Janet Yellen, the head of the Federal Reserve, has been criticised for dithering, but there are many factors stopping her from raising interest ratesWhen Janet Yellen sits down with her colleagues on the Federal Reserve’s interest rate-setting committee this week, another slice of her credibility will be on the line.America’s recovery since the financial crash has not followed the path it was supposed to. The central bank’s constant dithering over whether to raise interest rates has made it appear weak and unable to influence events. Continue reading...
Concerns over 23 June referendum compounded fears of a global economic slowdown, falling oil prices and next week’s Federal Reserve meetingInvestors are bracing for more choppy trading on financial markets in the final run-up to the EU referendum after Brexit jitters knocked the pound to a seven-week low, dented share prices and fuelled demand for safer assets such as bonds and gold.With opinion polls tight and less than two weeks to go before the vote, sterling came under pressure and it was down more than 1% against the US dollar at one point on Friday. In late afternoon trading the pound was worth $1.43.Related: FTSE falls sharply amid new Brexit warnings - as it happenedRelated: No single market access for UK after Brexit, Wolfgang Schäuble says#gold price appears to be tracking odds of #Brexit. We expect jump to at least $1,400 if UK votes to leave EU. pic.twitter.com/oDfYh59ZQp Continue reading...
Sports retailers, pubs and betting shops are hoping for a sales fillip off the back of a football feelgood factor“We’re not going home halfway throughâ€, sings Madchester veteran Shaun Ryder on England’s unofficial Euro 2016 anthem – and retailers across Britain will be sharing that dream. But this is no outpouring of patriotic support for England, Wales and Northern Ireland from retail executives. Shop owners, publicans and restaurateurs are hoping for a sales fillip off the back of a football feelgood factor, with some sectors in particular expecting for a boost from the month-long tournament, although the wider UK economy stands to benefit if workers concentrate on their jobs more than matches.Related: England's early exit from Euro 2016 'could wipe £6bn off stock market' Continue reading...
In Der Spiegel interview German finance minister rules out Britain’s chances of enjoying bloc benefits from outside EUGermany’s finance minister, Wolfgang Schäuble, has slammed the door on Britain retaining access to the single market if it votes to the leave the European Union.In an interview in a Brexit-themed issue of German weekly Der Spiegel, the influential veteran politician ruled out the possibility of the UK following a Swiss or Norwegian model that would allow it to enjoy the benefits of the single market without being an EU member.Related: A reverse Maastricht would be legal and politically feasible | Michael WhiteMajor intervention from Germany: UK would have to accept free movement and pay in to EU to continue to access trade https://t.co/jIAPPXM6hT Continue reading...
Biggest monthly increase since January 2014 could be linked to early Easter holidays this yearBritain’s construction output bounced back in April and along with strong industrial production data painted a brighter picture of the economy than expected.The Office for National Statistics said construction output rose 2.5% in April from the previous month. This was the biggest monthly increase since January 2014 and surprised economists, who had expected 1.7% growth. However, the rise was not big enough to make up for March’s 3.6% decline.A 2.3% rise in manufacturing, surging export volumes and a 2.5% construction rebound. Strong April data may push our Q2 UK GDP forecast up. Continue reading...
Your report on the consequences of a leave vote (Guerilla campaign mooted, 7 June) quotes a pro-European MP saying “We would have to respect the mandate of the referendumâ€. But it is quite unclear what that mandate might be, as the referendum question does not specify the range of alternatives to full EU membership should the UK vote to leave. Until parliament has determined whether, for example, it wishes the UK to remain in the European Economic Area, it would be inappropriate for David Cameron to formally notify the EU of the UK’s intention to withdraw from the EU. A leave vote would therefore need to be followed by an emergency debate in parliament from Monday 27 June onwards about the UK’s withdrawal options, where the most likely outcome, as you indicate, would be overwhelming support for the UK to remain in EEA, which would of course outrage hard-line Brexiters in the Conservative party.At the same time another more fundamental problem might arise in the wake of a UK referendum leave vote. What if Northern Ireland, Scotland and Wales vote remain, their MPs propose an amendment to parliament’s EEA motion in support of the UK’s continued membership of the EU, and pro-EU English MPs vote with them to pass their amendment? The UK would be plunged into a full-blown constitutional crisis concerning the very sovereignty of parliament.
