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Updated 2025-04-03 10:15
The Beatles legacy in Liverpool – in pictures
Research shows the band continues to add £81.9m to Liverpool’s economy a year and supports 2,335 jobs Continue reading...
Michael Howard: EU is flawed and failing and we should leave
Senior Tory challenges ministers’ warnings about economic dangers for Britain of leaving the European UnionBritain should vote to leave the “flawed and failing” European Union, the former Conservative leader Michael Howard has said.He becomes one of the most senior Tories to reject David Cameron’s EU reform deal.We are the fifth largest economy in the world. Everybody wants access to our marketRelated: David Cameron warns Brexit could cost jobs and force up prices Continue reading...
Examining Keynes's legacy, 80 years on
The notion that governments can and should prevent depressions is a lasting influence of Keynesian thinkingIn 1935, John Maynard Keynes wrote to George Bernard Shaw: “I believe myself to be writing a book on economic theory which will largely revolutionise – not, I suppose, at once but in the course of the next ten years – the way the world thinks about its economic problems.” And, indeed, Keynes’s magnum opus, The General Theory of Employment, Interest and Money, published in February 1936, transformed economics and economic policymaking. Eighty years later, does Keynes’s theory still hold up?Two elements of Keynes’s legacy seem secure. First, Keynes invented macroeconomics – the theory of output as a whole. He called his theory “general” to distinguish it from the pre-Keynesian theory, which assumed a unique level of output – full employment.Related: Keynes helped us through the crisis – but he's still out of favour Continue reading...
UK became more middle class than working class in 2000, data shows
Manual and lower-paid households have been in minority since turn of millennium – spelling bad news for Labour partyThe year 2000 was when Britain became more middle class than working class, according to social grading data.The proportion of households working in non-manual professions (known as ABC1s) was 50.6% at the turn of the millennium. It has since increased further, reaching 54.2% last year.
Bank of England chief accuses G20 of failing to reform to boost growth
Mark Carney rejects idea that central bankers have ‘used all ammunition’ against downturn but says system remains strongBank of England boss Mark Carney has accused the G20 of failing to adopt measures to boost global growth as he defended central banks and their power to play a role in stimulating economic growth following attacks from critics who say they have run out of ammunition.
Brexit vote would affect UK's top credit score, says Standard & Poor's
Ratings agency says downgrade would push up UK’s government borrowing costs and hurt its standing in global marketsThe UK would lose its top credit score if the public voted to leave the EU in the 23 June referendum, ratings agency Standard & Poor’s said in a fresh warning on Thursday.The only big credit ratings agency to award Britain the highest AAA ranking renewed its warning over the UK’s economic prospects outside the EU after David Cameron fired the starting gun on referendum campaigning last weekend.Related: Brexit provokes strange alliances Continue reading...
UK growth confirmed at 0.5% thanks to consumer spending - as it happened
Comsumer spending helped Britain’s economy grow in the last quarter, but exports failed to keep pace with imports
UK GDP spurred on by services sector, but the growth is built on cheap labour
We are simply using new technologies spawned by the internet to run faster for very little gainThe internet saved the economy. Or at least the British consumers’ obsession with all things internet. Oh, and a property boom that has filled estate agents’ pockets.That’s the only conclusion one can draw from the figures for GDP growth in the final quarter of 2015, which show that galloping services sector output more than made up for the damage done to factory orders by the downturn in global trade and the strictures placed by George Osborne on government spending.Related: UK economic growth confirmed at 0.5% but fears of slowdown persist Continue reading...
UK economic growth reaches 0.5% but slowdown fears persist
Business spending fell at sharpest pace for two years in final quarter, compounding anxiety about unstable recoveryThe UK economy grew by a solid 0.5% in the final quarter of 2015, official figures have confirmed, but news of a surprise drop in business spending fanned fears of a slowdown in the months ahead.Figures released by the Office for National Statistics on Thursday left estimates for GDP growth unrevised. But fresh details on what was driving the economy underscored the precarious nature of the recovery and raised questions about whether its pace is sustainable.Related: Why is the pound falling and what are the implications for Britain? Continue reading...
