As David Marquand points out, the UK is a multinational state and two parts of it, Scotland and Northern Ireland, voted to remain in the European UnionDavid Marquand asserts that “there is no such place as Britain” (How can Britain exit the EU? Britain doesn’t really exist, 13 January). If Britain is not a nation, to what nation does the “national” refer in “National Rail”, “National Trust”, “national debt” etc? No Welsh embassy, Scottish passport, Northern Irish armed force, or English international dialling code exists. All nations are artificial, invented constructs. The UK is no less a country than each of its constituent nations.It is perfectly possible for a nation state to be multinational. Marquand calls France a nation state, yet nationalist Bretons assert their own national identity. Basques and Catalans constitute different national groups but there is no doubt that the Kingdom of Spain, like the United Kingdom, is itself a country. Continue reading...

Less money, fewer teachers, little transparency and almost no accountability. A child’s education is too important for thisThe last few weeks have been all about the NHS crisis, but new figures published today reveal the stark cash situation facing schools in England. Forty nine out of every 50 schools, according to research by the Association of School and College Leaders and the Secondary Heads Association, will see a real-term per pupil funding fall between now and 2020; some schools lose up to 17% of their per pupil funding. That is the sharpest cut to schools’ budgets since the 1970s. The scale of today’s problem was illustrated last month by the National Audit Office, which showed the average secondary academy is in the red by more than £350,000.Education lacks the immediate warning lights of health: hospitals being forced to divert ambulances, cancel cancer operations and treat patients on trolleys in corridors. But these funding pressures are no less damaging than those facing the health service. They jeopardise the significant progress made in recent decades: nine out of 10 schools are now rated as good or outstanding. Without a sensible settlement inequalities will widen. Most notably, there is huge geographic imbalance in school quality. Children living in London have a far better chance of attending a good school than in Liverpool, where almost half of schools are inadequate or “require improvement”. In the northern powerhouse of Manchester the figure is one in three. This is a fundamental issue for social mobility. Continue reading...

FTSE 100 ends record 14-day winning streak as Theresa May prepares to make speech unveiling plansThe pound fell again on Monday – dipping below $1.20 at one point – as concern mounted that the UK was heading for a “hard” Brexit from the European Union and its single market, a day before a speech by Theresa May on the government’s plans.Some newspapers have billed the prime minister’s speech on Tuesday as a push away from preferential EU single market access and a hardening of the UK’s stance toward an economic bloc that accounts for roughly half its exports and imports.Related: Norway’s $885bn-nil advantage in Britain’s sea of social troubles Continue reading...

Performance better than expected, fund says as it cuts 2018 outlook and cites Trump protectionism as risk to global economyThe International Monetary Fund has upgraded its forecasts for the UK economy this year after the latest signs that businesses and consumers have shrugged off the Brexit vote.Unveiling its new forecasts on the eve of a key speech by Theresa May on the Brexit process, the Washington-based fund also cut the outlook for 2018, reflecting widespread uncertainty over Britain’s future outside the EU.Related: Sterling skids to three-month low on hard Brexit concerns Continue reading...

US leaders from Reagan to Obama have used borrowing to fund spending, and the president-elect is likely to be little differentIt is a post-financial-crisis myth that austerity-minded conservative governments always favour fiscal prudence, while redistribution-oriented progressives view large deficits as the world’s biggest free lunch. This simplistic perspective, while perhaps containing a grain of truth, badly misses the true underlying political economy of deficits.The fact is that whenever one party has firm control of government, it has a powerful incentive to borrow to finance its priorities, knowing that it won’t necessarily be the one to foot the bill. So expect US President-elect Donald Trump’s administration, conservative or not, to make aggressive use of budget deficits to fund its priorities for taxes and spending.Related: China voices economic fears about Donald Trump presidency Continue reading...

