Economics | The Guardian

Borrowing bill hits lowest January level in 17 years, putting chancellor in position to ease some austerity plansA boost in self-assessment tax receipts and a bumper flow of capital gains tax to the exchequer has sent the government’s borrowing bill to its lowest January level in 17 years.The boost in January’s tax receipts is expected to put the chancellor, Philip Hammond, in a position to ease some of the Treasury’s planned austerity in the next financial year when he stands up to deliver his first full budget in a fortnight.Related: UK tax burden will soar to highest level for 30 years, warns IFSRelated: UK tax burden will soar to highest level for 30 years, warns IFS Continue reading...

The same forces fuelling the rise of hate groups and crime in America are operating in Brexit BritainCrimes perpetrated on the basis of hate are nothing new. They are always with us. The levels, and the groups targeted, tend to ebb and flow with the political tides. However, the recent waves of rightwing populism in the UK and elsewhere have unleashed a hail of such incidents and emboldened those who provoke or endorse them.In the US, where each new day brings instability and fear under a presidency that has made some of the most offensive tropes around race and immigration mainstream, the latest annual analysis from the Southern Poverty Law Center (SPLC) on “hate groups” makes for stark reading. They are defined as having “beliefs or practices that attack or malign an entire class of people, typically for their immutable characteristics”. The SPLC has tracked hate crimes and groups for decades. Its latest report reveals that the number of hate groups rose for the second consecutive year in 2016. Continue reading...

All the day’s economic and financial news, including the unravelling of Kraft Heinz’s pursuit of Unilever and a Greek bailout meeting

CBI finds manufacturers’ concerns about inflation at highest levels in six years despite total orders hitting two-year highBritain’s manufacturers fear the rising cost of raw materials will soon dent a robust recovery since the Brexit vote that has included total orders hitting a two-year high.A survey of the sector found suggested that concerns over inflation were at their highest level for six years as firms said the weak pound was increasing the cost of imports, forcing them to raise prices or accept a severe squeeze on profits. Continue reading...

What the US president says and what he tweets can only be countered effectively if we take it seriously and resist itIn barely a month, the new US president has managed to spread chaos and uncertainty – and a degree of fear that would make any terrorist proud – at a dizzying pace. Not surprisingly, citizens and leaders in business, civil society, and government are struggling to respond appropriately and effectively.Any view regarding the way forward is necessarily provisional, as Donald Trump has not yet proposed detailed legislation, and Congress and the courts have not fully responded to his barrage of executive orders. But recognition of uncertainty is not a justification for denial.Related: Trump’s honeymoon with the stock market will soon be over | Nouriel RoubiniRelated: Trump's changed stance on Nato, will he sober up about IMF and WTO? | Barry Eichengreen Continue reading...

Chancellor’s March budget will show revised forecasts in short term, according to EY Item ClubBritain’s economic growth and borrowing levels will both be better than previously expected when the chancellor gives his budget next month, according to a report.The economic forecasting group EY Item Club said stronger-than-expected tax receipts meant the Office for Budget Responsibility was likely to cut its borrowing forecast for the current year by £3bn to £65bn on budget day. The fiscal watchdog was also likely to revise its GDP forecast up from 1.4% to 1.6%, or 1.7%, it said. Continue reading...

Savings rates have never been so low, but with a spread of sensible investments your portfolio can still deliver good returnsAs if savers needed to be told, it is a miserable time for anyone hoping to make money from their nest egg. With rates in the doldrums, the news last week that inflation has reached its highest point in the past two-and-a-half years means many cash savers are now losing money in real terms.Added to that, having a punt on premium bonds, the UK’s favourite flutter, is also set to become less appealing. In May the proportion of the total amount invested which is given out in prizes will be reduced, resulting in fewer big prizes. National Savings & Investments (NS&I) also announced it was cutting rates on three other products. Continue reading...

