The chancellor flashed the hypothetical cash, with a shower of stocking-fillers he calculates he’ll never have to pay forIn July, George Osborne came to the House of Commons to play Scrooge. On Wednesday, in chilly November, the chancellor used his return appearance to play Santa.The pre-show buildup had suggested the opposite. Austerity Osborne would unveil a spending review to make the eyes water, cutting and slashing at the state until it was left in bloody ribbons. In the event, he came bearing gifts, all but ho-ho-hoing as he told recipients of tax credits their payments would be safe (for now) or delivered similarly glad tidings to the nation’s police forces, assuring them their jobs would be safe after all.

Office for Budget Responsibility now expects higher tax revenues and lower debt interest repayments, but new figures could be inaccurate tooGeorge Osborne has pulled off what should have been impossible: he cancelled his tax credit changes in full, softened the sharpest edges of Whitehall budget cuts and still left himself a £10bn pre-election warchest by 2020.Speculation had been rife about whose pockets the chancellor would pick in order to pay for the well-signalled U-turn on tax credits. But in the event, Osborne was handed an extraordinary £27bn get-out-of-jail-free card by Robert Chote, the director of the Office for Budget Responsibility. Continue reading...

Ignore the chancellor’s escapology: George Osborne’s short-term deficit fixes are undermining our long-term economic stability and potential for growthLet’s start with the good news. In today’s spending review, George Osborne was forced to backtrack on his grossly unfair plans to cut working tax credits, a plan that would have left many worse off. This is a victory for anyone who believes that it is wrong to make the poor pay for the faults of the private banking system – a system that caused the public budget to rise following the crisis.But as Labour supporters congratulate themselves on the chancellor’s U-turn, and Conservatives cheer on the chancellor’s latest bit of political escapology, we shouldn’t lose sight of the bad news. Let’s face it, there are still £12bn in cuts to welfare spending to come in this parliament. This remains not only unfair, but unnecessary.Related: George Osborne scraps tax credit cuts in welfare U-turnRelated: Osborne plan has no basis in economics | Letter from Ha-Joon Chang, Thomas Piketty, David Blanchflower and others Continue reading...

Chancellor says in autumn statement that improvement in public finances means he is able to ditch controversial cut

Official forecasts envisage more tax revenue, allowing chancellor a big U-turn in his autumn statement. The problem is OBR estimates are often proved wrongGeorge Osborne was able to pull not one but three rabbits out the hat when he delivered his 2015 spending review and autumn statement.Rabbit No 1 was the decision to scrap the planned cuts to tax credits, which the chancellor announced in the summer but were strongly opposed by many of his own Conservative backbenchers, by free market thinktanks and Tory supporting newspapers.Related: George Osborne scraps tax credit cuts in welfare U-turnRelated: Spending review 2015: George Osborne scraps tax credit cuts and abandons plans to slash police budget - live Continue reading...

