Economics | The Guardian

Unless urgent changes are made to increase benefits and tax credits, and reform universal credit, the impact on poor families will be devastating, says Mike Stein. Meanwhile, David Higdon is shocked to find a woman at the checkout in tearsThe Institute for Fiscal Studies research predicting increases in child poverty to 37% over the next five years lays bare the current role of fiscal welfare in exploiting the poorest members of society through punishment, deterrence and regulation (Benefit cuts to leave 5m children in poverty, 2 November). Unless urgent changes are made to increase benefit and tax credit levels and reform universal credit, the impact on poor parents will be devastating. Research from the Nuffield Foundation has shown that pressures of poverty are associated with more children being placed on child protection plans and removed from their families. The impact of these benefit cuts will be greatly intensified by the severity of the government’s austerity measures, including reductions in essential services to support vulnerable children, families and young people.

Alan Partridge | Celtic’s undefeated run | Adam Smith Institute | M&S fashion | Dirty-old-men-ocracy? | Theresa May at churchPeter Bradshaw’s timely reminder about the re-emergence of Alan Partridge in Brexit Britain (The revenge of Alan Partridge, G2, 6 November) is underlined by the inclusion in recent TV schedules of such absurd real-life programmes as The Ganges with Sue Perkins and Gordon Ramsey on Cocaine, which might have been dreamed up by the great man in a previous television incarnation. Alan’s previous suggestions of Youth Hostelling with Chris Eubank and Monkey Tennis are surely now ripe for production.

British exporters could lose billions after two-thirds of EU firms saying they expect to move part of supply chain out of UKBritish exporters have been put on notice that they could lose billions of pounds worth of business after almost two-thirds of EU businesses who work with UK suppliers warned they expect to use more firms inside the single market after Brexit.The Chartered Institute of Procurement & Supply (CIPS) said 63% of the EU companies surveyed last month said they planned to move some of their supply chain out of the UK as a result of the decision to leave the single market and customs union. The results represent a large increase on a survey in May, when 44% of EU businesses said they were preparing to switch.A hard Brexit would take Britain out of the EU’s single market and customs union and ends its obligations to respect the four freedoms, make big EU budget payments and accept the jurisdiction of the ECJ: what Brexiters mean by “taking back control” of Britain’s borders, laws and money. It would mean a return of trade tariffs, depending on what (if any) FTA was agreed. See our full Brexit phrasebook.Related: Business Today: sign up for a morning shot of financial newsRelated: UK firms want a Brexit transition deal by March Continue reading...

Economics is gripped by its own mystery drama: why are central banks setting interest rates on the basis of a seemingly broken economic model?As mysteries go, it doesn’t rank with Murder on the Orient Express or the identity of Gerald the mole in Tinker Tailor Soldier Spy but the economics profession is currently gripped by its own drama.This story won’t make it to the silver screen with starring roles for Kenneth Branagh or Judi Dench, but a lot depends on how it ends. For central banks, in particular, the question of Who Killed the Phillips Curve? is a nail-biter. They badly want to know how it ends.Inflation is when prices rise. Deflation is the opposite – price decreases over time – but inflation is far more common.Related: Business Today: sign up for a morning shot of financial newsRelated: Struggling Brexit Britain can barely afford this rise in rates Continue reading...

Ten years of austerity has put the UK in the doldrums: that fact, coupled with the referendum, means there is scarcely a need to dampen things down furtherYou can look at it two ways. After ten years of inertia, Bank rate has doubled. Or: after 10 years of inertia, Bank rate has been raised by one quarter of one per cent, to half of one per cent. Big deal!Of course, for most businesses and individuals, the official rate is meaningless. It is the rate to which everything else is geared, but everything else is usually a lot higher than 0.25% or 0.5%. We read reports daily of how so many desperate borrowers find themselves struggling to pay the usurious interest rates associated with credit card debt. Continue reading...

Australia shouldn’t get too smug about Donald Trump Jr’s tone-deaf Halloween tweet. We have our own capitalist idiocyOn becoming New Zealand’s prime minister, Jacinda Ardern said that capitalism was a blatant failure, and in light of the deluded positions taken by proponents of capitalism and free markets this week it is hard not to agree.Ardern’s comments are revealing in how she framed the question. She suggested, “If you have hundreds of thousands of children living in homes without enough to survive, that’s a blatant failure. What else could you describe it as?”Related: Donald Trump Jr schooled on Twitter after Halloween 'socialism' tweetRelated: If greedy bosses have broken capitalism, who will fix it? | Hugh MuirRelated: Unions seek dramatic pay increases to ensure minimum ‘living wage' Continue reading...

