Chancellor acknowledges ‘pain’ of inflation caused by post-referendum depreciation of sterling, after figures reveal scale of slowdownPhilip Hammond has admitted that consumers are suffering from the pound’s sharp post-referendum fall, after what government statisticians have called a “notable slowdown” in growth in the first half of the year.The economy grew by just 0.3% in the second quarter of 2017 following 0.2% expansion in the first three months of the year, Office for National Statistics figures showed.Gross domestic product (GDP) is a key government statistic and provides a measure of the UK's total economic activity.Related: Brexit economy: sterling fall hits public finances and fails to boost tradeRelated: UK suffers 'notable slowdown' as GDP rises by 0.3% in second quarter of 2017 - business live Continue reading...

About 65% of the pump cost of petrol and diesel goes to fund public spending. As this falls, alternative sources of revenue will be needed

Rolling coverage as Britain’s economy posts its weakest six months of growth since 2012

Takeaway outlets are proliferating and life expectancy has stalled. This clear correlation is the sign of a society at a tipping point

The omens are better, with the IMF calling for debt write-offs – but the chances are Greece will require another bailoutCompare and contrast. As Greece raised money in the bond markets for the first time in three years on Tuesday, prime minister Alexis Tsipras declared that the fundraising was “the most significant step to finish this unpleasant adventure”, meaning the country’s bailout.Back in April 2014, when Greece was returning after a four-year absence, the country’s finance minister drew a similar moral. The return to international borrowing markets was “a catalytic undertaking,” he said. The crisis soon returned. The next bailout followed after a referendum on the terms of austerity. Continue reading...

The Single Market Act has given rightwing governments carte blanche to sit back and watch millions of people lose their livelihoods, writes Ian MacKillop. But Nick Dearden cautions against stepping away from the EU and towards the USPolly Toynbee (Labour should exploit the Tories’ disarray on Europe, not copy it, 25 June) claims it is wrong to suggest the EU prevents state ownership and gives as an example how European rail networks remain state-owned; she should have added “for now”. The market pillar of the fourth rail package, as agreed in April 2016, mandates “more competition and performance targets for public service contracts, so as to improve cost-efficiency and get better value for money for taxpayers”, which sounds wearingly familiar. And with 2020 as the target date.Given that the EU court of justice has deliberated that article 106 of the Single Market Act – the one prohibiting renationalisation – gives private companies the right to argue before their national courts that services must remain open to private-sector competition, it is hard to see any wriggle room there when Jeremy Corbyn seeks to implement his manifesto. Continue reading...

All the day’s economic and financial news, as Athens sells debt for the first time in three years

Some analysts express caution over CBI survey showing firms upping production and feeling optimistic about future ordersBritain’s manufacturers increased production last month at the fastest rate since the mid-1990s, according to the latest CBI industrial trends survey.The business lobby group said the fall in sterling over the last year – a 12% decline against the dollar – continued to bolster export orders while domestic demand for manufactured goods remained strong. Continue reading...

Analysis of inquiries to MoneySuperMarket found that 10% of applicants wanted to borrow more than their annual incomeHouseholds in the UK are increasingly relying on borrowed money with one in four people seeking a loan applying for at least half of their annual income, according to new figures that will add to worries about Britain’s mounting personal debt burden.The latest evidence of a rise in borrowing to fund new car purchases, holidays and to help clear older debts follows a stark warning from the Bank of England that lenders offering money on easy terms risked sparking a fresh financial crisis. Banks, credit card companies and car loan providers could be dicing with a “spiral of complacency”, the Bank’s director for financial stability said on Monday. Continue reading...

We shouldn’t be blaming immigrants for our economic slide, we are wasting our own resources through political laziness and incompetence

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It failed to spot the financial crisis coming – so it’s right to be cautious about the strength of the British and US economiesThree months before the start of the biggest financial crisis since the Wall Street Crash, the International Monetary Fund confidently predicted that the world economy looked “well set” for robust growth in 2007 and 2008. Sure, there were risks, said the IMF, but these seemed less threatening in April 2007 than six months previously.The IMF was not, of course, the only organisation that failed to spot economic armageddon coming – merely the one with the highest number of PhDs on the books. But if the fund’s patchy past record means all its forecasts should be treated with caution, its growth downgrade for the UK looks perfectly reasonable.Related: IMF cuts 2017 growth forecasts for UK and US Continue reading...