by Phillip Inman Economics correspondent on (#1GMJB)
Goods exports volumes climbed by 11.2% in April, the biggest monthly increase since records began in 1998A record jump for Britain’s goods exports helped the country’s trade deficit fall more than expected in April.Coming after a set of healthy figures from the high street and the manufacturing sector, the trade figures showed the UK economy had steadied ahead of the EU referendum, following a wobble in the first three months of the year.Related: UK trade deficit with EU hits new recordRelated: What would Brexit mean for UK trade deals? Continue reading...
by Fiona Harvey Environment correspondent on (#1GNET)
Toxic air set to cause as many as 9 million premature deaths a year around the world in the next four decades, with economic costs rising to trillions a yearAir pollution is becoming a “terrifying†problem around the globe, one of the world’s leading economic organisations has warned, and will get much worse in the coming decades if urgent steps are not taken to control the pollution.The Organisation for Economic Cooperation and Development (OECD) said on Thursday that pollution of our air from industry, agriculture and transport was set to cause as many as 9 million premature deaths a year around the world in the next four decades, and the economic costs are likely to rise to about $2.6 tn (£1.8tn) a year over the same period. Continue reading...
One lesson for Africa from China’s economic boom is that self-interest could be the perfect tool for getting the political elite focused on developmentManufacturing’s contribution to African GDP has remained constant at 10% for the past 40 years, and Africa’s contribution to global manufacturing has actually reduced from 3% in 1980 to 2% today.Related: Domestic critics carp over extent of China's munificence towards Africa Continue reading...
Manufacturing output grew 2.3% in April according to official figures that contrast with other data pointing to slowdownBritish industrial production grew at the fastest pace in almost four years in April, boosted by the pharmaceuticals and energy sectors.The official figures, which took the City by surprise and sent the pound higher, are in contrast with other economic data that has pointed to a slowdown in the economy before the EU referendum on 23 June.Related: Why upbeat UK manufacturing figures have silenced Osborne Continue reading...
News that production grew at its fastest pace in four years does not fit the narrative of an economy on edge before the EU voteIn normal times, George Osborne would have been all over the good news from the manufacturing sector like a rash. The figures from UK industry were better – a lot better – than the City had been expecting and showed the fastest month-on-month increase in almost four years.So where was the instant statement from the chancellor praising the strength of the economy and the success of the government’s strategy? Sherlock Holmes would have had the answer. Osborne’s unusual reticence was a classic case of the dog that doesn’t bark.Related: British industrial production grows at fastest pace in four years Continue reading...
by Phillip Inman Economics correspondent on (#1GEQD)
Growth expected to slow this year as oil exporters in developing countries struggle to cope with lower energy pricesGlobal growth will slow this year as oil exporters in the developing world struggle to cope with lower energy prices, the World Bank has said in its half-yearly economic health check.The benefit of cheaper oil pricesfor Europe, Japan and other oil importing nations, which has sustained their growth through 2015 and 2016, has failed to offset a slowdown in parts of Africa, Asia and South America that depend on selling energy to sustain their incomes. Continue reading...
Roberto Azevêdo says leave vote would present complex and unusual situation with UK unable to ‘cut and paste’ its former EU-negotiated trade dealsNegotiations about the shape of the UK’s post-Brexit trade arrangements would have to start from scratch after a leave vote in the EU referendum, the head of the World Trade Organisation said as he admitted there had been no preliminary discussions with the UK government.Roberto Azevêdo, the WTO director-general, said he expected any talks to be long and difficult, adding: “We haven’t had any discussions about the process. We don’t know what the process would be. We do know it would be a very unusual situation.†Continue reading...
by Phillip Inman Economics correspondent on (#1GD1P)
EU statistics estimate annual GDP growth at 1.7% with higher average quarterly rise rise outstripping UKThe eurozone’s reputation as the laggard of the global economy appeared to be overly pessimistic, after revised figures showed annual GDP growth in the currency bloc edged higher to 1.7%.Eurostat, the official data agency for the European Union, showed that GDP growth in the first quarter was 0.6%, after being trimmed to 0.5% in an earlier estimate, pushing the annual growth rate up from the previous estimate of 1.6%.Related: EU jobless rate hits seven-year low; US data mixed – as it happened Continue reading...
