First quarter figures of 0.2% GDP growth beaten by every other nation in 28-country bloc as weaker pound after the Brexit vote fuels price inflationThe UK economy was the worst performer in the European Union in the opening months of 2017 as the Brexit vote took its toll, according to official statistics that underscore the challenge facing the next British government.
The economic sweet spot may not last forever but at least the bank has got the European economy moving againGrowth forecasts revised up. Inflation forecasts revised down. Jobs being created. Take a bow Mario Draghi. Urged on by its proactive boss, the European Central Bank has achieved what looked impossible until recently: it has got the eurozone economy moving again.Draghi should milk the applause while he can because the eurozone’s sweet spot won’t last for ever. It didn’t in the US and it didn’t in the UK, two countries that pursued exactly the same macro-economic strategy as the ECB, only earlier.Related: Mario Draghi predicts faster growth and lower inflation after ECB shuts door to rate cuts – business live Continue reading...
Royal Bank of Scotland’s abrasive tone, and its seemingly freewheeling approach to racking up legal fees, have felt wrongNow we know: Royal Bank of Scotland’s rights issue in 2008 wasn’t a £12bn cash call, it was a £13bn affair. The extra £1bn is how much Fred Goodwin’s successors have spent settling and fighting claims from irate retail investors who thought the rights issue document was misleading.The latest settlement with RBS Action Group, worth about £200m, will probably bring an end to the process. One can’t yet say so definitively, because some claimants outside the group haven’t formally accepted, so the judge left the door ajar for a trial. But the diehards have only limited time in which to demonstrate they have the funds to continue, so a revival of proceedings is a long shot. Goodwin and three other former RBS directors can breathe more easily. They probably aren’t going to be called as witnesses.Related: Santander rescues Spain's failing Banco Popular from collapse - business live Continue reading...
Despite a media blackout, we’re at No 4 in the UK charts, with over 2.5m views on YouTube. It looks like young people are into political music after allSix months after the coalition government came to power, the first version of Liar Liar was written out of a deep frustration with austerity politics. David Cameron promised that “we’re all in this together†– but the aggressive cuts to public services coupled with banker bailouts told another story. We wanted to put the anger of many Britons to a beat and become an outlet for protest, while providing levity and solidarity in grim times.Liar Liar is an anomaly in the charts – no tantalising sexual lyrics, and Tory politicians in the videoRelated: ‘She’s a liar, liar’: anti-Theresa May song heads to top of charts Continue reading...
Neoliberalism was a creature of the Reagan and Thatcher era. Austerity is its death rattle. Before it does any more damage, Britain needs a plan for growthThe choice facing the voters in this election is clear – between more failed austerity or a Labour party advancing an economic agenda that is right for the UK. To understand why Labour is right, we first need to look back to the 1980s.Under Ronald Reagan in the United States and Margaret Thatcher in the UK, there was a rewriting of the basic rules of capitalism. These two governments changed the rules governing labour bargaining, weakening trade unions; and they weakened anti-trust enforcement, allowing more monopolies to be created. In our economy today we can see industries with one or two or three firms with market power. This gives them the power to raise prices – and as they raise prices, people’s incomes fall, in terms of what they can buy.Austerity has not only damaged the European economies, including the UK, but actually threatens future growthRelated: The austerity delusion | Paul Krugman Continue reading...
