Underlying weakness in British economy may necessitate ‘additional monetary stimulus’, says policymaker Jan VliegheA top Bank of England policymaker has warned that even if Britain votes to stay in the EU, underlying weakness in the economy could mean that more support is required from the Bank.Jan Vlieghe, one of the nine policymakers who vote on interest rates, has previously floated the idea of them being cut below zero. Speaking on Thursday, he again raised the prospect of rates coming down further from their record low of 0.5%, when he said the economy could require “additional monetary stimulus” if it does not rebound after a remain vote in the EU referendum on 23 June. Continue reading...

Revolt over lack of bill to protect NHS from EU trade deal threatened PM with first defeat on Queen’s speech since 1924David Cameron has moved to quell a rebellion by Conservative Eurosceptics over a controversial trade deal between the EU and US, after he faced the first government defeat on a Queen’s speech since 1924.The prime minister has been forced to accept a critical amendment about the Transatlantic Trade and Investment Partnership (TTIP) after it was signed by 25 Tory backbenchers, and backed by Labour, SNP and Green MPs.

Shares fall in Europe and Asia as America’s central bank signals it could raise interest rates next month

Staying active can benefit older people, but forcing employees to look busy does nothing for productivity. Sometimes, less work gets more doneWhat is your favourite style of literature? Voltaire was once asked. “All styles are good,” he said, “except for the boring kind.” People like the idea of busyness because it is better than feeling bored. The sadness at the heart of Waiting for Godot is that, for Vladimir and Estragon, there is “nothing to be done” (the play’s opening line). The closing stage direction says: “They do not move.”Related: UK productivity gap widens to worst level since records beganThe benefits of so-called 'multitasking' have now been revealed to be a myth Continue reading...

Official March figures show 4.3% rise on last year with only clothing and footwear retailers suffering from chilly weather and early EasterRetail sales rebounded last month as cheap deals lured British spenders back to the shops, but clothing sales suffered from chilly weather.There was little sign that uncertainty around June’s EU referendum was hurting consumers’ willingness to spend in April. Official figures showed retail sales volumes jumped 1.3% on the month, well ahead of expectations for a 0.5% rise in a Reuters poll. Sales were up 4.3% on a year earlier.

UN agency urges west to focus on helping developing world create more sustainable and better paid jobs, rather than just on aidWorsening economic conditions in Asia, Latin America and the Arab world threaten to undo decades of progress in reducing global poverty, according to a report by the International Labour Organization.The UN agency said a third of workers earn less than the “moderate poverty threshold” of $3.10 (£2.10) a day and their prospects are deteriorating as global trade slows and low oil prices affect producers in developing countries.Related: The world's poorest 50% are a trillion dollars worse off - what's going on? Continue reading...

Andrew Haldane says workers have little chance of making sense of funds when financial experts ‘have no clue either’Over-complex pensions are harming the UK economy and reinforcing mistrust of the financial sector, the Bank of England’s chief economist has warned, as he admitted even he was unable to make the “remotest sense” of them.Andrew Haldane said ordinary workers had no chance of making informed decisions for their retirement funds when experts and financial advisers “have no clue either”.Related: Pensions regulation gaps could see workers lose savings, MPs warn Continue reading...

US central bank says many policymakers would vote to hike borrowing costs next month, if economic data justifies it

The neglect of manufacturing and over-development of the financial sector is the cause of the economy’s decline, not fear of leaving the EUIt’s being blamed on the Brexit jitters. But the weakness in the UK economy that the latest figures reveal is actually a symptom of a much deeper malaise. Britain has never properly recovered from the 2008 financial crisis. At the end of 2015, inflation-adjusted income per capita in the UK was only 0.2% higher than its 2007 peak. This translates into an annual growth rate of 0.025% per year. How pathetic this performance is can be put into perspective by recalling that Japan’s per capita income during its so-called “lost two decades” between 1990 and 2010 grew at 1% a year.At the root of this inability to stage a real recovery is the serious imbalance that has developed in the past few decades – namely, the over-development of the UK financial sector and the atrophy of manufacturing. Right after the 2008 financial crisis there was a widespread recognition that the ballooning financial sector needed to be reined in. Even George Osborne talked excitedly for a while about the “march of the makers”. That march never materialised, however, and manufacturing’s share of GDP has stagnated at around 10%.Related: UK trade deficit with EU hits new recordGeorge Osborne talked excitedly about the ‘march of the makers’. That march did not materialise Continue reading...

