Employers’ groups say it is vital the new industrial strategy is underpinned by a powerful overseer to monitor progressBusiness leaders have warned that the government’s new industrial strategy risks being blown off course unless ministers create a powerful independent watchdog to monitor progress in boosting Britain’s weak productivity.While welcoming a white paper detailing five areas where the UK’s economic performance needs to improve, employers’ groups said it was vital Greg Clark, the business secretary, gave “teeth” to a planned advisory council.Related: White paper to set out industrial strategy in bid to boost UK productivityRelated: Industrial strategy is welcome, but good intentions are never enough Continue reading...

Yes, there are flaws and omissions, but in accepting that government has a vital role to play in creating a healthy economy, this is a big step forwardPraise be. A Conservative government has published a comprehensive industrial strategy which explicitly acknowledges that the state has a key role to play in steering and coordinating economic activity. So let’s give credit to Theresa May and Greg Clark for facing down their own backbench (and several frontbench) free marketeers who deny this fundamental principle of successful economic policy. And then let’s hope this white paper finally lays to rest the political and media orthodoxy that the economy grows best when “free enterprise” is left to itself; and that government helps the economy most when it intervenes least.The UK’s economy has been systematically underperforming on almost every key measureRelated: Life is going to turn very nasty if we can’t solve the growth puzzle | Andrew Rawnsley Continue reading...

Cuts to legal aid and disability benefits are costing more than they save. The refusal to abandon austerity looks increasingly irrationalIn our everyday lives, most of us are familiar with the idea of false economy. Ignoring a burst pipe might save you money on a plumber, but it’ll cost far more to deal with the damage caused by flooding. And I’ve lost count of the number of times I’ve purchased a tantalisingly cheap pair of shoes, only to see them fall apart three times as fast as a pair for double the price. Better quality products cost more upfront but often save you money in the long run – yet another way that people on low incomes are penalised.Related: The fightback against the Conservatives’ legal aid desert begins today | Richard BurgonLast month it was revealed that £40m was spent trying to deny sick and disabled people benefits they’re entitled to Continue reading...

Life in South America’s largest metropolis is anything but uniform – the city’s core and its periphery are worlds apart

Social protections can best be upheld through international cooperation. Labour should clearly back the single market and the customs unionBritish politics is polarised on nearly every axis, so it is strange how little conflict there is between Labour and the Conservatives on the biggest issue: the terms of departure from the EU. Jeremy Corbyn’s challenges to Theresa May over Brexit negotiations at prime minister’s questions last week felt remarkable because he so rarely opens battle on that front. Labour has not obstructed Tory legislation enabling the very hardest of Brexits. The frontbench say they would pursue a different model, putting “jobs first”. But whips have instructed Labour MPs to sit on their hands as the Tory agenda is enacted.Mr Corbyn’s views in the area are vague, except to insist that for democracy’s sake, the referendum verdict must be honoured. That is a sensible starting point for the leader of a national party, especially one that represents many areas that voted leave. But ending EU membership leaves a spectrum of options, notably in the question of the single market and customs union. The Tories are dedicated to rupture from both; Labour equivocates. Continue reading...

Readers respond to the advance in robotics, and what it means for our economy, social fabric and the planetThe difference between the robots of today and all previous forms of automation is that they are so flexible (Editorial, 25 November). Intelligent robots will be utilised in any new enterprise rather than people now because the financial returns are likely to be so much greater, given that there will be no recruitment difficulties, wage demands, overtime claims, strikes, sickness absence, pensions, transport or housing problems to take care of. Factories can be situated anywhere, and HS2 could be redundant before it becomes operational.In the past, workers displaced by automation could rely on new industries springing up to take them on, but in future these will create far more jobs for robots than people across the board. Our whole economic system, which concentrates on profitability and economics rather than the welfare of the population, can only encourage this trend. What we need is a new economic system.

In an interview with the Guardian, the shadow chancellor attacks the belief that ‘government borrowing is akin to burning money’John McDonnell has said Labour will win the argument for more borrowing for investment, saying the Conservatives and much of the media has failed to engage with the arguments for government spending.The shadow chancellor also attacked “media outriders using trite journalistic tactics” in an article in the Guardian, after a series of interviews where he said he would not engage with how much extra it would cost to service public debt under Labour.Related: Borrowing to invest isn’t burning money – it’s how Labour will fix the economy | John McDonnellRelated: John McDonnell had a chance to shine with the budget, but he blew it | Nicola MurphyRelated: Hammond to borrow extra £90bn after lower productivity forecast Continue reading...