Falling profits and increasingly tough high street trading fuels expectations of a much bolder restructuring plan from M&SMarks & Spencer is expected to ramp up its store-closure plan next week as a result of falling profits and tough trading conditions on the high street.Last year M&S announced it would close 30 stores as part of an overhaul designed to slash by 10% the amount of shopfloor space devoted to its struggling clothing arm. But industry sources suggest M&S’s chief executive, Steve Rowe, has been working on a bolder restructuring plan with the new chairman, Archie Norman, before its first-half trading update on Wednesday.Related: New M&S chairman faces tough task turning round high-street institution | Shane Hickey Continue reading...

Richard Kozul-Wright and Dianna Barrowclough of the United Nations Conference on Trade and Development on industrial strategyYour report (UK-wide official pledge on ‘basic infrastructure’ urged, 1 November) outlines an independent commission’s call for the British government to provide “universal basic infrastructure” for every citizen as part of an ambitious new industrial strategy. The commission’s report supports Unctad’s broader argument across many countries and contexts. Industrial strategy needs to be embraced as a long-term plan, managed strategically and embedded through government.Within hours of the report’s release, critics fretted about governments’ abilities to “pick winners” and eagerness to abuse the public purse. But with chancellor Philip Hammond’s forthcoming budget promising to boost productivity, it is timely to recall how industrial policies galvanised structural transformation in other times and places, from the Tennessee Valley Authority in the 1930s to China’s ambitious Manufacturing 2025. Continue reading...

Flurry of orders appears to bolster Bank of England decision to raise interest rates, pushing stock market index to new record highShares in Britain’s top 100 companies reached an all-time high on Friday, after buoyant sales across the services sector last month showed the economy remained resilient following the post-Brexit vote slump.A flurry of orders that appeared to bolster the Bank of England move to raise interest rates this week, helped send the FTSE 100 index to 7,560, beating the previous end of day high of 7,556 on 12 October.Related: US jobs rebound strongly in October, while FTSE 100 reaches new record close - business liveLenders have already bumped up the cost of fixed rate mortgages ahead of the Bank of England’s decision to raise base rate from 0.25% to 0.5%, and mortgage borrowers on tracker and variable rates will see their monthly payments become more expensive in the coming days. ​ Continue reading...

America’s closely watched non-farm payrolls report shows a 261,000 jobs rise in October after hurricanes triggered a sharp fall in September

Poorer families and unemployed will be especially badly hit, says thinktank report calculating cost of walking away from EU without trade dealHouseholds face increases of up to £930 in their annual shopping bills if Britain walks away from Brexit talks without a trade deal, according to new research that reveals a disproportionate impact on poorer families and the unemployed.

Jerome Powell is a sane and sober choice to succeed Janet Yellen – but he must uphold the Federal Reserve’s independenceWith the appointment of Jerome Powell as the next chair of the United States Federal Reserve, Donald Trump has made perhaps the most important single decision of his presidency. It is a sane and sober choice that heralds short-term continuity in Fed interest rate policy, and perhaps a simpler and cleaner approach to regulatory policy.Although Powell is not a PhD economist like current Fed chair Janet Yellen and her predecessor, Ben Bernanke, he has used his years as an “ordinary” governor at the Fed to gain a deep knowledge of the key issues he will face. But make no mistake: the institution Powell will now head rules the global financial system. All other central bankers, finance ministers, and even presidents run a distant second.Related: Trump names Jay Powell to replace Janet Yellen as Fed chief Continue reading...

Bank of England’s raised cost of borrowing, from 0.25% to 0.5%, may add £22 a month to average variable interest rate loansMillions of homeowners face higher mortgage payments after the Bank of England said it could no longer tolerate the inflation level and announced the first increase in interest rates in more than 10 years.Despite weak growth and mounting uncertainty over the terms of Britain’s exit from the EU, Threadneedle Street increased interest rates to 0.5% from 0.25% on Thursday, reversing emergency action taken immediately after the Brexit vote.Related: Bank of England raises UK interest rates for first time since 2007Related: UK rate rise: BoE governor Carney defends decision, pound sinks - as it happened Continue reading...

