Median price paid for a home leapt 259% between 1997 and 2016 while earnings rose only 68%, say ONS affordability dataRising house prices now stand at an average 7.6 times the average annual salary, more than double the figure for 20 years ago, according to official figures.However, the new headline figure disguises dramatic regional variations. In the affluent London borough of Kensington and Chelsea, house prices are typically 38.5 times greater than annual earnings, but, 330 miles to the north-west, prices in Copeland, Cumbria, which includes the port of Whitehaven, are typically 2.8 times the average salary.

The entrepreneurial spirit cannot flourish if people don’t feel valued, rewarded and, above all, sheltered from severe economic turbulenceUnleash the power of markets and the private sector will deliver returns that raise everyone’s living standards: that’s the market liberalism argument. However, for a decade now we have been living in a world where the opposite is true. GDP rises but wages shrink. The financial crisis was 10 years ago but austerity looks set to continue into the middle of the next decade, as we endlessly wait for the recovery that’s always round the corner.The chancellor, Philip Hammond, berated Labour during his budget speech for wanting to “saddle our children and burden our future”, but young people who entered the jobs market in 2010 will be in their mid-to-late 30s before austerity is projected to end. It’s not “protecting our children’s future” to keep them in low-waged, precarious work from 18 to 38. The UK government is issuing 40-year bonds at 1.87% and, in a fit of perversity, we’re “protecting” our children from those interest payments by forcing them to take payday loans at 1,500%.The NHS saves British business thousands on health insurance, compared with in the supposedly more flexible USRelated: Hammond's NICs U-turn is a political disaster for the government | Larry Elliott Continue reading...

With supermarkets facing tough competition from discounters, acquiring assets such as Argos looks sound“We entered the quarter with deflation and exited the quarter with inflation,” declared Mike Coupe, chief executive of Sainsbury’s, describing shop prices in the most recent trading period. Once upon a time, this would have been taken as excellent news for shareholders, as opposed to customers. Inflationary breezes, allowing prices to be raised faster than overheads, used to be a supermarket’s best friend and surest way to protect profit margins. Not now.Coupe didn’t give a figure for price inflation at Sainsbury’s, but it is unlikely to be as high as he – and his competitors – would wish. Industry consultant Kantar put the rate at 1.4% last month. That was double the rate in the previous month, but we’re not talking about the 5% within six months that his predecessor, Justin King, forecast four months ago for the entire industry.Related: Sainsbury's warns over 'uncertain' impact of pound's Brexit slide Continue reading...

Upbeat Federal Reserve outlook combines with relief at Dutch election result, pushing Amsterdam’s index to nine-year highStock markets across Europe soared as traders reacted to the defeat of an anti-EU candidate in Dutch elections and the latest interest rate announcement from the US central bank.The Federal Reserve accompanied its latest rate rise this week with guidance that it would not tighten policy quite as much as financial markets anticipated this year. That message buoyed share prices, adding to the upbeat mood prompted by the results of parliamentary elections in the Netherlands. Continue reading...

Officials believe letter may have been sent by group that claimed responsibility for parcel bomb sent to German finance ministerA letter bomb that was dispatched to the headquarters of the International Monetary Fund (IMF) in Paris and blew up on Thursday, injuring the employee who opened it, was sent from Greece, the Greek public order minister has said.Greek intelligence officials are working on the assumption that the blast in the French capital may have been orchestrated by an urban guerrilla group that claimed responsibility for a parcel bomb sent to the German finance minister, Wolfgang Schäuble, on Wednesday. Continue reading...

Bank of England will follow Fed with quarter-point rise only when evidence of upward inflationary spiral emergesWe have been here many times before. In the eight years since the Bank of England cut interest rates to a then record low of 0.5%, there has been regular speculation in the City that borrowing costs are heading back up.The latest flurry of excitement was caused when Kristin Forbes broke ranks with her monetary policy committee colleagues and said something should be done about rising inflation. Continue reading...