Brexit business fears overblown, says Merlin chief
Operator of Legoland, London Eye and Madame Tussauds says weaker pound is good for UK tourism and concerns over leave EU vote are misplacedWarnings by business leaders about the damaging consequences of a vote to leave the EU are overblown and the debate would be improved if bosses stayed out of the fray, the chief executive of Merlin Entertainments has said.Nick Varney said anguish over the falling value of the pound as the referendum approached was misplaced and that a lower rate of sterling against the euro was good for the economy. Continue reading...
IMF urges G20 to take 'bold action' on global economy
Fund’s report says risks of more severe downturn are mounting as UK government battles sluggish productivity growthThe International Monetary Fund has urged the UK to ease back on austerity should the economy slow further, as it warned finance ministers at the G20 summit in Shanghai to boost public spending on infrastructure to fuel global growth.In a report on the UK’s economic outlook, the IMF said the risks of a more severe downturn were mounting as David Cameron’s government battled sluggish productivity growth, a balance of payments deficit, high levels of household debt, and the forthcoming referendum on EU membership.Related: As austerity falters, Tory Milibandism gains ground | Rafael BehrRelated: OECD's calls for less austerity means common sense has prevailedRelated: Austerity, injustice and the forces of callous Conservatism Continue reading...
Concerns grow for US economy amid service sector slowdown
Influential PMI report shows first decline in sector’s business activity since October 2013 with forecast saying worse is to comeConcerns over the health of the US economy have grown following the publication of an influential report showing the first decline in service-sector business activity since October 2013.“The PMI data show a significant risk of the US economy falling into contraction in the first quarter,” said Chris Williamson, the chief economist of Markit, which published the US purchasing managers’ index of service sector performance, one of the bellwethers of economic activity, on Wednesday.Related: US factory woes add to pressure on Fed to hold interest rates Continue reading...
Sovereignty, autonomy and Britain’s relationship with Europe | Letters
The “Brexit buccaneers” (Polly Toynbee, 23 February) would suggest that an out vote will enable us to regain our sovereignty. That is a fantasy. As a nation, with the encouragement of successive governments, we have ceded sovereignty to a variety of external powers, including the EU, over many years.Major, foreign-owned multinationals determine levels of investment and jobs in this country as a consequence of decades of British national institutions and businesses being privatised or sold to the highest bidder. It is an illusion to believe that leaving Europe will somehow restore national sovereignty when our energy security is largely dependent on the French and Chinese governments deciding whether or not Hinkley C is built; Canadian multinationals decide how many aerospace jobs there will be in Northern Ireland; and Indian entrepreneurs preside over the survival of our steel industry. These same Indian entrepreneurs, and their German and Japanese counterparts, will decide the long-term health of our automotive manufacturing. Continue reading...
Brexit referendum could destabilise UK recovery, says IMF
Christine Lagarde warns that uncertainty over outcome ‘will be bad in and of itself’ in months leading up to voteThe International Monetary Fund has warned that Britain’s steady growth could be jeopardised by the uncertainty in the run-up to the referendum on EU membership in June.Related: Brexit could wipe 20% off the pound amid referendum turmoil, warns HSBCRelated: Ryanair to campaign against Brexit Continue reading...
IMF chief Lagarde warns against Brexit, as pound hits new seven-year low - as it happened
All the day’s economic and financial news, as sterling hits its lowest level since 2009
Is constant economic growth essential to capitalism?
Readers answer other readers’ questions on subjects ranging from trivial flights of fancy to profound scientific conceptsIs constant economic growth essential to capitalism?
January retail surge gives way to gloomy February
Concerns over falling wage growth and economic slowdown take toll on high street, CBI survey showsA bumper January for retailers has turned into a lacklustre February as shoppers reacted to news of falling wage growth and the slowing economy by closing their wallets and deserting the high street.The CBI’s quarterly survey of retailers found that sales dropped below normal in February and that shop owners expected next month to be even worse. Continue reading...
UK tops global table of damaging tax deals with developing countries
Treaties limit the tax poorer nations can place on British companies doing business within their borders, says ActionAidThe UK has signed a high number of tax deals with some of the world’s poorest countries, potentially depriving those states of millions in tax revenues every year, according to an analysis by ActionAid.
