Uncertainty about inflation and the impact of article 50 mean growth folllowing Brexit vote is unlikely to lastInterest rates are going up in the US, but in the UK they are going nowhere.That, bluntly, was the message from the Bank of England as it announced its latest decision on borrowing costs less than 24 hours after the US Federal Reserve not only tightened policy but signalled more to come in 2017.Related: Bank of England leaves UK interest rates on hold at 0.25% Continue reading...

Monetary policy committee votes to keep rates unchanged, but warns of likely slowdown in growth next yearThe Bank of England has left interest rates at their record low of 0.25% but repeated a warning that higher inflation and slower wage growth risk squeezing household budgets and spending next year.The Bank’s nine-strong monetary policy committee voted unanimously to keep rates on hold and maintain the current programme of electronic money printing known as quantitative easing. Policymakers had cut rates and expanded QE back in August to shore up confidence in the wake of June’s vote to leave the EU.Related: Bank of England leaves UK interest rates at record lows - business live Continue reading...

UK’s ambassador to EU is reported to have told PM of view that deal will not be finalised until early to mid-2020sEurope’s politicians believe a trade deal with the UK could take up to a decade or more and could still fail in the final stages, Downing Street has been warned by the UK’s ambassador to the EU.Sir Ivan Rogers, who conducted David Cameron’s renegotiation with the EU before the referendum, is reported to have told Theresa May that European politicians expect that a deal will not be finalised until the early to mid-2020s, according to the BBC. That deal could still be rejected by any of the 27 national parliaments during the ratification process.Related: Reality check: will it take 10 years to do a UK-EU trade deal post Brexit?Related: 'It terrifies me': Britons in Europe on how Brexit is going to affect themRelated: Philip Hammond: Japanese banks are concerned about Brexit Continue reading...

Currencies felt the pain around Asia as investors reacted to unexpectedly bullish comments by Fed chair Janet YellenThe prospect of three more hikes in US interest rates next year has sent the dollar to a 14-year high and caused a selloff on most Asian markets.

Federal Reserve predicts three US rate hikes in 2017, as it increases borrowing costs for the first time this year

Fed chairwoman Janet Yellen announced a 0.25% increase in the benchmark rate to 0.50-0.75%, and predicted three further rates increase in 2017The US Federal Reserve on Wednesday raised interest rates for the first time in a year, and only the second time since the 2008 financial crisis. The US central bank also predicted three further rates increase in 2017, up from previous expectations of two rate hikes.

In his comparison between 1936 and 2016 (A view from 1936: what Keynes would say now, 12 December), Larry Elliott omits to mention one of the major differences, and one that JM Keynes would surely have noticed as he speculated on its implications – namely the enormous increase in the productive power of labour and of the economy.Our priority should be to help people reduce their working hours (whether over a lifetime or weekly or daily) so that they can enjoy the leisure their productive capacity allows; today most people are still wage slaves, indeed more so than ever in the richest countries.Related: Keynesian economics: is it time for the theory to rise from the dead?The illusion has been created that higher house prices represent an increase in real national wealthRelated: Oh for the 1960s! People earned less but could afford more Continue reading...

Donald Trump and the EU crisis make the instability described by JK Galbraith nearly 40 years ago seem enviableThe year 2017 will mark the 40th anniversary of the publication of John Kenneth Galbraith’s The Age of Uncertainty. Forty years is a long time, but it is worth looking back and reminding ourselves of how much he and his readers had to be uncertain about.In 1977, as Galbraith was writing, the world was still reeling from the effects of the first Opec oil-price shock and wondering whether another one was in the pipeline (as it were). The US was confronting slowing growth and accelerating inflation, or stagflation, a novel problem that raised questions about policymakers’ competence and the adequacy of their economic models. Meanwhile, efforts to rebuild the Bretton Woods international monetary system had collapsed, casting a shadow over prospects for international trade and global economic growth.Related: Will Trump herald a US economic boom? Continue reading...

Latest ONS figures showing slight fall in employment after major rise in previous quarter are consistent with other surveysEmployment and unemployment down marginally. Wage growth and inactivity up a bit. Cut through the mass of data and the conclusion is clear: the improvement in the UK labour market has stalled.

Euclid Tsakalotos says Fund is ‘economising on the truth” after it insisted it wasn’t demanding more austerity to make Greek bailout targets credible.

Kent food manufacturer Nim’s Fruit Crisps faces higher import costs – but sees silver lining of increased export demand for productsManufacturer Nimisha Raja has been following the foreign exchange markets more closely than usual since the referendum. She makes dried fruit and vegetable crisps at a factory in Sittingbourne, Kent, and buying ingredients from abroad has become a lot more expensive since the Brexit vote sent the pound tumbling against the euro, the dollar and other currencies.Like other manufacturers who buy materials from abroad, Raja has had to decide whether to take a hit to profit margins at Nim’s Fruit Crisps, charge more to clients or change her products.Related: Inflation hits highest level in more than two years Continue reading...

