Many Republicans are unlikely to support adding trillions of dollars to public debt to reduce corporation and personal taxesPresident Donald Trump’s first major legislative goal – to “repeal and replace” the 2010 Affordable Care Act (“Obamacare”) – has already imploded, owing to Trump and congressional Republicans’ naivety about the complexities of healthcare reform. Their attempt to replace an imperfect but popular law with a pseudo-reform that would deprive more than 24 million Americans of basic healthcare was bound to fail – or sink Republican members of Congress in the 2018 midterm elections if it had passed.Now Trump and congressional Republicans are pursuing tax reform, starting with corporate taxes and then moving on to personal income taxes, as if this will be any easier. It won’t be, not least because the Republicans’ initial proposals would add trillions of dollars to budget deficits, and funnel more than 99% of the benefits to the top 1% of the income distribution.Related: Trump's border tax could damage the US a lot more than a wall | Kenneth Rogoff Continue reading...

Fears about Donald Trump’s protectionist rhetoric prompt joint defence of open markets with admission that more help for those ‘left behind’ is neededFears that Donald Trump’s arrival in the White House is threatening a new era of protectionism have prompted a joint defence of trade from the International Monetary Fund, the World Bank and the World Trade Organisation.Warning that the role of trade in the global economy was at a critical juncture, the three multilateral bodies said the opening up of markets had been good for growth but admitted that action was needed to help “left behind” individuals and communities.Related: Global productivity slowdown risks creating instability, warns IMF Continue reading...

Economists expect official statistics will vindicate Bank of England’s worries about slump in consumer spendingFresh details on price rises and wage growth this week are expected to underline the rising pressures on UK household budgets as the pound’s sharp fall since the Brexit vote continues to stoke inflation.The Bank of England has warned the economy’s main engine of growth, consumer spending, will lose momentum this year as rising living costs eat into people’s budgets. Economists expect official figures on Tuesday will vindicate those worries, with inflation forecast to have reached its highest level for more than three years in March.Related: Sterling’s fall lifts UK exports, figures show Continue reading...

Brexit makes improving the performance of UK firms essential. The state needs to meet the challenge if the private sector won’tNo developed country has been immune to the slowdown in productivity growth since the financial crisis, but Britain has been particularly hard hit. Instead of productivity rising by around 2% a year, as was customary before 2007, more workers have been employed to produce virtually the same output.International comparisons show that the US, Germany and France are at least 20% more productive than the UK, and the gaps show no sign of closing after a lost decade that has left productivity 15% below where it would have been had the pre-2007 trend continued. Put another way, the economy would be in the region of £250bn bigger – and living standards markedly higher – had productivity growth not collapsed. Continue reading...

When John Major set up our global warming strategy, the doom-mongers said it would ruin living standards. New research shows how wrong they wereJust before the Rio Earth summit 25 years ago, John Major, in whose cabinet I then served as environment secretary, made a bold prediction: reducing Britain’s carbon emissions in line with recommendations of climate science would not, he said, harm our economy: “Our initial measures ... will bring a worthwhile economic payoff to the country, to business and to ordinary people.”This was a controversial statement at a time when solar energy, for example, was a costly technology better suited to spacecraft than British rooftops. And indeed the argument can still be heard that reducing greenhouse gas emissions will ruin our economies – even that it will return us to a pre-industrial living standard.Related: Margaret Thatcher: an unlikely green hero? | John VidalFigueres is to be commended for her vision. The rationale remains what the British government put forward 25 years ago Continue reading...

Stalling property prices are a chance to rebalance the UK economy towards manufacturing and exportsReady to go house hunting? Tradition has it that no sooner have the hot cross buns been buttered on Good Friday than potential buyers start the search for a new home. Estate agents look forward to Easter the way retailers relish Christmas, but perhaps with less exuberance this year than is customary.