Economic indicators point to a prolonged slump in consumer spending, and as prices rise real income will fallAll things considered, it could hardly have gone better for Britain’s retailers in 2016. Shops and online outlets were fully braced for a big hit to activity in the period after the EU referendum but it didn’t happen. Consumers spent in the summer. They spent in the autumn and they spent at Christmas too.That spree is over. Retailers are going to find life tougher in 2017. Those facing the prospect of higher business rates alongside a dip in demand will experience a painful double-whammy. Continue reading...

With another bailout set to bring more cuts, quitting the euro is back on the agendaDimitris Costopoulos stood, worry beads in hand, under brilliant blue skies in front of the Greek parliament. Wearing freshly pressed trousers, polished shoes and a smart winter jacket – “my Sunday best” – he had risen at 5am to get on the bus that would take him to Athens 200 miles away and to the great sandstone edifice on Syntagma Square. By his own admission, protests were not his thing.At 71, the farmer rarely ventures from Proastio, his village on the fertile plains of Thessaly. “But everything is going wrong,” he lamented on Tuesday, his voice hoarse after hours of chanting anti-government slogans. Continue reading...

Rate-setter Kristin Forbes, who wanted borrowing costs higher, never felt she could vote for an increase. That’s because the economy can’t really take itSavers lost one of their last hopes for an interest rate rise when Bank of England rate-setter Kristin Forbes announced she would be heading back to her home in Massachusetts in June.Forbes, a US academic who craves a return to the “economic normality” of 4%-5% base rates, has consistently called for an increase, though never actually voted for one. After the summer, it could be that only Ian McCafferty is still inclined to raise rates among the Bank’s nine monetary policy committee members. Continue reading...

There is a progressive alternative to the Brexiters’ mythical Victorian free-trade golden age. All it needs is a simple regulatory changeThe truth is stranger than fiction. Rising out of the chaos of the Brexit vote stand two opposing visions of Britain’s future. There is Britain as the 19th-century free-trade, low-tax warrior, the world’s banker, insurer, and lawyer.Facts get in the way of visions. In the 19th-century free trade was about strong countries undermining the sovereignty of others. Not the best model for Britain today. Britannia no longer has the world’s most powerful navy to blockade Latin American ports until the locals pay City of London bondholders or push opium onto the Chinese.Related: Brexit has allowed the banks to get off Britain's naughty stepRelated: The overselling of financial transaction taxes Continue reading...

ONS says weaker sterling since Brexit vote led to 37.3m visits to UK in 2016, with big rise in North American touristsSterling’s slide since the EU referendum has lured bargain-hunting tourists to the UK, with overseas visitors hitting a record high last year.Official figures showed there were 37.3m visits to the UK in 2016, up 3% on the previous year and the highest since records began in 1961.Related: Luxury retailers hope Chinese new year tourists will leave them crowing Continue reading...

Kraft Heinz confirms it has approached Unilever about a deal that values the company at $143bn

Figures put UK growth forecast in doubt, with rising inflation squeezing household spendingBritish shoppers reined in their spending last month as a surge in fuel prices and higher food bills ate into household finances in a further sign the pound’s sharp devaluation is starting to bite.Official figures showed sales volumes fell 0.3% in January, confounding economists’ expectations of a rise. Adding to evidence of ailing consumer sentiment, December’s weak performance was revised even lower in the latest sales update to show a 2.1% decline over the Christmas period. Continue reading...

Crude oil’s 20% price leap and sterling’s slide against dollar have made cost of petrol and diesel rocket at pumpsRocketing UK fuel prices mean that two-car families are now spending almost £40 a month more on petrol than a year ago.

All the day’s economic and financial news, as shares continue to hit new peaks before coming off the boil in late trading

Free trade group lobbying against UK import tariffs slams Philip Hammond Brexit strategy as road to ‘self-harm’The chancellor, Philip Hammond, has been described as “economically illiterate” by the head of a group of economists lobbying for the UK to ditch tariffs and embrace free trade after Brexit.

Markets are at record highs, but optimism breeds recklessness. The question is how big the bubble will get before it burstsAll three main measures of the health in the stock market are at record levels. Donald Trump is bragging about the boost he has given to share prices. Bourses around the world are taking their lead from Wall Street and heading higher.What does that mean? It means the stock market is going to crash because sooner or later optimism breeds recklessness and boom will turn to bust. All that’s in question is how big the bubble will get before it bursts and when that moment will come.Stock market hits new high with longest winning streak in decades. Great level of confidence and optimism - even before tax plan rollout!Related: World stock markets hit record highs – business live Continue reading...

