by Rupert Neate and Edward Helmore New York on (#23FCZ)
Donald Trump appoints ex-Goldman Sachs banker who says he will oversee ‘the largest tax change since Reagan’Donald Trump has nominated Steven Mnuchin, a Goldman Sachs banker-turned-Hollywood movie financier with no government experience, as US Treasury secretary.Mnuchin, a multimillionaire who was dubbed a “foreclosure king†for buying up distressed mortgages and evicting thousands of homeowners during the financial crisis, immediately announced he would oversee “the largest tax change since Reagan†and said his “No 1 priority is tax reformâ€.Related: 10 economic consequences of Donald Trump's election winRelated: Donald Trump claims he is leaving his business interests 'in total' Continue reading...
by Phillip Inman Economics correspondent on (#23DY2)
Consumers view economy with increasing despondency as businesses worry recovery after Brexit vote is starting to recedeConsumer and business confidence tumbled in November amid concerns the UK economy would struggle to grow after a post-referendum slowdown, two surveys have found.Consumers were “resolutely gloomy†and viewed the economy with increasing despondency, while a broad range of businesses said they were worried the economic recovery after the Brexit vote was starting to recede. Continue reading...
Zoe Williams (Forget Fidel Castro’s policies. Above all, he was a dictator, 28November) bases her judgment of Castro on a frighteningly simplistic division of states into democracies, by implication multiparty ones, and dictatorships, by implication any state that is not multiparty. She then makes a blanket assertion that the latter are so inherently bad that their actual record of government is irrelevant. This is to ignore all the complex details of political structures by which a population can be oppressed or empowered. For us, from a practical point of view, the worst danger of such thinking is to exaggerate the benefits of our political system.While Castro may be rightly criticised for executing Batista supporters, even those guilty of torture and multiple murder, it may be salutary to remember that back then, in 1959, Britain executed people accused of a single murder. It was also a time when British forces were imprisoning and torturing Kenyans, and those of the French multiparty democracy were torturing and killing Algerians. Even those crimes pale before the horrors the US multiparty democracy was shortly to unleash on Vietnam. Continue reading...
Companies run like piggy banks for a select few are crippling our economy. The practice must stopAs important as the detail of the government’s proposals to change the way big businesses are run is the context. Today’s green paper comes in the year of Brexit and Donald Trump, at a time when voters, as Theresa May recently said, “see the emergence of a new global elite who sometimes seem to play by a different set of rules and whose lives are far removed from their everyday existenceâ€. Well ensconced in that global elite are the chief executives of major companies. Think of Philip Green, whom MPs have accused of letting BHS die. Think of Mike Ashley, apologising for staff mistreatment at Sports Direct. Think of all those bumper pay deals at FTSE 100 firms.As the High Pay Centre points out, the average FTSE 100 CEO is now earning as much as 147 of their own employees. The average CEO pay package comes in at £5.5m a year. Those are just the front-page stories: leaf through the business section of any paper and chances are it will contain some tale of fat-cattery. Crucially, all this is happening in the middle of the sharpest pay squeeze for 70 years and historic spending cuts. Continue reading...
Theresa May and her cabinet refuse to move on from ideas that hurt the poor and help the rich. It’s a collective death wishOn 11 September 1929 the Wall Street Journal quoted Mark Twain for its thought of the day: “Don’t part with your illusions; when they are gone you may still exist, but you have ceased to live.†Whatever that day’s subeditors thought they were doing, their choice now sounds as falsely confident as a rambler about to step off a ledge.Markets were already in turmoil, America was sinking into economic depression and running through the daily news was a thin, high note of hysteria. Still, Irving Fisher and the other wise men foresaw only the slightest of setbacks, and the brokers couldn’t take the cash fast enough. As John Kenneth Galbraith writes in his classic, The Great Crash 1929: “The end had come, but it was not yet in sightâ€.Related: George Osborne made more than £300,000 in a month from speechesThe Theresa May modus operandi can be summed up as: Cameroonism with a very quick paint job. Continue reading...
PA Consulting accused of overcharging the taxpayer and lack of clarity about invoices relating to £19m of government contractsA management consultancy firm that provided experts to a government agency has been accused by MPs of “potential sharp practices†that resulted in the cancellation of a £19m government contract.PA Consulting was also blamed by a parliamentary committee on Monday of breaches of corporate governance after appearing to mislead the government agency UK Trade and Investment when providing trade specialists to attract overseas investors. Continue reading...