LSE and Deutsche Börse: an Anglo-German pact in the shadow of Brexit
Consolidation is a fact of life in the stock exchange game, but this proposed merger is far from a done dealThe London Stock Exchange and Deutsche Börse pick their moments. The duo’s first set of merger talks, way back in 2000, created a storm when both parties appeared to suggest that share prices in London would soon be quoted in freshly-minted euros.This time, the negotiations come at the start of the UK referendum campaign in which the prime minister has claimed the City of London will be safe from continental meddlers. Cue, almost certainly, wails of anguish from some quarters about the potential loss of a great British institution. No wonder LSE and Deutsche tried to invoke visions of happy European harmony with their talk of “a merger of equals.” Continue reading...
London Stock Exchange in merger talks with Deutsche Börse - as it happened
Bank of England governor Mark Carney has told MPs that investors fear the pound will suffer fresh losses as the EU referendum approaches
Irwin Stelzer caricature
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Bank of England governor: pound hit by Brexit fears – video
Speaking on Tuesday before the Treasury select committee, the Bank of England governor, Mark Carney, says this week’s fluctuations in the value of sterling may be due to uncertainty about Britain’s future in the EU
Carney: Bank of England could cut interest rates to zero, but not below
Bank governor dismisses setting negative interest rates even in the event of an economic downturnThe Bank of England could cut interest rates to zero, but will seek to avoid following Sweden, Denmark and the eurozone by setting negative rates to bolster growth and inflation.Mark Carney, the Bank’s governor, said Threadneedle Street had “no intention and no interest” in implementing negative interest rates and would adopt the full range of the Bank’s other powers to deal with a downturn in the economy.Related: Negative interest rates: what you need to know Continue reading...
Heathrow: UK better off in reformed EU
Vote to remain part of trading bloc will secure country’s place as powerhouse in global economy, says airport chiefHeathrow has thrown its weight behind Britain remaining in the EU, despite the airport’s claim that its expansion plans would become even more urgent if the country voted to leave.The airport said Europe brought Britain more trade and prosperity. The chief executive, John Holland-Kaye, added: “Heathrow believes that the UK will be better off remaining in a reformed EU. We are the UK’s only hub airport, connecting Britain to over 80 long-haul destinations, and handling over a quarter of UK exports – but we recognise that for business to thrive we also need to be part of the single European market.” Continue reading...
Richest fifth in the UK worse off since financial crash, official figures reveal
Office for National Statistics data shows poorest fifth better off since 2007-08, in findings at odds with reports that show rich have got richerThe richest fifth of the population are worse off now in terms of disposable income than they were before the 2007 financial crash, but the poorest fifth have typically become better off, according to official figures which could spark controversy among anti-austerity campaigners.The data from the Office for National Statistics, published on Tuesday, also reveals a generational split, with the average disposable income of retired households now higher than in 2007-08 – in stark contrast to millions of working households, who are typically around £900 a year worse off.
Vienna named world's top city for quality of life
Study examining socioeconomic conditions places Austrian capital at apex of index while London, Paris and New York fail to make top 35Vienna is the world’s best city to live in; Baghdad is the worst, and London, Paris and New York do not even make it into the top 35, according to international research into quality of life.Related: Five things to do in Vienna, the world’s most liveable cityRelated: Vienna police fine man €70 for 'loud belch'Related: The 10 best parks Continue reading...
US factory woes add to pressure on Fed to hold interest rates
Worst manufacturing month for three years could influence central bank chiefs when they meet in three weeksUS factories have suffered their worst month for three years, heaping further pressure on the Federal Reserve to hold off from raising interest rates when it meets next month.A sharp decline in exports and plunging domestic orders were blamed for the fall in activity for February, making the month the lowest point for US manufacturing since the start of 2013 and joint lowest with October 2009.Related: The US 'manufacturing renaissance' doesn't exist, says new reportRelated: The Fed should show some reserve and not plough on regardless Continue reading...