Our best chance of building consensus is if we engage with voters’ concerns about jobs, society and rapid changeDonald Trump’s surprise election as the 45th president of the US has spawned a cottage industry of election postmortems and predictions in the US and abroad. Some correlate Trump’s victory with a broader trend toward populism in the west, and, in particular, in Europe, exemplified by the UK’s vote in June to leave the European Union. Others focus on Trump’s appeal as an outsider, capable of disrupting the political system in a way that his opponent, the former secretary of state and consummate insider Hillary Clinton never could. There may be something to these explanations, particularly the latter. But there is more to the story.In the months preceding the election, the mainstream media, pundits and pollsters kept repeating that Trump had an extremely narrow path to victory. What they failed to recognize was the extent of economic anxiety felt by working-class families in key states, owing to the dislocations caused by technology and globalization.Related: US economy adds 178,000 new jobs making Fed rate hike likely Continue reading...

Fearmongering Donald Trump and optimistic Silicon Valley seem to epitomize opposing ideologies. But the two have far more in common than you thinkTomorrow, Silicon Valley leaders will sit down for a summit with Donald Trump. Larry Page, Tim Cook, Elon Musk, and Sheryl Sandberg are all expected to attend. The agenda is unknown, but the mood is likely to be tense. After all, tech executives overwhelmingly backed Hillary Clinton and loudly railed against the dangers posed by a Trump presidency. And Trump regularly lashed out at Silicon Valley on the campaign trail, bashing the industry for building hardware overseas and importing foreign engineers.But tech has little to fear from Trump. If his cabinet appointments are any indication, he seems keen to govern as a free-market fundamentalist, cutting taxes and regulations to the bone. Trump’s elevation of ultra-hawkish ex-generals to key cabinet posts also suggests that he will aggressively expand the sprawling surveillance state inherited from Obama. This is excellent news for companies like Palantir, which sell data analytics tools to the CIA, the NSA and other agencies. Palantir was co-founded by Peter Thiel, the billionaire who broke with his Silicon Valley colleagues to embrace Trump. Thiel now sits on the transition team, and has begun drawing a select circle of tech industry allies into Trump’s orbit. He and his friends are likely to make lots of money.Related: Neoliberalism – the ideology at the root of all our problemsNo industry has played a larger role in evangelizing the neoliberal faith than Silicon ValleyThe irony is that Trump will only intensify the crisis that put him in powerRelated: 2016: the year Facebook became the bad guy Continue reading...

The 1.2% rate in November was driven by higher petrol and clothing prices, with leather sofas, bleach, pizza and computers also contrubuting, says ONSUK inflation climbed to 1.2% in November, the highest level in more than two years, in a sign that the fall in the value of the pound since the Brexit vote is fuelling a rise in the cost of living.

Lords Brexit reports: Cross-party peers accuse ministers of misunderstanding nature of free trade and overestimating negotiating positionBritain is naive to expect a “free lunch” in trade negotiations with the EU, according to a scathing House of Lords report that calls for a transition phase to ease the pain.“The notion that a country can have complete regulatory sovereignty while engaging in comprehensive free trade with partners is based on a misunderstanding of the nature of free trade,” said the cross-party group of peers. Continue reading...

Mark Carney is right that we must stop creating badly paid low-productivity jobs and redistribute wealth – and that will involve unleashing the machinesThe headlines were inevitable, once Mark Carney uttered the word automation. Robots, the Sun told us, are set to “steal 15m jobs from Brits”. Sadly, our main problem is not robots; still less the artificial intelligence technologies that will power them.Our real problem is symbolised by the car wash. A car wash used to mean a machine. Now it means five guys with rags. There are now 20,000 hand car washes in Britain, only a thousand of them regulated. By contrast, in the space of 10 years, the number of rollover car-wash machines has halved – from 9,000 to 4,200. The free-market economic model, combined with a globalised labour market, has produced a kind of reverse industrialisation. Continue reading...

Funding cuts, staff costs and rising need have spurred the government to consider increasing council taxThere is not a crisis in adult social care, says Nadra Ahmed, chair of the National Care Association. “We are now beyond the crisis point. We really are at the edge of the cliff now.”Residential care homes are closing at an unprecedented rate, hospitals are logjammed with elderly patients with nowhere to go; in the community, local authority cuts are leaving more than a million people desperately in need of more assistance in their homes.Related: Council tax hike being considered to cover social care costs Continue reading...