Retail therapy for seasonal gloom is a ploy dreamed up by advertisers – the myth that happiness can be bought has the potential to be disastrousWaking up today, on so-called Blue Monday, the “most depressing day of the year”, you may already be aware that this concept is based on a fraud. An almost deliciously spurious mathematical formula was dreamed up by a PR agency, given the veneer of academic rigour by attaching the name of a lecturer at a further education college, and a media phenomenon was born. More than a decade’s worth of articles and social media memes have at turns reinforced and defied the Blue Monday myth, and it is often now held up as a case study of bad science.It is, of course, laughable to have a formula where W stands for weather and days-since-Christmas is raised to the power of Q, the days-since-we-quit-our-new-year-resolutions. But the driver behind this mockable maths is a much more sinister lie, one from which many struggle to escape 365 days of the year. Continue reading...

Rising inflation may force the Bank of England to increase interest rates and put the brakes on growthThe UK economy performed surprisingly well in 2016. Indeed, when looking across the OECD economies, it is hard to find a better performer on key metrics such as growth and employment. However, when looking beneath the surface, the UK economy is, in fact, overheating. Already on the rise, the result is going to be the largest surge in inflation for many years, squeezing household budgets and placing the Bank of England in a bind largely of its own making.Already weak prior to the surprising Brexit referendum result, sterling declined sharply thereafter and has not recovered since. Year over year the pound is down about 20% against both the dollar and the euro. Combined with the sharp 70% rise in oil prices over the same time frame, UK energy and food costs are set to soar this year. These developments alone will push up UK consumer price index by 1 to 2 percentage points.Related: UK firms brace for further Brexit price rises, surveys showUK has been living on borrowed time and borrowed money ever since the financial crisis struck in 2008 Continue reading...

Sterling’s weakness since Brexit vote is pushing up prices of fuel, food and clothes, official figures to showInflation is set to hit its highest level in more than two years this week, according to economists, as the sharp drop in sterling since the referendum fuels a rise in the cost of living.Official figures due to be published on Tuesday are expected to show that fuel, food, air fares and clothing prices have driven the headline rate to 1.4% in December, from 1.2% in November. If economists polled by Reuters are correct, the rate would be the highest since August 2014, when the consumer prices index was 1.5%. Continue reading...

PM is expected to build on chancellor’s combative language by highlighting other potentially lucrative deals Britain can seekTheresa May will aim to strike a defiant tone in her upcoming Brexit speech on the risks to the rest of the EU of giving Britain a raw deal, echoing the combative approach taken by the chancellor.In a speech by the prime minister on Tuesday that will be watched closely in EU capitals, Downing Street is keen to impress that there are potentially lucrative economic opportunities elsewhere, weeks before the UK is expected to trigger article 50. Continue reading...

North Sea oil could have helped tackle the NHS crisis and pension liabilities by contributing to a sovereign wealth fundOne of the most famous pieces of football commentary came at the end of a match in Oslo more than 35 years ago in which unfancied Norway beat England 2-1. Few fans could now name the Norwegian commentator, Bjørge Lillelien, but plenty remember the rant and how it ended: “Maggie Thatcher, can you hear me? Your boys took one hell of a beating.”The humiliation for the boys with three lions on their shirts took place in 1981 during the early stages of a North Sea oil boom that benefited both Norway and Britain. Norway decided that it would set up a sovereign wealth fund – a piggy bank for the people – so future generations would reap the benefits of the unexpected bonanza. Britain did not. Continue reading...

The prime minister’s simultaneous promises to exit the EU and look after the interests of Remainers simply cannot be given credenceTheresa May is hopelessly conflicted. Quite simply, she cannot reconcile her promise to look after the interests of those who voted Remain with her commitment to a hard Brexit. To put it another way, she cannot look after the interests of the 72% of “the people” (that is, including those under 18) who did not “speak” on 23 June.For hard Brexit is what her policy is. By repeatedly placing controls over immigration above continued membership of the European customs union and the single market, she makes it abundantly clear that she has been captured by the Brexiters. Continue reading...

After 16 days and 7,456 miles, the locomotive’s arrival heralds the dawn of a new commercial eraWhen the East Wind locomotive rumbles into east London this week, it will be at the head of 34 carriages full of socks, bags and wallets for London’s tourist souvenir shops, as well as the dust and grime accumulated through eight countries and 7,456 miles.The train will be the first to make the 16-day journey from Yiwu in west China to Britain, reviving the ancient trading Silk Road route and shunting in a new era of UK-China relations.Related: David Baddiel on the Silk RoadRelated: Eurasia is an idea whose time has come around again Continue reading...