Disclosing the difference between the chief executive’s pay and a company’s median earner is a modest proposal whose time has comeExecutive pay reforms do not come much more modest than the idea of requiring public companies to say how much the chief executive is paid relative to the firm’s median earner. Nothing would have to happen as a consequence. Shareholders would not be asked formally if the ratio is too high or too low. The boss’s pay would not have to be capped at a fixed multiple. Instead, the hope is that boards, occasionally, might be embarrassed into exercising a little discipline.Yet even this gentle proposal, likely to be included in the government’s green paper on corporate governance on Tuesday, is running into resistance. Pay ratios are too crude and could mislead, runs one argument, because an investment bank, where lots of people tend to earn megabucks, could seem to be a “fairer†employer than a supermarket chain employing tens of thousands of shelf-stackers and checkout assistants. Worse, pay ratios could prove inflationary if bosses demand a higher place in a theoretical league table, runs another objection. Continue reading...
President of European Central Bank says Britain should address uncertainty over how withdrawal from EU will play outMario Draghi, the president of the European Central Bank (ECB), has urged the British government to disclose more information about its plans to leave the EU.He told the European parliament’s committee on economic and monetary affairs that the UK should address the uncertainty over how Brexit will play out.Related: Bank of England prepares to protect City firms from hard Brexit Continue reading...
The new president should seize the chance to tackle issues such as investment, tax reform and job creationDonald Trump’s victory in the US presidential election surprised most of the world. But the president-elect is not finished defying expectations. Contrary to the predictions of many experts, stock markets have rallied strongly since his victory, with the three major US indices reaching record highs while the dollar has soared. Explaining these unexpected responses could provide a glimpse of what the next few months have in store for markets.Before the election, most analysts predicted that a Trump win would trigger a large stock-market selloff and a rush into low-risk government bonds. And, indeed, when the results began rolling in, that is what happened, beginning with Trump’s dramatic victory in Florida and gaining traction as his lead in the electoral college grew. By the time that lead appeared insurmountable, the Dow Jones index of US stocks had fallen by 800 points, and the broader S&P 500 was “limit downâ€. Moreover, the dollar began to slide, and a flight to quality in US Treasury markets caused bond yields to plummet.Related: 10 economic consequences of Donald Trump's election win Continue reading...
From the French right’s selection of Fillon to the Italian referendum and Austrian election, Europe’s centre is oblivious to its own existential crisis. They might want to dust off their copies of Thomas Mann’s Death in Venice‘Good news for Europe,†read the first line of the analyst note. If I tell you it was from an investment bank that backed eurozone austerity to the hilt, you might guess what the good news is. Yes, François Fillon (the French Thatcher) stands poised for a runoff with Marine Le Pen (the French Mussolini) in next year’s presidential election.What could be better news for the investment banking community than having all non-fascist voters, left, right and centre, obligated to vote for a politician who wants to slash the welfare state, sack workers and extend the working day?Related: François Fillon is as big a threat to liberal values as Marine Le Pen | Natalie Nougayrède Continue reading...
The IMF and the OECD’s predictions of economic gloom went awry, and continued fallbacks may see them lose credibilityIn the months leading up to the EU referendum in June, George Osborne had two people he could always rely on to back the argument that Brexit would have immediate, dire consequences for the UK economy. One was Christine Lagarde, the managing director of the International Monetary Fund. The other was Ãngel GurrÃa, the secretary general of the Organisation for Economic Co-operation and Development.Osborne’s belief that voters would be swayed by fears of recession meant Lagarde and GurrÃa popped up regularly during the campaign. In the event, the plan did not work. Those who voted to leave the EU appeared sceptical about the forecasts produced by the IMF and the OECD – and those from the Treasury and the Bank of England, for that matter.Related: The IFS was not wrong to describe shrinking UK pay packets as dreadful Continue reading...