Most arguments for shunning animal products focus on health, ethics and the environment, the vegan author says. ‘I just wanted to have a fourth perspective, which is economics’David Robinson Simon’s latest colonoscopy was carried out at a major hospital in southern California by the head of its gastroenterology department. “I said something like, ‘I hope you don’t find any polyps, because I’m a vegan, so I shouldn’t be at risk,’†Simon says. “He said, ‘Ah, that’s a bunch of nonsense.’â€
If re-elected, the Tories will bring more austerity and no guarantee of investment-led growth. Labour’s plans could mean escape from stagnationOn the day that former Royal Bank of Scotland boss Fred Goodwin escaped explaining in court how he crashed the business and lost billions of pounds during the 2008 financial crash, it is timely to consider Britain’s post-election economic fortunes. It is a future still defined by the banking crash that Fred “the Shred†Goodwin was so much a part of, and by the aftershocks that still weigh the government down with debt. In particular, the blow to confidence deterred businesses from making the kinds of investments needed to raise productivity and lift average wages. Britain’s not a strong and stable economy, but a fundamentally weak and enfeebled one, brought low by a banking industry that lent hundreds of billions more than it should have to people it barely knew.It is not for the want of profits that businesses have shied away from shopping for the latest ideas or buying the latest kit. Official figures show corporate profits last year were back to the peak achieved in 2008. In the last quarter, the number of companies convinced their profit forecasts were on target or likely to exceed expectations was at a three-year high. Yet in the three months before Christmas, business investment actually fell 0.9% and was flat overall during the previous year. Continue reading...
The money tree should be more than a fantasy used by Conservatives to bash Labour spending plans, say Guardian readersTory politicians now frequently accuse Labour of believing in the existence of a “magic money tree†that will enable a Labour government to “pay for it†(Front page, 3 June). They hope that none of us will remember that in its 2014 Q1 Quarterly Bulletin the Bank of England published a graphic and explicit account of the facts of money: almost all money comes into this world “out of thin airâ€, conjured into existence by the book-keeping act in which “whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new moneyâ€. This had for very many years been well understood by bankers, but for some reason most of them had been too shy to admit such facts outside a small circle of consenting adults.The secret of political understanding is that most accusations hide guilty secrets. In this case the money tree is by no means a fantasy: it is the very real tree of quantitative easing, a tree that has dropped billions of pounds of new money into banks and financial institutions. The resulting inflation of asset values has allowed the few to become obscenely wealthy while the Tories have increased the national debt by nearly £800bn since 2010. Continue reading...
by Presented by Owen Jones and Jonathan Freedland wit on (#2S160)
Owen Jones and Jonathan Freedland are joined by Zoe Williams to discuss why the economy has played such a limited role in this election. Plus: London mayor Sadiq Khan becomes the latest target of Donald Trump’s Twitter feedElections in Britain and elsewhere are usually fought primarily on the economy – the line from Bill Clinton’s presidential campaign, “it’s the economy, stupid,†has become a political cliche. But in the 2017 election, interrupted twice by terrorist attacks and fought initially on Brexit, the economy has dropped down the agenda.Joining Owen Jones and Jonathan Freedland today is the Guardian columnist Zoe Williams. Continue reading...
Voters, take note: a World Bank survey of Indonesian households suggests people have a strong tendency to underestimate the extent of inequality – and it reveals how this can affect their political allegiance, too
Pundits pretend that Corbyn and May are poles apart. But both understand that the financial crisis changed everything – and a new ideological era is beginningSeen from a sofa, the world looks very different. And to listen to TV’s sofa pundits is to hear a very different election. They would have you believe that Labour and the Conservatives have rarely been further apart. That voters face “a clear choice†between a hard left and a Brextremist right, the inedible and the unpalatable. Plausible and conventional, it’s a classic sofa argument.It also misses the critical change in this election.The Conservative manifesto is closer to Labour’s than at any point since the second world warRelated: Britain is in the midst of a working-class revolt | John Harris Continue reading...
Reports show drop in retail sales, a slowdown in services sector and fall new car sales in MayBritish households are cutting back as the Brexit effect on the pound continues to raise living costs, according to a clutch of reports that show shops, car dealerships and other consumer-facing businesses coming under pressure last month.Uncertainty about the outcome of Thursday’s election was also cited as a factor as the reports showed a drop in retail sales, a slowdown for the vast services sector and a fall in new car sales last month.Related: Energy price rises help drive UK inflation up to 2.7% Continue reading...
London sees biggest drop, as property prices also slide for third month in a rowAverage UK rents have fallen for the first time in more than seven years, with London seeing the biggest decline, according to new data.The slowdown in the rental sector mirrors a similar picture in the housing market, with figures showing that property prices have fallen for the third month in a row.