The world is full of scary new problems for delegates at this year’s World Economic Forum - not that old ones like climate and poverty have gone awayDonald Trump’s US election victory and the UK’s vote to leave the European Union will cast a long shadow over the global elite’s annual gathering in the Swiss ski resort of Davos this week.This year, 3,000 politicians, business leaders, economists, entrepreneurs, charity leaders and celebrities will head to the World Economic Forum (WEF) to discuss the state of the world. As usual there’ll be big speeches, ultra-tight security, and experts in every field under the wintry sun. There’ll also be plenty of champagne and canapes for delegates gathering in expensive hotels to discuss issues such as inequality and the backlash against globalisation. Continue reading...

New research shows that developing countries send trillions of dollars more to the west than the other way around. Why?We have long been told a compelling story about the relationship between rich countries and poor countries. The story holds that the rich nations of the OECD give generously of their wealth to the poorer nations of the global south, to help them eradicate poverty and push them up the development ladder. Yes, during colonialism western powers may have enriched themselves by extracting resources and slave labour from their colonies – but that’s all in the past. These days, they give more than $125bn (£102bn) in aid each year – solid evidence of their benevolent goodwill.This story is so widely propagated by the aid industry and the governments of the rich world that we have come to take it for granted. But it may not be as simple as it appears.The flow of money from rich countries to poor countries pales in comparison to the flow that runs in the other directionRelated: Forget 'developing' poor countries, it's time to 'de-develop' rich countries Continue reading...

Almost 80% of delegates at the gathering of the world’s rich and powerful in the Swiss mountains next week will be menKlaus Schwab, the World Economic Forum (WEF) founder whose headquarters are the chrome and glass of a Bond villain’s lair, introduced this year’s event by saying: “The world around us is changing at unprecedented speed.” But it seems nothing has changed when it comes to the lack of women at Davos.Five years ago, when I was the Guardian’s women’s editor, I was sent to report on gender diversity at Davos. I dragged my short, not very masculine, body to the oddly bleak Swiss village to watch the world’s rich and powerful consort.Related: Army of staff descends on Davos to serve WEF super-rich Continue reading...

Exclusive: minutes of Michel Barnier’s meeting with senior MEPs reveal he wants 27 member states to have easy access to London’s financial institutionsThe EU’s chief negotiator in the Brexit talks has shown the first signs of backing away from his hardline, no-compromise approach after admitting he wants a deal with Britain that will guarantee the other 27 member states continued easy access to the City.Michel Barnier wants a “special” relationship with the City of London after Britain has left the bloc, according to unpublished minutes seen by the Guardian that hint at unease about the costs of Brexit on continental Europe.When asked on equivalence I said: EU would need special vigilance on financial stability risk, not special deal to access the City @guardianRelated: UK to begin talks with New Zealand on post-Brexit trade dealRelated: Theresa May to deliver long-awaited Brexit speech on Tuesday Continue reading...

The question arising from Owen Jones’s article (How the Tories are victimising young people, 12 January) has to be: is socialism choking itself to death on its own inherent contradictions? Has the past 50 years been a good period in history, or has it not? If it could be repeated, should it be repeated? If the parental generation has spent its children’s future, how does the next generation suppose it can avoid doing the same to its children?Jones reports that rates of depression and anxiety among the young have increased by 70%; a third feel they will have a worse standard of living than their parents; 42% feel owning a home is an unrealistic prospect. If we compare the last 50 years with preceding periods of history, it is apparent that the last 50 years has been the aberration. The parental generation enjoyed a higher standard of living, not because it worked for it, but because it mortgaged (borrowed) from subsequent generations. Continue reading...

Beijing’s concerns about a further slowdown in trade come as political uncertainty and social tensions spread anxiety about global economyChina suffered a sharp drop in exports last year and there are fears its trading position will weaken further in 2017 with repercussions for the global economy if Donald Trump’s protectionist policies prompt a trade war.