The Bank of England cut rates last year to deal with a Brexit downturn that didn’t happen but it raised rates now when the risks feel more immediateYou wait 10 years for a rise in interest rates and, when the moment finally arrives, the timing feels completely arbitrary.An easier moment to make the move would have been the start of this year. The August 2016 cut from 0.5% to 0.25% was presented as an emergency measure to prevent a post-referendum recession. When the downturn didn’t arrive – GDP growth in the final quarter of 2016 was a strong 0.7% – it would have been logical to revert to 0.5%. The Bank of England could have declared a minor victory and said it would remain vigilant on all fronts, looking for both inflationary breezes and Brexit headwinds.Related: Bank of England raises UK interest rates for first time since 2007Lenders have already bumped up the cost of fixed rate mortgages ahead of the Bank of England’s decision to raise base rate from 0.25% to 0.5%, and mortgage borrowers on tracker and variable rates will see their monthly payments become more expensive in the coming days. ​Related: BT to slash landline charges for 1 million customers Continue reading...

Threadneedle Street increases cost of borrowing from 0.25% to 0.5%, reversing emergency action after Brexit voteReaction to the interest rate riseThe Bank of England’s 0.25% rate rise sent the pound tumbling on foreign exchanges as gloomy forecasts for growth appeared to rule out the prospect of steep increases in the cost of credit before 2020.Related: What the interest rate rise will mean for youLenders have already bumped up the cost of fixed rate mortgages ahead of the Bank of England’s decision to raise base rate from 0.25% to 0.5%, and mortgage borrowers on tracker and variable rates will see their monthly payments become more expensive in the coming days. ​Related: UK interest rates raised for first time in a decade - business live Continue reading...

The Bank of England has voted to hike borrowing costs for the first time since July 2007

It might be a capitalist desire to squeeze the last remnants of humanity from its workforce, but today we have electoral tools to fight itSophia told ABC radio that robots deserved more rights than humans. It’s a statement that would be of concern should your mum announce it, yet disappointingly unremarkable if uttered by some right wing think-tanky person defending job automation on a panel show.But as Sophia is a robot herself, and one of a new robot technology generation guided by artificial intelligence that’s increasing in sophistication, the words are more than a little perturbing. Sophia is the product of Hong Kong based Hanson Robotics, and her notoriety exists not merely on the basis of her interview tactics, but because the government of Saudi Arabia has granted her citizenship rights after her recent local visit to a tech show. Many have noted that as she was provided a platform there without a male chaperone, she perhaps already has more rights than a Saudi woman. Continue reading...

The Bank has done everything to keep the failing economy moving. But this rise shows the problem lies with the government’s continued fiscal austerity

Inflation at 3% is not too convincing an argument to raise rates. More important is that the BoE’s credibility was on the lineIt’s been a long, long time coming. The last time the Bank of England raised interest rates in July 2007, Sir Mervyn King was in charge at Threadneedle Street, Barack Obama had only recently said he would run to be US president and Gordon Brown had finally replaced Tony Blair as prime minister.

Sex and Brexit obsess us, while the poverty revealed in the new IFS figures is seen as normal. Yet it’s not normal – it’s a shameful political choiceSoon more British children will be poor than since records began, back in 1961. In four years, progress will be reversed and all the good that was done undone. Over a million more will be plunged below the decency threshold.For 37% of children to be brought up poor is a national humiliation. Any politician boasting pride in “British tolerance” should include our remarkable tolerance of poverty, which exceeds all similar European countries. This is who we are and what we expect, so today’s chilling report from the Institute for Fiscal Studies didn’t make it into this morning’s BBC news bulletins. Sex and Brexit obsess us, while poverty is just normal Britishness.Osborne and Duncan Smith targeted the poorest, and the same families were struck down by cuts time and againRelated: Child poverty in Britain 'set to soar to new record' Continue reading...

A couple who bought a two-bed flat this year say they have few immediate concerns thanks to their fixed-rate dealThe size of mortgage taken out by first-time buyers Kieran Ellis, 32, and Jordan Stefanov, 29, will send shudders through many people. The couple borrowed about £450,000 in June to buy a £490,000 two-bed flat in Crystal Palace, south London – but they are relatively relaxed about the rise in interest rates.A 0.25% rise in rates adds £54 to the monthly payments on a £450,000 loan. But like the majority of young buyers Kieran and Jordan have taken out a fixed-rate mortgage – in their case pegged at just 1.8% for two years – so the rate rise has no immediate impact on their repayments, which come in at a bit below £2,000 a month.Related: What the interest rate rise will mean for you Continue reading...