Monetary policy committee is split 8-1 as members decide base rate of 0.25% is appropriate for post-referendum economyThe Bank of England has held interest rates at their record low amid signs of an internal split emerging about how to tackle rising inflation.The Bank’s monetary policy committee was divided on the rates decision, with Kristin Forbes voting to raise borrowing costs immediately. Other members also indicated that they could join her at future meetings if they felt inflation was rising too quickly.Related: Bank of England votes 8-1 to leave interest rates on hold - business live Continue reading...

The next chapter of austerity is upon us, and the gender inequality within it is shockingThat “austerity is a feminist issue” is now a well-used idiom does not mean it’s any less true. Look at the latest gender breakdown of cuts released this month and what’s striking is that nothing’s changing. According to Sarah Champion, the shadow equalities minister, 86% of the burden of austerity has fallen on women since 2010 – a figure that remains entirely static from last year. Inequality is business as usual: by 2020, a decade on from when austerity first began, men will still have borne just 14% of the total burden of “welfare” cuts.This unequal impact isn’t just contained within the benefit system, but rather spreads to many of the choices the Conservatives are making. NHS and local government cuts of course affect men as well, but as women are a vast chunk of the public sector workforce, they are hurt most when public services are squeezed. Similarly, although it’s rarely talked about in such terms, the crisis in social care is in many ways gendered: it’s largely women who make up home care and agency staff – insecure, low-paid work – while it’s also women who are the bulk of family carers for disabled children and elderly parents. When a council cuts a care package, it’s largely wives, mothers, and daughters doing the unpaid labour to plug the gap.As a new wave of child poverty approaches, it’s working-class mums who will be queuing in food banksRelated: Women bearing 86% of austerity burden, Commons figures reveal Continue reading...

Like London and Buenos Aires, cities can move their nightlife away from drink-dependent culture - if councils and businesses work togetherAfter years of unregulated growth, it looks like the good times may be over for those in the UK who make their living from people going out at night-time.

The Federal Reserve chair, Janet Yellen, announced on Wednesday that the Federal Reserve would raise interest rates. This raise is the second hike in three months, a move Yellen said was spurred by steady economic growth, strong job gains and confidence that inflation was rising to the central bank’s target

Wall Street is reassured by ‘dovish hike’, as Chair Janet Yellen says the US economy is doing well

Bricks and mortar shops are squeezed by online sales and business rates; perhaps Inditex’s Zara points the wayThe news that Jones Bootmaker is on the brink of falling into administration is a reminder of just how tough life is on the high street. The 160-year-old shoe retailer may yet be rescued, but about 1,000 workers are unsure about their future employment.Profits for bricks-and-mortar shops are being squeezed by the rise of online shopping, an increase in staff costs brought on by the introduction of the national living wage, and fierce discounting of the price of their products, which is designed to attract shoppers but hurts profit margins. On top of this is business rates – a tax that takes no account of falling profit and is now more costly than corporation tax for many shops. Continue reading...

Will Fed’s steady march to ‘new normal’ scare away the ghosts of financial crisis?It could have been worse. That was Wall Street’s initial response to the decision by the US Federal Reserve to raise borrowing costs in the world’s biggest economy by a quarter of a point.For once, the market reaction was entirely rational. The increase in interest rates was expected and it would have been a real surprise had Janet Yellen and her colleagues at the US central bank decided against a move.Related: US Federal Reserve raises interest rates to 1% in bid to hold off inflation Continue reading...

Fed chair says US economy in strong health as she announces third rate rise since 2008 and the first of several expected this year

It had been absolutely right to raise contributions, the chancellor said, which was why he was no longer going to do itThe phone call had come through just after eight in the morning while Phil “The Undertaker” Hammond was eating breakfast. It was the prime minister ordering him to bury Class 4 NICs. He had tried telling her that doing a U-turn on your only real budget measure less than a week after it had been announced made him and the government look hopelessly incompetent, but Theresa wasn’t having any of it. The Tory backbenchers were on her back. The Daily Mail was on her back. And now she was on his back.Six hours later The Undertaker rather sheepishly arrived in the Commons to try to explain how it was that, though he still absolutely stood by his budget because it was his budget that was his, he now wanted to fundamentally change it because although he hadn’t broken any promises in the Conservative party manifesto, as that’s not the sort of thing he would ever dream of doing, he had in fact broken the promises he had made in the Conservative party manifesto.Related: Philip Hammond defends scrapping national insurance rise for the self-employed Continue reading...

