The implications of the 3.9% rate for shoppers, savers, borrowers and pensioners

From sugar to bread and transport to recreation, how the cost of everyday items varies

Food prices were 29% higher last month than in September 2021, leaving many households still under pressure

This online tool will help you discover what is contributing to your household's cost of living increasesInflation has been soaring in the UK, with people being hit by higher prices for everyday essentials, but cost of living pressures are finally starting to ease.The latest inflation rate for the 12 months to November 2023 means that goods and services cost 3.9% more than they did a year ago - in most cases, surpassing any pay rises workers can expect to receive. Continue reading...

Though Johnson promised no non-tariff barriers', firms say they are struggling under compliance burden' of customs and safety checksAlmost two-thirds of British exporters have said selling to the EU has become harder in the past year, according to the British Chambers of Commerce, which is calling on the government to do more to smooth trade frictions post-Brexit.Three years on from Boris Johnson signing the Trade and Cooperation Agreement (TCA) with the EU, the small businesses which make up much of the BCC's membership are still struggling to negotiate trade barriers. Continue reading...

Plans to reintroduce the straitjacket of fiscal rules, at a time when the union faces exceptional challenges, are a mistakeAs last week's fraught summit discussions on Ukraine underlined, the European Union faces daunting and costly challenges in the years ahead. The decision to open membership talks with Kyiv was both a welcome affirmation of continued solidarity and a recognition of the reality that Europe's security is intertwined with Ukraine's resistance to Vladimir Putin's revanchist ambitions. But talks about a new 50bn aid package have had to be prolonged into the new year, following Viktor Orban's blocking tactics in Brussels.Eventually, some kind of modern Marshall plan will be required to reconstruct a shattered country. That will be a very expensive business. Similarly, achieving the ambition of making Europe the first climate-neutral continent by 2050 will require a massive injection of public funds. The European Commission estimates that about 700bn a year will need to be invested to meet the EU's green targets. That kind of fiscal firepower will be difficult to sustain after the EU's Covid recovery fund dries up in 2026. Continue reading...

Rolling coverage of the latest economic and financial newsMPs have heard that the complicated complex ownership structures used by private equity allow them to evade accountability, and stop unions asking asking questions about how business is being done.Nadine Houghton, national officer at GMB union, tells the Business and Trade committee that in the case of Asda, they have made formal financial disclosure requests" asking about the gap in its operating costs, and around where dividends are being declared.That's just about creating a structure that prevents working people from understanding what's happening in their employer, and their union being able to do their job and represent those members.Cashing in in a very big way because private equity is a wonderful reward system.Their fees are phenomenal, both direct and indirect. They have reaped a very big harvest.What you will see is much poorer performance figures coming out of the industry.I think the going will be tougher for the institutional investors who back them as well as for the fund managers. Continue reading...

Adobe's proposed $20bn merger with product design software company Figma has been terminated, following competition probes in EU and UKBP Plc said it will pause all its oil tanker shipments through the Red Sea.The move follows an escalation of attacks on merchant shipping being mounted from Yemen's ports by Houthi forces.The safety and security of our people and those working on our behalf is BP's priority.In light of the deteriorating security situation for shipping in the Red Sea, BP has decided to temporarily pause all transits through the Red Sea." Continue reading...

UK ministers had hoped to agree foundational trade partnership' before both countries head to pollsMinisters have given up on signing a trade agreement with the US before the next election, after the Biden administration signalled it had no interest in agreeing one.British officials had been hoping to agree a foundational trade partnership" before both countries head to the polls in the next 12 months, having already decided not to pursue a full-blown free trade agreement. Continue reading...

Conservatives are pointing to Venezuela's economy and 20-year-old lawsuits about dogs to try to damage Labour's prospects. With the country so broken already, will anyone buy their arguments?I'm sure there used to be a festive statute of limitations; a point in the year when it was no longer classy to launch into one's political opponents. Even at the height of Corbyn-phobia - when the guy couldn't walk down the street without someone finding the colour of his socks disrespectful to the queen - he caught a break just before Christmas.Not so Keir Starmer, who is under attack on two flanks. Jordan Peterson, the Canadian philosopher-king spinning life lessons out of pure gold such as be a man" and sit up straight", warned in an interview with the Daily Telegraph that, should the UK elect a Labour government, you're gonna be Venezuela for 20 years". Continue reading...

Deputy governor feels MPC will need more convincing that wage pressure is abating

Plan, which aims to support domestic producers, will also apply to iron, ceramics and cement

Tough first few months of 2024 forecast for the industry as consumer confidence remains lowRetailers are facing a tough new year as weak consumer demand is expected to combine with a barrage of increased costs, including the higher minimum wage.Shoppers are likely to keep their spending on pause during the first months of 2024, according to forecasts published today by the Retail Think Tank, a group of industry experts who analyse the health of the sector, as mounting mortgage and rental costs weigh on consumer confidence. Continue reading...