While the Tories have strangled the life out of the economy, we will support the new infrastructure, technology and ideas that are vital to growthThis is the pivotal period in which the battle of ideas over the future of our economy will be lost or won. All the evidence of the failure of austerity has been exposed, and the neoliberals are fighting for their ideological survival. The terrain they have chosen is over state intervention in the economy; they deploy media outriders using trite journalistic tactics to sow fears over the costs of state investment. Since I became shadow chancellor my aim has been to raise the level of economic debate and challenge the hegemony of this egregious ideology.The budget gives us the opportunity to confront and overrun the bogus economic arguments that have dominated political and economic policymaking for so long. The official figures released alongside the budget this year were utterly damning, a litany of failure not only for this government but for the entire economic philosophy it lives and will die by.There lurks a belief that government borrowing is akin to burning moneyRelated: Philip Hammond must ditch deficit reduction and invest. But he won't | Larry Elliott Continue reading...

Falling real incomes, rising debt and low productivity are pushing us towards the danger zone – and measures announced in the budget may not be enoughOn the historical average, Philip Hammond should be worried. Recessions have tended to occur once in every decade since the 1970s, and we’re now almost 10 years from the start of the last one.But while Brexit might be the obvious catalyst – for which the chancellor earmarked £3bn in emergency funding at the budget – two lost decades of earnings growth and more austerity to come should be just as troubling. In this regard, Hammond may be putting us all on course for another crash.Related: Brexit has created a political climate no budget can fix | Martin KettleProductivity is an economic measure of the efficiency of a workforce. It typically measures the level of output per hour of work, or per worker. Continue reading...

Press and broadcasting experts should look behind the gloomy OBR forecasts and tell us if the UK really is in a hole this big – and what we can we do about itWhat are political correspondents – from Laura, Nick and Robert on down – there for? Not to go to the same old briefings and sing the same old song? Independent judgment is a coverage pearl beyond price?And what are economics correspondents there for on the big budget outing? Not merely to take the latest Office of Budget Responsibility growth figures and turn them into a uniform tale of woe. As Alex Brummer of the Mail (and before that the Guardian) very reasonably pointed out, the OBR has “a flawed track record” on forecasting– and is glooming a damned sight harder than the Bank of England and IMF. Continue reading...

Trade secretary’s vision of entrepreneurial Britain fails to account for under-skilled workers, lack of training and opportunitiesBritain outside the European Union will enjoy much cheaper imports. That’s one of the threads running through arguments for Brexit.Outside the high walls of the EU’s economic fortress, we can scour the Earth for the cheapest stuff on offer, buy it and and bring it home to consume, saving ourselves billions of pounds. Continue reading...

The rise of the machines will make us richer. But to keep our humanity we need fundamental changes to our economic systemA country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker. That’s why Nobel laureate Paul Krugman concluded that productivity isn’t everything – but in the long run it is almost everything. Instead of wasting the nation’s time focusing on the non-existent threat of the deficit, the chancellor, Philip Hammond, this week conceded the “everything” that Mr Krugman had identified: British productivity has stalled and as a result workers’ real wages will be lower than when the recession began. Before the crash, we would have expected living standards to double every 40 years. Now that will take 80. That means lost decades for millions of ordinary people.It’s easy to become overly pessimistic. The epoch of enormous economic progress that characterised the 20th century is not over; we are suffering from seven years of government failure where ministers thought their job was to watch the economy and suffer passively from capitalism’s inevitable cycles. Rather than take a view of the economy and by fiscal action seek to secure prosperity for all, ministers embarked on a highly ideological agenda of dismantling the state and the protections afforded to workers – arguing erroneously that these were holding back the state. Mr Hammond has been forced to alter course because his party’s reckless policies had jeopardised the long-term improvement in the national standard of life. Continue reading...