The chancellor must tell us how extra social care will be funded, after Jeremy Corbyn, Labour and civic society forced him into a U-turnThe government’s U-turn on the unfair £2bn national insurance hike for the self-employed is a humiliation for chancellor Philip Hammond, who has shredded his reputation after only his first budget – and broke a manifesto promise to do it. Labour opposed the measure from the start: Jeremy Corbyn made our opposition loud and clear in his immediate budget response, and Labour MPs hammered the same message home over the next few days. Opposition came from all sides of the house, and from business organisations like the Federation of Small Businesses, leaving the Tory leadership completely isolated.The chancellor’s climbdown will be a huge relief to all those self-employed workers and businesspeople, earning as little as £8,000 a year, who faced a serious increase in their tax bill at a time when average pay for the self-employed has fallen dramatically – their average earnings are now just £12,480 a year.This is the third Tory budget in a row that has resulted in a major U-turnRelated: Hammond's NICs U-turn is a political disaster for the government | Larry Elliott Continue reading...

Making EPA data easily accessible to the private sector plays a significant role in many billion-dollar industries, from renewable energy to auto manufacturing

Falling pay growth shows how the balance of power has shifted in the past four decades away from workersThe last time Britain’s unemployment rate was lower than it is today was in the summer of 1975. For those whose memories don’t stretch that far back it was the time of the UK’s first referendum on EU membership, Harold Wilson was prime minister and inflation was at at postwar peak of more than 25%.The contrast with today’s labour market is stark. Joblessness stands at 4.7%, a level that many economists would consider close to full employment, yet there is not the glimmer of the upward pressure on wages that was so evident in the mid-70s.Related: UK unemployment falls to joint lowest rate since 1975 but wages stall Continue reading...

Wages in sector will fall by 2020 to levels last seen a decade ago, the Resolution Foundation forecastsPublic sector workers have become the first group to suffer a cut in real wages since the recovery of 2014 as forecasters predicted that the rest of the working population would follow suit later this year.The Resolution Foundation said the situation for 5.4 million public sector workers is expected to worsen over the rest of the decade as pay restraint and high inflation eat into their take-home pay and living standards.Related: UK social care: staff shortages put sector in crisisRelated: No pay rise for 15 years, IFS warns UK workers Continue reading...

The narrative that Britain is a poor country has been peddled for years, says Hugh Muir. But, he argues, the government is using the excuse of poverty to avoid its moral duties, such as funding the NHS or accepting child refugees. There is money in the pot to fund Trident and the royal family, he claims, so it follows that many budget cuts are purely ideological Continue reading...

Family businesses are often best suited to longevity. But product development, investing in staff and attention to detail help in a recessionFounded in 1860, awnings and blinds manufacturer James Robertshaw has seen its fair share of internal change and economic upheaval. The company also survived a major fire, in 1933. A feat managing director Nigel Sharrock, who took on the role in 1979, brushes off. “Fires were a common occurrence in those days,” he says.Sharrock took over from his father-in-law, who bought the business from the Robertshaws in 1960. The company, which has 24 staff, has also changed location a few times. Its most recent base is a factory unit in Bolton where all products are designed and manufactured. It is still a family business, with Nigel’s wife Lesley, and son, Matthew, on the board. Sharrock says its 157-year survival lies in constant innovation, new machinery, family values and business sense.Related: School's out, GCSE results are in, now's the time to hire an apprentice Continue reading...