Advertised salaries also rise, for first time since June, with social work recording biggest annual increase

The inflation shock may be fading but 13 years of Conservative-led governments haven'tRishi Sunak is approaching the end of the year with little to celebrate. Of the five priorities set by the prime minister in January, four are in a mess: the economy is shrinking, the national debt will only fall if you believe in tax and spending fantasy, NHS waiting lists remain sky-high, and stopping the boats", through the Rwanda policy, is both failing and blowing the Tories apart.This week there will, however, be one crumb of comfort: from official figures expected to show another fall in inflation, from 4.6% in October to 4.4% in November; no doubt to be accompanied by a flurry of government fanfare taking credit that the pledge to halve inflation, from over 10% at the start of the year, has been met. But even here Sunak could find trouble. Continue reading...

The drive to make ill and disabled people productive again needs joined-up thinking, not a punitive regime of sanctionsA basic tenet of Anglo-Saxon capitalism has come into conflict with the post-pandemic workplace in a way that is confounding Tory politicians.Mel Stride, the work and pensions secretary, wants ill and disabled people and the disaffected to find gainful employment, taking up many of the almost 1m job vacancies in the UK that need filling. Continue reading...

BoE insists that monetary policy must remain restrictive for an extended period', after money markets anticipated five rate cuts in 2024

Threadneedle Street says Britain faces tougher job to crush inflation than other advanced nationsThe Bank of England has said Britain is facing a tougher job to crush persistently high inflation than other advanced nations, as it kept interest rates on hold at the highest level since the 2008 financial crisis.Pushing back against expectations in financial markets for a deep round of interest rate cuts next year, the central bank said there was still a long way to go before it could declare victory on inflation, despite a worsening outlook for the UK's stagnant economy. Continue reading...

Bank of England expected to keep rates at 5.25% on Thursday but abandon current strategy next yearFinancial markets are betting the Bank of England will be forced to launch a deep round of interest rate cuts in 2024 amid the growing risk of a recession.Threadneedle Street is widely expected to leave borrowing costs unchanged on Thursday after warning that interest rates would need to remain high for a prolonged period to tackle stubbornly high inflation. Continue reading...

US central bank holds interest rates at 22-year high, but expects to cut rates three times next year as inflation continues to fadeOfficials at the Federal Reserve expect to cut interest rates three times next year as US inflation continues to fade from its highest level in a generation. The news sparked a rally on Wall Street with the Dow Jones index closing at a record high.Policymakers opted to hold rates steady at a 22-year high at their latest meeting, as expected, while they scrutinize the impact of their campaign to bring down price growth. Continue reading...

Rachel Reeves warns that economic growth is going backwards after GDP shrinks by 0.3% in October, prompting City to predict 100bp of rate cuts in 2024

High interest rates siphoning money away from spending on health, education and tackling climate crisisUrgent action is needed to prevent record debt repayments by the world's poorest countries developing into a full-blown crisis, the World Bank has warned.The Washington-based multilateral body said the escalating cost of servicing past borrowing caused by rising interest rates was siphoning money away from spending on health, education and tackling the climate crisis. Continue reading...

Bank of England and Niesr have not forecast a recession but October fall in GDP may suggest one is on the way

Package of spending cuts introduced in attempt to tackle country's worst economic crisis in decadesArgentina has devalued its currency, the peso, by more than 50% as part of a package of large-scale spending cuts intended to address the country's worst economic crisis in decades.The plans, introduced under the newly inaugurated administration of Javier Milei, include cutting energy subsidies and cancelling tenders for public works. Continue reading...

GDP fell by 0.3% in October as Bank of England prepares to keep interest rates on hold

US consumer prices rose at a slower rate last month, with energy costs dropping in a boost to America's drivers

The Federal Reserve's report was a mixed picture, with slowing inflation that still exceeded the central bank's target of 2%US inflation ticked down again last month, with cheaper gas helping further lighten the weight of consumer price increases in the US.At the same time, the latest data on consumer inflation showed that prices in some areas - services such as restaurants, used cars and auto insurance - continued to rise uncomfortably fast. Continue reading...

Bank of England could hold interest rates steady despite markets' expectations of cuts in new year

Bank of England will be monitoring figures as it decides whether to cut interest rates this week

Strong growth in earnings has been driven by increases in cost of living, says Resolution FoundationBank of England concerns over the high level of pay awards are likely to be eased in the coming months as wage settlements fall in response to a tumbling annual inflation rate, a thinktank has said.The Resolution Foundation said recent strong growth in earnings was primarily caused by a sharp increase in the cost of living, with workers trying to prevent their living standards being eroded. Continue reading...