ALP says it will try to change three major agreements that allow corporations to sue if they think a government has damaged their interestsLabor is promising to review three of the major free trade agreements signed by the Abbott and Turnbull governments in the hope of removing a controversial clause that allows foreign corporations to sue the Australian government.It will also make Australia’s involvement in a proposed huge free trade zone in the Asia Pacific – dubbed the Regional Comprehensive Economic Partnership (RCEP) – subject to stricter entry conditions than those the Coalition demanded.Related: Trump presidency would sink TPP and harm China relations, says Kim BeazleyRelated: TPP trade deal will expand Australia's economy by less than 1%, World Bank reveals Continue reading...
A fall in the value of the pound would make exports cheaper, but this could be negated by trade barriersIn this week’s EU referendum Q&A our panel discuss how a Brexit could affect the costs facing UK businesses:Would UK businesses be more or less competitive in the global market if we choose to leave? Continue reading...
British Retail Consortium reports rise of 0.5% after two months of falling sales, but says that conditions remain toughHigh street retailers enjoyed a modest rebound in sales last month as shoppers stocked up on summer clothes, barbecue food and outdoor toys, according to industry figures.The warm weather helped like-for-like sales rise 0.5% on the year in May, the British Retail Consortium (BRC) said. It brought some relief to retailers after falling sales in the previous two months, but the trade group said conditions remained tough.Related: Brexit forecasters miss everything that matters to real voters Continue reading...
Sports Direct founder cannot risk carrying on with the bluster when he gives evidence on working conditions for warehouse staffMike Ashley is a paper tiger. Having said he would not show up to give evidence to the House of Commons business committee, the Sports Direct boss has changed his mind and now says he will grace MPs with his presence.In truth, there was never the remotest possibility that Ashley would defy the will of parliament. Rupert Murdoch eventually deigned to make an appearance before a select committee, and to adapt Lloyd Bentsen’s putdown of Dan Quayle, Ashley is no Rupert Murdoch.Related: Questions Mike Ashley should answer on Sports Direct work conditionsRelated: High street sales make modest rebound helped by warm weather in May Continue reading...
Federal Reserve chair points to ‘considerable uncertainty’ in speech following weak jobs report on Friday, amid concerns over Brexit and Chinese economyHikes to US interest rates might be on hold again thanks to “considerable uncertainty about the economic outlook†Janet Yellen suggested in a speech on Monday.Speaking at the World Affairs Council of Philadelphia, days after a surprisingly poor report on the state of the US job market, the Federal Reserve chair said gradual increases to the interest rates were “likely to be appropriateâ€. But she omitted the phrase “in the coming months†– a phrase that, when spoken by Yellen 10 days ago, many economists took to imply that the Fed was ready to raise rates soon.Related: US economy adds paltry 38,000 jobs in May for weakest growth since 2010 Continue reading...
Signs of weakening demand from some business and private customers as new vehicle registrations increase 2.5% in MayNew car sales in the UK have continued to grow but at a slower pace than previous months amid signs of falling demand from some business and private customers.New car registrations in May rose 2.5% compared with last year to 203,585, the highest for the month since 2002, according to the Society of Motor Manufacturers and Traders (SMMT). But the trade group noted growth had eased off with May marking the second month running when car registrations rose by less than 3%. Continue reading...
A ‘Robin Hood tax’ would not have stopped the 2008 financial crisis. We need better regulation of financial markets and a progressive tax on consumptionHowever November’s US presidential election turns out, one proposal that will probably live on is the introduction of a financial transaction tax (FTT). While by no means a crazy idea, an FTT is hardly the panacea that its hard-left advocates hold it out to be. It is certainly a poor substitute for deeper tax reform aimed at making the system simpler, more transparent, and more progressive.As American society ages and domestic inequality worsens, and assuming that interest rates on the national debt eventually rise, taxes will need to go up, urgently on the wealthy but some day on the middle class. There is no magic wand, and the politically expedient idea of a “Robin Hood†tax on trading is being badly oversold.Related: Oil prices can provide a slippery picture Continue reading...