Key projects could be in jeopardy if Britain does not retain access to European single market after Brexit, surveyors warnThe UK construction industry could lose more than 175,000 EU workers – or 8% of the sector’s workforce – if the country does not retain access to the European single market after Brexit, the government has been told.Such an outcome could put key infrastructure and construction projects at risk at a time when the sector was also facing other pressures, including the tax changes in the recent budget, said the Royal Institution of Chartered Surveyors (Rics). Continue reading...

Janet Yellen, the Fed chair who has been criticised by Donald Trump, is set to raise rates for third time since financial crashThe US central bank is poised to raise interest rates for only the third time since the financial crash of 2008. With its headquarters just round the corner from the White House, the Federal Reserve and its chair, Janet Yellen, are in Donald Trump’s sights.On the campaign trail Trump said Yellen should be “ashamed” of the Fed’s low interest rate policy, and accused the bank of creating a “false stock market”. Trump has called for higher rates, but Yellen can not take a positive presidential reaction for granted.Related: Trump is set to win the battle on interest rates, but US economy will pay the price Continue reading...

ONS also adds non-dairy milks, council tax and smartphones – but out go menthol ciggies, child swings and cheque feesHipster culture is officially mainstream after the rising popularity of vegan diets, cycling and artisan gin were reflected in the annual shakeup of the shopping basket used to measure UK inflation.

All the day’s economic and financial news, as sterling slides after parliament gives Theresa May the green light to trigger article 50

Staying politically neutral on Trump administration policies is proving difficult for businesses in the face of mounting public pressureAmerican companies have a long history of weighing in on political and social issues. But the election of Donald Trump has fueled public pressure on businesses to go much further to take a stand on specific policies – and made it difficult for those that wish to remain neutral.

British Chambers of Commerce says British consumers are showing resilience to Brexit vote, but warns of rising inflationRobust consumer spending and a brighter outlook for trade and investment will mean the UK’s economic slowdown this year is less severe than previously feared, the British Chambers of Commerce has predicted.But in its latest set of economic forecasts, published as the UK prepares to embark on Brexit negotiations, the business group cut its outlook for 2018 and warned higher inflation would take a chunk out of household budgets.Related: UK economy ends 2016 on high – but rising import prices starting to biteRelated: UK economy to hit near standstill as Brexit vote hurts investment – BCC Continue reading...

A once destitute man is thriving now because a company paid its dues to society. Why don’t more do the same?I want you to meet Colin Burrell because he’s a walking good-news story. I want you to meet him because he’s brilliant. But most of all, I want you to meet this 25-year-old because his tale shows you what can be done to fix both a life and an economy.Related: Life after community death: this food bank has a lesson for Labour | Aditya ChakraborttyRelated: Why George Osborne sounds like Margaret Thatcher in the 1970s | Aditya Chakrabortty Continue reading...

The corporate world has a lot to lose from today’s populist shift. Its long-term stability will depend on a radical rethink of its valuesThe Western Australian election result confirms that the Australian polity has totally mastered the art of opposition. It’s the governing side of things that is proving the difficult part.Whether you are a recently punted administration still licking your wounds or a perennially bench-warming opposition, if you can’t excite a backlash against the sitting party then your heart really isn’t in it. Which is not to detract from the victory of Mark McGowan and his team, merely to mark the wild swings inherent in the modern two-party state as the new normal.

All the day’s economic and financial news, as investors anticipate US interest rates being raised on Wednesday, and Britain starting its exit from the EU this week

A plunge in the oil price since the 2014 referendum and a budget deficit appear to make Scotland’s finances less than rosyConvincing the Scottish people that they would be better off after independence proved beyond Alex Salmond in 2014. Project Fear failed to deliver for David Cameron in the EU referendum last June but it did the trick in Scotland 21 months earlier.Nicola Sturgeon faces the same tough challenge. Indeed, constructing an economic case for independence looks harder now than it did three years ago. Harder but not impossible.

Scotland’s first minister Nicola Sturgeon presses for a new referendum – but could it really happen?Nicola Sturgeon’s speech at Bute House on Monday in effect challenged Theresa May to give Scotland, which voted in favour of remaining in the EU by 62% to 38%, special access to the single market and substantial new powers or face a second Scottish independence referendum.Related: Nicola Sturgeon expected to set out plan for Scottish independence vote Continue reading...

