘time to move on’ from QE, nearly 10 years after the financial crash, because of its unwanted side-effectsA former senior Treasury mandarin has compared quantitative easing to heroin and called for an end to almost a decade of electronic money printing by central banks.Nick Macpherson was permanent secretary to the Treasury when Bank of England officials started buying UK government bonds to stimulate the economy following the financial crisis. On Monday, he said it was “time to move on†from QE, which is credited with helping Britain into recovery but remains in use nine years later amid concerns over Brexit.Related: Quantitative easing is a costly habit we should have kicked long ago | Larry ElliottQE like heroin: need ever increasing fixes to create a high. Meanwhile, negative side effects increase. Time to move on. Continue reading...
by Patrick Minford and Molly Scott Cato on (#2ZVNS)
Can freer trade and no EU regulations help us? Economist Patrick Minford and Green party economy spokeswoman Molly Scott Cato go head to head Continue reading...
More sensitivity is needed, says German chancellor, as finance ministry brackets diesel crisis with Brexit as threats to growthThe German chancellor, Angela Merkel, has described big bonuses to car industry executives as unfair following the diesel emissions scandal and called on the industry to rein them in.In an interview with the German newspaper Bild, Merkel was asked about multimillion-euro bonuses for car executives in the wake of the scandal, which erupted nearly two years ago when Volkswagen admitted that it had cheated US diesel emissions tests.Related: Diesel has to die – there is no reverse gear on thisRelated: The Volkswagen emissions scandal explained Continue reading...
by Dominic Rushe with video by Tom Silverstone on (#2ZVK9)
Fran Marion and Bridget Hughes are leading voices in Stand Up Kansas City, part of the Fight for $15 movement that aims raise the minimum wage across the USOnce a customer has barked their order into the microphone at the Popeyes drive-thru on Prospect Avenue, Kansas City, the clock starts. Staff have a company-mandated 180 seconds to take the order, cook the order, bag the order and deliver it to the drive-thru window.
Central bankers at meeting under pressure to explain how they will exit huge stimulus packages started after financial crisisIt was at Jackson Hole in 2014 that Mario Draghi prepared the ground for the European Central Bank’s massive bond-buying programme to help rescue the economies of the eurozone, embattled from years of sovereign debt crises.The annual event, held at the Wyoming fishing retreat by the Federal Reserve Bank of Kansas City since 1978, takes place from 24 to 26 August. And it could provide the backdrop for the ECB president to signal the eventual withdrawal from loose monetary policy by the central bank.Related: Central banks are ending policies like QE – but they'll be back | Nouriel Roubini Continue reading...
Britain’s productivity, management and skills training are all so woeful that agonising over a post-Brexit trade strategy is almost beside the pointGeorge Osborne was a worried man. It was May 2016 and the EU referendum was only a month away. The polls were tight, much too tight for comfort as far as the then chancellor was concerned.This had not been for the lack of effort on Osborne’s part. He had published a Treasury paper looking at the long-term implications of Brexit and had orchestrated heavyweight overseas support for the remain side from the International Monetary Fund, the World Trade Organisation and the Organisation for Economic Cooperation and Development. Continue reading...
Every government promises to simplify taxes. None succeeds. We need more scrutiny of schemes that are too easy to set up, and too difficult to take awayTwenty years have passed since former chancellor of the exchequer Gordon Brown launched his scheme to promote the British film industry, and in doing so innocently spawned numerous lucrative tax relief opportunities for advisers and their investors.The scheme, which allowed investors to claim back 40% of a film company’s losses against their own tax bills, ended up meaning that many investors were able to claim around £40,000 tax relief for every £20,000 they put into a production. Brown clamped down on this “double dipping†– effectively claiming tax relief twice on the same production – in 2004, after it became clear it was being abused. Continue reading...