The chancellor is revealing the economic forecasts for the year ahead and setting out public spending cuts for the rest of this parliament2.41pm GMTPaul Johnson, director of the Institute for Fiscal Studies, has just been on the BBC explaining how George Osborne has been able to fund his surprise “good news” announcements. Asked if the sums were credible, Johnson said:[Osborne] has got a bit lucky, in that there are some more tax revenues expected to come in by the OBR. And he’s got a bit lucky because he’s going to be a spending a bit less on debt interest. He has also increased taxes reasonably significantly. There’s a £3bn impost on business to pay for the new apprenticeships. And there are some increases in council tax, probably. And there are some other tax increases there.So he’s done two things. He has taken advantage of increased revenues and reduced spending on debt interest. He’s increased taxes a bit. And he’s essentially used most of that money to damp down the cuts in spending. And because those cuts in spending were on a relatively limited part of government, the effect of that bit of extra money is to significantly reduce the overall level of cuts.2.31pm GMTThe OBR has revised up its forecast for income tax and national insurance contributions this parliament by almost £15bn.That has helped to chancellor to stick to his deficit reduction targets despite raising spending - so there could be problems if they’re wrong...increase in income tax projections, which OBR has overestimated before (but Osborne has spent £££ in the mean time) pic.twitter.com/nNAGXGl5GM2.27pm GMTIt’s official, the cap doesn’t fit.The Office for Budget Responsibility has predicted that the government will fall into its welfare cap trap several times.Our central forecast shows that the terms of the welfare cap are set to be breached in three successive years from 2016-17 to 2018-19, with the net effect of policy measures raising welfare cap spending in each of those years, and to well above the 2 per cent forecast margin in 2016-17 and 2017-18.The terms of the cap are set to be observed by very small margins in 2019-20 and 2020-21, with spending above the cap but within the forecast margin and with the net effect of measures in those years reducing spending.2.21pm GMTThe OBR has calculated that today’s measures will raise gross tax take by £28.5bn by 2020.It says:These include the new apprenticeship levy (£11.6 billion), higher council tax (£6.2 billion), and the introduction of higher rates of stamp duty land tax for second homes and buy-to-let purchases (£3.8 billion).Apprenticeships Levy raises £3 billion a year - epic tax rise on business2.20pm GMTToday’s detailed forecasting by the OBR has some grim news for John Swinney, the Scottish finance secretary, by warning that income from taxes controlled by the Holyrood parliament in Edinburgh are likely to be lower than it thought.Raising fresh questions about the Scottish government’s future finances, the OBR forecasts that tax income from Swinney’s flagship replacement for stamp duty, introduced on new house sales earlier this year, will be 20% lower over the next six years than it predicted in July.2.12pm GMTHere is a quick round-up of what political journalists and writers are saying about John McDonnell on Twitter. Mostly they are not complimentary.(The consolation for McDonnell is that it does not really matter. Almost all the media focus today will be on Osborne.)"Bring back Ed Balls" shouts a Tory but McDonnell making a decent fist of it given he is speaking on something he hadn't previously seenMcDonnell a bag of nerves responding to spending review. Stumbling over words + gulping for air. Good hit on welfare cap, but struggling nowChris Leslie, Yvette Cooper scouring CSR small print on backbenches. Reminder that McDonnell never done rapid budget reaction. Others have.McDonnell overachieving against expectations here - on his debut in a tough situationI don't think it would matter whether McDonnell gave a spectacular response to this. Most Labour MPs are horrified he's even doing it.McDonnell is waving around Mao's little red book - apparently oblivious to the signal this sends out.I would say this McDonnell speech is worst response from the dispatch box I have ever seen. Dire.Labour response now from @johnmcdonnellMP shows why CX felt he cd get away with double U turn. Couldn't make capital out of tax credit win2.11pm GMTThe Office for Budget Responsibility confirms that it has raised its forecast for tax receipts, allowing George Osborne to ease back on austerity.In the first combined Spending Review and Autumn Statement since 2007, the Government has taken advantage of an improvement in the outlook for tax receipts – concentrated in the middle years of this Parliament – to further loosen the impending squeeze on public services spending, to increase capital spending and to reverse the main tax credit cuts it announced in July, while still delivering a modestly stronger budget balance in most years on a like-for- like basis. As the boost to receipts begins to ebb, the Government increases departmental spending by less and relies more on tax increases to maintain the bottom line improvement.Taken together with the other measures in the Autumn Statement, the Government has announced a net fiscal giveaway of £6.2 billion next year, more than half of which is the cost of reversing the tax credit cut. This outweighs a £2.9 billion improvement in the underlying forecast in that year and thereby pushes up the deficit.In his 1st term, OBR lifted its borrowing forecasts, forcing GO into more austerity. Now, in his 2nd term, opposite seems to be happening2.01pm GMTMcDonnell is still speaking. He says this statement was part of Osborne’s leadership bid.The statement will be seen as the apex of Osborne’s career, he says.1.58pm GMTJohn McDonnell, the shadow chancellor, is responding to George Osborne now. Having to respond to statements of this kind is the hardest task any parliamentarian ever has to undertake (because the opposition gets no advance warning of what is in these statements) and no one ever really triumphs in this role.McDonnell started by taunting Osborne for the fact that he failed completely to cut the deficit in one parliament as he promised in 2010. McDonnell’s argument was sound, although his attempt to lecture the Tories on deficit reduction and economic credibility prompted laughing from the government benches.1.57pm GMTThe Office for Budget Responsibility’s new Economic and fiscal outlook is online too. Now we can see the details of today’s figures....1.49pm GMTThe Spending Review and Autumn Statement are online here.1.49pm GMTJohn McDonnell has just stood up to respond to George Osborne. He has got quite a task, because there were some genuine political surprises there, as well as at least two leaps into Labourish territory. Quite how Osborne will fund his “good news announcements” is a total mystery, on the basis of what Osborne said, but after a few hours with the red book we should find out. But Osborne does probably deserve some credit for abandoning his tax credits completely, instead for opting for a fudge. If you are going to do a U-turn, you may well do one properly, and Osborne pulled this off with some aplomb. His announcement on police funding was a real surprise too (although we need to see the small print). More interesting were the apprenticeship levy - a £3bn tax on big business, not unlike Gordon Brown’s 1997 windfall tax, and more ambitious than anything Labour proposed at the election - and the punitive 3% stamp duty for buy to let landlords, another move that sounds Jeremy Corbyn than Ed Balls.1.48pm GMT1.43pm GMTHere’s Heather Stewart on today’s Autumn Statement:George Osborne has executed a complete U-turn on his controversial cuts to tax credits, as he delivered what he called, “a big spending review from a government that does big things”.Osborne had promised to modify the plans, which would have seen 3m low-income families lose an average of £1,000 a year, after they were rejected by the House of Lords, and criticised by Conservative backbenchers.Related: George Osborne scraps tax credit cuts in welfare U-turn1.40pm GMTYou always expect a few white rabbits from George Osborne.But this time, the Office for Budget Responsibility handed the chancellor a plump bunny, with better growth forecasts despite recent signs of weakness in the global economy.