The US president-elect’s policies are likely to be good for domestic growth – but rhetoric on trade is likely to have global implicationsFor those of us who were wrong about the US presidential election, it is worth suppressing emotional reactions, at least for a month or two, and attempting a dispassionate judgment about what Donald Trump’s administration may mean for the world. So here are 10 likely consequences of the Trump presidency, divided equally between the good and the bad.The good news starts with US growth, which will almost surely accelerate above the 2.2% average annual rate during Barack Obama’s second term. This is because the Republican aversion to public spending and debt applies only when a Democrat like Obama occupies the White House. With a Republican president, the party has always been glad to boost public spending and relax debt limits, as it was under Presidents Ronald Reagan and George W Bush. Thus, Trump will be able to implement the Keynesian fiscal stimulus that Obama often proposed but was unable to deliver.Related: World trade hangs in the balance as Trump prepares plan of action Continue reading...
In its first forecasts since Donald Trump’s election, thinktank says jobs will suffer if politicians row back on globalisationA new wave of protectionism and trade tensions risks denting global growth, stoking inflation and harming living standards, the west’s leading economic thinktank has warned in its first in-depth forecasts since Donald Trump won the US election on an anti-globalisation platform.The Paris-based Organisation for Economic Co-operation and Development (OECD) said it was optimistic that expected spending measures and tax cuts under the new US administration would boost growth there and in other countries. But it said global trade growth was already “exceptionally weak†and jobs would suffer if politicians rolled back the clock on trade liberalisation.Related: World trade hangs in the balance as Trump prepares plan of action Continue reading...
by Phillip Inman Economics correspondent on (#235TK)
Survey latest to show decline in businesses optimism, with many expecting slowdown to replace robust growth since Brexit voteThe strain of sluggish consumer spending and rising wages hit profits and dented the optimism of the UK’s services sector in November, according to the Confederation of British Industry.Predictions of a healthy Christmas failed to lift the sector’s spirits after falls in the pound and a rise in the government national living wage increased costs, a survey by the CBI found. Continue reading...
Wealth-creating sectors and manufacturing would be hit most significantly by leaving single market, a cross-party study warnsLeaving the single market would be damaging to almost every sector of the British economy, from manufacturing and energy to retail and financial services, according to a report commissioned by an alliance of Conservative, Labour and Liberal Democrat politicians trying to stop a hard Brexit.The study by the Centre for Economics and Business Research found that every major wealth-creating sector would be affected negatively, with manufacturing hit if there were tariff barriers to EU trade and the creative industries suffering a “body blow†if there were strict controls on immigration.Related: Bank of England prepares to protect City firms from hard BrexitRelated: Of course the forecasts are bad: no one has a plan for BrexitRelated: Brexit? I've no idea what's going on either, says Mark Carney Continue reading...
by Phillip Inman Economics corrrespondent on (#23558)
Governor Mark Carney begins work on transitional arrangements to maintain London’s stature in global financeThe Bank of England is pushing ahead with plans for transitional arrangements after Brexit negotiations in an attempt to protect financial institutions from a cliff edge deal that could undermine their stability.Governor Mark Carney has met senior figures in the City to stress the need for a smooth path out of the European Union that maintains its stature and strong links with the continent.Related: Bank of England to reveal stress test results for UK's biggest banks Continue reading...
Snapshot assesses resilience of six banks and one building society as well as risks to post-Brexit financial systemThe Bank of England is due to provide a snapshot of the strength of Britain’s biggest lenders after assessing their resilience to a dramatic economic downturn and sharp fall in house prices.Threadneedle Street will announce the outcome of its annual health check of the six biggest banks – and one building society, Nationwide – on Wednesday, alongside its assessment of the major risks to the financial system in the wake of the Brexit result.Related: RBS takes biggest knock of UK banks in EU-wide financial stress testRelated: Ireland is 'ideal home' for European banking regulator after Brexit Continue reading...
Picking infrastructure is easy, but unless low pay in the services sector is addressed productivity goals will remain elusiveAll roads lead to Rome, and experience would suggest, all autumn statements lead to roads.Under Alistair Darling there was an M1 upgrade in what was then called a pre-budget report. His Conservative successor George “we are the builders†Osborne pledged the biggest road investment programme since the 1970s and a permanent pothole fund. Then last week, Osborne’s successor Philip Hammond stuck with tradition and promised to push ahead with road schemes in the “northern powerhouse†and to tackle congestion on key routes under plans to revive the UK’s pitiful productivity growth. Continue reading...