The FTSE 100 closes at a record high for the 12th successive day

Amid sessions on inequality, hastily bussed-in hotel workers will pack five to a room on bunk beds to serve the super-rich and powerful delegatesHundreds of chambermaids, doormen and cocktail waiters have been flown to Davos to cater to every whim of world leaders, business executives and the super-rich who will descend next week on the Swiss Alps town for the annual World Economic Forum (WEF) celebration of capitalism.While WEF guests, including Theresa May, Chinese leader Xi Jinping and South African president Jacob Zuma, will spend their nights in some of the world’s most luxurious hotel suites, the staff brought in to serve them will be sleeping up to five to a room in bunk beds.Related: Parody-defying World Economic Forum must do betterRelated: ILO warns of rise in social unrest and migration as inequality widensRelated: Are Americans more ready to accept inequality? Continue reading...

Survey shows link between low hours and wages increased sharply in past 20 years, with one in five low-paid men now working part-timeMen on low pay are four times more likely to be working part-time than in the 1990s, according to a survey that illustrates the trend for low hours and wages to go together.The Institute for Fiscal Studies said 20 years ago only one in 20 men aged 25 to 55 worked part-time with low hourly wages. Today one in five of this group works part-time.Related: Zero-hours workers '£1,000 worse off a year' than employeesRelated: Is it time for a maximum wage cap? Our panel responds to Jeremy Corbyn Continue reading...

UN agency records rising discontent in all regions and calls on policymakers to tackle unemployment and inequality urgentlyRising unemployment, inequality and a lack of decent jobs have helped fuel a rise in social unrest that threatens to intensify unless policymakers take swift action, the UN’s labour agency has warned.The International Labour Organization said its measure of protest activities around the world had ticked higher in the last year against a backdrop of economic and political uncertainty. In a downbeat report into global labour market prospects, the agency also predicted migration could rise over the next decade as frustrated jobseekers leave their countries in search of better prospects. Continue reading...

George Monbiot makes many good points (Farmers fear life outside the EU, but it could mean a rebirth for rural Britain, 11 January), including free markets’ impact on small farmers whose incomes fall in times of plenty. He could have said more on food security. Climate change, including gas escapes from frozen deposits, is a growing threat but pests, diseases, routine weather and even large volcanic eruptions (eg Tambora, 1815) can create havoc. So who is actually responsible for food security, here or abroad?“Britain can always import” is the reply despite a falling pound, but a recent Russian drought caused a grain export ban which could spread if global supplies struggled. Fisheries are exhausted, good British land is vanishing under development, yet nobody wants the bill for food storage. Instead surplus food yields quick profits via livestock feed, biofuels, brewing or even cosmetics.Related: Of course farmers fear Brexit, but it could save the British countryside | George MonbiotRelated: Your opinions: what the Brexit vote means for farmers and EU nationals in the UK Continue reading...

Donald Trump’s trade and immigration policies will protect big agriculture but leave smaller businesses to failThe most significant event in food and agriculture over the past year did not take place on our farms. Nor did it occur in our factories, in our restaurants or on our kitchen tables. It happened in the voting booth.Rural voters turned out in overwhelming support of Donald Trump, throwing a Hail Mary pass against the growing economic hardship felt by these communities. Caught in a toxic cycle of depressed commodity prices, rising debt and plummeting income, it comes as no surprise that American farmers voted en masse for change and the hope of different leadership with new ideas.Related: Will new FDA rules curb the rise of antibiotic-resistant superbugs?Related: Can we feed 10 billion people on organic farming alone? Continue reading...

Both are anti-immigration and pro-Russia. Without media support the British firebrand became an outcast. With Twitter and Fox, Trump became presidentUnderstanding the political success of the US president-elect, Donald Trump, is not easy. There have been many glib comparisons to populist politicians of the past, from Huey Long to George Wallace. But the most revealing comparison may be with a historical figure from another country: the British nativist firebrand Enoch Powell in the late 1960s and early 1970s.At first glance, the comparison might seem peculiar. Powell came from a lower-middle-class family. He was a classical scholar of true erudition and a man of principle. He was also a political insider, having served as an MP since 1950 and as the junior minister for housing in Anthony Eden’s government in 1955.Related: My new year forecast: Trumpian uncertainty, and lots of it Continue reading...