The Bank of England’s interest rate rise has made Britons gloomier about economic prospects

Trump has promised a deal ‘very, very quickly’. If talks proceed as slowly as they are for a revised US agreement with Canada and Mexico, that won’t happenBeing a Canadian sabbatical visitor in the United Kingdom this year has allowed me to witness Brexit politics at close hand. As an economist, I’ve found it fascinating.Some Britons feel that Brexit sets the stage for a bright future for the UK, including a potential trade deal with the United States, while others are deeply concerned about the consequences of Brexit for both the economy and the country’s stature in the world.Related: Singapore-on-Thames? This is no vision for post-Brexit Britain | Jeevan VasagarRelated: Corbyn has seen the light on Brexit. Now he’s taking the fight to the Tories | Polly Toynbee Continue reading...

CBI survey of retailers comes before Black Friday discounting period, which is likely to drive sales furtherHigh street sales are staging a recovery after a sharp slowdown last month, overcoming the steepest growth in selling prices in almost 25 years.Grocers and clothing retailers fuelled stronger sales in November in the Confederation of British Industry’s survey of retail activity, which had recorded sales for October falling at the fastest rate since the height of the recession in 2009. While the study comes before the key Christmas shopping period, the early indications are likely to cheer the industry.Related: UK shoppers forecast to spend £10bn in Black Friday sales Continue reading...

This year, Australia is joining in on the most overtly avaricious retail event. And it’s sickeningOn Tuesday night I was chatting to the founder of a newly launched US footwear brand, who was eagerly anticipating Black Friday.

Thinktank’s budget analysis says forecasts for lower productivity, earnings and growth until 2022 were ‘pretty grim reading’Britain’s leading financial thinktank has warned workers to expect an unprecedented two lost decades of earnings growth and many more years of austerity as a result of the marked slowdown in the economy announced in Philip Hammond’s budget.The Institute for Fiscal Studies said in its traditional post-budget analysis that forecasts slashing productivity, earnings and growth in every year until 2022 made “pretty grim reading”, and predicted that even by the middle of the next decade, Britain’s public finances would still be in the red.Related: Public services face real-terms spending cuts of up to 40% in decade to 2020Productivity is an economic measure of the efficiency of a workforce. It typically measures the level of output per hour of work, or per worker. Continue reading...

Mainly grim news from thinktank, painting a picture of doom and gloom including predictions of a £35bn deficit in 2019-20Seven years after George Osborne ushered in a tough new age of spending cuts and deficit reduction, the Institute for Fiscal Studies had a grim message for the long-suffering British public yesterday: the age of austerity is not over.The IFS is to the budget what the pundits are to Match of the Day. It pores over the highlights, dissects why things have gone wrong (and more rarely why they have gone right), and takes delight in telling it the way it is.Related: Chancellor, keep a million children out of poverty. Fix universal credit | Debbie AbrahamsRelated: UK faces two decades of no earnings growth, IFS warns Continue reading...

Professor Wendy Burn on fears that promises of spending on mental health services will be broken; Colin Dyer of WellChild on the failure to prioritise the wellbeing of the young; Rev Paul Nicolson on inadequate benefits, poverty and ill health; plus, letters on housing and economic growthThere is a real and imminent danger that the promises made to improve mental health services for the millions of people who need them are about to be betrayed. This is because the chancellor failed to give the NHS the money it needs to continue to deliver current levels of care (Extra cash ‘plugs some gaps but not all’, warns top doctor, 23 November). Before the budget, the head of NHS England, Simon Stevens, warned that a cash shortfall would make it “increasingly difficult” to deliver on the government’s promise to improve mental health services in the coming years.The chancellor’s failure to heed that warning means difficult choices will have to be made when NHS England’s leaders meet to consider the budget next week. We are seeking an urgent commitment from NHS England and the government that the promised improvements to mental health services will be honoured. As shown by the case of girl X, highlighted by Sir James Munby this summer (Bed found for suicidal girl after judge’s fury, 5 August), this is a matter of life and death for many of our most vulnerable citizens. Continue reading...