Uncertainty grows about trade deal with the EU that some in the US felt would be more important to its interests than a post-Brexit deal with Theresa MayThe prospect of a revived EU-US trade deal is in “deep freezeâ€, according to Brussels sources, undermining reports that the EU has been inching ahead of the UK in the race for an arrangement with Washington.
Politicians talk up our world-beating arts scene — then cut the classes teaching children creativity through drama, art and musicThe creative industries haven’t had much of a look-in during this Brexit election. As far as I’m aware, culture secretary Karen Bradley hasn’t been allowed out during the campaign to talk about them. “Britain’s arts and culture are world-beating and are at the heart of the regeneration of modern Britain,†says the Conservative manifesto, politely; but the proposal to double the immigration skills charge will do nothing but damage a sector that thrives on international talent.The Labour manifesto, which is altogether more concrete about what can be achieved, refers to the creative industries as “a source of national prideâ€, and promises to “put creativity back at the heart of the curriculumâ€. This stops short of a pledge to add an arts element to the Ebacc – as the subset of GCSEs given special status by the government is now known – but is still welcome.Related: Music education is now only for the white and the wealthy | Charlotte C GillThe instant availability of everything you want turns out not to include the thing you want most of all: human contactRelated: Campaign issues cultural ‘call to arms’ to boost arts learning in England Continue reading...
The world economy faces some serious downside risks but at least we now know where the risks are and how to work around themFor the past two years, the global economy has been growing, but it has swung between periods of rapid expansion and deceleration. During this period, two episodes, in particular, caused US and global equity prices to fall by about 10%. Is a pattern emerging, or is a fitful global recovery set to stabilise?The first episode came in August-September 2015, when many observers feared China’s economy was heading for a hard landing. The second episode, in January-February 2016, also stemmed from concerns about China. But investors were also increasingly worried about stalling US growth, collapsing oil and commodity prices, rapid interest rate hikes by the US Federal Reserve, and unconventional negative-rate monetary policies in Europe and Japan.Related: Why the global markets are ignoring the global turmoil | Nouriel Roubini Continue reading...
Economics professor Richard Reeves says the upper middle are ‘opportunity hoarding’ – and pulling up the drawbridge behind themDoes the American dream exist? Or has the middle class ruined it by hoarding opportunity on a scale that makes even the infamous one-percenters appear harmless and ineffectual?That’s the question economics professor and Brookings Institution fellow Richard Reeves has set out to answer, and his findings are worrying: the top echelons of the US middle class – those earning over $120,000 – are separating from the rest of the US, and pulling up the drawbridge behind them.Related: When General Electric jobs left Schenectady so did a way of lifeRelated: Outclassed: how your neighbor’s income might affect your happiness Continue reading...
The news that the property market is going down has cheered many: but cheap credit and huge pent-up demand is likely to cushion the declineThere is a small but vibrant web forum, housepricecrash.co.uk, whose members’ outrage at inflated property prices is matched only by their dismay that the longed-for slump has never materialised. After Nationwide reported last week that house prices had fallen for the third month in a row, its faithful believe the day of reckoning is finally coming.The average home fell in value by 0.2% in May, said Nationwide, following on from declines of 0.4% in April and 0.3% in March. Not since the height of the financial crisis in 2009 have prices fallen for three months in a row. Continue reading...
If the SNP or Lib Dems end up holding all the cards come Friday morning, the economic catastophe of leaving the EU could be avertedAn important moment during the so-called election “debates†last week occurred when a young lady in the studio audience told Theresa May that she had voted for Brexit because she had swallowed the lie that it would bring £350m a week for the health service. The prime minister, an uncomfortable Remainer and now an uncomfortable Brexiter, had no answer to this, resorting to the cliche that the government spends more every year on the NHS. This, like so many of the answers trotted out by her (also uncomfortable) team is an example of what Dr Johnson might have called “a last refuge of the political scoundrelâ€.The crisis arises because the increase in NHS spending each year is nowhere near enough to meet the well-known demands on the service. As I understand it, extra NHS spending is running at no more than 1% a year in “real†– ie inflation-adjusted – terms, whereas merely to avoid going backwards the service needs an annual real-terms increase of 4%. Continue reading...