National survey suggests fall in number of smokers and rise in culture of eating out and recreational activities

A reality check may force the US president to climb down on his ‘America first’ rhetoric and see the merit of international bodiesDonald Trump did not assume the US presidency as a committed multilateralist. On that, partisans of all political persuasions can agree. Among his most controversial campaign statements were some suggesting that Nato was obsolete, a position that bodes ill for his attitude to other multilateral organisations and alliances.

Trump is learning that while he may love to give the middle finger to (supposedly) liberal public opinion, there are Republicans who will not join in

Jobs data show workers face rising costs and static pay, and no indication of Brexit vote triggering exodus of EU labourThe vast majority of employment growth was driven by non-UK nationals in the final three months of 2016 compared with a year earlier, the latest official figures on the labour market revealed.Of the 303,000 more people in work between October and December compared with a year earlier, 233,000 were non-UK nationals, taking the total to 3.48 million according to the Office for National Statistics. UK nationals working in Britain increased by 70,000 over the same period to 28.44 million.Related: Missing wage rises give lie to picture of full employment | Larry ElliottEncouraging labour market stats out today; record high employment rate and youth unemployment at its lowest level for more than 12 years Continue reading...

With non-UK nationals representing most of 300,000 rise in number employed, labour supply is helping keep lid on wagesBritain has all the hallmarks of a full-employment economy. The employment rate is at a record level, unemployment is at its lowest in more than a decade, and the percentage of women working is at its highest since modern records began.The one thing missing from this picture is an increase in wages. Full-employment economies are normally good for workers because they take advantage of labour shortages to strike better deals with employers. Continue reading...

Production costs jump 20% in a year as pound’s sharp fall following Brexit vote ramps up imports bill just as oil prices start to biteA surge in fuel prices helped push inflation to its highest level for more than two years last month and economists warned of more prices pressures as the Brexit blow to the pound ramped up firms’ costs.The Office for National Statistics said inflation rose to 1.8% in January from 1.6% in December and was the highest since June 2014. But it was slightly less than expected, as falling clothes prices offset some of the upward pressure on inflation from fuel and food.Related: UK inflation rate jumps to 1.8% as weak pound bites - business liveRelated: The UK's inflation foot soldiers: how the ONS measures the CPI Continue reading...

Geopolitical uncertainties surrounding Brexit, US economic policy and European elections are likely to stunt economic expansion in the year aheadThe German economy expanded less than expected in the final three months of 2016, dragging down growth in the 19-nation eurozone.Europe’s largest economy expanded by 0.4% between October and December, according to the German statistics office, Destatis. This was lower than the 0.5% forecast by economists. German growth in the third quarter was revised lower too, to 0.1% from 0.2%.Related: Eurozone growth rises to 0.5%; Trump adviser claims euro 'grossly undervalued'- as it happenedRelated: Eurozone consumer spending slows but exports rise Continue reading...

Higher fuel costs have driven the cost of living in Britain up again, at the fastest pace in two-and-a-half years

Asked about Donald Trump’s claim that the financial regulation meant businesses could not borrow, the Fed chair said growth in lending was robustDueling senators turned the Federal Reserve chairwoman’s first testimony before Congress since the election of Donald Trump into a row over Republican plans to defang Dodd-Frank, the financial regulation brought in after the Great Recession.Senator Elizabeth Warren, the Democrat emerging as Trump’s leading critic, quizzed Janet Yellen on Trump’s claims that Dodd-Frank was a “disaster” and on his plans to dismantle it.Related: Trump orders Dodd-Frank review in effort to roll back financial regulationRelated: Dismantling Dodd-Frank: Donald Trump's Valentine's gift to Wall Street | Jill Abramson Continue reading...