Readers respond to recent articles by Guardian columnists Owen Jones and Simon JenkinsThe most effective deceits are those that are wrapped up in a kernel of truth and Owen Jones is certainly right that postwar consensus-based politics has been damaged by the weakening of the role of the state in a mixed economy and the acceptance of increasing inequality (Centrists attack the left, but they are the true extremists, 17 August).But that political central ground is defined by the acceptance that there is not a monopoly on truth and thus a willingness to compromise to try to find common ground with those who share core attitudes of openness, toleration and respect for all in our society. That feeds into solid commitments to parliamentary democracy, gradualism, internationalism and the similar seeking of common ground and partnerships with open societies in Europe and elsewhere. Continue reading...
Beijing imposes restrictions to try to stem global buying spree that has included entertainment firms and football clubsThe Chinese government has served notice on the country’s foreign investment spree in football clubs, skyscrapers and Hollywood as it moves to curb rising levels of debt among domestic companies.The announcement of restrictions in a range of sectors follows a buying spree around the globe during which Chinese firms and business tycoons have taken control of assets including Legendary Entertainment, the US film producer behind Jurassic World and Warcraft, buildings such as the Cheesegrater in London, and English football clubs including Southampton and Aston Villa.Related: Trump trade investigation will 'poison' relations with China, media warns Continue reading...
European markets open lower after Wall Street suffers second biggest drop of the year, with airline shares among biggest fallers2.09pm BSTThe terror attacks in Barcelona and continuing concerns about Donald Trump’s presidency have put stock markets under a fair bit of pressure on the last trading day of the week.European markets opened lower, following the overnight lead from Wall Street and Asia.12.59pm BSTMore to watch out for next week - events at the Bank of England:Busy week at the @bankofengland next week pic.twitter.com/dLC2r1FBT312.35pm BSTOne of the other factors relating to investors’ concerns about the Trump presidency is talk that (another) key advisor may leave. Craig Erlam , senior market analyst at Oanda, explains:Trump has been no stranger to controversy in his short time as President but the latest entirely unnecessary and avoidable situation could prove quite costly for him. Trump has already this week been forced to dissolve his manufacturing council and the strategic and policy forum, while his infrastructure council never even got off the ground, after numerous CEO’s withdrew from the initiatives due to his response to the white supremacy rally in Charlottesville, Virginia, last weekend.The next casualty could be the most costly of the lot, with speculation growing that Gary Cohn – a key figurehead in Trump’s tax reform and spending initiatives – could resign from his position as National Economic Council Director. This would be a bitter blow for Trump and be the icing on the cake of what has been a dreadful week for the President. The negativity is flowing through to the markets as well as such a move would cast doubt over whether Trump will deliver on his tax reform and spending promises in the foreseeable future, two things that have been at least partly responsible for the post-election rally in the markets.11.29am BSTEuropean markets are showing little signs of recovering.The FTSE 100 is now down around 1% or 72 points, Germay’s Dax is down 0.5%, France’s Cac has lost 1.1% and Spain’s Ibex is 1% lower. Connor Campbell, financial analyst at Spreadex, said:There was no let-up this Friday morning, the European indices continuing to fall in the aftermath of yesterday’s atrocities in Spain.Though the likes of easyJet and IAG – which had both been down more than 3% early in the session – saw their losses reduce by a half and a third respectively, the FTSE itself only got worse as the day went on.11.02am BSTThe yen’s position as a haven in times of uncertainty has helped push the Japanese currency higher against the dollar.The combination of the latest terror attacks and continuing concerns about the stability of Donald Trump’s presidency has seen the yen gain 0.5% against the dollar.10.48am BSTHere are the eurozone construction figures:Euro area construction -0.5% in June over May; +3.4% over June 2016 #Eurostat https://t.co/rqx06LzPaO pic.twitter.com/kGnLJhwqSe10.25am BSTMore on the fall in airline shares. British Airways owner International Airlines Group and low-cost carrier easyJet are both down around 2%, albeit off their lows, following the Spanish terror attacks. Joshua Mahony, market analyst at IG, said:Unsurprisingly