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Updated 2025-04-26 08:30
Has the Bank of England governor been caught bluffing on interest rates?
Mark Carney has been dealt a weak hand and his forecast that borrowing costs would soon rise exposed as a bluff. A move into negative rates are more likelyIt will probably be “no change” at the Bank of England this week, with policymakers expected to keep interest rates at their historic low again.The monetary policy committee meets on Thursday and in all probability will sit on its hands for the 83rd straight month. Most likely the MPC will keep the base rate at 0.5% for the rest of the year.Related: Is it a bird? Is it a plane? No, it’s Super Thursday Continue reading...
Is it a bird? Is it a plane? No, it’s Super Thursday
The Bank of England’s monthly interest rate announcement is all a lot more exciting than it used to be. Not that rates are very likely to be raised this monthThe fusing of the Bank of England’s announcement of its decision on interest rates with the unveiling of its quarterly inflation report is a relatively new phenomenon.It has been dubbed “Super Thursday” by economists who don’t have much else to get excited about, and has been structured in this way to either (a) allow the Bank to “take a deeper look at inflation prospects and give it a fresh perspective on the monetary policy”; or (b) because there’s been so little to say about rates for seven years that the Bank’s press office has got a bit embarrassed. Continue reading...
Work also shrinks to fit the time available: and we can prove it
British productivity is still in the doldrums. What if the simple reverse application of Parkinson’s Law could solve it?‘It is a commonplace observation that work expands so as to fill the time available for its completion.” So wrote C Northcote Parkinson in jest about postwar bureaucracy in 1955. But his musings resonated far and wide, and now, 60 years on, what became known as Parkinson’s law is worth exploring in a country where productivity remains mired in the doldrums.What if solving the productivity puzzle is simply a case of fitting the same work into a shorter time? Continue reading...
If having more no longer satisfies us, perhaps we’ve reached ‘peak stuff’ | Will Hutton
Societies must learn to use economics to help provide purpose and fulfilmentReal men don’t eat quiche. Real economists don’t ask questions about happiness. The economy pumps out goods and services, all of which create jobs and incomes. There is no value judgment in such a statement, no view of what constitutes the good life. Even to invite such a question of an economist is to risk ridicule. The task of economists – a value-free quasi-science – is to make sure that as little as possible gets in the way of turning inputs into more outputs.But around the developed world consumers seem to be losing their appetite for more. Even goods for which there once seemed insatiable demand seem to be losing their lustre. Last week, mighty Apple reported that in the last three months of 2015 global sales of the iPhone stagnated, while sales of iPads tumbled from 21m units in 2014 to 16m in the same three months of 2015. In the more prosaic parts of the economy – from cars to home furnishings – there are other warnings that demand is saturated. Continue reading...
We print money to bail out banks. Why can’t we do it to solve climate change?
We need an estimated $1tn per year to stay below a global temperature rise of 2C. Creating new money might be the only way to meet this financial challengeThe international community has agreed on an ambitious agenda to curb climate change. Some 195 countries have decided to try and cut greenhouse gas emissions to a level that will limit the rise in average global temperatures to well below 2C. The question we now face is: how are we going to finance the changes needed to reach this goal? Quantitative easing – creating new money – might just be the answer.Related: Wanted: unprecedented collaboration to solve poverty and climate changeA percentage of that spent to bail out private banks could pay for investments needed to stabilise the world’s climateRelated: UN urges business leaders to double investment in green energy by 2020Related: $100bn? A drop in the ocean, says environment minister Amina Mohammed Continue reading...
Google deal highlights need for 'radical change' to international tax rules
Institute for Fiscal Studies report urges governments to scrap corporate tax system and write new rules for multinationalsGoogle’s £130m tax deal with the UK reveals the need for a radical overhaul of the international tax system, according to Britain’s leading authority on tax and spending.The Institute for Fiscal Studies (IFS) said governments should consider going back to the drawing board to develop a tax system that accommodates multinationals which currently escape making corporation tax payments in some countries.Related: Google's tax deal with the UK: key questions answered Continue reading...
Global markets end tumultuous month on a high
2016 has seen some dramatic falls already, but Bank of Japan’s negative interest rates put some hope back into the global economyGlobal markets have ended a difficult month on a stronger note after the Bank of Japan stepped in to boost its economy with negative interest rates.However, weak economic growth figures in the US underscored the scale of a global slowdown that has rattled investors. Continue reading...