European economics commissioner Pierre Moscovici postpones potential action over countries breaking budget rules until JulyThe European commission has avoided handing a propaganda weapon to those campaigning for Britain to leave the EU by delaying a decision on disciplinary action against Spain and Portugal for breaking budget rules until after the EU referendum.Brussels said the postponement of possible action, which could include fines, was due to the general election in Spain on 26 June, three days after the referendum on Britain’s EU membership. Continue reading...

We are better prepared for the next financial crisis but regulators are still slow to adapt to the changing public moodWhat do people mean when they criticise generals for “fighting the last war”? It’s not that generals ever think they will face the same weapon systems and the same battlefields. They certainly know better. The error, to the extent that the generals make it, must operate at a more subtle level. Generals are sometimes slow to get around to developing plans and ordnance for those new weapon systems and battlefields. And just as important, they sometimes assume that the public psychology, and the narratives that influence the morale that is so important in achieving victory, is the same as in the last war.That is also true for regulators whose job is to prevent financial crises. For the same reasons, they may be slow to change in response to new situations. They tend to be slow to adapt to changing public psychology. The need for regulation depends on public perceptions of the last crisis, and, as George Akerlof and I argued in Animal Spirits, these perceptions depend heavily on changing popular narratives. Continue reading...

Employment rate for women hits record in March after retirement age changes, with figures contradicting EU referendum fearsBritain’s employment rate reached a record high and wages ticked up in March, dashing government claims that the job market was being seriously damaged by the threat of a leave vote in the EU referendum.The number of people employed increased by 44,000 to 31.58 million, while total pay including bonuses edged up by 2%, from 1.9% in February, on the rolling quarter-on-quarter measure used by the Office for National Statistics.Related: UK employment rate hits record high as more women work longer - live updates Continue reading...

Higher prices, a drop in savings and weak pay growth weighed heavily on family budgets in MayBritish households were under the worst financial strain in almost two years in May, according to a new report.Weak pay growth, a drop in savings, and higher prices weighed heavily on family budgets in May, the survey by Markit found. Continue reading...

The salary threshold for workers to qualify for overtime pay will double to $47,476 by December 2016, but the new rule has faced oppositionMore than four million working Americans could get a bigger paycheck by the end of the year, thanks to a new overtime rule to be finalized by the US Department of Labor on Wednesday.Previously, only salaried workers who earned below $23,660 were eligible for overtime pay. As of December 2016, that threshold will double and be set at $47,476 a year.Related: Overtime update for American workers long overdue, reports say Continue reading...

UN agency urges west to focus on helping developing world create more sustainable and better-paid jobs rather than just on aidWorsening economic conditions in Asia, Latin America and the Arab world threaten to undo decades of progress in reducing global poverty, according to a report by the International Labour Organisation. The UN agency warned that a third of workers earned less than the “moderate poverty threshold” of $3.10 (£2.10) a day, and many were in precarious jobs without basic social protections such as healthcare and welfare benefits.It urged governments in the developed world to focus on improving the quality of jobs in the developing world, rather than just on aid, to create more sustainable and better paid employment.Related: The world's poorest 50% are a trillion dollars worse off - what's going on? Continue reading...

Paul Mason’s “leftwing case” for Brexit is depressingly familiar (There is a leftwing case for Brexit – but we can’t let Boris Johnson turn Britain into a neoliberal fantasy island, G2, 17 May). It is no more nor less than the argument the British left has always made, namely that if only it could get its hands on the powers of the nation state, all would be well. Mason simply brackets off the international order as a market conspiracy and so tells us nothing about how the utopian left British state would function in either the European or the global economy.But the greater irony is that his manifesto is the mirror image of that of the Gove-Johnson project. Left and right sovereigntists share the same assumptions that British self-government is the means, while they differ as to the ends of how this power might be used. A truly leftwing agenda would be one based on cross-national cooperation and solidarity. But the difficulty is, and always has been, that in both national and European elections, voters have not consistently supported parties of the left. Working out how to change that is the challenge for the left across Europe. All Mason offers us is a dismal choice between old Labour Brexitism or pragmatic remainism.