High street competition has helped rein in prices, but households are facing rising cost of living due to falling pound and rising commoditiesIt was nice while it lasted, but the days of ultra-low inflation are over – at least for the time being.The year ahead is going to be marked by rising prices and squeezed living standards, but the pickup in the cost of living needs to be put in perspective; January’s increase was smaller than expected, and the result of prices falling less sharply than they did a year ago.Related: UK warned to expect higher inflation as CPI jumps to 1.8% - business live Continue reading...

The city voted for Brexit because it felt cut off by a failing economic system, says councillor Matthew Brown. But the region has been revived by thinking locallyMatthew Brown believes few available jobs and rising inequality led Preston, like every other district of Lancashire, to vote to leave the EU in June. “People are angry with how the economy is structured. Brexit has happened because of a failure of the current economic model,” says the 44-year-old councillor. But he adds: “What we’re doing now is in response to that, it’s about how we can change local economies to work for people who feel excluded.”Related: Council job cuts have finally caught up with me – but I'm relieved Continue reading...

Lord Kerslake’s damning report exposes the yawning skills gap at the heart of government – just when we need to manage BrexitWhitehall needs a strong centre more than ever, to keep the show on the road, to monitor the effects of leaving the European Union and to coordinate Theresa May’s government’s various (and variously contradictory) initiatives.The Treasury has to be a pillar of that strength – yet for the past seven decades at least it has abused its power and UK government has suffered as a result, according to a damning report by former head of the civil service Lord Kerslake.Related: Osborne’s bleak Brexit forecast ‘has undermined the Treasury’The Treasury pares candle ends without promoting effectiveness and efficiency Continue reading...

Study shows low-paid self-employment and zero-hours contracts costing exchequer £75m a week – a quarter of England’s weekly social care budgetThe rapid rise in insecure work in the UK is costing the government almost £4bn a year in lost tax income and benefit payouts, according to new research into the gig economy by the Trades Union Congress.The UK’s growing legions of low-paid, self-employed workers and those on zero-hours contracts earn significantly less than regular employees and therefore pay less tax and national insurance. Their relatively low earnings also make them more likely to need to rely on in-work benefits such as tax credits and housing benefit, the TUC said.Related: Zero-hours workers '£1,000 worse off a year' than employeesRelated: Self-employment in UK at highest level since records began Continue reading...

Executive arm of EU sees UK economy growing 1.5% this year, compared with earlier forecast of just 1% growthThe eurozone will enjoy stronger economy growth than previously thought this year and next but face risks from uncertainty surrounding Donald Trump’s presidency and the UK’s negotiations to leave the European Union, according to forecasts by the European commission.The executive arm of the EU became the latest body to concede its predictions made shortly after the Brexit vote had been overly gloomy. It also upgraded its outlook for the UK this year.Winter 2017 Economic Forecast | check all information (also by country) here: https://t.co/2c560Rv1yk #ECForecast pic.twitter.com/HrZXe0pKpq Continue reading...

Many of the problems humanity faces are shared ones. That’s why it is so vital that we start to find communitarian solutions to social problemsIn an interview with Woman’s Own in 1987, Margaret Thatcher said: “Too many … people have been given to understand, ‘I have a problem, it is the government’s job to cope with it.’” It’s a sentence that perfectly epitomises both the rise of neoliberalism – for which Thatcher can largely be thanked – and its death.For there’s no doubt that neoliberalism – a system focused on free-market policies – is in decline after decades of dominance. As Aditya Chakrabortty argues in Guardian Opinion, we are witnessing its death.Related: Britain’s housing crisis could be solved – if only the government wanted to | Jonn ElledgeRelated: The great British make off: how a new materialism can give us back control | Ruth Potts Continue reading...

Experts warn drop in sales could be sign of ‘tougher things to come’ as rising prices since Brexit vote ‘hurt spending power’Britons slashed their spending on new clothes and shied away from the high street in January as they juggled Christmas debts and rising living costs.Spending increased by a meagre 0.4% in January, according to Visa’s consumer spending index. The year-on-year growth rate was a five-month low, which followed December’s robust 2.5% increase. The spending tracker highlighted a grim period for clothing retailers, with the amount Britons spent on their wardrobes dropping 3.8% – the biggest decline since April 2012.Related: Brexit economy: weak pound stokes inflation as jobs market coolsRelated: Rising food bills to dent UK high street spending, says top thinktank Continue reading...