Chancellor has concluded the department cannot find enough savings to compensate for decision to slow pace of cuts to tax creditsGeorge Osborne has set in train plans to breach the Treasury’s welfare cap after deciding he cannot find enough savings to compensate for the decision to slow the pace of cuts to tax credits.The chancellor has held discussions with the Department for Work and Pensions (DWP) to arrange a Commons vote that would give the government permission to breach the cap.

Chancellor to spell out how axe will fall on Whitehall budgets that were not protected in election manifesto pledgeGeorge Osborne will announce big cuts in spending for the police, social care, local government, further education, renewable energy and welfare as he is forced to finally spell out how he plans to have reduced spending in key government departments cumulatively by nearly 50% since the Conservatives came to power in 2010.After weeks of media focus on protected Whitehall departments, the chancellor will detail how the cuts will fall across the rest of government departments.Related: Autumn statement: As reality bites, revulsion could yet sink Osborne and Cameron | Polly ToynbeeRelated: How Tory cuts have sliced through David Cameron's backyardRelated: Deficit-reduction plan risks UK health and security, says John McDonnell Continue reading...

Deficit is a word that has haunted western economies since the financial crisis of 2008, but what is it? Why does it get so often confused with debt? And how important is it to the running of an economy? Economists still argue over how best to eliminate it - either by stimulus or by austerity, but one thing is certain: the deficit is set to dominate economic and political discussion for years to come Continue reading...

Tory attempts to steal from the fallen Labour leader have yet to create a party of responsible capitalismEveryone’s favourite opponent is the one most recently defeated, which explains why many Tories now speak warmly of Ed Miliband. Their gratitude to him for losing the election has even unlocked an indulgent view of the case the former Labour leader tried to make: that insecurity, low wages and lack of opportunity are systemic flaws in Britain’s economy.Related: 'Shocking' inequality levels in Britain must be addressed, says John MajorSome Conservative thinkers privately bemoan the limitations imposed by a kind of stubborn libertarianism in the ranks Continue reading...

