Chancellor attacked by Labour MPs for failing to acknowledge his target will only be met by increasing number of new jobs and finding migrants to fill themGeorge Osborne came under fire from MPs on Tuesday for refusing to admit that he plans to rely on a strong rise in net immigration to achieve a budget surplus at the end of the parliament.The chancellor said the increase in jobs over the next five years would be taken mainly by Britons, despite figures from the independent Office for Budget Responsibility (OBR) last week showing the government would need to almost double net immigration to hit its target of a £10bn surplus in 2020. Continue reading...

BoE reviewing lending criteria adopted by firms and puts banks on notice about holding £10bn capital cushion to guard against economic downturnThe Bank of England is scrutinising the terms under which mortgages are being granted to buy-to-let landlords as it decides whether to take action to cool the fast-growing market.The Bank’s latest warning to landlords came in a list of risks to the financial system, as Threadneedle Street put banks on notice thatthey could be forced to hold a special capital cushion of up to £10bn to guard against any economic downturn.Related: UK banks pass stress tests, but RBS and Standard Chartered are weakest - live updates Continue reading...

Rolling coverage as the Bank of England publishes its annual health check of Britain’s financial sector

Internet shopping ‘steals show’ over discounting weekend imported from US, with online sales on Monday forecast to be up by almost third to £943mBritain’s retailers are hoping the flat reaction to Black Friday on the high street, when shoppers preferred trawling the internet to visiting a department store, will pay off on Cyber Monday as the pre-Christmas discounting spree moves online.Imported from the US like its Black Friday cousin, Cyber Monday is forecast to bring in more than £900m for online retailers – up nearly a third on last year. By the end of Cyber Monday, total sales over the four-day shopping event will surpass £3bn in the UK, some analysts have predicted.Related: Four-day shopping spree promises £3bn sales record for UK retailers Continue reading...

Bank’s stress test results will determine whether seven institutions should be forced to hold capital in order to rein in risky lendingBritain’s biggest lenders are braced for a decision by the Bank of England on whether they are strong enough to withstand turmoil in global markets, as Threadneedle Street considers restrictions on their activities to slow down the growth in consumer lending.The results of the annual health check on six banks – Barclays, HSBC, Santander UK, Standard Chartered, Lloyds Banking Group and Royal Bank of Scotland – and Nationwide building society are released on Tuesday and will determine whether the institutions need to tap investors for cash or take other steps to bolster their financial strength.Related: Consumer spending rise troubles Bank of EnglandRelated: European banks sitting on €1tn mountain of bad debt, survey finds Continue reading...

The Seattle CEO cut his own salary to give his employees a much higher basic pay, an experiment some describe as ‘lunatic’, others pioneering. It’s about values, he says, and hopes others will follow his lead in tackling inequality. But will they?It’s Monday morning and a dozen people sit round a conference table in an office on an industrial lot in rain-splattered Seattle. A woman writes on a white board. Coffee is sipped. The clock ticks: it’s just after 8am. I’m at a meeting of division heads in a credit card processing firm and everything seems, well, a bit grey.A latecomer slips in and takes a seat among them. With his unkempt hair, jeans and trainers, he could be just another member of staff. But his presence brings a shot of Technicolor to the proceedings because this is the boss and Dan Price is probably the best boss to work for in the world.Tammi Kroll, 52, found Price’s mission inspiring enough to take an 80% pay cut and move from San Jose to Seattle Continue reading...

He promises a revolution in the funding of local government, but the chancellor will badly hurt some of our poorest places. AgainTip for Labour frontbenchers: next time you’re looking for a quote, ditch the Mao for a splash of Lenin. Specifically, this bit: “There are decades where nothing happens; and there are weeks where decades happen.” This week, George Osborne made a decade happen in local government. As a result of his spending review, independent economists predict a “genuine revolution” will sweep England’s town halls. It may not be as eye-catching as a quick U-turn on tax credits – but it will mark a permanent and drastic change in how local councils fund the provision of core services. It will certainly prompt the scrapping of many of those. And it will also lead to something that governments of all stripes have tried to avoid for decades: a postcode lottery, in which where you live determines how frequently your bins are collected, whether your streets and parks are kept clean, whether street lights go on after dark – even whether your mum or sister can count on a decent level of care.David Cameron came to power promising localism – then promptly stripped out the cash that might have made that transition a smooth one. By the end of this decade of cuts, the department for local government will have had the biggest cuts of all, with a total of 79% lopped off its day-to-day spending since 2010. Money from Whitehall is not the only thing that counts for town halls, but it’s still a major component of council budgets. Mr Osborne’s clear calculation was that cuts to local government services would largely be blamed by voters on their councillors, not Downing Street. It was a shrewd political calculation that has had disastrous effects on some of the poorest places in England. As the Institute for Fiscal Studies points out, those councils most reliant on central government grants have already suffered a near 40% drop in their spending power. That is twice as big a hit as those at the opposite end of the scale – and it is compounded by the way the welfare reforms introduced by the coalition government have, in the words of economists Steve Fothergill and Christina Beatty, hit “the poorest places hardest”. Put those two forces together, and a leafy shire such as Mr Cameron’s west Oxfordshire has got off relatively lightly, even while deprived places such as Blackpool have been kicked to the floor. Continue reading...

Changes to how Office for Budget Responsibility calculates future finances gives chancellor another £27bn – but will their assumptions be proved correct?

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George Osborne is a master of expectation management. Things are never as bad as they were going to be. At least, not yetEver since 2010, an odd choreography has developed around budget time between George Osborne and the media. You could call it the Lesser Awfulism. Before every “fiscal event”, the chancellor hints at all the really awful cuts he’ll have to make, and the press trail just what these things are and how awful they will be. When the appointed day comes, he does something slightly less awful than promised – and the press hail his political savvy.Wednesday saw the Lesser Awfulism strategy at its most effective. After months of speculation about cuts to tax credits, and over how badly squeezed police, prisons and councils would be, Mr Osborne went to the dispatch box – and announced that things would be much less awful than feared. Those cuts to tax credits will now be scrapped. Police numbers will go untouched. The result was an eruption of goodwill among Conservative MPs and a puzzled, disconsolate air on opposition benches. The analysts and commentators tuned in expecting a bloodbath: what they got was a relief rally. Continue reading...