The Bank of England has increased its base rate after a decade – here’s how it will affect homeowners and saversThe 0.25% rise in Bank of England base rate to 0.5% may be small, but it marks the first rise in borrowing costs for a decade. Many mortgages will rise in cost, but savers will be looking forwards to better returns.Related: 'We have a £450,000 mortgage – but we're relaxed about the interest rate rise' Continue reading...

Increase from 0.25% to 0.5% looks imminent in wake of latest good news from Britain’s manufacturing sectorThe Bank of England is on track to raise interest rates for the first time in more than a decade on Thursday after data from manufacturers strengthened the case for an increase.The industrial sector is reporting that it remains in rude health as companies benefited from strong sales in the UK last month and new export business driven by the weak pound. Combined with high inflation and record low unemployment, the figures pointed to the Bank raising the cost of borrowing from 0.25% to 0.5%. Continue reading...

IFS forecast that 37% of children will be in relative poverty by 2022 would see all progress made in the last 20 years undoneThe number of children living in poverty will soar to a record 5.2 million over the next five years as government welfare cuts bite deepest on households with young families, a leading UK thinktank has said.New research from the Institute for Fiscal Studies predicts an increase of more than a million in the number of children living in poverty, more than reversing all the progress made over the past 20 years. Continue reading...

Gender parity ‘shifting into reverse’ as World Economic Forum adds 47 years to time needed to reach workplace equalityWomen around the globe may have to wait more than two centuries to achieve equality in the workplace, according to new research.

British manufacturing strengthened in October, but the City faces up to 75,000 job losses after Brexit

Government should guarantee access to transport, schools, hospitals and digital access, says industrial strategy commissionBritain’s north-south divide should be tackled by a government pledge in its new industrial strategy to provide every citizen with decent transport, schools, hospitals and digital access, an expert body says.The independent industrial strategy commission on Wednesday urged ministers to tackle Britain’s regional imbalances by committing to universal basic infrastructure – a guaranteed standard for the whole of the UK.Related: Surge in UK consumer borrowing fuels likely interest rate rise Continue reading...

Thinktank says it is ‘almost certain’ leave vote has damaged living standards as it scales back economic growth forecastsBritish households are each more than £600 a year worse off following the vote to leave the European Union, according to one of the UK’s leading economic forecasting bodies.The National Institute of Economic and Social Research (NIESR) said it is “almost certain” the leave vote has damaged living standards and hit the growth potential of the economy. The thinktank also scaled back its expectations for growth in the UK for the next three years.

A strong performance by France has helped the euro area post its strongest annual growth since the debt crisis in 2011

The incoming head of the New Economics Foundation on how the radical thinktank’s moment has come to lead the fight against inequalityMiatta Fahnbulleh, a former academic turned policy wonk who has worked for three prime ministers and the Labour party, is not your typical thinktank chief.Related: Corbyn: Hammond right to say Labour threatens whole economic systemWages have flatlined. It means you have these huge divides in wealth – and people are feeling poorer, year after year Continue reading...

The government is refusing to release 58 studies of the economic impact of leaving the EU. It is undemocratic to keep British people in the darkBrexit, we’re regularly reminded, is the will of the people. We had a referendum and the result was clear. Question the wisdom of the decision and you show yourself to be anti-democratic and out of touch, a member of a cosseted, globalist elite that fails to understand the concerns of ordinary folk.Never mind that 48% of voters represents rather a large “elite” by any normal measure. Nor that the people most enthusiastically pushing this line – among them Nigel Farage, Rupert Murdoch and several senior politicians – are themselves both privileged and powerful. The attack lands, in part, because it contains a kernel of truth. Prominent remainers sometimes have spoken about leave voters in sneering, snobbish terms. There really is an unwillingness among some affluent, metropolitan Europhiles to acknowledge that material factors contributed to the result. It doesn’t seem to occur to them that showing contempt for mass democracy could have lasting social and political repercussions – potentially fuelling more extreme rightwing populism.Related: Government refuses to release details of studies into economic impact of BrexitA hard Brexit would take Britain out of the EU’s single market and customs union and ends its obligations to respect the four freedoms, make big EU budget payments and accept the jurisdiction of the ECJ: what Brexiters mean by “taking back control” of Britain’s borders, laws and money. It would mean a return of trade tariffs, depending on what (if any) FTA was agreed. See our full Brexit phrasebook. Continue reading...

Barclays’ appetite for blind risk and greed in the midst of financial crisis is an intriguing tale – somebody should now spill all the beansGordon Brown is not alone in thinking errant British bankers got off lightly in the 2008 financial crisis. We should also be worried that the former prime minister thinks the new criminal offence of reckless misconduct that causes a financial institution to fail, which was introduced after the crisis to address the perceived legislative weaknesses, may not be up to the job.Related: Gordon Brown: Bankers should have been jailed for role in financial crisis Continue reading...