Revolution, radicalism and rebellion dominate this year, as writers, journalists and academics look back on a century of political upheaval

The rationalisations and concessions are starting to emerge as the reality of leaving dawns. This is not the moment for Remainers to despairThere is nothing one can do to avoid natural disasters, or “acts of God” as they used to be called. But the prospect of Brexit is a man-made disaster. I say prospect because it hasn’t happened yet and could still be avoided, despite the fact there seem to be a lot of people around who think it has already happened.The “best face” and rationalisation process has already begun. Last week saw inspired reports that, on her trip to Saudi Arabia, Theresa May was softening her tone from the earlier approach towards a “hard Brexit”.There might be a revolt of the young, who stand to lose far more than the comfortably off 'sovereignty' brigade Continue reading...

Only diehard communists now take to the streets in a nation where the Brussels bailout programme is showing little signs of workingEight years into Greece’s ordeal to escape bankruptcy, thousands of Communist party sympathisers packed into Syntagma Square in Athens on Friday to protest at the latest concessions made by Alexis Tsipras’s leftist government to keep the country afloat.Massed before parliament in the fading light of day, they did what they had come to do: rail against the cuts that loom in return for further disbursement of the emergency aid now needed to avert economic collapse. The serial drama of Greece’s debt repayments will reach a climax again when loans of €7.5bn mature in July. Continue reading...

Weakening retail sales as inflation raises price of imports allied with lower industrial output point to the UK economy ‘dropping down a gear’Worries that the UK economy is losing steam have been strengthened by news of a housing market slowdown, a drop in industrial output and the weakest performance for a year by the construction industry.Economists on Friday said there was growing evidence that the UK economy slipped down a gear as it entered the new year, following a strong finish to 2016 that had confounded the doomsayers predicting a post-Brexit-vote slump.Economic activity was relatively subdued in Feb, following strong growth across key industries at the end of 2016 https://t.co/quM5OtzuBORelated: UK house prices slide for first time in almost two years, says Nationwide Continue reading...

Government hiring freeze and faltering retail sector led to a disappointing month following February report, which Trump seized upon as proof he’s boosted hiringThe US economy added just 98,000 jobs in March as a cold snap, a government hiring freeze and a faltering retail sector appear to have put the chill on Donald Trump’s promise to boost hiring.The jobs market had got off to a flying start in 2017, adding an average of 236,500 jobs a month. February’s jobs report was the first under Trump and was seized upon by the president as evidence that his promise to bring back US manufacturing jobs was coming true.

Mark Carney sets 14 July deadline to see plans, saying firms must prepare for ‘all eventualities’ as he calls on politicians not to cut City adrift from EuropeThe Bank of England has given financial firms a deadline of 14 July to explain how they are planning for the UK’s departure from the EU and warned them to be ready for all possible outcomes, including a hard Brexit.The Bank wrote to hundreds of banks, insurers and other financial firms on Friday ordering them to get contingency plans in place. The move follows prime minister Theresa May’s triggering of article 50 last week, formally launching the Brexit process.Related: Ryanair 'will have to suspend UK flights' without early Brexit aviation deal Continue reading...

Deliveroo says its couriers are independent suppliers in kit – not uniformed employees. We should pay attention to the way businesses use language“When I use a word,” Humpty Dumpty told Alice, “It means just what I choose it to mean – neither more nor less.”Deliveroo seems to be quite his equal as a master of verbal control. A list of do and don’t terms for managers, seen by the Guardian, stresses that the couriers start the day not signing in, but “logging on”. They are not workers, staff or team members but “independent suppliers”. They are not hired but “onboarded” (which is, of course, not a word at all, and deeply ugly to boot). They agree availability instead of accepting shifts; their branded outfits are “kit” or “equipment” rather than uniform. The website urges people to “ride with us” and “join the Roo community”, as if applicants are seeking a group of fellow sports enthusiasts, rather than a means of paying rent. Continue reading...

You report that the chancellor has, once again, told the Indians that “there is no quota, no limits, no restrictions on Indian students applying to British universities” and that “90% of Indian students who apply for a student visa, get a student visa” (Britain is open to Indians, says Hammond, 5 April).All of that is (nearly) correct so, all must wonder, what is the problem? But it is far from the full story and does not explain why the numbers have shrunk so dramatically. As one hopes government ministers understand – and as Indians clearly do understand – the real reason why such a high proportion obtain visas is that far fewer apply for them in the first place, believing that the rules and restrictions are now so strict and the entitlements (especially to part-time and post-study work) so limited, that far fewer believe they will qualify or that the UK is the right destination for them. Unless those issues are adequately and honestly addressed, it is, sadly, unlikely that the numbers will again rise and contribute, as many believe is so essential, to an expanded relationship with India.