In a dark room in central London, the Institute for Fiscal Studies pores over the figures behind Wednesday’s budget and finds little actually thereCall it the revenge of the geeks. On every other day of the year, politicians feel free to play fast and loose with the figures. Anything to massage them towards their own ends. But having stayed up all night going through Treasury forecasts, the day after the budget belongs to the experts. This is when they get to have their say on the government’s competency, and the chancellor can do little but sit back and suck it up.Philip Hammond is quite happy to kick back his heels and listen to MPs from all parties delivering their verdicts in the Commons in the post-budget debate, as he knows that almost all of them are totally innumerate. So even if one of them does happen upon an accounting error there’s a fair chance no one will know if it’s accurate or not. But a big thumbs down from the nerds can be career ending. And there’s no one the chancellor fears more than the Institute for Fiscal Studies, an independent thinktank that has a far better track record of getting things right than anyone in the Treasury. Continue reading...

Rolling coverage of the day’s political developments as they happen, including reaction to the budget, Philip Hammond’s morning interviews and the Institute for Fiscal Studies’ post-budget briefing.

Updated growth figures show British businesses reined in their spending over the summer - bad news for the productivity crisis

Heather Stewart is joined by Larry Elliott, Sonia Sodha and Robert Colvile to discuss the second budget of the year. Plus we hear from Robert Chote – the man responsible for the drastic downward revision to Britain’s economic growth forecasts – and the Resolution Foundation’s Matthew WhittakerIt was billed as a “make or break budget” for the under-fire chancellor, so Philip Hammond put on a brave face and offered up tax cuts to first-time buyers, a bit more money for the NHS, tweaks to universal credit and a higher minimum wage.But the major story from the second budget of the year came in the form of drastically revised economic growth projections from the independent Office for Budget Responsibility. Its director, Robert Chote, joins Heather Stewart to explain why he cut his forecast for Britain’s economic output so suddenly. Continue reading...

The dominant school of economics has long marketed itself as value-free. But the chancellor should be honest about the ideological nature of his decisionsYou’d think that a leading figure giving their most important speech of the year on what exactly they’re planning on doing with the nation’s money would try to avoid inductive leaps, questionable stats, and a stubborn inability to be open about the fact that their actions are a choice, not a necessity.But when it’s the budget, and your job title is chancellor of the exchequer, it seems like anything goes. It’s not Philip Hammond’s fault (though given he uses “too many technical words” by his own admission, he’s probably not helping); I’m not sure there’s ever been a time where the budget felt like an honest, open, high-quality discussion on how our collective tax money is going to be spent. Isn’t that a little strange?The public is tired of being told that there’s only one way forward, when it’s clear that political choices are being made on our behalfRelated: Hammond’s ‘make-or-break budget’ wasn’t bold – just more of the same | Aditya Chakrabortty Continue reading...

Chancellor’s measures to improve economic growth include training, tax relief and £2.5bn fund for innovatorsThe government’s latest attempt to tackle Britain’s poor productivity record focused on extra funding for artificial intelligence, skills and technology, as the chancellor introduced measures to boost economic growth.Philip Hammond said there would be an expansion in the national productivity investment fund which he launched last year. The fund would rise from £23bn to £31bn to help kickstart improvements in efficiency levels across the UK.Productivity is an economic measure of the efficiency of a workforce. It typically measures the level of output per hour of work, or per worker.Related: Budget 2017: Hammond masks gloomy outlook with stamp duty cutRelated: The real budget story is the sharp cut in growth forecasts | Larry Elliott Continue reading...

Shadow chancellor refuses to be pinned down on specific cost of servicing debt from party’s spending plans, accusing BBC presenter of ‘trite journalism’The shadow chancellor, John McDonnell, has refused to put a figure on the cost of Labour’s plans for extra borrowing and dismissed being challenged on specific numbers as “trite journalism”.Asked nine times by BBC Radio 4’s Today presenter Mishal Husain how much extra it would cost to service public debt under Labour, McDonnell refused to give a figure. Instead he repeatedly claimed that extra borrowing would “pay for itself”.Related: Budget 2017: Hammond dismisses claim stamp duty cut will just push up prices - Politics live Continue reading...

Resolution Foundation says cut in growth announced in budget means household disposable incomes will fall until 2020The UK is on course for the longest fall in living standards since records began in the 1950s, as analysis shows Philip Hammond’s budget will drive up inequality.The Resolution Foundation said the stark downgrade to economic growth revealed by the chancellor on Wednesday means household disposable incomes were now set to fall until 2020. It also found the poorest third are set for an average loss of £715 a year over the coming five years, while the richest third stand to gain £185 on average. Continue reading...