It’s taken a year, but as Britain’s economy slumps and inflation bites, the warnings about the costs of our vote to leave the EU are coming trueThis week Britain slumped to the bottom of the GDP growth rate league table of advanced economies. Along with Italy, Britain is officially the worst performer among the G7 so far this year, held back by high inflation that is putting consumers under pressure. The cause of that high inflation is primarily the knock-on effect of the weaker pound, which dropped by 20% immediately after the Brexit referendum result last year.Related: UK comes bottom of G7 growth league as Canada takes leadThe economy question seems to have dropped out of the debate because it has been so debased by Brexit evangelistsRelated: Living standards in UK fall for the first time since 2014 Continue reading...
Paul Nicolson on the advantages of a land value tax, Kate Macintosh on the flaw in incentives to demolish and rebuild, and Tommy Gee on land nationalisationJohn Veit-Wilson is right (Letters, 2 June); destitution is being used by the Conservative government as a policy tool to destroy the defining principle of all welfare states, that they offer a minimum real level of living to all inhabitants. Such a minimum income must be able to pay for truly affordable housing, the provision of which was neglected in the Cambridge TV debate. The need for food banks will continue to grow, and the health of the poorest diminish, until the chaotic UK housing market is brought under control. Rents must stop taking the money needed for food, fuel, water and other necessities. Several parties’ manifestos gave land value tax a nod. The advantages are that land cannot be placed tax-free in an overseas bank, taxing land forces into use the 600,000 plots of unused land owned by the big builders, it is progressive, it relieves the incomes of hardworking people and companies by enabling the abolition of inefficient taxes such as council tax, business rates and stamp duty.Two other laws are needed: no international speculator should be allowed to buy British land, which must be reserved for British citizens; and landowners should be required to sell any property they have left unused for six months.
Only 138,000 jobs were created across the US in May, well below the expected figure of 180,000Global stock markets reached new peaks on Friday, but came off their best levels following disappointing US jobs data.Only 138,000 jobs were created across the US in May, well below the expected level of 180,000. March and April’s figures were revised down by 66,000.
Action is needed to safeguard economic progress against a prejudiced White House that rejects science and enlightened valuesDonald Trump has thrown a hand grenade into the global economic architecture that was so painstakingly constructed in the years after the end of the second world war. The attempted destruction of this rules-based system of global governance – now manifested in Trump’s withdrawal of the United States from the 2015 Paris climate agreement – is just the latest aspect of the US president’s assault on our basic system of values and institutions.The world is only slowly coming fully to terms with the malevolence of the Trump administration’s agenda. He and his cronies have attacked the US press – a vital institution for preserving Americans’ freedoms, rights and democracy – as an “enemy of the peopleâ€. They have attempted to undermine the foundations of our knowledge and beliefs – our epistemology – by labelling as “fake†anything that challenges their aims and arguments, even rejecting science itself. Trump’s sham justifications for spurning the Paris climate agreement is only the most recent evidence of this.Related: How to respond to Trump's America | Joseph Stiglitz Continue reading...
The language of economics doesn’t have to baffle ordinary people. My charity campaigns for clear communication, so voters can make informed decisionsOne of the most crucial things we will be deciding in the polling booths is who we want running our economy and with what economic policies behind them.Related: Who should I vote for? The UK election manifestos comparedPeople connect confusion by the language surrounding economic policies to powerlessness in the political system Continue reading...