Brexit panic knocks pound to seven-year low
Sterling suffers biggest one-day fall since David Cameron became PM after Boris Johnson backs campaign to quit EUThe pound tumbled to a seven-year low and the UK was warned its credit rating was at risk on Monday as the effect of Boris Johnson’s backing for the Brexit campaign was felt in financial markets.However, as traders and city economists wagered that the London mayor’s intervention had raised the probability of a leave vote in June’s EU referendum, high-profile business figures threw their support behind prime minister David Cameron’s push to stay in the EU.Related: Top firms back pro-EU letter, but supermarkets refuse to signRelated: Why is the pound falling and what are the implications for Britain?Related: Moody's warns Brexit would risk UK's credit rating Continue reading...
Why is the pound falling and what are the implications for Britain?
Sterling down to seven-year low against dollar, while ratings agency warns UK credit score at risk if public votes to leave EU in JuneThe pound has slumped to a seven-year low against the dollar after David Cameron fired the starting gun on a four-month battle to determine the UK’s future in Europe. Ratings agency Moody’s has also warned that Britain’s strong credit score would be at risk if the public vote to leave the EU.On financial markets, investors are gearing up for choppy trading between now and the 23 June vote. So why is sterling under pressure? What does it mean for you? And why do we care about the UK’s credit rating?Related: Brexit panic knocks pound to seven-year lowRelated: Top firms back pro-EU letter, but supermarkets refuse to sign Continue reading...
Pound hits seven-year low after Boris Johnson's Brexit decision – as it happened
Sterling slumps by nearly 2% to its lowest point since March 2009, following London mayor’s decision to back the campaign to leave the EU
Moody's warns Brexit would risk UK's credit rating
Credit ratings agency said the economic costs of Britain leaving the EU would outweigh the benefitsA vote to leave the EU in June’s referendum will threaten the UK’s strong credit score, potentially pushing up the cost of government borrowing, the ratings agency Moody’s has warned.On Monday the pound tumbled on growing fears of a Brexit, hitting a seven-year low against the US dollar and also weakened against other big currencies as investors pulled money out of UK assets. Currency experts said London mayor Boris Johnson coming out for the leave campaign intensified pressure on sterling.Related: Pound hits seven-year low after Boris Johnson's Brexit decision - business live Continue reading...
Office for Budget Responsibility under fire over 'non-factual changes' to reports
Treasury select committee chair says amendments ‘give the appearance of a minister trying to lean on the OBR’The Treasury select committee is concerned that the independence of the body set up by the government to provide economic forecasts is being compromised.In a report into the Office for Budget Responsibility (OBR) published on Monday, the Treasury select committee found that words such as “topslice” to describe spending cuts were removed – although concluded that in the end this did not change the analysis of the economic situation. Continue reading...
Why Britain won't vote to leave the EU
An exit from the European Union would mean huge economic costs for Britain and no political benefits whatsoeverAmong the multiple existential challenges facing the European Union this year – refugees, populist politics, German-inspired austerity, government bankruptcy in Greece and perhaps Portugal – one crisis is well on its way to resolution. Britain will not vote to leave the EU.This confident prediction may seem to be contradicted by polls showing roughly 50% support for “Brexit” in the June referendum. And British public opinion may move even further in the “Out” direction for a while longer, as euroskeptics ridicule the “new deal” for Britain agreed at the EU summit on 19 February.Related: EU referendum: a timetable for the UK Continue reading...
Central bankers on the defensive as weird policy becomes even weirder
Growth is tepid, productivity is poor, and inflation is too low: all is not going according to policymakers’ masterplansMembers of the Treasury select committee get the chance to grill the governor of the Bank of England on Tuesday. Mark Carney will make the short journey from Threadneedle Street to Westminster to face questions on the state of the economy. It should be an intriguing contest. The committee’s chairman, Andrew Tyrie, will treat the governor with the weary disdain of a headteacher ticking off a pupil for a substandard piece of homework. Carney will answer in sentences so long that MPs may feel the need for a drinks’ interval half way through them.
Our quixotic prime minister may need Labour to save him in Europe
David Cameron is swimming in deep waters in Brussels: it may yet fall to his steady, broadly pro-European opposition to hand him a referendum victoryIn his Antimémoires, the French writer and politician André Malraux recalls a conversation with President de Gaulle after the second world war in which De Gaulle said he planned to nationalise the banks and public utilities.But he went on to emphasise that he was going to do this “not for the sake of the left but for the sake of France”.The question ‘who is the real David Cameron?’ intrigues me much more than ‘who is the real George Osborne?’ Continue reading...