Though the president is ruining life for his fanbase, many would vote for him again. And the sneery haters just make things worseEvery week for the past few months, news has emerged from across the US that Donald Trump supporters are suffering. In February it was farmers in California’s Central Valley, a demographic who voted heavily for Trump, who are now discovering that their workers – 70% of whom may be in the country illegally – are threatened by Trump’s executive orders on immigration.In March, we discovered that those who stand to lose most in the way of tax credits under Trump’s new tax plan are, by a heavy percentage, his own low-income voters. A few days ago, the New York Times columnist Nicholas Kristof surveyed Trump supporters in Oklahoma and found that threatened cuts to local services – for the unemployed and the elderly – will effect schemes that many of them rely on.Related: I can tell a narcissist from a drama queen. I learned it in a quiz | Emma Brockes Continue reading...

Prolonged cheap borrowing costs would hit earnings and force financial institutions to change business models, study saysA prolonged period of low interest rates will tempt banks to take greater risks and sound the death knell for final salary pensions, the International Monetary Fund has warned.A new study from the IMF said a continuation of the cheap borrowing environment seen since the global financial crisis a decade ago would pose a “significant challenge” to financial institutions and force them to make fundamental changes to their business models.Related: Markets volatile after Federal Reserve surprise and ahead of Trump China meeting - business live Continue reading...

Investors nervous as US central bank says it will reduce balance sheet size and as president meets Xi Jinping

It is time to ditch the belief that economies obey rigid mechanical rules, which has widened inequality and polluted our planet. Economics is evolvingThings are not going well in the world’s richest economies. Most OECD countries are facing their highest levels of income inequality in 30 years, while generating ecological footprints of a size that would require four, five or six planet Earths if every country were to follow suit. These economies have, in essence, become divisive and degenerative by default. Mainstream economic theory long promised that the solution starts with growth – but why does that theory seem so ill-equipped to deal with the social and ecological fallout of its own prescriptions? The answer can be traced back to a severe case of physics envy.In the 1870s, a handful of aspiring economists hoped to make economics a science as reputable as physics. Awed by Newton’s insights on the physical laws of motion – laws that so elegantly describe the trajectory of falling apples and orbiting moons – they sought to create an economic theory that matched his legacy. And so pioneering economists such as William Stanley Jevons and Léon Walras drew their diagrams in clear imitation of Newton’s style and, inspired by the way that gravity pulls a falling object to rest, wrote enthusiastically of the role played by market forces and mechanisms in pulling an economy into equilibrium.People and money are not so obedient as gravity, as it turns out, so no such laws existRelated: Activism is mainstream again … how can protests create change? | Saira O’MallieLike a well-trained child, growth will apparently clean up after itselfRelated: The world is stuck in the past, Hans Rosling showed us the way forward | Paul Currion Continue reading...

Fall in the pound and sugar reduction efforts cited as reasons for latest round of shrinkflationDoritos, Peperami and Coco Pops are the latest products to fall victim to shrinkflation as rising costs hit food producers.The size of a large bag of Doritos has been reduced by 10% to 180g but remains on sale at the same average price of £1.99. A £1 “grab bag” is shrinking by nearly 12% to 90g. Continue reading...

The Prudential Regulatory Authority should use its power to stop credit card companies making it easy for people to get into debtNew figures on business confidence suggest that the one place where the service sector boom is on the ebb is in the consumer sector – hotels and restaurants, gyms and hairdressers. The twin pressures of rising inflation and slowing pay rises are squeezing household incomes. The ratio of personal debt to household income, which fell steadily in the years after the financial crisis, has now again begun to rise. Last week, new figures were published showing February brought the highest increase in credit card debt in 11 years.The British economy’s failure to wean itself off an addiction to growth fuelled by an expanding consumer debt bubble is bad for consumers, and bad for the economy as a whole. It is no substitute for business investment, which the OECD has forecast will fall sharply in future years in a post-Brexit climate of uncertainty. It makes recession more likely, and, when it comes, deeper and longer. The human costs of getting into problematic debt are no less profound: people are a third more likely to develop mental health issues if they find themselves struggling with debt. Continue reading...