Investors love cheap money – and hate optimistic central bankers
Stock markets rally thanks to Bank of Japan interest rate cut but the signs are the global economy is still feeling fragileIt would be easy to think that the worst is over, at least for the time being. Watching world stock markets rally after the Bank of Japan cut interest rates gave a sense of relief to many in the financial community. Oil prices, which slumped to just $27 (£19) a barrel a fortnight ago, stood at $34, up 40 cents on the day.Yet the reverse is true. If anything, investors are worried that governments and central banks have failed to realise how weak the global economy still is, seven years after the crash. Dangerous levels of private debt in China, bad debts lurking in Europe’s banking system, nervous consumers everywhere: it’s a nuclear device that needs careful handling.Related: Investors love cheap money – and hate optimistic central bankers Continue reading...
Markets rise as weak US GDP dents prospects of Fed rate hikes – as it happened
Markets also boosted by Bank of Japan’s surprise move to negative interest rates. French economy slows in fourth quarter while Spain powers ahead.
Bank of England to force bigger UK lenders to hold more capital as 'risk buffer'
Threadneedle Street wants banks and building societies to be able to continue lending in times of stressBritain’s biggest lenders will be required to hold more capital than smaller rivals to ensure they can keep credit flowing into the economy, under proposals from the Bank of England.In the latest effort to avoid another taxpayer bailout of the banking system, Threadneedle Street will require the divisions of banks involved in lending to businesses and individuals to keep some capital in a “systemic risk buffer”. Continue reading...
Iran's dealmaking with Europe: the seven biggest contracts
Deals worth nearly €40bn were struck during the Iranian president’s four-day visit to Europe after the lifting of sanctionsAimed at renovating its ageing air fleet struck by years of sanctions, Iran Air has ordered 118 commercial passenger planes including 12 Airbus A380s, the world’s largest jet airliner. Other models on the list include 21 A320ceo, 24 A320neo and 27 A330ceo jets. Continue reading...
US GDP slows sharply in fourth quarter on weak consumer spending
US economy slowed to just 0.7% growth in the final three months of 2015 as Americans spent less and businesses cut back on investmentsThe US economy barely grew in the final three months of 2015, rising at an an anaemic 0.7% annual rate amid signs of a global economic slowdown.Related: US economic growth slows sharply in fourth quarter – live Continue reading...
Japanese yen takes a deliberate dive to keep things turning
Big business will not invest in extra production without assurance that the yen will stay low for the time beingJapan’s exporters need all the help they can get – 25 years of stagnation have taken their toll. So a drive to push down the value of the yen, making it easier to export, can be expected to raise a cheer in the sake bars of Kyoto.And that’s just what the Bank of Japan did when it imposed a 0.1% charge on deposits. It’s not the official policy objective – fighting inflation is. Conversely, the central bank emphasises the negative impact on saving and therefore the incentive for corporates to spend their large cash piles. Continue reading...
What does Bank of Japan hope to gain by imposing negative interest rates?
Country’s battle with deflation enters new phase with central bank hoping to avoid pitfalls of unconventional interest rate moveThe Bank of Japan (BoJ) has imposed negative interest rates on banks to encourage them to lend to businesses, instead of hoarding cash, to support the flagging economy and the country’s battle to break free of deflation.Related: Stock markets rebound after Japan's shock move to negative interest rates – liveRelated: Bank of Japan shocks markets by adopting negative interest rates Continue reading...
Is the global economy about to crash? – video explainer
A slowdown in China, plummeting stock prices, debt worries in emerging markets and low oil prices point to a bumpy patch in the global economy. Could we be on the verge of another major crisis, as some analysts warn? We look at the reasons to be fearful and cheerful about the economy in 2016 Continue reading...
Was there ever a time when so few people controlled so much wealth? | Eoin Flaherty
Two things are clear: radical new ways of getting rich have been invented, and things have probably never been this unequal since before the second world warOxfam’s latest report claims that income inequality has reached a new global extreme, exceeding even its predictions from the previous year. The figures behind this claim are striking – just 62 individuals now hold the same wealth as the bottom half of humanity, compared with 80 in 2014 and 388 in 2010. It appears that not only have the global elite weathered the financial crisis, but their fortunes have collectively improved.Related: We’ve been conned by the rich predators of Davos | Aditya ChakraborttyRelated: Inequality isn’t inevitable, it’s engineered. That’s how the 1% have taken over | Suzanne Moore Continue reading...