It is hard to find a suitable response to what is no longer simply austerity but the willed destruction of social generosityIt was a budget that coincided with International Women’s Day. The chancellor marked the happy event by sprinkling generosity on the hardworking wives and mothers who, in their resilience to violence and discrimination, make up the wellspring of this nation’s doughty good cheer. So £20m, over three years, to domestic violence charities; a £5m fund to help women back into work after having children; another £5m to the ones who haven’t necessarily done anything reproductively useful, and merely want to celebrate next year’s centenary of female suffrage.Related: Women bearing 86% of austerity burden, Commons figures revealWe could say austerity kills. But this isn’t even austerity. No books are being balanced as a result of these actionsRelated: Million Women Rise: thousands march through central London Continue reading...

Poorest countries hit hardest as lower commodity prices and strong dollar raises repayment bills, campaigners warn

Bill Gates’s idea of taxing robots sounds like common sense but we need more practicable ways of redistributing wealthA tax on robots is one of those ideas that sounds attractive, and when it’s put forward by someone with the credibility of Bill Gates, as it was in a recent interview with Quartz magazine, you can guarantee it will generate a lot of interest. If he, of all people, says taxing robots is a good idea, then surely it is worth considering?Well, perhaps not.Related: Brand human: why efficient automation will not always be best for businessRelated: Robots won't just take our jobs – they'll make the rich even richerRelated: Yanis Varoufakis: 'People were confused that I didn't support Brexit' Continue reading...

Research finds no G20 countries interact with EU without arrangements over trade, as UK could do if it leaves without dealIf Britain leaves the European Union without a replacement trade deal its commercial links with the bloc will overnight become less favourable than any other major industrialised nation, a cross-party campaign has warned as Theresa May prepares to trigger article 50.Research commissioned by the Labour MP Pat McFadden – a supporter of Open Britain, which campaigns for continued ties with Europe in the aftermath of Brexit – found that no members of the G20 group of richer nations currently interact with the EU without some sort of trade arrangement.Related: The Guardian view on the Brexit negotiations: no deal is not an option | Editorial Continue reading...

Ill-fated austerity plans will wreck the country, but the government knows it has no opposition to worry about

Despite his rib-tickling performance on Wednesday, Philip Hammond will sadly not be appearing in front of the Commons committees this weekTradition has it that, the week after the budget, the Treasury select committee gives the chancellor of the exchequer a good grilling about his sums.Not this time. Having already broken convention by abolishing future spring budgets and then using his final one to deliver a few gags (“they don’t call it the last Labour government for nothing”), Philip Hammond will be spared from explaining himself to Andrew Tyrie and co this week. Continue reading...

Donald Trump pushed the Federal Reserve to raise rates, but the policy could backfire on president’s economic planDonald Trump spent much of his campaign for the White House attacking the Federal Reserve chief Janet Yellen. Shouting at the camera in the first presidential debate, he even went as far as to accuse the head of the central bank of “being political”, spurring her to deny she was anything but impartial.Trump’s anger was a lightning rod for American savers, who like savers across the developed world, have suffered eight years of ultra-low interest rates. A rate rise this week will be taken as another sign by commentators that the Fed is slowly capitulating to the new president’s tub-thumping campaign. Continue reading...

If we don’t ensure free trade benefits are distributed equally, the world could get dangerous very quicklyIt’s not often you go to a conference on agriculture and come away feeling quite scared for the future. But this week’s Abare’s 2017 Outlook conference featured a talk on the future of trade that painted a dire picture of trade barriers and nations moving into blocks that engage in trade wars and perhaps more violent conflicts. It was a stark warning to those who value the benefits of trade of the need to also value the concerns of those who miss out on those benefits.In a conference featuring the usual talks on innovation in agriculture and pest management, the Abare conference also featured a speech by Rabobank economist, Michael Every that had me – and most in the audience – wondering if it was time to start collecting canned food and building a bunker.Related: Trump could end global trade and force choice between US and China, says economistRelated: Top bosses question benefits of globalisation, PwC survey finds Continue reading...