The chancellor is to set out his four year spending plans and he needs a £20bn surplus by 2020 - this is what he has to doThe comprehensive spending review that George Osborne will announce on Wednesday will set out how the government intends to spend taxpayers’ money for the next four years, covering the period up until the next election. It is one of the key moments of the 2015-20 parliament.He will also set out the autumn statement, which is the government’s update on its plans for the economy and includes new forecasts for growth and public finances from the Office for Budget Responsibility.Related: Autumn statement 2015: five key chartsRelated: Autumn statement: As reality bites, revulsion could yet sink Osborne and Cameron | Polly Toynbee Continue reading...

Chancellor sets out his spending review and autumn statement on Wednesday. Here’s what he is likely to say on the subjects such as the economy, tax credits and housingThe independent Office for Budget Responsibility will announce its latest forecasts for economic growth and a range of other indicators, including inflation and unemployment. In July, it was expecting GDP growth of 2.4% this year and 2.3% in 2016.Related: Autumn statement: As reality bites, revulsion could yet sink Osborne and Cameron | Polly Toynbee Continue reading...

Growth, borrowing, spending cuts, deficits and surpluses - what you need to look out for in George Osborne’s statement on the economyRelated: Spending review 2015: George Osborne delivers his autumn statement - live updatesThere is very little need for the Office for Budget Responsibility to modify its economic forecasts. The projection for 2.4% year-on-year growth this year and a slight moderation next year to 2.3% both look reasonable.”Borrowing will total £80.3bn this year if the current trend continues, nearly £11bn more than the OBR’s £69.5bn prediction...“In Wednesday’s autumn statement, the chancellor can accommodate a small rise in the borrowing forecast and still adhere to his Charter for Budget Responsibility, which requires him to achieve a surplus by the end of the parliament. But his margin for error virtually will disappear, with the surplus in 2019/20 probably being revised down to about £5bn from £10bn.”This year’s autumn statement and spending review marks the halfway point in a ten year campaign to eliminate Britain’s budget deficit. Just under half of the cuts in public spending needed to balance the books have taken place, leaving much of the hard grind of deficit reduction ahead.”“In identifying where the axe will fall in this parliament, the chancellor’s room for manoeuvre is severely limited by existing commitments. The government has ring-fenced around 60% of day-to-day spending... These commitments leave a handful of areas of spending most exposed to further cuts, with local government, the Home Office, Justice and Business in the firing line.”The reductions will take government spending relative to the size of the economy to levels that, in recent times, are below average but not unprecedented. However, the sustained period of cuts – a decade – will be unprecedented.”handy chart from a series of handy charts: @instituteforgov on spending review wiggle room https://t.co/R6NTgLuxF4 pic.twitter.com/ykCUK6QFvW Continue reading...

Analysis of 105 banks by European Banking Authority raises concerns over ‘drag on profitability’ from non-performing loansEuropean banks are sitting on bad debts of €1tn – the equivalent to the GDP of Spain – which is holding back their profitability and ability to lend to high street customers and businesses.According to a detailed analysis of 105 banks across 21 countries in the European Union conducted by the European Banking Authority (EBA), the experience of Europe’s banks to troubled customers is worse than that of their counterparts in the US. Continue reading...

The Bank of England governor didn’t have a care in the world as he purred his way through a meeting with the Treasury select committeeIt is a trademark Canadian drawl that elides not just words and sentences, but decades too.“Thepressureonindependencegloballyhasincreasedpleasedtosaynationalauditofficeoversightpolicyoperationalletmegotodifficultyfirstentranceriskoftaileventsheadwindsdissipateinterestratesmorestimulative,” purred Mogadon “Mañana” Mark Carney.Related: Mark Carney testifies to parliament; US growth revised up - as it happened Continue reading...

GDP grew at reported annual rate of 2.1% between July and September – higher than previously claimed but still down from second quarterThe key measure of the US economy was revised from bleh to meh on Tuesday as businesses restocked goods at a stronger pace than first thought, adding to the likelihood of an historic US rate rise next month.The overall economy, as measured by the gross domestic product (GDP), grew at an annual rate of 2.1% in the July-September period, the Commerce Department reported, up from a previously estimated growth of 1.5%.Related: US jobs data smash forecasts and send dollar soaring – as it happened Continue reading...