Old art of checking and recording by trained collectors remains at heart of compiling the index as data is also fed by software scanning online pricesIn a shop stacked to the ceiling with toys, Brenda Cleaver is searching for a very specific car. “I am looking for a modern road vehicle, and I am checking the price. Here it is. It hasn’t changed,” she says, comparing the price sticker on the toy car with the information on her handheld computer. She moves on in search of a snakes and ladders game.

Senate vote to repeal law forcing US energy and mining companies to disclose payments to foreign governments has gladdened the hearts of kleptocratsCorruption is a curse. It stunts development, breeds conflict in fragile states, makes taxpayers in rich countries dubious about providing aid to poor countries, and gives crooked firms an advantage over those that play by the rules.Governments have become less tolerant of dirty business dealings over time, as Rolls-Royce has found to its cost. The aerospace company – one of the UK’s genuinely world class manufacturing firms – will this week announce one of Britain’s biggest ever corporate losses, in part the result of the £671m cost of settling bribery actions.To argue that easing up on the fight against corruption is good for business is to turn truth on its headRelated: Bribery and Brexit propel Rolls-Royce towards historic losses Continue reading...

Germany is saying no debt relief; the IMF warns Greece will go under without. But the best any of the players in this Athenian tragedy can hope for is just to surviveThe European commission wants Greece off the political agenda before elections in the Netherlands next month: that much is clear at the end of a turbulent week of claim and counter-claim that appears to be ending in yet another messy compromise.Greek finance minister Euclid Tsakalotos dashed to Brussels last Friday to hear about a deal that appears to delay any punishment for Athens’s lack of reforming zeal until next year, when the Dutch, French, German and possibly Italian elections will be out of the way. To call it a sticking plaster would be to do disrespect to the healing powers of the humble Elastoplast. Continue reading...

Fifty years after Harold Wilson’s speech, people are still talking a load of nonsense about sterlingThis year marks the 50th anniversary of Harold Wilson’s memorable broadcast following his government’s devaluation of the pound.“It does not mean, of course, that the pound here in Britain, in your pocket or purse or in your bank, has been devalued,” he said. This, depending on your preference for modern or traditional language, is either a) an alternative fact or b) a brazen fib. Continue reading...

The majority in both houses believe leaving the EU is a disastrous idea. But only a principled few have tried to steer Britain away from its fate‘The first duty of an MP is to do what he [or she] thinks … is right and necessary for the honour and safety of Great Britain. His second duty is to his constituents, of whom he is the representative but not the delegate.”These are the wise words of Sir Winston Churchill, ignored by the majority of our elected representatives in last week’s vote on the Brexit bill. Continue reading...

Lord Kerslake says department is in a poor position to influence Brexit decisionsGeorge Osborne’s “project fear” forecasts about the economic risks of leaving the European Union have undermined public confidence in the Treasury and left it ill-equipped to influence Brexit, according to a damning new report from former Whitehall chief Lord Kerslake.The Treasury is traditionally Whitehall’s most powerful department and its civil servants some of the brightest and best. But Kerslake finds that its reputation waned in the wake of the financial crisis – and when it published bleak forecasts of the impact of Brexit in the run-up to the referendum, “the public reaction ... was unprecedentedly hostile”. Continue reading...

Jeroen Dijsselbloem, head of Eurogroup of finance ministers, says claims of crisis are exaggerated as emergency talks beginGreece and its EU creditors have been locked in emergency talks, after the head of the eurozone dismissed suggestions that the country’s bailout programme was in crisis.

The ratings agency said President Trump’s policies could lead to downgrades for countries with close economic ties to the US

Ratings agency highlights US president’s unpredictability and break from ‘norms’ of international relations as risksDonald Trump’s presidency poses a risk to the global economy, a leading credit ratings agency has warned, highlighting his unpredictability, his administration’s aggressive tone and his break with established “norms” in international relations.Less than a month into a presidency characterised by frequent Twitter tirades and an executive to order to ban citizens from some Muslim-majority countries from entering the US, Fitch said Trump posed a threat to global economic conditions.#Trump Administration Poses Risks to Global Sovereigns https://t.co/XObCY0Dz9p Continue reading...