The Leavers somehow managed to deflect the blame for austerity on to ‘Europe’. But they are far less convincing about our economic future nowThe European Union did not cause the 2007-08 financial crisis. The European Union did not instruct George Osborne to introduce an austerity policy which magnified the deleterious effects of that crisis. The European Union did not impose neoliberal and excessively deregulatory policies which contributed to a situation where the “fruits of globalisation†were concentrated in the top 5% of the population.However, in a propaganda feat which will go down in history, the Leave campaigners managed to persuade enough British voters that the EU was the source of many of our problems, and, just as bizarrely, that leaving the EU would be the answer. Continue reading...
The forecasters due to be quizzed by the Treasury select committee this week are not likely to strike a chord with its buttoned-up chairmanA big week in parliament for the Jacob Rees-Mogg committee (formerly known as the Treasury select committee), which will again be grilling one of its favourite targets: economic forecasters.First up on Tuesday comes Paul Johnson, director of the Institute for Fiscal Studies, which last Thursday said that Brexit really means British workers facing the longest pay squeeze in 70 years. The following day will see Robert Chote, chairman of the Office for Budget Responsibility, whose organisation also had a run-out last week, when it predicted the UK economy would slow next year and inflation would rise. Continue reading...
Outstanding loans have risen sharply to 40% of GDP but analysts fear the end of the credit binge could trigger a crisis for the wider worldChinese household debt has risen at an “alarming†pace as property values have soared, analysts have said, raising the risk that a real estate downturn could wreak havoc on the world’s second largest economy.
The president-elect’s protectionism has alarmed the WTO and been damned as ‘destructive’ in a major report. But was it just loud campaign bluster?Donald Trump’s determination to stamp his mark on US trade policy “would be horribly destructiveâ€, according to the most exhaustive assessment of his pre-election tweets, speeches and declarations in Fox News interviews.Among the more consistent themes in his various pronouncements, the president-elect said he would tear up the Nafta agreement that gives Mexico tariff-free access to US markets on about half of its goods. Continue reading...
Sliding deadlines for safety improvements following the Rana Plaza disaster demonstrate why the Bangladesh government must act (Bangladeshi workers still in danger despite safety pledges, says report, 21 November).Rana Plaza made the potentially deadly conditions in garment factories impossible to ignore. Safety improvements promoted by retailers have brought some positive changes but, given the scale of the problem in Bangladesh, these cannot tackle the root of the problem on their own, and they are not exclusive to garment factories – so what about other sectors? Continue reading...
ONS says consumers kept spending and business investment beats forecasts, defying predictions of slowdownBritish businesses continued to invest and consumers carried on spending in the months following the Brexit vote, defying predictions that a wave of uncertainty would hit economic activity.In the first official estimate of how firms’ spending fared after the referendum, the Office for National Statistics said business investment rose 0.9% in the July-to-September quarter. That was only a small slowdown from 1% growth in the previous quarter and beat forecasts for 0.6% growth in a Reuters poll of economists. The figures echoed business surveys suggesting companies have shrugged off the shock of the referendum result for now.Business investment increases by 0.9% (£0.4 billion) in Q3 2016 compared with Q2 2016 pic.twitter.com/iTsX4OPjc1Related: UK living standards squeeze 'will be worse than after global crash'Q3 #GDP increase led by growing consumer spending, fuelled by rising household incomes https://t.co/idV7bGKXHB Continue reading...
Chancellor’s cash to help startups grow to scale is welcome, but it’s a mere drop in the ocean – especially after Skyscanner saleThe best joke in Philip Hammond’s autumn statement was the line about how he is injecting £400m of venture capital funding into the British Business Bank “to tackle the longstanding problem of our fastest-growing technology firms being snapped up by bigger companies, rather than growing to scaleâ€. A day later, one such UK pioneer, Edinburgh-based Skyscanner, is being bought by large Chinese travel group Ctrip for £1.4bn, a sum that makes Hammond’s £400m fire-fighting fund look like a water pistol.The Treasury might argue that it has smaller, earlier-stage companies in mind for its £400m and that Skyscanner, boasting 60 million users a month for a service that scans the internet for cheap flights, had already achieved scale.Related: How will the autumn statement change Britain? Our panel’s views | Matthew d’Ancona, Martin Kettle, Gaby Hinsliff, Aditya Chakrabortty and Polly Toynbee Continue reading...