Luxury jeweler lowers full-year earnings guidance as uncertain economic and market conditions in the US and other regions impact consumer spendingA strong dollar and economic uncertainty tarnished Tiffany’s third-quarter results. The luxury jeweler also lowered its full-year earnings guidance.Frederic Cumenal, chief executive officer, said in a statement that the strong dollar pressured its results when having to translate foreign sales into US dollars and on foreign tourist spending in the US.

CBI survey shows sales at shops slowed in first half of November as shoppers await bargainsShops have experienced a surprise slowdown in sales this month as shoppers appear to be delaying their spending spree for Black Friday.A CBI survey found 38% of firms had recorded an increase in sales compared with the same period a year ago, while 31% had experienced a decline. This represents a total sales balance of +7, significantly lower than the expected figure of +28.Related: Black Friday is here to stay, says AO chief Continue reading...

Chief economist Andy Haldane says financial policy committee could look into recent rise in personal loansBank of England policymakers may need to take action to prevent a risky consumer borrowing binge as the economy recovers, the bank’s chief economist has warned.Related: Bank of England governor Mark Carney: no plans to abolish cash - live updates Continue reading...

The huge post-credit crunch buying up of urban buildings by corporations has significant implications for equity, democracy and rightsDoes the massive foreign and national corporate buying of urban buildings and land that took off after the 2008 crisis signal an emergent new phase in major cities? From mid-2013 to mid-2014, corporate buying of existing properties exceeded $600bn (£395bn) in the top 100 recipient cities, and $1trillion a year later – and this figure includes only major acquisitions (eg. a minimum of $5m in the case of New York City).I want to examine the details of this large corporate investment surge, and why it matters. Cities are the spaces where those without power get to make a history and a culture, thereby making their powerlessness complex. If the current large-scale buying continues, we will lose this type of making that has given our cities their cosmopolitanism.If the current buying continues, we will lose the type of making that has given our cities their cosmopolitanismPrivatisation in the 90s has resulted in a reduction of public buildings and an escalation in large, corporate ownershipA large city is a frontier zone where actors from different worlds can have an encounter with no rules of engagementRelated: The privatisation of cities' public spaces is escalating. It is time to take a stand Continue reading...

Agreement comes in wake of yet more austerity measures – opposition to which has seen government’s majority in parliament drop to just three seatsGreece has been formally cleared to receive its next bailout loan, worth €2bn (£1.4bn), after it agreed to implement new austerity measures.The eurozone bailout fund, the European Stability Mechanism (ESM), said on Monday it had agreed to release the next instalment of the country’s bailout programme, following a €13bn payout in late August. Continue reading...

It’s clear George Osborne intends to make austerity permanent. Those at the top will benefit, but hard times beckon for everyone elseA familiar dance begins on Wednesday, as soon as George Osborne reveals his blueprint for Britain. The analysts immediately begin poring over his plans for the next five years. They tell us how deep are the cuts in neighbourhood policing, how tight the squeeze for your local school – and the knock-on effect for the Tory leadership hopes of George and Theresa and Boris.But many will miss the backdrop forming right behind them. Britain is now halfway through a transformative decade: staggering out of a historic crash, reeling through the sharpest spending cuts since the 1920s, and being driven by David Cameron towards a smaller state than Margaret Thatcher ever managed. None of this is accidental. While much commentary still treats the Tories as merely muddling through a mess they inherited, Osborne proudly promises a “permanent change” and “a new settlement” for the UK.Related: UK budget deficit could be £40bn in 2020, academics warnAusteria is a place where the past is honoured while the future is ignoredRelated: UK government waters down financial regulation regime Continue reading...

Survey shows both manufacturers and services sector companies reported weaker growth in activity in NovemberThe first snapshot of French business mood since the Paris attacks points to a slowdown in economic activity, with companies in the service sector reporting a blow to trade and confidence.A wide-ranging poll of French companies signalled that private sector output grew in November, but at the slowest pace for three months. Some companies in the services sector, which includes hotels and restaurants, said the gun and suicide bomb attacks on the French capital had dented trade.Flash #France Composite Output Index at 3-month low of 51.3 in Nov (52.6 in Oct) https://t.co/sW7KDR1UYuFlash #eurozone #PMI Composite Output Index at 54.4 (53.9 in Oct), Services at 54.6 (54.1 in Oct), Mfg #PMI at 52.8 (52.3 in Oct)#PMI data signals that #eurozone growth and job creation hit 4.5-year highs in November. https://t.co/IUui1BtTEe pic.twitter.com/4N6GgYXS8G Continue reading...