OBR warns chancellor faces long period of sluggish wages growth that will dent tax receipts and increase borrowingPhilip Hammond must borrow an extra £90bn over the next five years after the Treasury’s independent forecaster downgraded productivity growth.The Office for Budget Responsibility (OBR) warned that the chancellor faced a long period of lower than expected wages growth that would dent tax receipts and push up borrowing. The cumulative effect over the life of the parliament would add £90.5bn to the UK’s debt pile and jeopardise Hammond’s target of balancing the government’s books by 2025, it said.Productivity is an economic measure of the efficiency of a workforce. It typically measures the level of output per hour of work, or per worker.Related: The real budget story is the sharp cut in growth forecasts | Larry ElliottThe Office for Budget Responsibility is the government’s independent forecaster, which gives its verdict on the outlook for growth and the public finances twice a year. Continue reading...

Budget aims to tackle London-centric economy by announcing spending plans for areas including the north and MidlandsEnglish regions including the north and the Midlands will receive a multibillion-pound investment in an effort to reduce the weighting of the economy towards London.Speaking as he announced plans aimed at improving transport links and devolving more power to the regions, Philip Hammond said “far too much of our economic strength is concentrated in our capital city”.Related: Autumn budget: the winners, the losers and the overlooked Continue reading...

Just over 157,000 cars produced in October, 3.5% more than same time last year, as exports rise by 5% and domestic demand falls 2.9%Car production increased last month as rising exports made up for falling demand in the UK, new figures reveal.

Forecaster now expects economy to grow by just 1.5% in 2017, rather than 2% originally suggested in MarchBritain’s growth prospects are far weaker than previously thought, according to the Office for Budget Responsibility, as stalling productivity and cash-strapped consumers provide a bleak backdrop for the economy.The government’s independent economic forecaster sharply downgraded its growth predictions and now expects the economy to grow by just 1.5% this year, after predicting 2% growth back in March at the time of the last budget.The Office for Budget Responsibility is the government’s independent forecaster, which gives its verdict on the outlook for growth and the public finances twice a year. Continue reading...

Philip Hammond has admitted that seven years of obsessing about the public sector deficit and shrinking the state has left the economy enfeebled and smaller than before the crisis. But he continues to put ideology above evidence

How did Philip Hammond’s budget affect you? The Guardian talks to families, workers and businesses across BritainWith a newborn baby and a 14-month-old son to support on an annual income of less than £20,000, police community support officer Laurence Ridge, 21, was hoping for better news in the budget.“I think the decision to abolish stamp duty for first-time buyers is reasonable but he should have announced a bigger pay rise for public sector workers – the 1% we get is miniscule compared with inflation. Building 300,000 affordable homes is nothing, spread out across the country. Where are they all?”Related: Stamp duty cut for first-time buyers will push up prices, warns OBRRelated: Key points from budget 2017 – at a glanceRelated: What the 2017 autumn budget means for you Continue reading...

Hammond may have called time on austerity but his money is too little, too late – with Brexit looming the weak economy needs to be put on war footingThe 1956 Suez crisis was the moment Britain had to wake up to the fact that it was no longer the force it once was. The November 2017 budget was its economic equivalent.Forget the extra money to paper over the cracks in the NHS. Leave to one side the willingness to throw money at sorting out universal credit. The real story was not the latest attempt to boost home ownership but the news from the Office for Budget Responsibility on the state of the economy. This was little short of calamitous.The Office for Budget Responsibility is the government’s independent forecaster, which gives its verdict on the outlook for growth and the public finances twice a year. Continue reading...

Chancellor calls it a ‘balanced’ budget and uses eye-catching offer to first-time buyers to counter Britain’s deteriorating economic prospectsPhilip Hammond placed a stamp duty cut for first-time buyers at the heart of his budget on Wednesday as he sought to mask Britain’s deteriorating economic prospects by pledging to “revive the homeowning dream”.Faced with evidence showing that the UK will be one of the weakest growing major economies in the next five years, the chancellor announced a modest increase in funding for the NHS, and announced £15bn of measures to tackle the housing crisis.Related: Autumn budget: the winners, the losers and the overlookedRelated: The Guardian view on budget 2017: a missed opportunity | EditorialThe Office for Budget Responsibility is the government’s independent forecaster, which gives its verdict on the outlook for growth and the public finances twice a year. Continue reading...