Employers and policymakers urged to tackle bias and racism in the workplaceBlack, Asian and minority ethnic (BAME) workers are much more likely than white workers to be in insecure jobs such as zero-hours contracts, according to the Trades Union Congress.The TUC is urging policymakers and employers to tackle bias and racism in the workplace after its research found one in every 13 BAME workers is in temporary or zero-hours work, compared with one in 20 white workers.Related: BME career progression 'could add £24bn a year to UK economy'Related: British Asians 'struggle for top jobs despite better school results' Continue reading...
Factories increase ouput and recruitment, according to purchasing managers’ index, with weak pound helping exportersBritain’s manufacturers stepped up production and hiring last month to keep pace with strong demand from home and abroad.The closely watched poll of factory sentiment came in just ahead of City economists’ expectations and suggested firms were shrugging off any uncertainty created by the general election. However, the responses from about 600 companies were collected between 12 and 25 May – before opinion polls started to show a significant narrowing in the Conservatives’ lead. Continue reading...
by Michael Safi South Asia correspondent on (#2RG43)
Prime minister Narendra Modi’s policy of stopping issue of higher value banknotes has weakened economy, say expertsIndia has posted its slowest growth rate in two years, ceding its status as the world’s fastest-growing major economy to China, with economists blaming the downturn partly on last year’s shock decision to recall the country’s two highest-value bank notes.Related: India withdraws 500 and 1,000 rupee notes in effort to fight corruptionRelated: India's small businesses facing 'apocalypse' amid biggest financial experiment in historyRelated: India's banknote ban: how Modi botched the policy yet kept his political capital Continue reading...
Drinks industry says 75cl bottle now costs £5.56 with champagne heading £1 higher courtesy of extra duty and rising import cost following Brexit voteWine lovers are suffering a Brexit-related hangover as the price of the average bottle has soared since the referendum to hit an all-time high of £5.56.Prices have risen more in the first three months of the year than in the past two years, according to the drinks industry, which is warning of more increases ahead.Related: Wine: how to beat post-Brexit price rises Continue reading...
Nationwide says average cost of home fell 0.2% last month with price growth slowing further in 2017 as inflation squeezes household incomeHouse prices in Britain have fallen for the third month in a row, for the first time since the height of the financial crisis in 2009.The fall further dragged down the annual growth rate in May, to 2.1%, the lowest in nearly four years, providing further evidence that the housing market is losing steam, according to Nationwide, the UK’s biggest building society. Continue reading...
While the economy needs more borrowing in order to keep growing, personal debt is already at dangerously high levelsAs the election on 8 June nears, the debate has intensified over how much Britain’s frothy cappuccino-drinking economy can cope without endless dollops of interest-free credit.Financial regulators are worried about it. So are the debt charity workers who pick up the pieces when the debt merry-go-round grinds to a halt. And they should be worried. Many of the biggest, shiniest new cars zipping round UK streets would still be sitting on the garage forecourt without ultra cheap credit deals that rival mortgages for their rock-bottom rates. Continue reading...
Britain’s 0.2% growth rate puts it on a par with Italy, while Canadian economy expanded by 0.9% in first quarterThe UK has slumped to the bottom of the league table of advanced economies after Canada registered stellar growth in the first three months of the year.Canada was the final member of the G7 to report its growth figures, which confirmed the UK as officially the joint worst performing member so far this year. The announcement marked a significant decline for the UK economy, which a year ago was outshining Germany, the US and Japan. In February it was announced that Germany had pipped the UK as the fastest-growing G7 nation during 2016 by 10 basis points. Continue reading...
Free-market economics has undermined the fabric of society and left millions behind – and manifestos across the political spectrum recognise itSomething strange is happening in British politics. I’m not talking about the divisive quagmire of Brexit or the frightening rise of xenophobia. I’m talking about a broad cross-party agreement that the economic model of the last half a century has failed. I’m referring to an (almost) ubiquitous call across the multi-coloured manifestos of the 2017 election to start building “an economy that works†– for everyone.Isn’t it a bit odd to find this exact same turn of phrase across the political spectrum: blue, red, orange, green? (Only Ukip has no truck with an economy that works.) It looks a little bit like someone has been copying someone else’s homework; and it isn’t entirely clear who. When Theresa May first used the phrase, on the steps of Downing Street back in July 2016, she made it sound like her own idea. But in fact she lifted the language – lock, stock and barrel – from a speech Jeremy Corbyn gave at the launch of Labour’s inaugural state of the economy conference. He promised to “create an economy that works for all, not just the fewâ€.Related: Is Finland’s basic universal income a solution to automation, fewer jobs and lower wages? Continue reading...