We must improve the dissemination of and access to climate­-friendly technologies, goods and services which support the transition towards a low­-carbon economyIn a few weeks’ time world leaders will have the opportunity to usher in a new era of multilateral cooperation on climate change. This starts with the UN climate change conference in Paris, but it does not end there. Building momentum to tackle climate change is a common challenge for us all – individually and institutionally. The broader international community, including the WTO, has to play its part.Like most economic activity, trade is often linked to carbon emissions, but the world cannot stop trading – not least as trade is essential in achieving many other shared goals. Trade can help to improve the efficiency of production, it can improve food security and, above­ all, it has proven to be one of the best anti-­poverty tools in history. Trade played a key role in helping us reach the millennium development goal to cut extreme poverty by half – and it is a cross-­cutting element in many of the new sustainable development goals agreed at the UN in September, so this work will continue.Related: Ed Miliband urges UK to enshrine zero carbon emissions target in law Continue reading...

Ahead of chancellor’s autumn statement, City University report says Treasury has underestimated impact of welfare and department cutsGeorge Osborne could be forced to borrow billions of pounds more than forecast by 2020 if he sticks with spending cuts that will hit economic growth, according to a report by City University.With only days to go before the chancellor’s autumn statement, the report says the Treasury has underestimated the impact of welfare and departmental spending cuts on the broader economy and especially cuts to public sector investment.Related: Relentless cuts won’t help Britain’s long-term economic prospects | Letters Continue reading...

Beneath the crude statistic that the world is heading towards 70% urbanisation by 2050 lie regional differences in demographic, economic and environmental change. LSE Cities’ Urban Age programme takes a deeper look at the dataIn 1950, the fishing village of Shenzhen in south-east China had 3,148 inhabitants. By 2025, the UN predicts, that number will exceed 12 million. Congo’s capital Kinshasa will have gone from 200,000 to more than 16 million, growing over the next decade at the vertiginous rate of 4% a year (about 40 people an hour). Meanwhile Brazil’s economic engine São Paulo will have slowed to less than 1% per annum, nonetheless experiencing a 10-fold expansion over the 75-year period.

The emergence of a young, monied elite whose inherited wealth is highly visible is a new thing for New Zealand – but how do we respond?When I went on television to launch my new book about wealth inequality in New Zealand, I didn’t expect much of a backlash. The core of my book is straightforward information: new data showing that the wealthiest 10th of New Zealanders own more than half of all assets, while the poorest 50% have just 4%.

This week’s spending review will be a key test of the Tory party’s values, and is a chance to show it’s moved on from Margaret ThatcherLest you were in any doubt about its purpose before, the Conservative party has left little room for confusion in 2015. The cover of its election manifesto promised “a brighter, more secure future”. In July George Osborne announced “a budget that puts security first”. Its conference slogan in Manchester was: “Security. Stability. Opportunity.”Related: Spending review 2015: now it's time for George Osborne to face tough choicesRelated: Everything we hold dear is being cut to the bone. Weep for our country | Will HuttonThe chancellor and the Treasury chief secretary truly believe they are enacting a revolution Continue reading...

What a thoroughly reactionary article by Simon Jenkins (From militant doctors to angry lawyers, professionals are the new union barons,19 November), supporting government attacks on junior doctors and legal aid lawyers. He peddles the nonsense that the cost of legal aid is 20 times Europe’s average, ignoring the many comparable reports that have found costs to be average. His quaint middle-class idea that representation can simply be resolved by us seeking mediation ignores the role of some legal aid lawyers in supporting campaigns that exposed terrible police practices in cases such as Hillsborough or Stephen Lawrence.His idea that everyone should be denied both a solicitor and a barrister would lead directly to masses of miscarriages of justices, where the police and prosecution would have representation denied to everyone else. It would also lead to a lack of accountability. The last time I was at court was at an inquest for a family of a man who had died in a G4S prison. The prison had skilfully managed to tell the wrong family their son had died. This did not stop them having four representatives at the inquest – but it also did not stop the jury criticising their practices. Decent representation may not be important for the likes of Simon Jenkins, but the majority of society cannot afford to be without it.