Bank of Japan shocks markets by adopting negative interest rates
The central bank has imposed a 0.1% fee on deposits in an attempt to force more borrowing as way out of the deflationary spiralJapan’s central bank has made a shock decision to adopt negative interest rates, in an attempt to protect the flagging economy from market volatility and fears over the global economy.In a 5-4 vote, the bank’s board imposed a 0.1% fee on deposits left with the Bank of Japan (BoJ) – in effect a negative interest rate. Continue reading...
Are we heading for a crash? | Albert Edwards, Aditya Chakrabortty, Linda Yueh, Ruth Lea, Fred Harrison, Vicky Pryce, Dambisa Mayo, Yanis Varoufakis, Mariana Mazzucato
Economists can’t agree if gyrating financial markets mean we face a global meltdown. We asked leading analysts to debate the question … Continue reading...
Barclays faces '£1bn lawsuit' over 2008 financial crisis deal
Lender believes claim made by instigator of £3.5bn deal with Abu Dhabi client to be ‘misconceived and without merit’The dealmaker who played a key role in finding backers for Barclays’ emergency fundraising during the 2008 financial crisis has filed a lawsuit against the lender and is reportedly seeking nearly £1bn.A spokesman for Amanda Staveley confirmed the existence of the claim but declined to put a figure on the total being sought by the financier and her firm, PCP Capital Partners. However, the Financial Times reported that Staveley is suing for almost £1bn. Continue reading...
Oil price jumps as Russia hints at production cuts
Price of oil temporarily leaps 8% as Russian energy minister says February discussions with Opec members will address topic of production cutsThe price of oil jumped 8% at one stage on Thursday after Russian officials said they would discuss production cuts with Saudi Arabia and other Organisation of Petroleum Exporting Countries (Opec) at a meeting next month.Brent blend almost hit $36 per barrel before sinking back to just over $34 as Saudi sources played down suggestions it had already considered reining in crude volumes. Continue reading...
FCA orders new inquiry into HBOS chiefs
The City regulator is to re-examine events surrounding near-collapse of HBOS group and whether its bosses should face actionCity regulators are to investigate the role of HBOS’s senior management in the near-collapse of the bank during the financial crisis more than seven years ago.
Lloyds sell-off teaches George Osborne a valuable lesson in timing
The chancellor may blame the markets for cancelled share sale, but a stock like Lloyds is a weathervane for health of UK economyGeorge Osborne has discovered that share prices can go down as well as up. The chancellor has postponed his plan to flog £2bn of Lloyds Banking Group shares to the public because stock markets are deemed too “turbulent”, by which he means that Lloyds shares sit at 64p, well below the state’s break-even price of 73.6p.Spring had been the deadline for the sale – now it’s not. The scheme can be resuscitated at a later date but there is a simple moral to this tale: don’t make promises on timing, because markets can make you look foolish.Related: George Osborne postpones sale of last publicly owned Lloyds Bank sharesRelated: Oil prices to stay near current level throughout 2016, World Bank saysRelated: FCA orders new inquiry into HBOS chiefs Continue reading...
Government business department shuts largest non-London office
George Osborne’s ‘northern powerhouse’ policy questioned as branch closure in Sheffield casts doubt on chancellor’s pledge to revitalise English citiesThe Department for Business, Innovation and Skills (BIS) is to close its largest office outside London, prompting accusations that the chancellor’s “northern powerhouse” project was empty rhetoric.Plans to close the BIS office in Sheffield by 2018 were announced on Thursday by the department’s permanent secretary, Martin Donnelly, who told the centre’s 240 staff that all those faced with job losses would be provided with “comprehensive support”. Continue reading...
UK GDP growth rises 0.5% as annual rate slows to three-year low
Manufacturing and construction sectors falter as Brexit fears, market turmoil, China slowdown and falling oil price prompt cloud economic outlookBritain’s economy picked up pace at the end of 2015 but GDP growth for the year as a whole was down markedly, as both the manufacturing and construction sectors struggled with an uncertain outlook.Official figures published on Thursday showed GDP expanded 0.5% in final three months of 2015, up from 0.4% growth in the previous quarter and in line with the consensus forecast in a Reuters poll of economists. On a year earlier, GDP was up 1.9%, after growing an annual 2.1% in the third quarter. This latest quarter marks the slowest annual expansion rate since early 2013.Related: HBOS probe launched; UK growth hits 0.5% - business live0.5% growth in #GDP in Q4, up from 0.4% in Q3 https://t.co/HtgUwDgHlyLatest stats show economy grew at 0.5%. Shows UK continues to grow steadily & despite turbulence in global economy we're pushing ahead Continue reading...