Only when it is in peril is the idea of Europe so inspiring | Fintan O’Toole
Britain’s potential departure from the European Union marks yet another existential moment for the continent, but it is just at such moments of crisis that the true strengths and worth of the project come to the foreMost ideas prove themselves by working well. The idea of Europe, on the other hand, seems to be most powerful when it’s going disastrously wrong. Over the course of modern history, it appears that Europe becomes an urgent business only when it is threatened with disintegration. When things are OK, Europe bores us to tears. It is 28 shades of grey. But plunge Europe into existential crisis and it suddenly seems to matter. This is the great paradox of the idea: it grips the imagination only when it is in a dire state. The odd way in which the threat of Brexit makes the notion of Europe interesting again is actually quite familiar.Europe has always drawn energy from the proximity of catastrophe. The first modern conception of Europe – that of a Christian commonwealth of holy kingdoms – took hold because the Turks were at the gates of Vienna and the triumph of Islam in Europe seemed a real possibility. The religious wars in which Catholic and Protestant powers tore each other apart were ended by appealing to that same idea of European Christendom. Continue reading...
Christine Lagarde appointed for second term as IMF chief
The former French finance minister won praise from developing countries but criticism from Greece during first termThe International Monetary Fund has appointed Christine Lagarde for a second term as managing director after she rebuilt the Washington-based organisation’s reputation following the sex scandal that engulfed her predecessor.Lagarde, 60, who was the only candidate, was backed by the UK, Germany, China, and her home country, France, to stay on for another five years.Related: Christine Lagarde, IMF chief with a key role in the Greek debt talks - profile Continue reading...
UK retail sales soar, while January public finance surplus best since 2008 - as it happened
Crude oil dips on renewed supply glut fears, with markets set to end positive week on downbeat note2.47pm GMTA slide in oil prices on concerns about oversupply - notwithstanding the recent proposal from producers to freeze output at January levels - continues to take the shine off this week’s stock market rally.US markets have followed Europe lower, with the Dow Jones Industrial Average down 70 points or 0.4% in early trading. As well as oil, investors were unsettled by higher than expected inflation numbers, which could prompt the Federal Reserve to raise rates sooner than forecast.2.42pm GMTAnother point about US inflation:Markets are focused on the black line (goods = 30% of core CPI). Fed should be focused on blue line (services = 70%) pic.twitter.com/3vbr3ftfIZ2.29pm GMTOver in Greece, protesting farmers have upped the ante, expanding roadblocks nationwide ahead of what some are calling make-or -break talks with prime minister Alexis Tsipras on Monday. Helena Smith reports from Athens:A month into their protests over pension and tax reforms, the powerful bloc of farmers that have brought chaos to Greece intensified their action, announcing that tractor blockades would be stepped up around Thessaloniki airport this afternoon.More than 66 % of Greece’s import and export trade is carried by road to Europe with the economy suffering huge damage as a result of the blockade.2.16pm GMTTurning back to the UK public finances, the Office for Budget Responsibility, the government’s independent economic analysts, said there was uncertainty over the outcome for the rest of the year:On the current data, meeting our full-year forecast for 2015-16 would require borrowing to fall by £18.4 billion in the year as a whole. That implies borrowing of £7.0 billion over the next two months, compared with £14.8 billion in the same period last year. Our November forecast does assume stronger growth in receipts in the remainder of the year (particularly income tax and stamp duty land tax) but local authority borrowing as measured in the statistical bulletin looks likely to exceed our November forecast. Considerable uncertainty remains over prospects for the remaining two months of the financial year, while data on local authority borrowing are often subject to substantial revisions over subsequent months.Public sector net debt (PSND) in January 2016 is estimated to have fallen by 0.1 per cent of GDP relative to January 2015. A major contributor to the drop over the past 12 months has been the Government’s programme of financial asset sales, including multi-billion pound sales of Lloyds shares and UK Asset Resolution mortgage assets. But the nominal GDP estimate used to calculate the debt ratio is in part still a forecast, so it remains to be seen if debt is still shown to fall on this basis in the year to January in future outturn estimates.2.03pm GMTStill, the higher than expected US inflation