The UK chancellor has dug a big hole for himself over tax credit cuts with room to manoeuvre limited by the worsening deficit. But he has optionsGeorge Osborne is a lucky man. In different circumstances, the headlines in the 10 days before his autumn statement on Wednesday would have been dominated by the mess the chancellor has made for himself over tax credits.

Chancellor refuses to rule out cuts to policing in Wednesday’s spending review, which will include cuts to many government departmentsThe Home Office has agreed a deal on police cuts that are expected to hit frontline services despite heightened security concerns, George Osborne has revealed.Confirming all government departments have settled their future spending plans for this parliament, the chancellor refused to confirm the exact nature of cuts to British policing.

However belated the report into the bank’s collapse and the new inquiry may be, they remain jobs that were worth doingThe British establishment, it is often said, is capable of decisive and clear-minded action only when it is confronted by a crisis. At other times, it prefers insularity, hates self-analysis and loathes outside criticism.This character trait was seen clearly during and after the great banking crisis of 2007-09. The disaster itself arrived with the run on Northern Rock in September 2007 but only became truly dangerous in October 2008 when HBOS and then Royal Bank of Scotland were on the brink of failure. Continue reading...

Any five-year-old sees that it’s not fair for poor families to keep falling further behind the rest of us. But the Tories have decided not to measure thatAs I was bundling up a cosy red coat that my five-year-old has outgrown to donate to charity last week, I gently explained to her that while we could just buy ourselves new, warm clothes when winter draws in, not everyone is so lucky.Not for the first time, I was struck by how obvious it seemed to her – not just that other children shouldn’t have to go without, but that we have more than enough, and that that makes others’ deprivation more shocking. No child should go cold and hungry at all, but in a society where plenty is the norm, it seems peculiarly senseless.Family income matters: kids from poorest families are more likely to struggle at school and to suffer health problems Continue reading...

Treasury shadow chief secretary Seema Malhotra announces review of government support for enterpriseLabour will launch a detailed review of the multitude of tax breaks offered to Britain’s businesses, as the party seeks to craft a distinctive Corbynite economic policy, according to shadow chief secretary to the Treasury Seema Malhotra.In an interview with the Observer, Malhotra said business reliefs, which allow companies to reduce how much they owe the taxman, should be subject to the same scrutiny as any other area of public spending. Continue reading...

Under pressure to halt his tax credit cuts, the chancellor needs to find extra savings to hit his £20bn target – but can he afford to slash the police budget at such a critical time?

The shadow chancellor’s pro-business deputy has George Osborne’s ‘tax credit fiasco’ firmly in her sights as the autumn statement approachesSeema Malhotra, the shadow chief secretary to the Treasury, could hardly be more different from her boss and constituency neighbour in west London, John McDonnell.While the shadow chancellor – and Jeremy Corbyn’s righthand man – cites Marx as a major intellectual influence, Malhotra, a rising Labour star, is a former management consultant who grew up above a shop in Hounslow, the daughter of Indian immigrants, and speaks in glowing terms of the contribution business can make to society. Halfway through an interview dissecting the Tories’ economic policies, a division bell rings, and she swaps her heels for trainers and bolts off to vote. Continue reading...

Former Greek finance minister warns Australia has ‘false sense of well-being’ and needs to change direction to avert crisisAustralia is a “plaything” of forces it cannot control as the world economy heads into another phase of the global financial crisis, according to the former Greek finance minister Yanis Varoufakis.The “remarkable” flow of overseas money into the economy in recent years had created a “false sense of well-being”, he said, but the economy needed to change direction quickly to avert a crisis.Related: Yanis Varoufakis: ‘If I’m convicted of high treason, it would be interesting’Related: EU referendum: Yanis Varoufakis says Britons should vote to stay in unionRelated: In defence of Yanis Varoufakis Continue reading...