By prioritising protection and rebuilding of local economies the left can find a positive answer to voters’ concerns while challenging the extreme rightNext week will see protectionism take centre stage globally as the Davos elite gathers to vent about its rise, and the Twitter protectionist Donald Trump becomes US president.Yet there is a left, green alternative that could effectively challenge the rise of the extreme right, while giving voters hope for a better future. In my new book Progressive Protectionism: Taking Back Control, I detail why progressives should endorse the controlling of borders to people, capital, goods and services, but not as occurred in the 1930s, when governments attempted to protect domestic jobs while still wanting to compete and export globally at the expense of others.Related: Parody-defying World Economic Forum must do better Continue reading...

It is easy for the government to ignore the plight of this generation, but failure to act damages us allThe Conservative party has made a strategic decision to stuff young people. Not out of sadism, not because it derives vicarious thrills from inflicting misery on the next generation: the Tories don’t care because they have calculated that they don’t have to. The young are less likely to vote, goes their rationale, and they are certainly unlikely to vote for us. We can safely ringfence them for economic pain, balancing the nation’s books on their youthful backs, and we will suffer few political consequences for it.Short-termism doesn’t cover it. Britain’s destiny is now in the hands of a generation soaked in pessimism, scarred by economic insecurity and decline, demonised by politicians and press barons. It did not need to be so: it was a choice.They have stolen the essential of human existence, that which offers assurance at times of difficulty: optimismRelated: Theresa May's mental health pledges don't roll back years of Tory cuts | Hannah Jane Parkinson Continue reading...

Enrique Peña Nieto draws battle lines for changed relationship with the US amid fallout from Trump’s tiradesMexico’s president, Enrique Peña Nieto, has rejected any suggestions of his country paying for a border wall and pledged to sign an updated free-trade agreement with the European Union as he seeks to diversify the economy away from the United States.

Year-on-year sales for November and December were up 10%, boosted by 9% rise in gifts such as providing safe water for small communitiesOxfam has reported its highest sales for five years on the back of increased demand for secondhand clothes and ethical gifts.Healthy sales of Fairtrade goods such as chocolate and coffee helped the charity post a 10% year-on-year rise in sales for November and December, worth £17.2m. Continue reading...

Governor tells MPs fears over impact of Brexit vote have receded and EU countries face greater risk than BritainThe Bank of England looks set to upgrade its forecasts for the UK economy after admitting that some of the risks posed by the Brexit vote last June have now receded.

ONS figures show rise in manufacturing and energy in November, although record imports outweigh higher exportsThe pound has fallen to a fresh 10-week low against the dollar as Brexit fears and the prospect of a Donald Trump bounce for the US economy gripped the markets.For the first time since 25 October, sterling fell to almost $1.20 before it mounted a recovery after figures showed the UK’s industrial sector returned to health in November.Related: UK firms brace for further Brexit price rises, surveys show Continue reading...

Getting the measure of GDP | Finding rare ingredients | Nepotism in politics | Gabriel Jesus headline | Bees’ knees | Er, so, wellRe Aditya Chakrabortty’s article (One blunt heckler has shown just how much our economists are failing us, 10 January), GDP is a crazy measure for prosperity: a country’s GDP equals the aggregate income of its inhabitants. Therefore car accidents make us richer, because the income of repairers goes up. War contributes significantly to global GDP, as arms manufacturers make a mint and destroyed cities need rebuilding. And London’s highly paid financial specialists make a “healthy” contribution to UK GDP.

Rising income inequality and the polarisation of societies pose a risk to the global economy in 2017, says World Economic Forum.

Income gap was behind Brexit vote and Donald Trump’s victory, says World Economic Forum risk reportRising income inequality and the polarisation of societies pose a risk to the global economy in 2017 and could result in the rolling back of globalisation unless urgent action is taken, according to the World Economic Forum.Before its annual meeting in Davos next week, the WEF said the gap between rich and poor had been behind the UK’s Brexit vote and Donald Trump’s election victory in the US.Related: WEF outlines global economic risks as Trump and Brexit loom – business liveRelated: Xi Jinping to become the first Chinese president to attend WEF in Davos Continue reading...