we are seeing the airlines leading the FTSE lower this morning, in the aftermath of yesterday’s terrorist attack in Barcelona. In London, Paris and now Barcelona, the terrorist attacks over recent years have taken place in the three most visited cities in Europe, with inevitable implications for numbers over the coming year. With Turkish tourism numbers finally coming back, the focus on top European cities will arguably be a bigger hit to low cost European carriers if people decide to stay away.10.06am BSTWith the Spanish attack and Donald Trump’s widely-reviled response to the events at Charlottesville, last week’s concerns about North Korea have been overtaken for the moment.But ratings agency S&P reckons there is nothing much to worry about anyway. Repeating its AA rating on South Korea, it said:Although geopolitical tensions have risen of late in the Korean peninsula, we believe a direct armed conflict is unlikely.[North Korea] appears to have achieved significant improvements in its weapons technology in the past few months. Nevertheless, we view the likelihood of the North Korean regime provoking a major armed conflict on the peninsula to be low. This is based on our opinion that such an event would very likely destabilise North Korea politically and bring no benefit to the country.That said, the risk of an unintended military conflict has risen from a low level. We believe the ruling elite of [North Korea] is rational and has a strong sense of self-preservation. Still, after ratcheting up tensions with little to show for it, the regime could underestimate the risks of a more dramatic provocation in the hope of winning some concessions. On the other side, the U.S. may be less patient in responding to North Korean provocations than before, now that it views the country as being close to achieving inter-continental nuclear strike capability. In this situation, a miscalculation by either side of this standoff could spark a direct military conflict.Korea’s record of steady economic growth has generated a prosperous economy, a high degree of fiscal and monetary flexibility, and a solid external position.We are affirming our ‘AA’ long-term and ‘A-1+’ short-term sovereign credit ratings on Korea.Related: South Korea's thirst for craft beer helps food and drink exports top £10bn9.57am BSTGold is not the only haven gaining ground in the wake of the latest terror attack and the concerns about Donald Trump’s presidency. Arnaud Masset of Swissquote Bank said:Investors are switching to risk-off mode, fleeing into safe haven assets. Gold reversed early-week losses, rising more than 2% since Tuesday. Demand for treasury bonds soared. 10-year German Bund yields dipped to 0.40%, while the 2-year slid to -0.71%. So did demand for higher yielding currencies such as the Aussie and the Kiwi. AUD/USD rose 0.45% while NZD/USD was up 0.50%. The Japanese yen was up 0.40%.9.28am BSTGold is moving higher as investors seek havens in the wake of the current uncertainties. The precious metal is up $6 an ounce to $1293, its highest level since early June.9.16am BSTHere’e the eurozone current account for June:#Euro Current Account at €28.1B https://t.co/iWgeVfiiuR pic.twitter.com/SKMnzcAPAH9.03am BSTIt may be a summer lull in the business world in many ways but there are still a few key events to come, so here’s a quick preview of next week from IHS Markit:Next week's economic diary includes the flash #PMI surveys for the US, Eurozone & Japan plus UK #GDP. Read more here https://t.co/53Tv6QHZBB pic.twitter.com/VFRkCcoAXH8.44am BSTHere’s Neil Wilson, senior market analyst at ETX Capital, on the fall in airline shares:Airlines bore the brunt of a risk-off turn on the open, with shares in Ryanair, IAG, Air France KLM, Lufthansa and EasyJet all slumping following the terror attacks in Spain. As we’ve seen over the last couple of years in Europe, these kinds of atrocities affect tourism and will hit airline earnings. Investors are concerned that demand will fall over the rest of the year, which was already looking like it would be a tough patch for the industry.Airlines are already dealing with a price war and several have warned about the second half. The attacks in Spain will do nothing to help and should hit earnings, although we won’t know to what extent until the quarterly updates come in.8.40am BSTThe Spanish market, inevitably, is also among the losers. The Ibex is currently down 1.1%, but has recovered a little from its worst levels.8.28am BSTIt is no wonder investors are shying away from equities, says David Morrison, senior market strategist at SpreadCo:European equities and US stock index futures have begun today’s session on the back foot. This follows yesterday’s sharp sell-off on Wall Street which saw the major indices log some of their biggest daily losses so far this year.The move mimics that from last week. Back then investors