The attack on the Office for Budget Responsibility reveals where power now lies. Leavers are the masters, and will flex their muscles at willThe Office for Budget Responsibility shines like a good deed in a naughty world. It was created as an independent statutory body in 2010 to promote more trustworthy government. It was an excellent idea, was widely welcomed and has worked well. It has survived six and a half years. Now, though, it has been kneecapped in a back alley by Brexit provos and its brand has been trashed in the anti-European press’s embrace of post-truth politics.It may survive the encounter. Let us hope that it does. But this week’s hit-and-run attack means the age of OBR innocence is over. Its cautious forecasts about the impact of Brexit on the British economy had barely been reported by Chancellor Philip Hammond on Wednesday before Brexiteers decided the OBR had to be done over for displaying insufficient optimism in the cause.Related: Philip Hammond admits Brexit vote means £122bn extra borrowing Continue reading...
Expert analysis of the impact of the autumn statement shows the worst pay outlook in 70 years. That could be fertile territory for populist agitationThe slow economic strangulation of millions of Britons started long before the vote to leave the European Union this year. It was first felt when austerity wrapped its long fingers around public spending. But it all began with the Great Crash in 2008. Cataclysmic events have contributed to desolate times for workers for many years ahead. The Institute for Fiscal Studies’ finding that after this week’s autumn statement real wages in the country will still be lower by 2021 than they were in 2008, as the workforce suffers the worst decade for pay in at least seven decades, should ring alarm bells. The reasons are now well known: lower business investment, scared off by Brexit uncertainty, will result in lower productivity and sink wage growth. The drop in sterling, sparked by the fears of Britain’s departure from the continent, has pushed up inflation. Real wages will flatline next year and looming benefit cuts will squeeze living standards. The thinktank pointed out that by 2021 real GDP per household will be £1,000 lower than expected only months ago, back in March.This points to a dark time ahead for a country already split over attitudes to Europe and polarised by political forces once considered on the fringe, but now firmly in the mainstream. The IFS revealed a nation divided since 2007: while the over-60s saw their incomes rise 11% until 2014, British workers aged between 22 and 30 saw median wages fall 7%. The tax and benefit changes, modelled by the IFS, reveal that over the next five years the top 30% of earners will benefit; the bottom 70% will lose out. The government’s plan to raise the new minimum wage for over 25s – to £9 an hour by 2020 – has been derailed by lower growth. Continue reading...
by Phillip Inman Economics correspondent on (#22VFM)
Dismal trade, growth of low-level service jobs with low-level pay, and a chronic lack of investment only partly explain the gapExtra funds for new roads, research and development and skills training will drive up UK productivity and put the economy in a better position to withstand the looming Brexit shock.That was the central message in Philip Hammond’s autumn statement and went to the heart of a debate about the UK’s low productivity growth, which according to official figures, has fallen well behind Germany, the US, France and Italy.Related: Business leaders call for 'tarmac and telecoms' from productivity fund Continue reading...
This week there is much unenlightening squabbling about economic forecasts. In 1971 I arrived at university intending to read engineering and economics. After two weeks I swapped to pure engineering because I had realised that there was no “right answer†in economics. I have spent my life developing mathematical models of physical systems and making “engineering forecasts†or predictions, as engineers call them. Now, older and wiser, I realise that there is no right answer in engineering either.However, engineers address that difficulty directly. It is standard engineering practice to attach an estimate of error or uncertainty to a central estimate – to provide only a central estimate can be highly misleading. It seems this approach has not reached economics. With proper analysis of the forecasting model it will be possible to attach a probability of exceedance to any central estimate. The Brexiters might then adopt a level with, say, a 30% probability of exceedance (optimistic), whereas the remainers might adopt 60% (cautious). Political interpretation of a result can then be clearly distinguished from the model used to derive it. Such an approach might also have been useful before the referendum. I recommend it to economists who may find the results both frightening and embarrassing!
Given that real wages will still be below their 2008 level in 2021, the outlook for people on low and middle incomes is bleakDirectors of the Institute for Fiscal Studies normally avoid hyperbole. They do not tend to use words such as “dreadful†when analysing the state of the economy or the public finances.But that was the term Paul Johnson, the head of the IFS, chose to describe the era of shrinking pay packets triggered by the financial crash of 2007-08.Related: IFS warns of biggest squeeze on pay for 70 years over BrexitRelated: Autumn statement: what the economists sayRelated: UK living standards squeeze 'will be worse than after global crash' Continue reading...