A study suggesting US citizens are more likely than Scandinavians to see inequality as fair could explain Donald Trump’s winAs Donald Trump prepares to move into the White House, you may still be wondering how the billionaire Republican managed to win the US election while simultaneously promising tax cuts for the richest and claiming to be on the side of workers.Academics in Scandinavia think they may have the explanation. It comes down to how far Americans are happy to accept inequality. Continue reading...

French presidential candidate says currency amounts to a ‘weak Deutsche Mark’ that has failed to unify EU states and stand up to the US dollarThe euro may not exist in 10 years’ time if Paris and Berlin fail to bolster the single currency union, French presidential candidate Emmanuel Macron has said, adding that the current system benefits Germany at the expense of weaker member states.

The group is also planning to plead guilty to criminal misconduct as part of a deal with the US Justice DepartmentThe Volkswagen group confirmed on Tuesday that it has negotiated a $4.3bn (£3.53bn) draft settlement with US regulators to resolve its diesel emissions troubles, alongside plans to plead guilty to criminal misconduct charges.The guilty plea is part of the deal to settle the scandal, as the carmaker looks to restore its tarnished global brand. Volkswagen (VW) said that, with the addition of the fine, its diesel scandal costs will exceed the nearly €18.2bn (£15.76bn) it set aside to handle the problem. VW added that it will face oversight by an independent monitor over the next three years. Continue reading...

Washington-based bank says policy uncertainty and protectionist tendencies could undermine pickup in 2017A tentative pickup in the global economy this year is at risk from the political uncertainty unleashed by Brexit and the arrival of Donald Trump in the White House, the World Bank has said.The Washington-based organisation said 2016 had been the weakest year for the global economy since the deep recession of 2008-09 and expressed concern that protectionist pressures would continue to increase unless the pace of activity picked up.Related: Hard Brexit threatens global financial system, City chiefs tell MPs Continue reading...

A wave of hatred is sweeping Britain, with migrants blamed for a range of social ills. But migrants have not run down our public services, it’s not them that failed to build the houses our economy needs and they don’t cause a race to the bottom on wages or conditions. These are the results of political choices made by governments and corporations.In fact, the free movement of people can build our collective power and creativity in the face of attempts by the super-rich to turn the world into a gigantic marketplace in which we are all isolated individuals competing against one another. Fear and hate further drives this isolation and undermines our ability to cooperate. It allows the already rich and powerful who have done so much damage to our country to win. Continue reading...

Finance chiefs demand clarity on EU exit strategy as MPs hear concerns for tens of thousands of jobs if London loses euro clearing and passporting rightsBrexit poses a risk to the global financial system and could spark more than 230,000 job losses, senior City figures have told MPs as they called for clarity on the UK’s future relationship with the EU.

Boost in pensions is main driver of rising standards for low-income groups, ONS figures showThe gap between Britain’s rich and poor fell sharply last year after a boost to the incomes of the poorest 20% and a squeeze on the richest fifth.The Office for National Statistics said median disposable income for the poorest fifth of households had risen by £700, or 5.1%, in the year to April 2016, while the richest fifth of households saw their incomes fall by £1,000, or 1.9%, over the same period.

London index hits record high for ninth consecutive day, beating its eight-day run in May 1997 after Tony Blair swept to powerThe FTSE 100 reached another new peak on Tuesday and broke a near 20-year record for its longest run of closing highs.The index jumped 37.70 points or 0.52% to end the day at 7,275, its ninth consecutive day of closing highs, beating the eight-day run in May 1997 following Labour’s general election landslide under Tony Blair.

Industry figures add to signs that the economy ended 2016 strongly – although some analysts see slowdown aheadUK retail sales continued to grow at the end of last year as Britons made a late dash for Christmas gifts and festive foods, according to industry figures that add to signs the economy ended 2016 on a strong note.The British Retail Consortium (BRC) pointed to challenges ahead from rising costs and political uncertainty but said its members went into the new year having enjoyed solid sales growth over the crucial Christmas period.Related: Consumer spending slowed over Christmas period, Visa figures show Continue reading...