Treasury jumps on data showing transport and clothing cheaper than year earlier as signs of Britain being better off within EUUK inflation fell unexpectedly in April, with lower air fares, clothes and secondhand car prices triggering the first drop in seven months.Britain’s main measure of inflation, the consumer prices index, fell from 0.5% in March to 0.3% last month, according to the Office for National Statistics. Economists had forecast no change at 0.5%.Related: UK inflation rate falls to 0.3% due to cheaper air fares and clothes – business live Continue reading...

Britain’s inflation rate has fallen for the first time since last September, but US inflation figures put spotlight back on Fed rate decision

Power cuts, food shortages and rising violent crime are contributing to an economic and political crisis in Venezuela that has left its embattled president Nicolás Maduro with ever-decreasing options. For a country reliant on oil revenues, the lengthy global oil price crash has been catastrophic. Maduro blames private ‘bigwigs’ and threatens to take control of idle factories

Despite the weakness in core inflation, many economists expect a post-Brexit bounceFor a country that has had so much trouble controlling the cost of living, the recent performance of prices in Britain has been extraordinary. Inflation has been below the government’s 2% target for more than two years. For the best part of 18 months it has been running at under 0.5%. It fell in April to stand at just 0.3%.To be sure, there were some one-off factors at play. The early timing of Easter made a difference, because air fares rose sharply to coincide with the holiday period in March and then fell back again last month. The drop in the cost of clothing and footwear almost certainly had something to do with the dismal weather.Related: UK inflation drops as air fares fall Continue reading...

South-east Asian countries have grasped what the UK has sadly forgotten: that prosperity for the population is linked to investment in infrastructureIf anyone needs convincing of the need for greater UK investment in infrastructure, they should visit south-east Asia. Hanoi, the capital of Vietnam, has a modern airport and a highways network that is arguably better than that of any major UK city other than London. Lining the highways are large factories built by global corporations such as Canon and by local businesses. The huge levels of employment and wealth creation would not exist without the highway infrastructure.Kuala Lumpur, the capital of Malaysia, has a modern highway network connecting it to other major cities, and a clean, modern suburban rail network. Its airport is world class. Viewed from the air, the massive industrial developments around the highway network are breathtaking. The high-speed railway that is being built to Singapore will open at least 10 years ahead of the first of the UK’s high-speed lines.Related: Smart infrastructure is the key to sustainable development Continue reading...

Organisation urges better city planning and defensive measures to defend against rapid rise in climate change-linked disastersThe global community is badly prepared for a rapid increase in climate change-related natural disasters that by 2050 will put 1.3 billion people at risk, according to the World Bank.Urging better planning of cities before it was too late, a report published on Monday from a Bank-run body that focuses on disaster mitigation, said assets worth $158tn – double the total annual output of the global economy – would be in jeopardy by 2050 without preventative action.

Crude prices are heading back towards $50 per barrel for the first time since last November

Vote to leave EU would have palpable effect on economies of other members and lead to disharmony, says ratings agencyA vote for Brexit in next month’s referendum could lead to disharmony across the rest of the 28-member bloc, strengthen anti-EU groups and dent other European economies, a leading credit ratings agency has warned.Fitch, which previously warned that Brexit could hurt the UK’s strong credit score, reiterated the risk in an update to investors on Monday. It also warned that a vote to leave the EU on 23 June could hurt British airlines and trigger further failures in the retail sector, but that a weaker pound would bolster exporters’ competitiveness.