Banks, credit card companies and car loan providers told they face action against reckless lendingThe Bank of England has told banks, credit card companies and car loan providers that they risk fresh action against reckless lending as it warned of a looming “spiral of complacency” about mounting consumer debt.In its toughest warning yet about the possibility of a rerun of the financial crisis that devastated the economy 10 years ago, Threadneedle Street admitted it was alarmed about the increase in the amount of money being borrowed on easy terms over the past year.Related: Business Today: sign up for a morning shot of financial newsRelated: End of the 'rip-off': all charges for paying by card to be banned Continue reading...

All the day’s economic and financial news, as Athens looks to end its three-year banishment from the markets

Detailed analysis of ‘shrinkflation’ confirms some of the UK’s favourite treats really are getting smallerFor all those shoppers who feel chocolate bars, cartons of drink, toilet rolls and countless other products have been getting smaller, now comes official confirmation. A grand total of 2,529 products tracked by the Office for National Statistics have decreased in size over the past five years.In an analysis of the phenomenon known as “shrinkflation”, the ONS explored whether these dwindling portions are making life more expensive. The theory goes: if a chocolate bar gets smaller but the price stays the same, that is a form of inflation because you are paying more for each bite.Related: Brexit economy: sterling fall hits public finances and fails to boost tradeSome of our favourite sweets are shrinking. What effect is #shrinkflation having on the price of chocolate? https://t.co/r00K4IlmRu pic.twitter.com/2pS4nY1Rp4 Continue reading...

Successful issue of new five-year bonds would help crisis-hit country exit long cycle of austerity and bailoutsAthens has outlined plans to return to the financial markets for the first time since 2014, with a plan to sell new five-year bonds to investors.Existing Greek five-year bonds were trading at 3.6% on Monday morning compared with 63% at the height of the Greek financial crisis in 2012 when the finance ministry was unable to pay public sector wages and there were riots in the streets. Following the announcement that Athens would be returning to the market, the yield fell to 3.4%.

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 uncovers signs amid the ongoing slowdown that the impact of the pound’s depreciation is starting to fadeThe sharp fall in sterling triggered by the EU referendum result is having an adverse effect on Britain’s already weak public finances but has yet to bring about the expected improvement in the trade deficit, a Guardian analysis of the economic news of the past month shows.In a period in which business confidence took a hit from the government’s loss of its overall majority in the general election, the Guardian’s monthly tracker found little evidence that the impact of a more competitive currency was offsetting a slowdown in consumer spending caused by dearer imports.Related: How has Brexit vote affected UK economy? July verdictRelated: 'Britain is fast becoming the sick man of Europe' – experts debate Brexit data Continue reading...

Two former members of Bank of England’s interest rate-setting committee find little comfort in low productivity and rising inflationProfessor 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: sterling fall hits public finances and fails to boost tradeRelated: Brexit economy: sterling fall hits public finances and fails to boost trade Continue reading...

‘Tepid performance’ so far of UK economy and Trump’s failure to deliver tax cuts lead to downgrade to 1.7% and 2.1% respectivelyThe International Monetary Fund has cut its growth forecast for the UK economy this year after a weak performance in the first three months of 2017.In its first downgrade for the UK since the EU referendum in June last year, the IMF said it expected the British economy to expand by 1.7% this year, 0.3 points lower than when it last made predictions in April. Continue reading...

Greg Clark to flesh out industrial strategy by setting out plans to increase productivity, including research projectsA £246m investment in developing battery technology in Britain is to be launched by the government as part of its drive towards what it says is a modern industrial strategy.The business and energy secretary, Greg Clark, will announce the funding, including a £45m competition to make batteries more accessible and affordable, in a speech on Monday that should spell out further the government’s plans to increase productivity and growth. Continue reading...

Profit warnings in three months to June plunge 40%, but analysts say firms are just meeting already low expectationsThe number of UK companies issuing profit warnings fell sharply in the second quarter, but experts warned there could be worse to come.According to advisory group EY, quoted companies issued 45 warnings in the three months to June, a 40% fall on the previous quarter and a third lower than this time last year. This is the biggest quarterly percentage drop since the second quarter of 2009. A stronger-than-expected global economic backdrop and falling forecasts have combined to significantly lower warnings, according to the report. Continue reading...

If the chancellor is to fund higher spending without increasing borrowing, he will need revenue – step forward, Prof Avinash PersaudFor Spreadsheet Phil, the numbers look bad. Growth is weakening. Higher inflation means debt interest payments are rising. The recent election showed a nation heartily sick of austerity. There are pressures for higher public-sector pay.The one big initiative announced by Philip Hammond in his year or so as chancellor was to move the annual budget from the spring to the autumn. Preparatory work for the first of those will begin in earnest over the summer, and nothing so far has suggested that Hammond will be in a generous mood. Quite the contrary, in fact.Related: Post-Brexit UK economy demands a new type of Robin Hood tax Continue reading...