Robots and automated systems are getting faster, better and cheaper by the day. A study of US jobs has found that 47% are threatened by automation in the next 20 years. So what can robots already do? What jobs are safe? And what will we do all day if we don’t have any work to do? Continue reading...
BDO’s output index is the lowest since September 2013 amid worries over the negative impact of a vote to leave the EUOrders among UK firms have fallen to their lowest level for almost three years as growing worries over this month’s EU referendum hit the British economy.Accountancy firm BDO reports that company investment is flatlining, forcing them to rein in their hiring plans. It fears that economic growth could fall sharply unless firms bolster their investment plans later this year.Related: Bank of England in preparations for potential Brexit Continue reading...
NatWest analysts says the figures are a testament to the flexibility of the UK labour marketA big pick-up in high skilled jobs helped Yorkshire and the Humber record the fastest employment growth in the UK last year, according to a report that will be a welcome boost to George Osborne’s “northern powerhouse†agenda. Continue reading...
What if the warnings from the IMF, the OECD and the Bank of England are just going straight over the heads of ordinary people?The International Monetary Fund says Brexit would either be pretty bad or very bad. The Organisation for Economic Cooperation and Development warns that there would be dire consequences not just for Britain, but for the rest of the world. The Bank of England says output would go down and inflation would go up. As far as George Osborne and David Cameron are concerned, the evidence could not be clearer. A vote to leave in the referendum would be a self-inflicted wound. They think they have won the economic argument, which is why the Brexiters are now focusing on immigration.The remain camp’s strategy could yet pay off, but its case is not nearly as watertight as Cameron and co think. For a start, it is worth mentioning that the forecasting record of the IMF, the OECD and the Bank of England is rotten. Not one of these three august bodies was capable of predicting the 2008 crash – the biggest economic crisis in living memory – even when it was staring them in the face. Continue reading...
The latest American job market figures are truly alarming: and will require a complete change of approach from the Federal ReserveBritain is trapped in its own little Brexit bubble. For the next two and a half weeks, the country will be obsessed with the result of the referendum on 23 June. Nothing that is going on in the rest of the world will get much of a look-in.But beyond these shores, things are happening. The authorities in China are desperately trying to shore up growth. Eurozone finance ministers have all but guaranteed that, sooner or later, the Greek crisis will flare up again. Most pressingly, the US economy looks to be heading for serious trouble. Continue reading...
Bank of England boss Mark Carney should listen to those who fear regulators need to do more to stop continued bad practice in the financial sectorBehind the easy-going manner, Bank of England governor Mark Carney is angry. The object of his anger is Sir John Vickers, the mild-mannered former deputy governor who keeps telling the world that Carney has gone soft on the bankers.In recent months, when he hasn’t been discussing the impact of the EU referendum, Carney has behaved as if he were a Plantagenet king, dispatching his lieutenants to crush a former friend turned critic. The most recent intervention was led by Martin Taylor, a Barclays chief in the 1990s who sits with Carney on the financial policy committee, the UK’s financial watchdog. Continue reading...
by Miles Brignall and Patrick Collinson on (#1G2Z2)
Petition against decision to freeze repayment threshold reaches 120,000 signaturesThe government is coming under intense pressure to reverse controversial changes to student loans, after one of the scheme’s leading proponents, Martin Lewis, branded them a “disgraceâ€, and a petition opposing them started by a Durham student hit the crucial 100,000 signatures needed to trigger a possible debate in parliament.Last week, there was a huge outcry after it emerged that students are seeing their debts rise by as much as £180 a month because of the interest alone, with graduates charged 3.9% as the sum balloons. Many feel they have been duped and cheated. Students are also angry after the government backtracked on promises made in 2010 that the £21,000 earnings threshold – at which point students are required to pay back loans – would rise annually with average earnings.Most students were not aware of this change … it certainly wasn't in the small print Continue reading...