dumped equities after President Trump responded to North Korea’s threat to fire missiles towards Guam with a couple of bellicose tweets.8.25am BSTRenewed worries about tourism in the wake of the Barcelona attacks have sent the European travel and leisure sector index down 1.4% in early trading.8.04am BSTFollowing the Barcelona attacks, markets have opened sharply lower.The FTSE 100 is down 0.66%, with airlines easyJet and International Airlines Group leading the fallers on fears about the effect the attacks may have on tourism.7.59am BSTEven this early in the day, Heineken directors may well be raising a glass after the Competition Commission gave the go-ahead to the company’s £403m purchase of 1,900 pubs from Punch Taverns.There were concerns about the impact on the ranges of cider and beer supplied to pubs in 33 local areas, but the regulator has accepted Heineken’s proposals to sell pubs in the affected areas.7.38am BSTGood morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.The recent brief revival in stock markets has come to a grinding halt, as Donald Trump’s presidency descends into further confusion and the Barcelona attacks revive terrorism fears.Our European opening calls:$FTSE 7353 -0.48%
Advanced economies responded with temporary measures when they needed broader, longer-term solutionsTen years ago this month, the French bank BNP Paribas decided to limit investors’ access to the money they had deposited in three funds. It was the first loud signal of the financial stress that would, a year later, send the global economy into a tailspin. Yet the massive economic and financial dislocations that would come to a boil in late 2008 and continue through early 2009 – which brought the world to the brink of a devastating multi-year depression – took policymakers in advanced economies completely by surprise. They had clearly not paid enough attention to the lessons of crises in the emerging world.Anyone who has experienced or studied developing-country financial crises will be painfully aware of their defining features. For starters, as the late Rüdiger Dornbusch argued, financial crises can take a long time to develop, but once they erupt, they tend to spread rapidly, widely, violently and (seemingly) indiscriminately.Related: A decade after the financial meltdown, its underlying problems haven’t been fixed Continue reading...
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. By Stephen MetcalfLast summer, researchers at the International Monetary Fund settled a long and bitter debate over “neoliberalismâ€: they admitted it exists. Three senior economists at the IMF, an organisation not known for its incaution, published a paper questioning the benefits of neoliberalism. In so doing, they helped put to rest the idea that the word is nothing more than a political slur, or a term without any analytic power. The paper gently called out a “neoliberal agenda†for pushing deregulation on economies around the world, for forcing open national markets to trade and capital, and for demanding that governments shrink themselves via austerity or privatisation. The authors cited statistical evidence for the spread of neoliberal policies since 1980, and their correlation with anaemic growth, boom-and-bust cycles and inequality.Neoliberalism is an old term, dating back to the 1930s, but it has been revived as a way of describing our current politics – or more precisely, the range of thought allowed by our politics. In the aftermath of the 2008 financial crisis, it was a way of assigning responsibility for the debacle, not to a political party per se, but to an establishment that had conceded its authority to the market. For the Democrats in the US and Labour in the UK, this concession was depicted as a grotesque betrayal of principle. Bill Clinton and Tony Blair, it was said, had abandoned the left’s traditional commitments, especially to workers, in favour of a global financial elite and the self-serving policies that enriched them; and in doing so, had enabled a sickening rise in inequality.Related: How statistics lost their power – and why we should fear what comes next | William Davies Continue reading...
Clothing and footwear retailers particularly badly hit in July amid ‘volatile’ trends, says Office for National StatisticsBritain’s consumers are taking a more cautious approach to shopping as higher inflation above the level of earnings eats into their spending power.Only higher spending on food in supermarkets kept retail sales growing last month, with declines in all other main sectors, according to figures published on Thursday by the Office for National Statistics (ONS).Related: UK retail sales growth flat but beats forecasts - business live Continue reading...
It is hardly news any more to say that we have a record low in wage growth. But it’s becoming a problem for workers, companies and the government alike