Ex-PM warns failure to take tougher stand has made it inevitable that rogue bankers will again gamble with public moneyGordon Brown has claimed bankers should have been jailed for their fraudulent and dishonest behaviour during the financial crisis that led to Britain’s deepest post-war recession and his defeat in the 2010 general election.The Labour former prime minister used the second extract from his memoirs to warn that the failure to take a tougher line with wrongdoing – as pursued by other countries – has made it inevitable that rogue bankers will again gamble with public money.Related: Gordon Brown memoirs: Barclays' RBS bid in 2008 is a staggering revelation Continue reading...

People on the building society’s variable rates would see a 0.25% increase in their monthly bill, if the Bank raises the base rate to 0.5%Nationwide has paved the way for an across-the-board increase in mortgage costs by announcing that a 0.25% interest rate rise would be passed on in full to its 600,000-plus variable-rate home loan customers.The building society said that if, as is widely expected, the Bank of England lifts the base rate by 0.25% to 0.5% on Thursday, it would increase both of its variable rates by 0.25%. Continue reading...

Weak productivity and Brexit uncertainty make it hard for chancellor Philip Hammond to see tax cuts or spending increases in next month’s Budget

The 9.9% annual growth figure further adds to concerns of unmanageable debt among UK householdsA near-double-digit increase in lending to households in the year to September has left the Bank of England on track to raise interest rates on Thursday, amid concerns that consumers are creating an unmanageable mountain of unsecured debt.The pace of annual consumer credit growth was 9.9% last month, according to figures from the central bank, as borrowing on credit cards, overdrafts and unsecured loans jumped.Related: Average UK debt at £8,000 per person (not including the mortgage)Related: Consumers appear loth to spend. Is it a blip, or Brexit beginning to bite? Continue reading...

Survey reveals 6m Britons fear never being debt-free with 25% struggling to make ends meet and 62% worried about personal debt levelsMore than 6 million Britons don’t believe they will ever be debt free, according to new research which has also found the average person in the UK owes £8,000 – on top of any mortgage debt.

Fresh analysis reveals £20bn gap between government spending and tax receipts, says Institute for Fiscal StudiesFresh analysis that reveals a hole of almost £20bn in the public finances will heighten the pressure on the chancellor, Philip Hammond, ahead of next month’s budget.Britain is on track for the deficit – the gap between government spending and tax receipts – to reach £36bn by 2021-22, more than twice the initial official forecast of £17bn, according to the Institute for Fiscal Studies (IFS).Related: Bank of England poised to push interest rates back up to 0.5%Related: How the actual magic money tree worksRelated: Sparkling employment figures mask real picture of UK economy Continue reading...

Readers respond to Catalonia’s declaration of independencePaul Mason’s normally incisive journalism seems lacking in his latest piece on regional self-determination (G2, 24 October). The common thread linking separatist movements in Catalonia, Lombardy and Veneto is rich regions objecting to subsidising poorer parts of their respective countries. What’s more, the core message from Brexiters is that “we want our money back” because people are “fed up with subsidising less prosperous parts of Europe”.What we lack in this debate is any appreciation of the benefits of solidarity, with richer regions/countries working hard to help poorer areas catch up. Continue reading...

The head scratching over the failure to raise productivity is ignoring the real problem: cheap labour is a disincentive to investmentTheresa May originally wanted her purpose in power to be defined by improving the wellbeing of the less well-off. Despite all that has happened since, she has not, apparently, given up: with the gender pay gap in mind, at the weekend she pressed even those smaller firms not legally required to publish the difference between their male and female employees’ earnings to survey their workforce. This is typical of her style: imprecation rather than action. Within weeks of that Downing Street pledge, she was backtracking on some of the measures, such as workers and consumers on boards, that she had proposed as a way of showing she would be the voice of the just-getting-by.Yet there is no doubt she got one thing right: she identified the issue that is likely to do most damage to her government, whatever the upshot of the Brexit negotiations. A decade after the crash, many voters are still not better off; the roll-out of universal credit is going to leave some even poorer. And many of those who have had real income growth don’t feel the difference. Continue reading...