The head of the British Chambers of Commerce says Britain would be outflanked in any hastily arranged transatlantic deal agreementAs someone born in the US who has spent all his adult life in the UK, you might think I would be a natural advocate for a comprehensive US-UK free trade agreement. After all, more than 15% of all UK goods exports already go to the US – the biggest percentage for any single country, if the 47% of UK goods exports that go to the EU’s 27 countries are discounted.The US and UK are the world’s two pre-eminent services exporters and the flow of knowledge and deals between them is similarly immense, as is the healthy competition between firms and financial centres. Because of this, a surprisingly large number of politicians and commentators seem to believe that, rather than pursuing quick wins that tackle some of the practical issues faced in UK-US trade, a comprehensive FTA with the US should be an early goal for post-Brexit Britain.Related: Rex Tillerson: 'America first' means divorcing our policy from our valuesRelated: Hopes of EU-US trade agreement put on ice, say Brussels sources Continue reading...

David Davis and Liam Fox may believe that Britain can have its cake and eat it, but few others doDon’t worry, the Brexiters say – when the negotiations reach their nail-biting conclusion, Brussels will cave in.In parliament, there are more than enough Tory backbench MPs who hold this view to stymie any backsliding by chief negotiator David Davis and his cabinet colleagues. Or so they think. Continue reading...

Profits at Goldman Sachs fall 40% with other investment banks badly hit as calm returns to the marketsCity bond traders have put the champagne on ice. They had a good run. For some it lasted almost a year. But it’s over now and the “new normal” of low trading volumes and weak profits is reasserting itself.On Wall Street, Goldman Sachs took the biggest hit. This week the firm reported profits had plunged 40% in the second quarter on its bond, currency and commodities trading desks. Continue reading...

Government borrowing rises by more than expected to £6.9bn in June – almost 50% higher than in the same month last yearThe government was forced to borrow more than expected in June after a jump in the UK’s budget deficit to £6.9bn – almost 50% higher than the same month last year.The sharp rise followed a spike in the cost of financing the UK’s debt, a drop in corporation tax receipts and a larger than forecast contribution to the EU in June.Related: The Tories have failed to fix the roof – and now storms are brewing | Larry Elliott Continue reading...

All the day’s economic and financial news, including coverage of the latest UK public finances

Senior source tells Guardian mood has shifted under pressure from British businesses to secure a workable dealThe British cabinet has accepted that free movement of people for up to four years after Britain leaves the EU will be part of a Brexit transition deal, according to a senior source.As the EU chief negotiator, Michel Barnier, underlined the need for clarity on the British side at the end of the latest round of exit negotiations, soft Brexiters in the cabinet are now confident they have achieved a consensus about an “off the shelf” transition deal.Related: Blow-by-blow Brexit: how the main players see the seven key areas Continue reading...

All the day’s economic and financial news, including rolling coverage of the European Central Bank’s monetary policy meeting

Retail sales rise beats expectations but economists warn it could prove temporary as inflation squeezes payRetail sales rebounded in June as the sunny weather put consumers in the mood to update their summer wardrobes.

Analysts say shoppers buying fewer and cheaper baking ingredients less often in sign inflation dampening Great British Bake Off effectThere are signs Britain’s home baking boom may be running out of steam, just as Channel 4 prepares to relaunch one of its main catalysts, The Great British Bake Off.The amount of baking ingredients, including flour, dried fruits and cake coverings, sold by supermarkets fell 3.8% in the year to the end of March, according to analysts at Kantar Worldpanel.Related: Channel 4's Great British Bake Off 'will have fantastic chemistry' Continue reading...

Markets have no idea where the economy is headed and interest rate rises could easily push the UK back into recession

Investors await monetary policy reading from the ECB as key index hits 2007 levels after the Dow, S&P and Nasdaq hit new all-time highsShares in Asia have reached their highest point for nearly 10 years bolstered by a surge in stock markets around the world on the back of strong US corporate earnings.As investors awaited the European Central Bank meeting for clues on its policy outlooks, the MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.15%, hovering near its highest level since December 2007.Related: How could we cope if capitalism failed? Ask 26 Greek factory workers | Aditya ChakraborttyEverything is Awesome!!!

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All the day’s economic and financial news, including new eurozone construction and US housing data

James McGill Buchanan’s vision of totalitarian capitalism has infected public policy in the US. Now it’s being exported

TUC urges government to act as IFS report highlights growing north-south divide and regional concentration of povertyThe TUC has demanded action from the government to close Britain’s regional inequality divide after a report showed that incomes in the Midlands, Wales and the north of England are no higher than they were in the south-east two decades ago.Frances O’Grady, the TUC general secretary, said ministers could not shrug off findings from the Institute for Fiscal Studies indicating that incomes in the most prosperous part of Britain – the south-east of England – were 25% higher than in the poorest region, the West Midlands.Related: Which countries are the most (and least) committed to reducing inequality? Continue reading...