Latest survey of Britain’s service sector beats forecasts, but consumer-focused companies may struggle this year

Rebound in March despite evidence that inflation is hitting spending in hotels, restaurants, gyms and hairdressersBritain’s services firms have bounced back from a new year lull to expand at the fastest rate since late 2016.The latest health check of a sector that accounts for more than 75% of the economy’s output showed the pace of activity picking up to a three-month high in March.Related: UK services sector growth hits three-month high, as car sales smash records - business live Continue reading...

Failure to recover to pre-financial crisis levels has seen 16% gap open up between UK and fellow membersBritain’s poor productivity performance before, during and after the financial crisis of a decade ago has left a gap of 16% with the other six members of the G7 group of industrial nations.International comparisons published by the Office for National Statistics show that output per hour worked continued to lag well behind the US, Germany and France in 2015 – the last year for which data is available.Related: Global productivity slowdown risks creating instability, warns IMF Continue reading...

Politicians such as Donald Trump, Marine Le Pen and Beppe Grillo are wildcards that could kill off gathering growthAfter nine dreary years of downgrading their GDP forecasts, macroeconomic policymakers around the world are shaking their heads in disbelief: despite a populist-propelled wave of political tumult, global growth is actually set to outperform expectations in 2017.It’s not just American exceptionalism. Although US growth is very strong, Europe has been outperforming expectations by more. There is even happy news for emerging markets, which are still bracing for US Federal Reserve interest-rate hikes but have gained a better backdrop against which to adjust.Related: Trump is wrong to criticise Germany over trade – he should look closer to home Continue reading...

Minutes show Bank is growing concerned at mounting risk to lenders as consumers tap looser borrowing conditionsThe Bank of England has flagged up new concerns about the rapid growth in consumer borrowing as Britons rack up debt on credit cards, car purchase schemes and personal loans.Reinforcing recent warnings from the Bank about signs of a borrowing binge, minutes from a policy meeting published on Tuesday suggested it was worried about looser lending conditions such as higher maximum loan limits.Related: UK's borrowing binge is worrying the Bank of EnglandRelated: Sub-prime cars: are car loans driving us towards the next financial crash? Continue reading...

Supermarket moves to ditch promotions coupled with weakened pound following Brexit vote add average £21.31 to quarterly food billsA sharp rise in food prices has added £21.31 to the average household shopping bill over the past three months as the number of promotions fell to an 11-year low, according to new grocery market data.The price of everyday goods at supermarkets rose 2.3% in the three months to 26 March from a year ago, said Kantar Worldpanel, a sharp pick-up from the 0.2% food price inflation recorded in the 12 weeks to 1 January – the first time prices rose in more than two years.Related: From energy bills to dental work, it's UK national price hike day Continue reading...

Ministers say 3m earning and learning schemes will plug the UK skills gap but critics say new levy is yet another financial burden for businessesWhen Mohammed Choudhury was studying for A-levels, one of his teachers mentioned apprenticeships as an alternative to university. Now the 19-year old is learning computer coding and fixing software bugs for the Gloucestershire precision manufacturing firm Renishaw. Many of his friends went to university, but Choudhury has no regrets about picking a software apprenticeship.

Christine Lagarde says governments must invest in education, cut red tape and encourage innovation to drive up growthThe head of the International Monetary Fund has issued a stark warning that living standards will fall around the world unless governments take urgent action to increase productivity by investing in education, cutting red tape and incentivising research and development.Christine Lagarde used a speech in Washington to tell policymakers they could not simply wait for innovation to drive up productivity growth and help living standards recover from the legacy of the global financial crisis.Related: Ignore the nanny-state claims – credit card firms need to help those in long-term debt | Nils Pratley Continue reading...