numbers may not prevent the Federal Reserve from sitting on its hands in terms of any imminent rate rises, says Rob Carnell of ING Bank:US CPI for January came in a little stronger than had been expected, with the headline rate unchanged on the month, and the core rate rising by 0.3% month on month. Headline inflation in January is now double that in December at 1.4% year on year, with the core rate now at 2.2% (up from 2.1%).Inflation has been one of the factors the Fed has cited for its cautious stance towards monetary policy changes. But despite these latest inflation increases, concerns over the ebbing strength of domestic activity may start to provide more of an excuse for further foot dragging, whilst external demand and financial market turbulence provides yet another excuse for the Fed to do nothing for the foreseeable future.1.49pm GMTThe US data does seem to show a trend:Beating estimates in past 2 wks:
Rise in UK income tax receipts not enough to keep Osborne plan on track
Modest 4.7% rise in payments misses City forecast by £1.1bn and may thwart chancellor’s plan for dramatic cut in public borrowing this yearA modest rise in income tax receipts last month was not enough to salvage George Osborne’s plan for a dramatic cut in government borrowing by the end of the financial year.In the last report on the public finances before next month’s budget, the Office for National Statistics said income tax receipts jumped by 4.7% compared with January last year to help produce an £11.2bn surplus in January, which is traditionally a healthy month for tax receipts. Continue reading...
Closing the capital drain from emerging markets
The real worry for the global economy is not just falling commodity prices but also huge capital outflows, which hold serious knock-on effects for growthDeveloping countries are bracing for a major slowdown this year. According to the UN report World Economic Situation and Prospects 2016, their growth will average only 3.8% this year – the lowest since the global financial crisis in 2009 and matched in this century only by the recessionary year of 2001. And what is important to bear in mind is that the slowdown in China and the deep recessions in the Russian Federation and Brazil only explain part of the broad falloff in growth.True, falling demand for natural resources in China – which accounts for nearly half of global demand for base metals – has had a lot to do with the sharp declines in these prices, which have hit many developing and emerging economies in Latin America and Africa hard. Indeed, the UN report lists 29 economies likely to be badly affected by China’s slowdown. And the collapse of oil prices by more than 60% since July 2014 has undermined the growth prospects of oil exporters.Related: What's holding back the world economy? Continue reading...
We need a new language to talk about the economy | Tom Clark
The images used by politicians can simplify difficult theories, but they are also being used to mislead usBanks trembling, shares tumbling and gathering fears of a new slump. The start of 2016 has been chilling for a global economy that has still to shake off the crisis of 2008. Worse, there is no agreement on what to do should the worst happen again. The big ideas that might make a difference – targeting higher inflation, printing money to give consumers something to spend with, or ploughing serious public funds into infrastructure – remain too contentious for politicians to voice out loud. That is a shame, because history suggests that the words they use matter.Related: The Guardian view on the world economy: don’t drive on winding roads with a steering lock | EditorialFrom economics seminars to rage-pumped Trump rallies there is a consensus: we need to do better next time Continue reading...
Centrica and Go-Ahead battle it out for title of most-hated business in Britain
The bosses of the two companies, Iain Conn and David Brown, have faced a barrage of questions about their treatment of customersIain Conn and David Brown should compare notes after the day they have just had.The two men are in charge of companies battling it out for the unofficial title of most-hated business in Britain. Conn is the boss of Centrica, owner of British Gas, while Brown is the head of Go-Ahead, which operates the Thameslink, Southern and Southeastern rail franchises through its subsidiary Govia. Continue reading...
ECB expected to take further action to boost eurozone economy
Minutes of ECB governing council meeting indicate bank’s readiness to cut credit costs further to improve bank lendingThe European Central Bank is expected to take further action to stimulate the eurozone economy at its next meeting in March.Minutes of the ECB governing council’s last get-together show that without an improvement in the outlook for growth for the rest of the year and 2017, policymakers are ready to cut credit costs further to boost bank lending.Related: Draghi has financial markets hoping bad news is really good news Continue reading...