If people maintained and repaired their possessions, the world economy and the impact of human activity on the environment would be transformedAffluenza has not just changed the world, it has also changed the way we see the world. Short of money? Borrow some. Caught in the rain? Buy an umbrella. Thirsty? Buy a bottle of water and throw the bottle away.Our embrace of “convenience” and our acceptance of our inability to plan ahead is an entirely new way of thinking, and over the past seventy years we have built a new and different economic system to accommodate it.Related: If having more no longer satisfies us, perhaps we’ve reached ‘peak stuff’ | Will HuttonIf people continue to embrace the benefits of 'convenience', the impact on the natural environment will be devastating.Related: Materialism: a system that eats us from the inside out | George Monbiot Continue reading...

With the economy sluggish, Thursday is expected to bring reversal of emergency action taken following Brexit voteThe Bank of England is poised to raise interest rates this Thursday for the first time in more than a decade, raising the cost of borrowing for British households already hurt by an earnings squeeze.Threadneedle Street is expected to reverse emergency action taken following the EU referendum, when it cut rates from 0.5% to 0.25% to avert a recession. While a slump has not materialised, the British economy appears in worse health than most other major countries with potential to be blown further off course by faltering talks to leave the EU. Continue reading...

85% of MPs were unaware that new money is created every time a bank extends a loan. Were you?

Not only are most new jobs low-skill and low-wage, but the total number of ‘hidden jobless’ remains highFalling unemployment has been the one bright spot in what has been a distinctly mediocre year for the economy. Harold Wilson was prime minister the last time Britain had a jobless rate as low as 4.3%.When the Bank of England’s monetary policy committee meets this week to discuss interest rates, the state of the labour market will feature prominently. Many of the members think that the UK is at, or very close to, full employment and that any further falls in joblessness will lead to wage inflation.Related: Falling unemployment is great for the economy? Try telling cleaners like Irene | Stefan BaskervilleIf the Bank puts up interest rates this week, it won’t be because the labour market is overheating in the Welsh valleys Continue reading...

The banks are obsessed with lending to property owners and developers, at the expense of other businesses – and the government gives them its full backingWhen everyone around you sits on their hands, it’s tempting to take control. While companies refuse to invest and Whitehall is paralysed by Brexit, why not legislate and nationalise to get something done?Britain is in the midst of an investment crisis, a productivity crisis, an income crisis and an inequality crisis – and all are so entrenched that they are beyond policies that tinker or No 10’s “nudge unit”. Continue reading...

After a decade of ultra-low rates, many predict a rise this week. Vital for controlling inflation and saving Bank chief Mark Carney’s face, say the hawks. A terrible idea in a weak economy, argue dovesMarkets have a tendency to panic when central banks threaten to raise interest rates. In 2014, the US Federal Reserve and its then boss, Ben Bernanke, sent traders across the world into a spin when he merely hinted that the era of almost zero rates might be ending.It’s been a decade since the Bank of England last increased the cost of borrowing, so it is no surprise that this week’s vote by the monetary policy committee, which Threadneedle Street has sketched out as a good moment for a rise, is being closely watched.Keeping the economy expanding has won out over the imperative to maintain inflation steady at 2%'Inflows of new business in September were at their lowest for 13 months, suggesting that demand has "waned again"' Continue reading...

Rush for dwindling supply of fixed-rate deals as Bank of England is expected to increase base rate this weekHouseholders have been scrambling to grab fixed-rate mortgages before Thursday’s expected interest rate rise, which would lead to the first increase in monthly loan payments in a decade.Staff at the big mortgage brokers have reported a “busy last few days”, and say they are expecting more calls this week as householders with base-rate-linked loans try to insulate themselves from the anticipated increase. Continue reading...

The economy is weak and the impact of higher rates on consumer behaviour is arguableIt has been a grim week for economic news. High street stores reported rapidly falling sales – the worst since 2009. Output from Britain’s car factories tumbled, shrinking by 4.1% in September, with demand from UK car buyers plummeting by 14.2%. Meanwhile, official figures revealed the average pay for full-time workers crept up to £550 a week, but in real terms have fallen as they have been outstripped by prices. Even the one mildly positive bit of economic news – that GDP growth was slightly higher than expected – came with a warning that construction activity contracted for the second quarter in a row.In normal times we might expect a chancellor to be finding ways to stimulate the economy, with the Bank of England loosening the purse strings to lift activity. But precisely the opposite is about to happen. We are told there is an 80% certainty that the governor of the Bank of England, Mark Carney, will make the momentous announcement on Thursday that UK interest rates are to rise for the first time in 10 years.Maybe Mark Carney wants us to wake up and smell the coffee after years of bingeing on debt Continue reading...