The German version of conservatism provides a model, says John Veit-Wilson; while Derrick Joad suggests Michael Oakeshott should be essential readingKate Maltby’s analysis of the Conservative party’s disarray (My party has gambled away its reputation, 17 July) fails to see that its neoliberals are the equivalent of what the Trotskyists were in the Labour party of the past. Neoliberals are an entryist group standing for a body of economists’ ideas that can’t be implemented in a real, living diverse society with complex people in it, because it is a simple imaginary theory, totally anti-statist and individualist, as opposed to the far-left totally statist and collectivist version. Both are essentially authoritarian, not democratic.What Maltby ought to recommend to the Conservative party is paying more attention to the continental version of conservatism, which has continued its success as exemplified in modern Germany, strongly statist to ensure a hierarchical integrated society with a powerful but decentralised state to provide the social and logistical infrastructure for the economy of modern business and industry as well as social order for the population. Continue reading...

The cost of living in Britain rose at a slower rate in June, but is still rising faster than wages

Average UK property price rose 4.7% last year adding about £3,300 to the cost of buying a typical home but London growth slows markedlyGrowth in UK house prices has slowed but remains close to 5%, with faster growth seen outside London, according to official data.House prices across the country increased 4.7% in the year to May, hitting an average of £220,713, the Office for National Statistics (ONS) said. The annual rate fell from 5.3% in April. Between April and May, prices were up 0.5%.Related: Prefab sprout: off-the-peg homes bid to ease UK housing crisis Continue reading...

Fall means the squeeze on real incomes will be less severe – and removes the threat of an interest rate riseRising inflation has been one of the big economic stories of the past year. The depreciation of sterling after the EU referendum has made the things Britain imports, such as clothes and food, dearer and the cost of living has risen steadily as a result.The drop in the annual inflation rate to 2.6% in June was a welcome surprise. Two years ago, inflation was zero; in the month of the Brexit vote it was 0.5%. By May it had risen to 2.9%, with many City analysts confident that it would breach the 3% barrier within the next couple of months.Related: Lower fuel prices slow pace of UK inflation Continue reading...

CPI drop to 2.6% provides some relief for cash-strapped consumers, but concern grows over living standards squeezeInflation fell unexpectedly in June for the first time in nine months as lower fuel prices provided some respite for cash-strapped consumers.The consumer prices index fell to 2.6% from a four-year high of 2.9% in May according to the Office for National Statistics. Economists had expected the rate to be unchanged. Continue reading...

Cuts have almost certainly halted a rise in life expectancy. Our social order is bankrupt. We don’t just need a new government, we need a new way to organise society

A brave group have become an example for Britain, and all of Europe, in taking back workplace control

Economy likely to cool in next two years because of rising inflation arising from weak pound, consultancy predictsRecord levels of employment will fail to prevent the economy’s growth rate slowing this year and next during a period when consumer spending will be squeezed by rising inflation and falling living standards, the consultancy firm PwC has predicted.PwC said action by the chancellor, Philip Hammond, in his autumn budget would help offset weaker household spending and delayed investment by firms anxious about Brexit.Related: Business Today: sign up for a morning shot of financial news Continue reading...

City analysts believe there will have been a pause in June in cost of living rises, but food prices are expected to increaseFresh evidence of the impact of the post-Brexit depreciation in the value of the pound will be revealed on Tuesday with the release of the latest set of official inflation figures.City analysts believe there will have been a pause in June in the steady increase in the cost of living to 2.9% in the 12 months since the EU referendum, but most believe the respite will prove temporary. Continue reading...

Sir Michael Marmot, a former government adviser, highlights ‘miserly’ levels of spending on health and social careA century-long rise in life expectancy has stalled since 2010 when austerity brought about deep cuts in NHS and social care spending, according to research by a former government adviser on the links between poverty and ill-health.Related: Now we find out the real cost of austerity – our lives cut short | Owen Jones Continue reading...

All the day’s economic and financial news, including reaction to China’s latest growth figures

Britain’s economic growth will continue to weaken in 2017, as Brexit-related anxiety and domestic political uncertainty continueThe UK needs to prepare itself for weaker economic performance, two major forecasting groups have said, in the latest studies predicting the downsides of the Brexit vote.Related: Election euphoria won’t last if Labour doesn’t foil Brexit folly Continue reading...