Rolling coverage as chancellor Philip Hammond delivers the 2017 autumn budget

The chancellor’s second budget of the year sets out where Philip Hammond expects the state to get money from in 2018, and how he expects it to be spent. Phillip Inman explains Continue reading...

Philip Hammond could have responded to bad economic news with cuts – instead he has increased spending and borrowingForget the extra money for housing. Put to one side the package of support for the NHS. Ignore the willingness to throw money at sorting out universal credit. The real story from the budget was slower growth not just this year but every year up until 2022.This downgrade has been a long time in coming. Ever since it was founded, the independent Office for Budget Responsibility has wrongly predicted a pick-up in productivity growth and is now heartily sick of ending up with egg on its face.Related: Key points from budget 2017 – at a glance Continue reading...

Philip Hammond has held on to his own job, for now. But his budget changes may prove little more than window dressing as Brexit loomsRelated: Autumn budget 2017: Hammond scraps stamp duty for first-time buyers for homes worth up to £300,000 - updatesRelated: Stamp duty cut for first-time buyers hopes to fix housing marketRelated: The real budget story is the sharp cut in growth forecasts | Larry Elliott Continue reading...

Autumn budget also includes stamp duty cut, £1.5bn universal credit U-turn and extra £3bn for Brexit preparations

The chancellor, Philip Hammond, has unveiled the budget. These are the main points, with political analysis

Retailers say households facing squeeze on real incomes are putting off purchases as they go into key Christmas periodBritons are putting off major home appliance and furniture purchases and DIY projects, in the latest sign that household budgets are under pressure in the run-up to Christmas.On Tuesday, the DIY chain B&Q, the department store chain John Lewis and AO, the online electrical retailer, joined the list of companies warning of tough trading conditions, as the slowdown in the housing market has a knock-on effect on demand for everything from fitted kitchens and bathrooms to sofas and washing machines.Related: Business Today: sign up for a morning shot of financial news Continue reading...

As the graphs and data show, Philip Hammond faces weaker growth, Brexit uncertainty and falling living standardsThe chancellor, Philip Hammond, is delivering one of the most difficult budgets in recent times, set against a backdrop of weaker growth, Brexit uncertainty and falling living standards.Here are five key charts to consider. Continue reading...

Growth must go on – it’s the political imperative everywhere, and it’s destroying the Earth. But there’s no way of greening it, so we need a new system

These are not normal times: the chancellor is unable to fund giveaways by raising taxes in the hope the public will forget themIn normal times, the first budget after a general election is a predictable affair. The chancellor of the exchequer stands up, conjures up the ghost of Sir Stafford Cripps, administers some pain and quickly moves on.In Westminster it is known as aligning the economic and political cycles. In plain English, it means getting the bad news out of the way early in order that there will be money to spare just before voters have to go to the polls again. Only rarely do governments deviate from this approach and when they do it rarely ends well.Related: Business Today: sign up for a morning shot of financial newsRelated: Widening UK budget deficit hands Hammond a headache Continue reading...

How will the chancellor try to improve British productivity and tackle pressures over public services and welfare?This is Philip Hammond’s first budget statement since the general election in June and the third since he became chancellor last year.In March he was cheered by his backbenchers after the UK avoided the recession predicted by many analysts following the Brexit vote last year. Employment was climbing and measures of consumer and business confidence, which plummeted after the referendum, had bounced back. Continue reading...

Britain borrowed more than expected last month, but borrowing is still down almost 10% since the start of the financial year

Global demand for British goods and weak pound bring sharp improvement in both total and export order booksOrder books for Britain’s factories are at their strongest for almost 30 years as the weak pound and global growth bolsters demand for manufactured goods.In a boost to the chancellor on the eve of the budget, the CBI’s monthly health check of industry showed a sharp improvement in both total and export order books.Related: UK budget deficit widened unexpectedly, but factory orders rise – business live Continue reading...

Rise in public sector net borrowing points to weaker economy than expected and will further limit chancellor’s spending powerBritain’s deficit unexpectedly widened in October, handing Philip Hammond disappointing news on the eve of the budget.