European Central Bank expected to increase quantitative easing as French consumer spending collapses amid ‘avalanche’ of tourist cancellationsMario Draghi has signalled fresh help from the European Central Bank for the struggling eurozone economy amid signs that the terrorist attacks in Paris have led to a collapse of spending by French citizens and “an avalanche of cancellations” from tourists.With the big Paris department stores, Printemps and Galeries Lafayette, reporting footfall down by between 30% and 50%, Draghi all but confirmed that the ECB would step up its efforts to stimulate growth and lower unemployment. Continue reading...

Institute for Fiscal Studies says watering down planned changes would make it impossible for George Osborne to keep welfare spending below £115bnGeorge Osborne is at risk of breaching his self-imposed ceiling on welfare spending if he makes concessions on plans to curb tax credits to hard-pressed families, Britain’s leading thinktank on the public finances has said.The Institute for Fiscal Studies said unless the chancellor could find savings from elsewhere in the benefits bill, it looked likely that he would have to ask parliament to raise the welfare cap announced in the summer budget. Continue reading...

Shock deficit figures for October mean the police, courts, local government, business and above all education face 30% cuts in autumm statement, says Resolution FoundationThe police, courts, education, local government and business are facing spending cuts of up to 30% next week as five Whitehall departments bear the brunt of George Osborne’s attempt to put Britain’s public finances back in the black, according to an independent thinktank.The ringfencing of key areas of spending, such as the NHS, coupled with agreements already struck between the chancellor and some of his cabinet colleagues, has left five big areas of spending under threat, says the Resolution Foundation.Related: Shock UK deficit figures dent George Osborne's economic plan Continue reading...

Surprising figures for October mean the chancellor must find an extra £10bn than envisaged. Prepare for some creative accounting – and more cutsOn the surface, the figures are bad. Government borrowing was 16% higher in October than the same month last year.The deficit was supposed to be going down – and quickly. Forecasts by the Office for Budget Responsibility, which assesses the government’s spending plans, predicted growing tax receipts and lower spending would generate a 23% cut in borrowing over the financial year. It is currently only 11% lower.Related: Shock UK deficit figures dent George Osborne's economic plan Continue reading...

Gap between state spending and revenue is worst in October for six years with economists warning chancellor will need further austerity or miss annual targetGeorge Osborne’s deficit-cutting drive has been dealt a blow ahead of next week’s spending review after official figures showed the worst October for the public finances in six years.The deficit, or the gap between what the government spends and takes in, swelled by 16% from a year earlier to £8.2bn in October, according to the Office for National Statistics (ONS). It was a larger shortfall than the £6bn forecast by economists in a Reuters poll.Related: UK deficit figures: expect a new George Osborne conjuring trick Continue reading...

Ahead of the COP21 UN climate summit, Nicholas Stern and Dimitri Zenghelis argue that the choices cities make today on transport and industry will determine whether the world can benefit from resource-efficient growthCities are home to half the world’s population and produce around 75% of the world’s GDP and greenhouse gas emissions. By 2050, between 65% and 75% of the world population is projected to be living in cities, with more than 40 million people moving to cities each year. That’s around 3.5 billion people now, rising to 6.5 billion by 2050; a huge and singular event in human history.This places cities at the centre of economic activity affecting how economies grow, how resources are allocated, how innovation takes place, whether innovation is used well or badly and, if badly, how much damage it inflicts on others now and in the future. They can also be very exposed and vulnerable to climate risks such as water shortages, floods and heat stress. The mass congregating of people and rising demand for resources, under poor organisation and governance, make cities prime sources of pollution, congestion and waste.

Why do businesses and households need the Federal Reserve to intervene with higher borrowing costs if they are already restraining themselves?There was never going to be a right time for the Federal Reserve to raise interest rates, yet now, as the US central bank prepares for a December “lift-off”, it seems the first move in seven years will be both too early and too late.Too early, because many of the underlying weaknesses of the US economic system are still evident: the low rate of Americans’ participation in the workforce; a lack of above-trend wage growth to drive up shop prices. Then there is the insipid global growth forecasts brought on by a decline in global trade. Continue reading...