There is nothing progressive about cutting taxes for companies and the very wealthiest while hitting the self-employedThis week’s budget revealed the government’s true priorities. It’s not about supporting workers or small businesses. It’s a government for tax avoiders and giant corporations. Phillip Hammond was boasting about the continuing cuts to taxes for corporations and the super-rich, now totalling £70bn over the next few years, even as he hammered the self-employed with a £2bn national insurance tax hike.The unfairness of this is very clear. They’re making the minicab driver pay more, but the company they work for pays less. A hairdresser earning £15,000 a year will be £139 worse off as a result of the measures announced. On the day, the government has attempted to disguise the true impact of the change by hiding it behind an earlier revision to national insurance contributions. But anyone earning over £8,000 will be hit by the new changes.Related: 'Rookie error': former chancellor criticises Hammond's NICs planRelated: OmNICshambles: how it all went wrong for 'spreadsheet Phil' Hammond | Heather Stewart and Larry Elliott Continue reading...

Protests thwart plans to hold around 25,000 auctions as banks struggle to sell properties to settle shortfallsThe cavernous halls of Athens’ central civil court are usually silent and sombre. But every Wednesday, between 4pm and 5pm, they are anything but. For it is then that activists converge on the building, bent on stopping the auctions of properties seized by banks to settle bad debts.They do this with rowdy conviction, chanting “not a single home in the hands of a banker,” unfurling banners deploring “vulture crows”, and often physically preventing notaries and other court officials from sitting at the judge’s presiding bench.Related: Greek farmers clash with riot police in Athens over austerityRelated: Greece desperate for growth strategy as public mood darkens Continue reading...

President Trump quickly claims credit for 235,000 jobs created last month as pressure on Federal Reserve grows to order first of three predicted risesThe US Federal Reserve is poised to raise interest rates next week for only the third time since the financial crisis after the latest job numbers for the world’s largest economy beat expectations.The closely watched Labor department data for February showed that the number of new jobs soared to 235,000, the best month for job growth since July last year, adding to pressure on the central bank to agree the first of three predicted rises this year.Related: US jobs report means Fed rate hike is a bolt-on certaintyRelated: US jobs report signals Fed will raise interest ratesRelated: US jobs report: strong figures pave way for Fed interest rate hike - as it happened Continue reading...

It’s good news for Donald Trump as employment rose by more than expected – but the Federal Reserve will be worried about the economy overheatingThe latest US jobs report removes any lingering doubts about whether the Federal Reserve will raise interest rates next week.Following news that the world’s biggest economy generated 235,000 net new non-farm jobs in February, it is a bolt-on certainty that the central bank will push up the cost of borrowing by a quarter of a point.Related: The Guardian view on US rate rises: a sterling challenge | Editorial Continue reading...

The coming housing benefit cuts show the damage that centre-left fiddling has done. For the sake of all who need a home, Labour needs to own this issueHousing benefits for 18- to 21-year-olds are due to be cut next month. This is, of course, a policy that is both vicious and vacuous, and whose impacts will be felt in a rise in homelessness and the increased vulnerability of young people, especially those who are members of marginalised and at-risk groups. Even David Cameron’s government shied away from the idea.Access to housing is probably the most vital issue in UK politics at the moment, despite all the parties being mindlessly distracted with the Brexit dog and pony show. Houses in the UK are the smallest in Europe, badly built and, despite successive governments claiming they want to make them “affordable,” absurdly expensive. Over the years policymakers have shifted towards treating houses as assets first, and only secondarily as places that people live in. Asset appreciation is probably the closest thing we have to “printing money” in our economy, and the short-term gains that can be realised for free have proved too attractive for governments to resist.Related: Housing benefit cuts 'put young people at risk of homelessness'Related: My homeless friend’s death shocked me into taking action | Susannah Tresilian Continue reading...