A booming Britain? Whose GDP do we mean, when the wealth gains of the past decade have all been in London and the south-east?There’s a lady I’ve been thinking about for the past few days, even though we’ve never met. She’s the central character in a true story told by the Europe expert Anand Menon. He was in Newcastle just before the referendum to debate the impact of Britain leaving the EU. Invoking the gods of economics, the King’s College London professor invited the audience to imagine the likely plunge in the UK’s GDP. Back yelled the woman: “That’s your bloody GDP. Not ours.”Subtle and learned this was not. But in all the squawking over the past few days about what’s wrong in economics and with the economy, her brutally simple criticism is closer to the mark than are most of the pundit class.Related: Economists have completely failed us. They’re no better than Mystic Meg | Simon JenkinsCameron’s legacy will be that there is no such thing as an economy Continue reading...

Which policies Trump will pursue remains unknown, to say nothing of which will succeed or what the consequences will beEvery January, I try to craft a forecast for the coming year. Economic forecasting is notoriously difficult but, notwithstanding the truth expressed in Harry Truman’s request for a one-armed economist (who wouldn’t be able to say “on the other hand”), my record has been credible.In recent years, I correctly foresaw that, in the absence of stronger fiscal stimulus (which was not forthcoming in Europe or the US), recovery from the great recession of 2008 would be slow. In making these forecasts, I have relied more on analysis of underlying economic forces than on complex econometric models.Related: Joseph Stiglitz: what the US economy needs from Donald Trump Continue reading...

Manufacturing and construction sectors air concern over rising import costs with companies facing ‘more risks than opportunities’ in 2017British companies are grappling with higher costs and bracing for further pressure in the months ahead as the start of Brexit talks threatens to drag the pound down further and ramp up the price of imports to the UK.Reports from the manufacturing and construction sectors on Monday point to a sharp rise in the prices paid for materials by firms in Britain and worries that their profit margins will be squeezed as they decide how much of those higher costs they can pass on to customers. Continue reading...

Spending fell 2.3% in December but was up for 2016 as a whole, with some raising concerns about mounting consumer debtConsumer spending slowed over the Christmasperiod, according to figures that suggest Britons shunned the high street in favour of online shopping and nights out.Spending fell back 2.3% in December from a strong November when Black Friday deals appeared to boost sales, figures from Visa show. That left consumer spending up 2.6% on the year, a slowdown from November’s growth of 3.1%.Related: Brexit worries and online stores hit shopping centre salesRelated: No one can afford to stop the new consumer credit crisisRelated: UK credit binge approaching levels not seen since 2008 crashRelated: No one can afford to stop the new consumer credit crisis Continue reading...

Wouldn’t today’s economists be better served by reading some economics history rather than relying on their models (Economics in crisis, admits Bank expert, 6 January)? JK Galbraith’s classic The Great Crash, 1929 details the things that contribute to a volatile, overheating economy, and in the foreword to the recent reprint, his son James, also an economist, notes the uncanny similarities in the build-up to 2007-08 to those before October 1929, particularly mentioning America, Britain and Iceland. But how far can economists be of help when the model is flawed and we have a government that is determined to sweep away all vestiges of Keynesianism and New Dealism and return our economy to the 19th century?

Economists have been found guilty of groupthink, guided by political ends and using error-prone gravity modelling. No wonder they crash back down to Earth

The Bank of England is too complacent about rising debt in households with stagnant incomes. But government dare not risk any slowdown in spendingConsumer debt has raised its ugly head again. According to the latest figures, the total has soared back to a level last seen just before the 2008 financial crash. To the untrained eye, the dramatic increase in spending using credit cards and loans might appear to prefigure a disaster of epic proportions.Excessive consumer debt played a big part in the collapse of Northern Rock, and looking back, this landmark banking disaster appears to have been the harbinger of an even bigger catastrophe when, a year later, Lehman Brothers fell over. Continue reading...