Originally I supported the £9,000 tuition fee regime. But now, after my own daughter has gone through the system, I realise that the interest rates charged are scandalousI have three children, all of whom went through university under different student loan regimes; the last one started university in 2012, just as the fees went up to £9,000. I was a supporter of the student loan system, as I figured it was not like a real debt, being written off after 30 years and only payable on a sliding scale of earnings. In this respect, I was out of line with most of the rest of my family and friends, who all seemed obsessed with the idea that Nick Clegg and the Lib Dems had done a U-turn on this. I thought I agreed with Vince Cable, who defended the move as a sensible way to fund a massively expanded higher education system.Then, after my daughter had already clocked up a term’s worth of loan, I was alerted to the high interest rate payable on the £9,000. She’d be paying RPI plus 3% while she was studying and at least RPI thereafter, more if she earned more. I was appalled by this, and since we have the resources, we paid off her loan and thereafter funded her studies ourselves. Continue reading...
Total falls 122,000 short of economists’ expectations ahead of crucial Federal Reserve meeting, but unemployment rate dips to 4.7%The US economy added just 38,000 jobs in May – 122,000 fewer than expected and the weakest growth since 2010. The unemployment rate slipped down to 4.7%, the Department of Labor announced on Friday.The report added to concerns that the US economy is slowing, ahead of a crucial meeting of the Federal Reserve, and was immediately seized on by Republican presidential candidate Donald Trump. “Terrible jobs report just reported. Only 38,000 jobs added. Bombshell!†he wrote on Twitter.Related: Verizon strike ends as tentative deal promises 'big gains' for workersRelated: Fed chief Janet Yellen says interest rates will rise 'in coming months' Continue reading...
One in three businesses say uncertainty is having a detrimental impactBusinesses in Britain’s services sector enjoyed a rebound in growth last month but were more nervous about hiring new staff before this month’s EU referendum, according to a survey.One-in-three firms said uncertainty around the 23 June vote was affecting their them, with new business gowing at the slowest pace for three-and-a half years. But 51% of firms in the sector, which spans hotels to insurers, said they had been unaffected by Brexit uncertainty. Continue reading...
George Osborne says 400,000 jobs could be lost while top figures in the services sector sign statement backing remain voteLeaders of some of Britain’s biggest firms have warned the UK’s service sector will be damaged by Brexit, with George Osborne saying as many as 400,000 jobs could be lost.
Dutch finance minister and Eurogroup president wants UK to play a stronger role if Brexit is rejected on 23 JuneOne of the eurozone’s most senior figures has called on Britain to lead in Europe and go beyond defending the interests of the City of London.
Economists for Brexit group claims that downturn would be avoided if Britain removed all trade barriers after leaving EUEconomists campaigning for Britain to leave the European Union have accused the Treasury and international institutions of “groupthink†in a report that says growth would be boosted if all trade barriers were removed after a leave vote in this month’s referendum.The group Economists for Brexit (EfB) said consumers and businesses would benefit from lower prices once EU-imposed tariffs were removed and dismissed predictions that the UK would be plunged into immediate recession if the remain campaign lost on 23 June. Continue reading...
Switzerland is poised to hold a referendum on introducing the concept, and Finnish and Dutch pilots are set for 2017To its acolytes, it is the revolutionary policy idea whose arrival is as urgently needed as it is inevitable. In a future in which robots decimate the jobs but not necessarily the wealth of nations, they argue, states should be able to afford to pay all their citizens a basic income unconditional of needs or requirements.Universal basic income has a rare appeal across the political spectrum. For those on the left, it promises to eliminate poverty and liberate people stuck in dead-end workfare jobs. Small-state libertarians believe it could slash bureaucracy and create a leaner, more self-sufficient welfare system.Related: Should we scrap benefits and pay everyone £100 a week?Related: A no-strings basic income? If it works for the royal family, it can work for us all | John O’FarrellRelated: And now for something completely different: some positive newsRelated: Even in Finland, universal basic income is too good to be true | Declan Gaffney Continue reading...
GDP figures reveal strong economic growth but falling labour costs suggest wage growth remains particularly weakThe latest gross domestic product figures showing the Australian economy grew the strongest it has for four years surprised most analysts and brought a smile to the prime minister and treasurer. The figures, however, reinforce just how dependent we are upon our exports – especially to China – rather than through any great strength within the domestic economy.In the March quarter Australia’s GDP grew by 1.1% in seasonally adjusted terms and a slightly more muted 0.9% in trend terms:Related: Economy is growing faster than expected at 3.1%, but news is not all goodRelated: Cutting corporate tax won't create jobs. It's yesterday's solution to our problems | Wayne SwanRelated: Fraction of small businesses likely to use Coalition tax cuts to expand – industry body Continue reading...