Kingdom’s plan to diversify economy with Vision 2030 project could be blueprint for other countries hooked on ‘black gold’Saudi Arabia has captured the world’s attention with the announcement of an ambitious agenda, called Vision 2030, aimed at overhauling the structure of its economy. The plan would reduce historical high dependence on oil by transforming how the kingdom generates income, as well as how it spends and manages its vast resources. It is supported by detailed action plans, the initial implementation of which has already involved headline-grabbing institutional changes in a country long known for caution and gradualism.Related: Mohammed bin Salman: the prince trying to wean Saudi Arabia off oil Continue reading...

Investment is set to double in the next five years as wealthy rush to get their money into overseas assets, especially housesChinese nationals have become the largest foreign buyers of US property after pouring billions into the market in search of safe offshore assets, according to a study.

Gloomy global outlook prompts church to offload £250m of equities even as it outperforms the marketThe Church of England has said it fears a looming global economic slowdown with governments relatively powerless to shore up growth, as it revealed a decision to offload a portion of its substantial stock market holdings.The church commissioners, who manage the C of E’s £7bn investment fund, said they enjoyed market-beating returns of 8.2% last year but warned they would struggle to keep up that pace in future. Over the past 30 years the fund’s average annual return has been 9.7%. Continue reading...

HR industry group forecasts average pay to increase just 1.7% with retail sector warning shoppers are dwindling and EU referendum denting confidenceWorkers are being warned to expect meagre wage rises until at least 2020, as weak productivity and new costs such as the national living wage curb employers’ readiness to raise salaries.Even though employment is expected to rise, pay growth is forecast to be just 1.7% over the next year, as an ample supply of labour helps employers hold back on wage rises in a “jobs-rich, pay-poor” economy, said the Chartered Institute for Personnel and Development (CIPD). Continue reading...

Insiders say oil firm’s New Energies renewables arm could grow very big, but not for a decade or moreShell, Europe’s largest oil company, has established a separate division, New Energies, to invest in renewable and low-carbon power.The move emerged days after experts at Chatham House warned international oil companies they must transform their business or face a “short, brutal” end within 10 years.Related: Oil firms have 10 years to change strategy or face 'short, brutish end' Continue reading...

Bank of England governor Mark Carney speaks on BBC1’s Andrew Marr Show on Sunday, defending his previous warning that leaving the EU could lead to recession. He says the last financial crisis taught us that an independent institution should have responsibility for stability, adding that it was his job to be ‘straight with people’. Earlier in the programme, energy minister Andrea Leadsom accused Carney of ‘dangerous intervention’

Bank’s governor has destabilised financial markets by warning on possible short-term effects of leaving EU, says Andrea LeadsomThe Bank of England’s warning that leaving the EU could lead to a recession is an “incredibly dangerous intervention” that has increased financial instability, a Tory minister campaigning for Brexit has said.

There are very good reasons to be wary of leaving the EU. But what if we stay and the union breaks up?They say that it pays to have friends in high places. As they battle to keep Britain in the EU, David Cameron and George Osborne have been spoilt for ammunition over recent days. Dire warnings on the consequences of Brexit came through thick and fast and, naturally, the Remain camp seized on every one.The Bank of England raised the threat of recession and soaring inflation, the International Monetary Fund warned of tumbling house prices and Gordon Brown formed a rare alliance with Cameron over the prospect of the third world war. Continue reading...

A vintage performance by the former PM on the EU referendum was in marked contrast to that of his buffoonish rivalExtraordinary, is it not? The political, financial and media worlds are obsessed by a referendum we could do without, called to sort out problems of Conservative party management that will almost certainly not be resolved, and masterminded by a prime minister who is desperately dependent on the support of the Labour party to avoid humiliation.On a typical day last week we had the menacingly mendacious Alexander (Boris) Johnson being taken far more seriously than he should – what do you make of a man who tells his close friends we must stay in the European Union and then, for nakedly ambitious reasons, goes back on his word? Continue reading...

Christine Lagarde backs Bank of England governor’s claim that Britain could enter recession after vote to leave EUA vote to leave the EU next month could precipitate a stock market crash and steep fall in house prices, the International Monetary Fund has warned.Christine Lagarde, the IMF managing director, also backed warnings from the Bank of England governor Mark Carney that Britain could fall into recession following a Brexit vote.Related: IMF: Brexit would send shockwaves through UK economy - business liveRelated: EU referendum: barrage of grim forecasts takes aim at our homes Continue reading...