Frustrated from implementing much of his economic agenda, the president can only continue lashing out at perceived enemiesDonald Trump took office promising a raft of sweeping economic policy changes for the United States. He has quickly discovered, like previous US presidents, that America’s political system is designed to prevent rapid, large-scale change, by interposing formidable institutional obstacles, from the Congress and career civil servants to state governments and the courts.Start with reform of personal income tax. This should be a slam-dunk, because the president and congressional Republican leaders are on the same page. Trump’s goal of removing the government’s groping hand from Americans’ pockets, by cutting the top marginal tax rate on ordinary income from 39.5% to 33%, is entirely consistent with mainstream Republican ideology, according to which high tax rates penalise success and stifle innovation.Related: Trump's border tax could damage the US a lot more than a wall | Kenneth Rogoff Continue reading...

Heather Stewart is joined by Larry Elliott, Jonathan Freedland, Rowena Mason and Torsten Bell to discuss Philip Hammond’s first budget. We hear from Labour’s Jonathan Reynolds and Tory Ed Vaizey. Plus: Henry McDonald in Belfast on the deadlock in Northern Ireland’s power-sharing talksSubscribe and review: iTunes, Soundcloud, Audioboom, Mixcloud, Acast & Stitcher and join the discussion on Facebook and TwitterPhilip Hammond’s first budget is met with a barrage of bad headlines and threats of a Tory revolt.Has a Tory manifesto tax pledge been broken? And has ‘Spreadsheet Phil’ forgotten to do his political calculations? Continue reading...

Forget national insurance rates. The IFS and Resolution Foundation focus on the real story: 15 years without a pay rise, a decade of lost growthFifteen years without a pay rise. The most protracted squeeze on real wages since Nelson’s victory over Napoleon’s fleet in the Battle of Trafalgar. A lost decade for productivity growth.The gist of the post-budget analysis from two of Britain’s leading thinktanks was simple: the economy continues to break records – mostly for the wrong reasons.Related: No pay rise for 15 years, IFS warns UK workers Continue reading...

There’s a new mood in the United States and a turbulent world will have to start focusing on monetary policy again“The stocks were sold; the Press was squared/ The Middle Class was quite prepared.” What Hilaire Belloc wrote of Lord Lundy applies double to Janet Yellen. With excellent reason. With the crybaby aristo, all that effort was spent on his career in politics; Ms Yellen, on the other hand, is doing something far more important. The head of the US central bank is busy preparing America, its new president, and indeed the world, for rising interest rates – and for a new economic era. The story of US interest rates this decade is simple to the point of tedium. The key fed funds rate has been dragging along just above zero ever since the banking crash. In December 2015, it was nudged up by a quarter of a percentage point by Ms Yellen and her colleagues at the Federal Reserve. A whole year later, they nudged it up again, which means that seven years after the notional end of the US recession it stands at mere 0.75%.That is set to change. Over the past few weeks, rate setters at the Fed have dropped broader and broader hints that interest rates will go up as soon as next Wednesday – and will keep going up. Last Friday was the turn of Ms Yellen. Speaking in Chicago, she said: “We currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect.” That is about as straightforward as you get in central-bank speak. Nor is that likely to be the end of the rises: according to the Fed’s charts, committee members now forecast three interest-rate rises this year alone, and more in 2018. There are geopolitical reasons to hold off making too early a move. Next month, France’s presidential election, in which rightwing, anti-euro candidate Marine Le Pen is leading the polls, kicks off. Last year, the Fed held off in June before the Brexit vote. Continue reading...

Thinktank’s post-budget analysis says average wages will be no higher in 2022 than in 2007 with weak pay growth exacerbated by looming welfare cutsWorkers in Britain are on course to suffer an unprecedented 15 years of lost earnings growth and have been warned to prepare for a third successive parliament of austerity by a leading thinktank.Analysing Philip Hammond’s spring budget, the Institute for Fiscal Studies (IFS) said that after suffering a lost decade of earnings growth, households were now about to be hit by big welfare cuts.