Analysts fear the boom in personal contract plans are mirroring the sub-prime mortgage scandal and are fuelling a colossal build-up of debt in UK and USA huge increase in the amounts borrowed by already indebted households in Britain and the US to buy new vehicles is fuelling fears that “sub-prime cars” could ignite the next financial crash.British households borrowed a record £31.6bn in 2016 to buy cars, up 12% on the year before, said the Finance and Leasing Association on Friday. Nine out of 10 private car buyers are now using personal contract plans (known as PCPs), which have boomed since interest rates fell to historic lows. Continue reading...

ONS data shows increased output and narrowing of trade gap in December as economy defies Brexit uncertaintyBritain’s manufacturers and construction firms had a December bounce, adding to evidence that the UK economy ended 2016 on a strong note despite the Brexit vote.Backing up official estimates that show the UK economy was the fastest growing of the G7 leading industrial countries last year, figures published on Friday came in stronger than City economists expected.Related: UK industry is on a roll – but inflation could send it on the slide | Larry Elliott Continue reading...

As Donald Trump steers the US towards isolationism and protectionism, China’s leader is casting himself as a champion of internationalism and free trade. But are Xi’s values really compatible with those of the rest of the world?Some call it Xi Jinping’s Big White Book; a 515-page, 2.5kg tome in which China’s paramount leader lays out his thinking on everything from tree planting to macro-economics; from Karl Marx to the importance of being earnest.More than five million copies of Xi’s The Governance of China now adorn bookshelves and coffee tables around the globe, if Communist party propagandists are to be believed, in languages including Russian, Cambodian, Portuguese, Arabic and Nepali.Related: US-China war would be a disaster for the world, says Communist partyRelated: Trump agrees to support 'One China' policy in Xi Jinping call Continue reading...

Reduction was a core wish of leave voters, but overall figure will probably fall by less than 15%, thinktank predictsTheresa May’s attempt to reclaim control of UK borders after Brexit could reduce annual migration from the EU by just 50,000 – one-sixth of the current overall annual figure, according to new research.The projection of a “vanishingly small reduction” is one of the first attempts to estimate how likely labour market demand, and the government’s planned new controls, could reduce the number of migrants coming to the UK. Reduction in immigrant numbers has been repeatedly cited in polls as the chief reason voters backed leaving the European Union.Related: Brexit bill: MPs reject amendment to protect EU citizens in UK Continue reading...

Germany’s finance minister Wolfgang Schäuble tells Athens it can cut its £280bn debt only by leaving the single currencyThe Greek government has expressed hope of an imminent deal with its EU creditors, despite a warning from the German finance minister, Wolfgang Schäuble, that the country could cut its debts only by leaving the single currency.

Chief operating officer will manage Bank’s strategy during Brexit negotiations and sit on monetary policy committeeThe Bank of England has appointed Charlotte Hogg as its second most powerful executive, in a role that hands the former financier the task of keeping a check on Britain’s financial sector.Hogg has been appointed deputy governor for markets and banking, while consolidating her position at Threadneedle Street by retaining her current role as the central bank’s chief operating officer. She replaces Minouche Shafik, who is becoming director of the London School of Economics. Continue reading...

Consumers and employees want to know where their companies stand on Trump’s policies. Here’s how businesses should be reactingOn 12 January, a week before the inauguration, LL Bean found itself smack bang in the middle of one of now-President Trump’s notorious tweets:Thank you to Linda Bean of L.L.Bean for your great support and courage. People will support you even more now. Buy L.L.Bean. @LBPerfectMaineMy daughter Ivanka has been treated so unfairly by @Nordstrom. She is a great person -- always pushing me to do the right thing! Terrible!Related: Super Bowl ads trolling Trump: 'The world is more beautiful the more you accept' Continue reading...