Today’s markets are characterised by the persistence of high monopoly profitsFor 200 years, there have been two schools of thought about what determines the distribution of income – and how the economy functions. One, emanating from Adam Smith and 19th-century liberal economists, focuses on competitive markets. The other, cognisant of how Smith’s brand of liberalism leads to rapid concentration of wealth and income, takes as its starting point unfettered markets’ tendency toward monopoly. It is important to understand both, because our views about government policies and existing inequalities are shaped by which of the two schools of thought one believes provides a better description of reality.For the 19th-century liberals and their latter-day acolytes, because markets are competitive, individuals’ returns are related to their social contributions – their “marginal product”, in the language of economists. Capitalists are rewarded for saving rather than consuming – for their abstinence, in the words of Nassau Senior, one of my predecessors in the Drummond Professorship of Political Economy at Oxford. Differences in income were then related to their ownership of “assets” – human and financial capital. Scholars of inequality thus focused on the determinants of the distribution of assets, including how they are passed on across generations.Related: Has the global economic growth malaise become the 'new normal'? Continue reading...

Osborne, Carney and Lagarde are like wartime generals, with a relentless salvo of bad news for Brexiteers. It isn’t working. Targeting house prices might do the trickDifferent location, same story. On Thursday, it was Mark Carney sitting in Threadneedle Street issuing a warning from the Bank of England about the perils of Brexit. Less than 24 hours later it was Christine Lagarde, the managing director of the International Monetary Fund, delivering the same message.The approach being taken by the government to the referendum appears similar to tactics adopted by the British high command on the western front during the first world war: soften up the enemy with a constant and ferocious pounding.Related: IMF: Brexit would send shockwaves through UK economy - business live Continue reading...

ONS says output fell 3.6% in March from previous month, fuelling fears that EU vote uncertainty is hampering economyBritain’s construction sector suffered a sharp slowdown in the opening months of this year, adding to signs the economy is losing momentum as uncertainty around the EU referendum and the global outlook increases.The Office for National Statistics said construction output – which accounts for about 6% of the economy – fell 3.6% on the month in March. It was the biggest drop for more than four years.3.6% fall in construction in March, with both new work and repair & maintenance both falling by 3.6% https://t.co/voiTrqNdBc1.1% fall in construction in Q1, slightly bigger than the 0.9% fall estimated in preliminary #GDP https://t.co/voiTrqNdBc Continue reading...

Chancellor will milk the Bank of England’s dire forecasts but the poor picture painted is as much due to UK structural weakness as EU referendum fearsBritain will make up its mind whether it wants to remain in the European Union in six weeks time, so it was inevitable that the last Bank of England inflation report before 23 June was dominated by the referendum.

Steel dumping by Beijing has led to anti-Chinese sentiment among EU states, resulting in huge vote against giving country market economy statusThe timing of the steel crisis could hardly have been worse for China. Beijing is desperate to be granted market economy status within the World Trade Organisation but is running into stiff opposition from both the US and Europe.With Chinese steel being dumped on global markets, the European parliament on Thursday voted against the idea that China should be treated the same as the EU or the US by a thumping margin. The decision puts pressure on the European commission to either oppose market economic status outright or include safeguards for specific industries.Related: UK steel boost as MEPs oppose giving China market economy status Continue reading...

Central bank issues unprecedented warning over EU vote, claiming exit could depress pound and raise unemployment

Governor Mark Carney tells press conference that there would be a ‘material impact’ on growth if Britain votes to leave the EU

Michel Sapin says remaining member states would be reluctant to allow Britain’s departure to jeopardise the economyEuropean countries would counter the economic shock of a British vote to leave the EU by accelerating plans for closer integration, the French finance minister has said.Michel Sapin said Europe was undergoing a recovery after eight years of almost zero growth and would be reluctant to allow a “shock to the European economy” to jeopardise it.Related: Brexit could lead to recession, says Bank of EnglandRelated: David Cameron opens London summit describing corruption as 'a cancer' – live Continue reading...