Hammond’s nemeses at the Institute for Fiscal Studies put the budget on the couch and find relief only in the demise of the autumn statementThe geeks fight back. Experts may have had a bit of a kicking over the last six months but it’s looking like they are going to have the last laugh. Or at least chuckle. Laughing may be a social skill too far for an economist.Having had a night to go through the chancellor’s autumn statement, the Institute for Fiscal studies, the UK’s leading independent economic thinktank, had convened in an airless basement – daylight and the IFS are not on speaking terms – off London’s Tottenham Court Road to deliver their verdict.Related: Chancellor's looser finance targets highlight weaker UK economyRelated: The British umpire: how the IFS became the most influential voice in the economic debate | Simon AkamRelated: Philip Hammond finds his safe space with Treasury select committee | John Crace Continue reading...
Thinktank says the poorest 10% have been unable to recover from financial crisis because of falling real wagesThe gap between the rich and poor remains at record levels, according to the Organisation for Economic Cooperation and Development as the poorest 10% have been unable to recover from the blow dealt by the financial crisis.The Paris-based thinktank said while the richest 10% had rapidly bounced back, long-term unemployment, low-quality jobs, and greater job insecurity had disproportionately hit low-income households.Related: World Bank renews drive against inequality Continue reading...
Respected thinktank says UK’s withdrawal from EU will stoke inflation and peg back wages to below their 2008 level in 2021Workers in Britain face the longest squeeze on their pay for 70 years as Brexit knocks wage growth and stokes inflation, a leading thinktank has said.Picking over Philip Hammond’s first autumn statement, the Institute for Fiscal Studies said that by 2021, real wages in the UK – pay adjusted for inflation – will still not have recovered to their 2008 level before the global financial crisis hit.Related: IFS says workers face 'dreadful' decade without real-terms increase in wages - Politics live Continue reading...
Free-market forces have helped create a health crisis – and governments must take action to stop subsidising junk foodIt is estimated that today’s obesity epidemic costs the global economy about $2tn (£1.6tn) or some 3% of GDP. For individuals, deciding what to eat is a jealously guarded privilege, but for economists obesity is not really about people exercising free-market choice. Instead it is a market failure.The causes of the epidemic are complex, spanning the social sciences to biology and technology. Consider, for example, the shift towards urbanisation and car transport. By reducing many people’s daily physical activity, these are estimated together to reduce individuals’ need for food by 300 calories a day. So how much less food should the car driver eat to compensate? About one biscuit less a day – a trivial change that only goes to illustrate that few of us really understand the energy needs of our bodies.
What you need to know from the OBR’s latest forecasts, from the budget deficit to GDP growthA shortfall between government spending and income that reached £155bn in the aftermath of the banking crash was forecast in March this year to fall to £55.5bn in 2016-17. The Office for Budget Responsibility said its forecast was optimistic and it will now be £68bn.Related: Brexit will blow £59bn hole in public finances, admits HammondRelated: At a glance: autumn statement – 26 key points Continue reading...
Increase to 11.9% of people aged 16-24 follows years of decline and fans fears that Brexit uncertainty will weaken jobs marketThere has been a rise in the number of young people in the UK who are not in education, employment or training, known as Neets.Official figures show an increase in the number of 16- to 24-year-olds classed as economically inactive over July to September, lifting the number of Neets to 857,000. That was an increase of 14,000 from the previous three months and up 3,000 from a year earlier.14,000 rise in the numbers of #NEETs in July-Sept 2016, compared with previous 3 months https://t.co/1K0hFWezka Continue reading...
Six experts give their verdict on Phillip Hammond’s speech and the Office for Budget Responsibility’s new forecastsThe chancellor Philip Hammond has delivered his first major set-piece on the economy and public finances. Growth forecasts for 2017 and 2018 were revised down by the the independent Office for Budget Responsibility, while government borrowing was revised up.Six economists give their take on the autumn statement.This statement makes clear that the big theme of economic policy under Hammond will be improving productivity. He wants to send a powerful signal that the UK is open for business and that the government has a plan to grow the economy through this parliament.