The spread of zero-hour contracts and a weak pound mean many employees are worse off than they were before Brexit vote, warns Standard & Poor’sRising prices on the back of the Brexit vote and the trend towards more insecure work will rob British workers of any growth in real wages this year, with repercussions for the wider economy, a new report has warned.With just over a week to go until a snap general election largely focused on looming Brexit negotiations, economists at the ratings agency Standard & Poor’s are the latest to highlight the blow to living standards from last year’s vote to leave the EU. Continue reading...
State subsidies to promote home ownership is not always a good thing – it hikes public debt, cuts labour mobility and often boosts prices not ownership levelsAt the end of the first quarter, according to the Federal Reserve Bank of New York, American consumer debt for the first time exceeded its previous peak (in dollars), reached in the third quarter of 2008, just as the global financial crisis erupted. Although car loans and student debt have been rising especially rapidly, housing debt remains more than two-thirds of the $12.7tn total.As a share of income, household debt is nothing like the threat to the national economy that it was 10 years ago. But the new statistic is a reminder that American households don’t save enough.Related: Can Donald Trump better renegotiate Nafta? Yes, by bringing back TPP Continue reading...
Readers respond to the Institute of Fiscal Studies’ criticisms of the parties’ general election manifestosLike a lot of people, I was very interested in the Institute for Fiscal Studies’ criticisms of the parties’ policy proposals – given that the latter would no more than somewhat ease the position of our severely cash-strapped health and social care services (Report, 27 May). Could the IFS now do us all a favour before this election gets underway and tell us once and for all what they think it would cost to “fully meet our public care needs†(viz, the figure which would meet all major needs, fully cover ongoing costs, and ultimately repay borrowing for associated capital expenditure) – as, for example, “a percentage increase on existing direct tax ratesâ€. Would, say, another 10% in all rates (2p on the 20% rate, 4p on 40% and 4.5p on the 45% rate) meet the bill? Or would the figure be more like 20% on all rates? Or some yet higher figure?At least we would then reach square one in deciding what we should do to fully sort this out, at and beyond this election: pay the estimated direct tax increases; find other ways of raising revenue; get people to take out more private insurance; or contemplate continued strain on our ill and our frail old people till kingdom come?. I’m surprised that none of the reporters at the IFS presentation actually raised this. Come to think of it, the Guardian’s own economic commentators may have their own estimates. In any event could someone, somewhere please enlighten us, preferably before we take to the booths?
Action group has told members it has accepted 82p share offer, presented hours before high court case was due to beginThousands of private investors who claim they were misled by Royal Bank of Scotland and its former chief executive Fred Goodwin into investing in the bank before it was rescued by the taxpayer are being urged to settle their legal case.An action group representing investors involved in the long-running legal battle has told its members it has decided to accept the 82p-a-share offer, which RBS presented to them just hours before the case was due to begin last Monday.Related: RBS shareholders refuse to settle in effort to force Goodwin to take stand Continue reading...
The progress of the past 50 years has stalled, and the government has stopped listening – that’s why we’re holding Tuesday’s disability hustingsNext year I’ll be leaving school and I don’t know what that will mean for my life. Obviously a lot of 18 year olds feel this way, but for me it’s different. I have profound physical disabilities and a learning disability.This is my first time voting and I know that, as a disabled person, my future will be greatly shaped by the next government.Related: Limited life chances of disabled people in Britain revealed by damning reportRelated: 'I’m angry': voter confronts Theresa May over disability benefit cuts Continue reading...
Economics | The Guardian