Forget the distraction of Brexit – cuts coming in this week say so much more about the UK’s national identityThe country may still be reeling from the triggering of article 50 but it’s this week that Britain will truly define itself – and in the most shameful of ways. In the coming days, Theresa May’s Conservative government will bring in a range of widespread benefit cuts – cuts that target disabled people, young people, and parents on low wages.Related: Cancer patient's family stands to lose £50k under benefit cuts Continue reading...

The west’s post-cold war failures across the former Soviet bloc should not weaken its resolve to create democratic statesToday, a quarter-century after the cold war’s end, the west and Russia are again at odds. This time, at least on one side, the dispute is more transparently about geopolitical power, not ideology.The west has supported in a variety of ways democratic movements in the post-Soviet region, hardly hiding its enthusiasm for the various “colour” revolutions that have replaced longstanding dictators with more responsive leaders – though not all have turned out to be the committed democrats they pretended to be.Related: Donald Trump, the master of unreality, must be resisted at every turn | Joseph Stiglitz Continue reading...

Survey of chief financial officers reveals drop in negative sentiment but leaving EU is still top concern

The naming and shaming of employers is welcome, but the fight for equal pay for women has just begun

It’s riding high as the UK City of Culture and beneficiary of huge investment from Siemens. But Hull voted overwhelmingly for Brexit, and uncertainty after the referendum led the German giant to put expansion plans on hold. Should residents be worried?At the start of this year, the civic columns and royal statue of Hull’s Queen Victoria Square were brutally intruded on by a 75-metre-long white turbine blade on a plinth. This was the 2017 UK City of Culture’s monument to wind power, its new hope for a sustainable future at sea.Hull has never recovered from the near-total ending of its long-distance fishing industry after the “cod wars” with Iceland in the 1970s. For all its efforts, it is Britain’s third most deprived local authority, with one large ward, Orchard Park and Greenwood, suffering some of the country’s deepest poverty. So the decision by the German manufacturer Siemens in November 2014 to establish Hull as the home of its factory to make blades for Britain’s vast new North Sea wind farms delivered the city’s most far-reaching economic boost for decades.Related: Siemens freezes new UK wind power investment following Brexit vote Continue reading...

With its manufacturing and engineering tradition, the West Midlands should be at the forefront of British hopes for exporting beyond Europe. Sadly, on most measures, it is in no position to do soBrexit, according to its cheerleaders, offers British businesses the chance to expand trade beyond Europe to the rest of the world. Trade minister Liam Fox infamously said the easy option of shipping goods across the Channel had deterred businesses large and small from looking further afield. They had become fat and lazy, and now they would be forced to be more entrepreneurial.Setting aside the reasons why countries all over the world mostly export to their neighbours (it’s cheaper, and there are shared histories and cultures) and try to do so within free-trade blocs (profits are higher when tariffs are low and regulations are harmonised). let’s consider the question of how fat and lazy business has become. Is it ready to accept Fox’s challenge? Continue reading...

The growth in credit and fall in savings have alarming echoes of the financial crisis. But at least regulators are no longer asleep at the wheelCould it be 2005 and 2006 all over again? Industry figures last week showed that UK credit-card debt has soared while the savings rate has plunged to an all-time low. Meanwhile, across the Atlantic, data shows that late last year car loans were being taken out at a faster rate than any time in US history.Almost everyone in America leases a car or buys it using cheap credit. Except that they don’t take the opportunity to lower their outgoings and cut their monthly loan bills. Instead, they take the cheap credit and buy a bigger car. A much bigger car. Continue reading...

The designer who became a global brand has been declared bankrupt after years of court action and financial bad luckKaren Millen is used to seeing her name in lights. With 400 outlets spread across 65 countries, there is even a store that bears the Kent-born designer’s name in Mongolia.But last week Karen Millen, the woman, became famous all over again for the wrong reasons, after suffering the humiliation of being declared bankrupt over an unpaid tax bill. Continue reading...

Latest data shows UK households feeling the pinch, as Britain posts a trade surplus with non-EU countries

ONS data raises hopes that sharp decline in pound since Brexit vote could make economy less reliant on domestic spendingBritain’s trading position with the rest of the world improved markedly in the final three months of 2016, boosting hopes that the pound’s sharp fall since the Brexit vote can help the economy become less reliant on domestic spending.