Why tackling corruption in corporate governance is not impossible
As the Corruption Perceptions Index shows, there is still a long way to go but the process of change provides a roadmap for winning the battleCorruption is a global scourge, sometimes becoming so deeply ingrained in countries that combating it seems impossible. In January, Transparency International released its annual Corruption Perceptions Index, noting that the problem “remains a blight around the world”.The International Monetary Fund, for example, has just warned Ukraine that its $40bn financial bailout could be cut off, owing to fears that corrupt officials will steal or squander the funds. During his recent visit to Mexico, Pope Francis called on the country’s leaders – several of whom (including the president and his wife) are embroiled in conflict of interest scandals – to fight endemic corruption. Continue reading...
OECD's calls for less austerity means common sense has prevailed
If the thinktank sticks to its guns over coordination between countries, there could enough fireworks to rival Chinese new year at G20At last, the OECD has converted to the teachings of John Maynard Keynes. The austerian non-believers, for so long the dominant force in the Paris-based thinktank, are banished to a distant land. Common sense has prevailed.As revolutions go, it has taken a while. Five years ago ago, the priority was public spending cuts. George Osborne was lauded. Then there was muted criticism. Now the austerity delusion, as the economist Paul Krugman called it, is no longer a central tenet of thinking at the Organisation for Economic Co-operation & Development, the club formed to provide advice to 34 wealthy countries.Related: OECD calls for less austerity and more public investment Continue reading...
The truth behind China's exchange rate delusion
The current bout of anxiety is a symptom of the fact that China’s transition from an export-led growth strategy is proceeding far less smoothly than hopedChina’s management of its exchange rate peg continues to rattle global financial markets. Uncertainty about renminbi devaluation is fuelling fears that deflationary forces will sweep through emerging markets and deliver a blow to developed economies, where interest rates are at, or near, zero and thus cannot be lowered to defend against imported deflation. Fiscal gridlock in Europe and the US is heightening the angst.But the current bout of exchange rate anxiety is really just a symptom of the fact that China’s transition from an export-led growth strategy to one propelled by domestic consumption is proceeding far less smoothly than hoped. For some people, visions of the wonders of capitalism with Chinese characteristics remain undiminished. They are certain that, after more than three decades of state-directed growth, China’s leaders know what to do to turn their slumping economy around. Continue reading...
How mounting job cuts could threaten UK's economic recovery
Tens of thousands of workers are being laid off in key sectors, prompting fears of a ripple effect through the British economyMajor UK-based companies have announced tens of thousands of job losses that are expected to ripple through the economy in the coming months, casting a shadow over Britain’s recovery.Affecting vast areas of the UK economy – from factories to the high street, banking, media and energy – the job losses announced in the past fortnight coincided with another wave of panic selling on stock markets and fears of a further global recession.Related: Job losses gather momentum across UK and EuropeRelated: Lloyds Banking Group to cut 1,755 jobs and close 29 branchesRelated: Boots to cut up to 350 jobs in bigger UK stores Continue reading...
Negative interest rates: what you need to know
Following the Bank of Japan’s launch of negative interest rates, we answer the key questionsNormally savers earn interest when they deposit their money in banks. Similarly, commercial banks that lodge money with central banks receive interest for doing so. Negative interest rates turn this arrangement on its head. Savers have to pay banks for holding their money and central banks penalise banks for depositing cash with them.Related: OECD calls for less austerity and more public investment Continue reading...
UK productivity gap widens to worst level since records began
Growing gulf means UK workers produce significantly less per hour than G7 averageBritain’s poor productivity record has been highlighted by government figures showing the biggest gap with other leading western economies since modern records began in the early 1990s.Output per hour worked in the UK was 18 percentage points below the average for the remaining six members of the G7 group of industrial nations in 2014, the Office for National Statistics said.Related: UK's productivity plan is ‘vague collection of existing policies’ Continue reading...
OECD calls for less austerity and more public investment
One-time deficit reduction supporter slashes growth forecasts and urges richer countries to exploit cheap borrowing to spend more on infrastructureThe OECD has called for its rich-country members to ease up on austerity and collectively agree to spend more on infrastructure projects to boost flagging growth.The Paris-based Organisation for Economic Cooperation and Development expressed concern about the state of the global economy as it cut growth forecasts made three months ago and warned that low interest rates and money creation by central banks were no longer enough for a lasting recovery. Continue reading...
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