Thinktank says low-paid will be hardest hit in next five years as inflation and welfare cuts compound slow earnings growthFamilies face a worse squeeze on their living standards over the next five years than they suffered in the wake of the financial crisis, as Brexit slows the economy and Conservative welfare cuts bite, according to a new report.Analysis of Wednesday’s autumn statement by the Resolution Foundation thinktank suggests average earnings are set to grow only half as rapidly as in the austerity years after the economic crisis. At the same time, living standards will be undermined by higher inflation and ongoing welfare cuts. Continue reading...
by Phillip Inman Economics correspondent on (#22SK5)
City analysts say Philip Hammond’s measures are sensible as Britain faces challenging years of Brexit negotiationsThere was a veneer of discipline in the chancellor’s handling of the UK’s public finances, after he ditched his predecessor’s strict target of balancing the budget in 2020 with three looser targets to be met in the next parliament.Philip Hammond opted to set a cap on welfare spending, but only applied the new rule from the 2021/22 financial year. He also said the government’s new aim was to bring down debt as a proportion of GDP by 2021, which George Osborne had hoped would happen under his watch.Related: Move over Jams, next year this time the focus may be on PGPsRelated: The Guardian view on the autumn statement: half right, half wrong | Editorial Continue reading...
In the 2016 autumn statement the cities of the north have lost out, and all the spoils have gone to London and the south-east – againThe chancellor, Philip Hammond, is Theresa May’s chauffeur. It must be a ghastly job. He has to drive the economy towards Brexit, with no instructions, no map and no clear road ahead. Meanwhile, he has three blind mice in the back seat: David Davis, minister for I-haven’t-a-clue, Liam Fox, minister for what-on-earth-is-happening, and Boris Johnson, minister for Oh-Christ!Related: Autumn statement: OBR says Brexit impact could be even worse than feared - liveRelated: At a glance: autumn statement – 26 key points Continue reading...
This year’s shopping sales extravaganza is likely to have a feel of going, going, gone, with many items set to get more expensiveAs the clock ticks down to Black Friday, aggressive promotions on everything from 4K TVs to tablet computers and winter coats could be the last hurrah for shoppers before price hikes in 2017.After bargain-hunting consumers went on the rampage on Black Friday in 2014, fighting in the aisles for cut-price widescreen televisions, last year it was a much tamer affair, as shoppers retreated to the safety of seeking the best bargains online.Related: Black Friday: a shopper’s guideRelated: Black Friday warning as report finds only half of offers are the real deal Continue reading...
Chancellor attempts to strike cautiously upbeat tone but OBR warns of extra borrowing over next five yearsPhilip Hammond conceded that Brexit will blow a £59bn black hole in the public finances over the next five years, as he outlined plans to boost investment in infrastructure and housing to equip the UK economy for life outside the EU.In his first fiscal statement, the chancellor, who had supported remain, sought to strike a cautiously upbeat tone about the country’s prospects, saying the economy had “confounded commentators at home and abroad with its strength and its resilience†since the referendum result last June.Related: At a glance: autumn statement – 26 key pointsRelated: The Guardian view on the autumn statement: half right, half wrong | Editorial Continue reading...
Gloomy UK economy forecast for 2017 may compel the chancellor to provide for ‘poor getting poorer’ alongside the ‘just about managing’The new chancellor could barely have hoped for a better backdrop. High street spending is booming, inflation remains low, unemployment is the lowest it’s been for more than a decade. And all that despite the shock referendum result and warnings from people like Bank of England governor Mark Carney and the International Monetary Fund that a vote to leave could spark recession.But it would be a very unwise chancellor who said Britain had escaped this vote unscathed. Brexit negotiations have not even started and in crucial areas such as business investment very little data is available at this point to reveal quite how much the referendum upheaval has knocked the economy off course. Continue reading...
A dysfunctional economy meant the chancellor, Philip Hammond, largely dispensed with political theatrePhilip Hammond’s first and last autumn statement was a sombre affair. The chancellor largely dispensed with political theatre to tell it straight. Britain’s economy is dysfunctional. Austerity has failed. Welfare cuts are going to bite. Brexit will be a £60bn drag on growth and the public finances. That’s the way it is.Related: Chancellor to crack down on letting fees in autumn statementRelated: 'No evidence' Jane Austen ever went to stately home mentioned in autumn statement Continue reading...