Rolling coverage of the latest economic and financial news

Gita Gopinath says global economy's fragmentation into power blocs risks wipeout of trillions of dollars in GDPThe world economy is on the brink of a second cold war that could annihilate" progress made since the collapse of the Soviet Union, a senior International Monetary Fund official has warned.Gita Gopinath, the IMF's first deputy managing director, said the accelerating fragmentation of the world economy into regional power blocs - centred around the US and China - risked wiping out trillions of dollars in global output. Continue reading...

Insolvency specialist recruits more staff as small businesses are hit by tough economic climateHigher interest rates are pushing an increasing number of companies into insolvency, according to one of the UK's biggest insolvency practitioners.Begbies Traynor said it expected to see more businesses tip into insolvency in tandem with the indicators of corporate financial stress in the UK", alongside its financial results published on Monday. Continue reading...

Cost of festive season is up almost a quarter in three years, according to the Centre for Economics and Business ResearchConsumers will pay more for less this Christmas, economists have warned, getting less of a bang for their buck than the faint phutting of a puny, overpriced cracker being pulled.Although Britons will spend more than in the belt-tightening 2022 festive season, the resultant fare won't yet match the pre-pandemic Christmases past. Continue reading...

Sir Keir Starmer has popular plans to green the economy but electoral support is the crucial precondition to make them a realityPoliticians know they can't win an argument without making it. Yet unfortunately that is what Sir Keir Starmer seems to believe. In 2021, the party earmarked 28bn a year for a green industrial strategy to rid the economy of its carbon addiction and create a wave of clean jobs". This summer, however, the spending was postponed to the second half of the next parliament. Then it was reported that it would take a full term to ultimately redeem the pledge. Last week, because of self-imposed fiscal rules, Sir Keir suggested it might not happen. This was unsettling, especially as Labour is miles ahead in the polls. Yet more disappointment is in store. On Tuesday, according to reports, the Labour leader will extol the virtues of small technocratic policies rather than big transformative ones.Sir Keir is mistaken if he thinks he can avoid a fight by not turning up. British governments are unusually free to overhaul the country's economy, but electoral support is the crucial precondition for such changes. Green policies won't happen by themselves. This week, Cop28 will reach a climax, spotlighting the climate emergency. Inaction is not an option: relying on volatile gas prices would cost Britain double that of achieving 2050 net zero targets. Sir Keir knows that Labour spending will be caricatured as a tax bombshell" by the Tories. Ministers hope to overwhelm facts with emotional force. But Labour should take heart that Rishi Sunak's U-turn on climate targets in September, coupled with a conspiracy-laden assault on the opposition, fell flat with voters. Continue reading...

Interest rate hikes will probably end by next year, but small business owners should be prepared for a consumer slowdownIf this year has been all about interest rates, next year is all about the consumer.Rising interest rates were a shock for small businesses in 2023, climbing from 3.25% in early 2022 to 8.5% - a 20-year high. As a result, many of my small business clients - who usually pay a few points above prime if they can get the financing at all - found themselves unable to afford the capital they needed to grow while many others faced a credit tightening. Continue reading...

Stubbornly high inflation forces central banks to avoid cuts, but markets expect falls next yearThe western world's largest central banks are poised to keep interest rates on hold this week amid concerns over stubbornly high inflation, despite growing expectations for sharp cuts in borrowing costs next year.In a crunch week for the global economy, the US Federal Reserve, Bank of England (BoE) and European Central Bank are expected to keep interest rates at their current restrictively high levels to ensure inflation continues to fall back from the highest levels in decades. Continue reading...

Inflation is coming down, but Keir Starmer will need to improve public services when there is a lack of ready cashOpinion was divided in the Labour party after its crushing defeat in the 2019 general election. Optimists thought it would take two terms for the party to have a chance of again forming a government. Pessimists thought it was doomed to permanent opposition.Yet four years on, the polls suggest Labour is on course for a thumping victory. With the Conservatives gripped by an existential crisis, Rishi Sunak could be the last Tory prime minister for a long time to come. Continue reading...

Tory policy has caused huge damage over the decades. In praising it, Starmer has ventured too far behind enemy linesAs a longtime critic of many of Mrs Thatcher's economic and social policies, I was somewhat taken aback by the enthusiasm with which the Labour leader, Sir Keir Starmer, recently bracketed her with Clement Attlee and Tony Blair.I don't think I am alone. In what was a none too subtle, indeed blatant, attempt to attract voters away from the fissiparous remains of the Conservative party, Starmer has taken quite a chance. It can be hazardous to venture behind enemy lines: he risks alienating traditional Labour voters, indeed whole communities, for whom the memory of the social scars of the 1980s is still very much present. Continue reading...