Innovations come when governments and businesses are forced out of their comfort zonesTribute bands are all the rage these days. So it should come as no surprise that the triggering of article 50 was marked by a homage to a band that toured the country in the summer of 2016: Project Fear.Project Fear 2017 has been playing its own versions of Beatles hits: I (Don’t) Feel Fine, We (Can’t) Work it Out and, of course, that all-time classic, While My Economy Gently Weeps. It has been quite a trip down memory lane to the days when the band’s lead vocalist, George Osborne, was predicting immediate recession in the event of a Brexit vote.Related: Brexit Britain is suddenly debating trade – but it's the wrong talking point | Larry ElliottTrade does not lead to innovation and investment; rather innovation and investment lead to tradeRelated: Why denying refugees the right to work is a catastrophic error | Paul Collier and Alexander Betts Continue reading...

Figures suggest people are increasingly dipping into their savings as disposable income also fallsBritish households ran down their savings to a record low at the end of 2016, raising fears that the UK is on course for a fresh consumer debt crisis in the wake of the Brexit vote.The saving ratio – which estimates the amount of money households have available to save as a percentage of their total disposable income – fell sharply in the fourth quarter last year to 3.3% from 5.3% in the third. Continue reading...

New report shows automation is already causing losses, depressing wages and likely to have lasting, devastating effectIn 2013, the Oxford Martin School released a report that looked at the automation of work, assessing the likelihood that robots and other technologies would replace humans. It concluded that of the 702 job categories examined, 47% were susceptible to automation within the next 20 years. The report completely upended our ideas about the future of work.Now, a new report by the National Bureau of Economic Research (NBER) in the United States is set to be an even bigger wake-up call. Written by economists Daron Acemoglu (MIT) and Pascual Restrepo (Boston University), it not only adds support to the Oxford Martin conclusions, it actually suggests the jobs are already lost and unlikely to come back.

Young Vic, London

All the day’s economic and financial news, as City firms prepare to move jobs out of London after Brexit

Bankers, pharmaceutical giants, Google, Facebook ... a new breed of rentiers are at the very top of the pyramid and they’re sucking the rest of us dryThis piece is about one of the biggest taboos of our times. About a truth that is seldom acknowledged, and yet – on reflection – cannot be denied. The truth that we are living in an inverse welfare state.Related: Capitalism simply isn't working and here are the reasons why | Will HuttonRelated: Wolfgang Streeck: ‘Look at London – it’s a second Rome. This is what an empire looks like’Related: Meet the rightwing power players lurking beneath Silicon Valley's liberal facade Continue reading...

Attempt to create European trading powerhouse has been formally derailed by Brussels, which said it would create a monopoly

We’ve road-tested the new 12-sided coin, and found that some ticket and vending machines don’t actually accept it

The president thinks Germany’s trade surplus is the result of manipulating the euro, but Wall Street fuelled the problemDonald Trump has criticised Germany’s enormous current account surplus, which he considers the result of German currency manipulation. But the president is wrong. While Germany’s external surplus, at 8% of GDP, is big – too big – it is not the result of currency manipulation by Germany. The real culprits are an inflationary credit bubble in southern Europe, the expansionary policies of the European Central Bank, and the financial products US banks sold to the world. So, instead of blaming Germany, Trump would do well to focus on institutions in his own country.Germany’s trade surplus is rooted in the fact that the country sells its goods too cheaply. Here, the Trump administration is basically right. The euro is too cheap relative to the US dollar, and Germany is selling too cheaply to its trading partners within the eurozone. This undervaluation boosts demand for German goods in other countries, while making Germany reluctant to import as much as it exports.Related: Trump’s trade advis​​er says Germany uses euro to 'exploit' US and EU Continue reading...

UK officials recognise that failure to agree post-Brexit trade deal with EU27 would cause havoc, according to EU sourcesEuropean diplomats based in the UK say the British government is stepping back from its threat to leave the EU without a trade deal if negotiations break down.Related: Sir Tim Barrow to hand-deliver article 50 letter to Donald TuskRelated: Brexit: everything you need to know about how the UK will leave the EU Continue reading...