Until governments act collectively to bolster growth, lasting recovery from the 2008-09 recession will remain elusiveA wind of change is howling through the world’s economic institutions. Last week it was the International Monetary Fund saying that austerity could do more harm than good and that neoliberalism was not all it was cracked up to be. This week it is the turn of the Organisation for Economic Cooperation and Development to challenge the orthodoxy.The OECD says governments around the world should consider banding together to spend more on public works, something it deems necessary because lasting recovery from the deep recession of 2008-09 remains elusive. Continue reading...
Foreign demand for goods from UK factories falls for fifth month as customers unwilling to commit to investmentUncertainty over Britain’s membership of the EU is hitting a third of businesses in the UK manufacturing sector, which barely scraped growth in May according to a closely watched survey.Foreign demand for goods from British factories fell for a fifth month as firms reported that customers were unwilling to commit to investment ahead of the 23 June referendum.Related: Brexit 'would leave British workers £38 a week worse off' Continue reading...
On 23 June, the UK will vote on whether to leave the European Union. The campaign to leave has been dubbed ‘Brexit’ – a pithy portmanteau derived from the words ‘Britain’ and ‘exit’ – and is dominating the news in Europe. But what do New Yorkers make of the debate? And can they even decipher what the Brexit is? The Guardian’s Adam Gabbatt finds out
Paris-based thinktank compares consequences of UK leaving EU to effects of China’s high-tempo economy grinding to a haltBritain’s departure from the EU poses as big a threat to the global economy as a “hard landing†in China, the Organisation for Economic Cooperation and Development has said.
Despite a rise in prices, using oil as a signal for wider global economy may be short-sighted, as often it will fluctuate simply according to textbook economicsFor the first time since last October, the price of a barrel of oil has broken through $50. So it seems a good time to update the analysis I presented in January 2015. Back then, I argued that $50 or thereabouts would turn out to be a long-term ceiling for the oil price.At the time, with crude prices still above $60, almost everyone believed that $50 would be the rock-bottom floor. After all, futures markets predicted prices of $75 or higher; the Saudi and Russian governments needed $100 to balance their budgets; and any price much below $50 was considered unsustainable, because it would put the US shale-oil industry out of business.Related: Is Opec relevant in an oil market of falling prices and overproduction? Continue reading...
Company’s CEO Ian Taylor has kept a low profile but is finally breaking cover to lobby against EU plans to tighten regulation of commodity trading“The biggest company you’ve never heard of†is a label regularly bandied around but is well-deserved by the global trading firm with a name more suited to a household cleaning product: Vitol.You will not hear its name at this week’s Opec meeting in Vienna or have heard it quoted on the subject of the significant rise in oil prices over the past four months, but a Saudi oil minister would know the name Vitol as they would Shell or BP. Continue reading...
Legatum Institute index says Nigeria – Africa’s biggest economy – is only the 26 most prosperous African country, as fuel shortages hamper growthDecades of economic growth across Africa have failed to improve the lives of millions of people, according to a report (pdf).The Legatum Institute’s Africa prosperity index, published on Wednesday, rates countries by opportunity, freedom, education and security, as well as social bonds.Related: It's naira or never: Nigeria needs decisive action on its currency | Oluseun OnigbindeRelated: Finish line far out of sight in Nigeria's race to beat corruption | Oluseun Onigbinde Continue reading...
Comparisons with German and Dutch regions where productivity is already high do not stand up to scrutinyThe idea behind George Osborne’s northern powerhouse is a simple one. Improving transport links between the big cities of the north will create economies of scale and greater dynamism. Britain, it is said, can learn lessons from the Rhine-Ruhr region of Germany and the Randstad region of the Netherlands, both of which have a number of cities clustered together. The chancellor has pledged Treasury support for a number of key infrastructure projects, including high-speed rail links.Related: Osborne's budget builds on 'northern powerhouse' ambitions Continue reading...