Stronger than expected population growth made inflation hardier than most experts predicted and property prices defied successive rate rises

Two years on from the first in the Bank's run of rate hikes, how have they changed the shape of Britons' finances?Two years ago, Britain's economy was entering an uncertain winter. The Omicron variant of Covid-19 was hitting businesses hard. Furlough had ended. Inflation was at a 10-year high of 5.1%.Against this backdrop - two years ago this week - the Bank of England took its first tentative step to raise interest rates from 0.1% to 0.25%. A month earlier, the Bank had ducked a decision to raise rates given concerns over the end of the government's furlough scheme, wrong-footing financial markets. Few predicted how far Threadneedle Street would go next. Continue reading...

Readers respond to an article by Larry Elliott that said the UK's departure from the EU hasn't been as bad as predictedLarry Elliott makes two main arguments in his article (I've got news for those who say Brexit is a disaster: it isn't. That's why rejoining is just a pipe dream, 5 December). He's wrong on both.His first point is that the EU is faltering and the UK is recovering more quickly from global headwinds. However, he is using the wrong comparison. We should not compare the UK with the EU, but with what the UK would have been like without Brexit. The opportunity cost, not the relative comparison, is the relevant factor. And on this correct measure, Brexit is deeply damaging to the UK economy. Continue reading...

Rolling coverage of the latest economic and financial news

Jobless rate down to 3.7% as world's largest economy grapples with interest rates and American policymakers plot next movesThe US workforce added 199,000 jobs last month, a robust reading as the world's largest economy continues to grapple with higher interest rates.Employment growth has been fading this year after the Federal Reserve launched an aggressive campaign to pull back inflation from its highest levels in a generation. Official data has bolstered hopes that the central bank will manage to guide the US economy to a so-called soft landing", where price growth normalises and recession is avoided. Continue reading...

Even if inflation falls, soaring debt levels, deglobalisation and populist pressures will have an impactEven with the recent part retreat in long-term real and nominal interest rates, they remain well above the ultra-low levels to which policymakers had grown accustomed, and they are likely to stay at such levels even as inflation retreats. It is now past time to revisit the widely prevailing free lunch" view of government debt.The idea that interest rates would be low for ever seemed to support the view that any concern about debt was an endorsement of austerity". Many came to believe that governments should run large deficits during recessions and only slightly smaller deficits in normal times. No one seemed concerned with the possible risks, in particular to inflation and interest rates. The left championed the notion that government debt could be used to expand social programmes, going beyond what could be generated by reducing military spending, while those on the right seemed to believe that taxes exist only to be cut. Continue reading...

Number of borrowers in severe financial stress' has risen but most showing resilience, Reserve Bank's Andrea Brischetto says

Vacancies declining as growth falters, recruiters' body tells Bank of EnglandBritain's largest recruiters have warned the Bank of England that demand for permanent hiring among UK businesses has plunged at the second fastest rate since the pandemic, amid worsening headwinds for the UK economy.Ahead of the central bank's decision on interest rates on 14 December, the Recruitment and Employment Confederation (REC) trade body said lingering economic uncertainty and hesitancy to commit to new hires had weighed on activity in November. Continue reading...

Treasury select committee says Edinburgh reforms launched a year ago have had little impact on UK economyJeremy Hunt's post-Brexit City shake-up has been dismissed as a damp squib" that has had little impact on the UK economy a year after its launch.The chancellor announced the bold collection" of policy changes known as the Edinburgh reforms in December 2022 with the claim they would create jobs, support businesses and power growth across all four nations of the UK". Continue reading...

Multinationals in particular hiked prices far above rise in costs to deliver an outsize impact on cost of living crisis, report concludesProfiteering has played a significant role in boosting inflation during 2022, according to a report that calls for a global corporation tax to curb excess profits.Analysis of the financial accounts of many of the UK's biggest businesses found that profits far outpaced increases in costs, helping to push up inflation last year to levels not seen since the early 1980s.ExxonMobil: profits of 15bn increased to 53bnShell: 16bn up to 44bnGlencore: 1.9 bn up to 14.8bnArcher-Daniels-Midland: 1.4bn up to 3.16bnKraft Heinz: 265m up to 1.8bn Continue reading...

There was no miracle, only a myth manufactured by the Iron Lady herself. It's time Westminster woke up to thatA spectre is haunting British politics. Its outline is instantly recognisable to every Briton of a certain age:hair coiffed into a halo, shoulders firmed up withpads and, jutting out from the left wrist, the inevitable handbag.More than three decades after she was driven out of No 10, and a decade after her death, Margaret Thatcher still casts a long shadow over the country she once ruled, and her party. Rishi Sunak sat in her old Rover (and tweeted about it, naturally) and LizTruss copied her wardrobe. She influenced the Labour party under Tony Blair, though this admiration was first tempered by Labour under Ed Miliband and even more under Jeremy Corbyn. Sir Keir Starmer's praise for Mrs Thatcher is perhaps more about internal Labour politics than about the Tories' leaderene". Continue reading...