The Jodie Foster-directed satire about the financial meltdown isn’t especially original, but it’s arguably more honest than Oscar favourite The Big ShortA miasma of pure silliness settles on this movie directed by Jodie Foster, showing here in Cannes out of competition; it deserves a genre of its own: screwball action. Julia Roberts plays a harassed TV producer who has to keep in line her waning star: Lee Gates, played by George Clooney, the ego-crazed, silver-fox presenter of a TV show called Money Monster, giving stock picks and spurious shock-jock-type commentary on the market, celebrating unfettered capitalism by breaking into embarrassingly geriatric hip-hop moves with backing dancers. (He reportedly bears a certain resemblance to a real-life pundit: Jim Cramer, presenter of a programme called Mad Money, on CNBC.)Related: Café Society review – Woody Allen's amiable, if insubstantial, tribute to golden-age Hollywood Continue reading...

The crisis in Britain’s steel industry has helped to drive manufacturing output down by 1.9% in the last year

Factory output was down in two consecutive quarters as the steel crisis helped drag down the sector’s overall outputGovernment hopes of rebalancing the UK’s service-sector-dominated economy have been dealt a blow with the latest official data showing industry slipping into its third downturn within a decade.A slight pickup in activity in March was not enough to offset sharp falls in output earlier in 2016 and meant production dropped for the second successive quarter – the definition of a recession.Related: UK factory output suffers biggest fall since 2013 - business live Continue reading...

Nicola Sturgeon will split finance secretary job in two to create economy secretary to tackle poor productivity and job creationNicola Sturgeon is to create a new cabinet post to focus on Scotland’s struggling economy following a slump in job creation and amid faltering productivity.The first minister, who retained power after the Scottish National party’s emphatic victory in the Holyrood election last week, will split the post of finance secretary into two separate roles in a cabinet reshuffle next week. Continue reading...

Even if the global economy produces all you need, it will not give you a pay packet to buy things with, argues Sir Keith BurnettIt’s time to tell it like it is. Immigrants aren’t taking your job. Free market ideologues took it years ago. Why have we lost so many of the higher paying jobs that factories gave? Is it the price we have to pay for believing in democracy and capitalism? Is it because we are in the EU?No, it’s because we have been led by a misguided capitalist sect that treat free markets as a gift of God, rather than a tool for human beings. So let’s think about how things have gone wrong, as illustrated by the latest manufacturing figures.Related: UK industry falls back into recessionRelated: CBI calls on government to back manufacturing sector strategy Continue reading...

Research blames 2008 recession for lower real salaries rather than rise in foreign workers, adding they paid more into UK economy than they took outThe rapid increase in migration from other EU countries has not had an adverse impact on the wages and job prospects of UK-born workers, according to research by the London School of Economics.The study found areas of Britain that have seen the biggest rises in workers from the rest of Europe have not suffered sharper falls in pay or seen a bigger reduction in job opportunities than other parts of the country.Related: Brexit ‘unlikely to mean deep migration cuts but may lead to 2p tax increase’ Continue reading...

Proportion finding it hard to get by has fallen while more are satisfied with their income, says Office for National StatisticsFinancial pressure on Britain’s young people has eased slightly since the depths of the financial crisis, according to the Office for National Statistics.The proportion of people aged 16-24 finding it difficult or very difficult to get by fell to 8% in 2013-14, from 15% in 2009-10, the ONS said. Over the same period, young people’s satisfaction with their household income increased to 56% from 51%.Related: Young people are right to be angry about their financial insecurity Continue reading...

Gap between exports and imports in the first three months of 2016 widened by £0.7bn to nearly £24bnBritain’s trade deficit with other European Union countries is running at a record high level ahead of the referendum next month, official figures show.The latest healthcheck from the Office for National Statistics on goods coming in and going out of the UK reveal that the gap between exports and imports in the first three months of 2016 widened by £0.7bn to £23.9bn.Related: Business support for EU membership has fallen in run-up to voteRelated: EU referendum: top economic thinktank warns of post-Brexit shocks Continue reading...