Osborne is storing up a heap of trouble for the UK economy
Rising house prices do not offset the fact that manufacturing and construction shrank in the last three months of 2015Last summer, a brief recovery in the manufacturing sector was already running out of steam. The construction sector followed the same path. Affected by a slowdown in global trade, the high value of the pound, and possibly the government’s determination to impose another five years of austerity, businesses became more circumspect about expanding output.Now, official figures for GDP growth in the final three months of 2015 show that these backbone of the economy activities, the stuff of making and building things, actually shrank.Related: UK economic growth slows in 2015: what the economists are saying Continue reading...
UK economic growth slows in 2015: what the economists are saying
Leading economists assess outlook for 2016 after figures show GDP growth rate falling from 2.9% in 2014 to 2.2% last yearThe UK economy expanded 0.5% in the final months of 2015 as expected, but for the year as a whole, growth was down markedly.Official figures show GDP grew 2.2% last year after rising 2.9% in 2014. That slowdown came against the backdrop of a waning global economy.Given the difficult international background, it is not surprising that the UK failed to sustain the more impressive economic growth seen in 2014. Services remains the main driver of the economy, while production and construction are down.The GDP figures demonstrate that the recovery remains fragile. While the services sector continues to grow, production is close to stagnation and the construction sector is now in recession. Every effort must be made to support both these sectors as we seek to rebalance the economy.Despite some global headwinds, the UK economy continued to deliver solid growth of 0.5% in the fourth quarter of 2015, close to its long-term trend rate. As in previous quarters, this reflected the strength of domestic demand and private services sectors, while manufacturing and construction output were broadly flat.Looking ahead, strong job creation, low energy prices and positive real income growth should keep consumer spending growth at a decent rate of about 2.5% in 2016. This should allow the UK economy as a whole to deliver continued steady growth of just over 2% this year, despite recent financial market volatility.Manufacturing ended the year on a flat note, rounding off a disappointing year for the sector. However, the picture remains very much a sectoral story, with those sectors exposed to oil and gas struggling, while those consumer facing, such as automotive, are faring much better on the back of a healthy labour market and strong wage growth.While we expect the sector to grow this year, the risks are mounting. Along with the oil price remaining low, slower growth in emerging markets, especially China, is likely to hamper export prospects.Our Deputy Chief Economist Zach Witton comments on today's #GDP and #manufacturing figures from @ONS #ukmfg pic.twitter.com/XflbvV73sDAfter volatility in the financial markets during the first few weeks of the year, these GDP figures should settle nerves about the health of the real economy. Growth of 0.5% a quarter is far from remarkable, but with services continuing to power the recovery, and housebuilding expected to undergo something of a revival as the year progresses, this expansion looks sustainable.Across the economy, high levels of debt remain a concern – especially at this point in the cycle. This debt bubble can still be deflated with effective monetary policy, and it would be wise to take action before it becomes unmanageable.The upturn masks an unbalanced economy and a slowing pace of expansion, with the annual rate of growth slipping to the weakest for almost three years. Survey data also point[s] to a further loss of momentum in December.Uncertainty over ‘Brexit’, weak overseas growth and financial market volatility are all creating an unsettling business environment and point to downside risks to the economy in 2016. The coming year could easily see the pace of economic growth slow further from last year’s 2.2% expansion, and the chances are growing that we will see yet another year in which interest rates are left at their record low of 0.5%.UK GDP +0.5% in Q4, but driven (once again) entirely by services according to ONS pic.twitter.com/dxJHKsitv5The figures mean that GDP in 2015 as a whole rose by 2.2% – respectable, but still a fairly significant slowdown from 2014’s 2.9% rate. And the economy faces a number of headwinds this year, potentially including the EU referendum and rising inflation and interest rates. So we doubt that we will see a strong pick-up in growth this year. Nonetheless, we don’t expect a further slowdown either. And we are still more optimistic than most about the prospects for growth next year.Sub-trend growth suggests one of Carney's conditions for rate rise - growth set to use up remaining slack - not met pic.twitter.com/ckqWdvfLiEIt’s a big concern how fragile the recovery still looks, and how unbalanced it is, with growth almost entirely dependent on services.We need a stronger recovery that’s built to last and that reaches all sectors of the economy. The weakness of manufacturing and construction is no surprise given the government’s lack of a proper industrial policy to boost the economy and protect crucial industries such as steel.This morning’s UK GDP figures provide a timely counterweight to some of the recent economic pessimism ... Although this was in line with median expectations, given the singular focus on the downside risks in recent weeks, many in the market were no doubt braced for a weaker outturn.Today’s data provides welcome confirmation that the economy continued to grow broadly in line with its trend. It remains to be seen whether this resilience can be maintained in the wake of the recent market turmoil. Given the strength of the labour market, exceptionally loose monetary conditions and the positive impact on consumer and business spending of the fall in oil prices, we believe it will.The outlook for the UK in 2016 remains fragile and we expect a slowdown in growth compared with last year. The public could easily vote to leave the European Union in a referendum later this year, if the latest opinion polls give an accurate picture of voting intention.While the longer term implications of ‘Brexit’ are debatable and depend on a wide range of factors, the short-term implications would undoubtedly be messy. If Brexit happens, Cebr envisions a sharp fall in the value of sterling, as well as further volatility in other financial markets. There would also be negative impacts on overseas demand for property and foreign direct investment – in the short term at least.Monetary policy will remain highly accommodative for most of the year and help sustain or even accelerate consumer credit growth – already at decade highs – and boost consumption.In addition, consumer confidence remains elevated and stable, with the negative effects of continuing economic and financial market turbulence being offset by record high employment levels and continued increases in house prices. Finally, further falls in the price of oil and strong competition in the supermarket sector are driving down the cost of basic necessities such as food and oil, freeing up household income to spend on other goods and services. Continue reading...
The economy isn’t working. This could be Labour’s chance | Stewart Wood
Google, crony capitalism and zero-hour contracts are just some of the things fuelling public anger. We need to channel that rage into reformGeorge Osborne did something foolish last weekend. On Saturday morning at 8.15am, possibly as his guard was down while munching on some rösti over breakfast in Davos, he tweeted: “#Google tax bill is a victory for the action we’ve taken”.Related: Google £130m UK back-tax deal lambasted as ‘derisory’ by expertRelated: The Big Shortfall: how UK taxpayers are cheated by business lobbyists | Simon Jenkins Continue reading...
Federal Reserve is 'closely monitoring' global economy as it leaves rates on hold - as it happened
Latest: US central bank leaves borrowing costs unchanged and reveals it is watching markets closely
The Guardian view on the economy: learn the lessons of 2008 before the next slump hits | Editorial
The debate about prevention and cure needs to break out of the confines of the seminar room and into the political debateThe Federal Reserve on Wednesday shrewdly declined to draw firm conclusions about recent mercurial swings of the markets. But investors are at least wary about a new global downturn. Citizens are similarly apprehensive: on Wednesday, Ipsos Mori’s confidence index gave the gloomiest reading in three years. Meanwhile, the economics profession has still only done a fraction of the difficult thinking demanded by the last crash. Sure, there is more understanding than in 2008 about banks keeping rainy-day funds aside, and more realism, too, about complex financial products, which exist to conceal rather than to manage risks. But the deeper questions about a more sustainable prosperity, less prone to disruptive vicissitudes, remain unanswered. So, too, does the immediate question about how to resuscitate the economy when it next falls to the floor.The nasty end to the Nice decade – the years of non-inflationary, continuous expansion – came so abruptly in 2008 that practice had to move faster than theory. Interest-rate cuts broke all records and, before the austerity turn, there was a fiscal stimulus too. Quantitative easing, which nobody had heard of until it started happening, entered the language. The same excuse for lack of preparedness is not going to cut it again. And yet – as a sobering Resolution Foundation report lays bare on Thursday – we are in some respects even less well-placed to respond. Continue reading...
Federal Reserve keeps interest rates unchanged while monitoring markets
US stock markets fell again Wednesday as the central bank left rates unchanged but pledged to monitor developments in the global economyUS stock markets fell again on Wednesday as the Federal Reserve announced it would keep key interest rates unchanged while pledging to closely monitor developments in the global economy and financial markets.In December the central bank made the decision to raise rates for the first time since the recession. Stock markets have been turbulent across the world since the move, and all the US markets entered negative territory again after the announcement.Related: Market panic’s over – but ingredients are there for more thrills on the rollercoaster Continue reading...
How historically accurate is The Big Short?
Adam McKay’s subprime meltdown drama is fast, witty and furiously righteous. But when it comes to the real events behind the story, is it a good bet?Director: Adam McKay
Number of Chinese tourists visiting UK soars nearly 40%
More than 200,000 Chinese holidaymakers visited in first nine months of 2015 and £2,700 spend per head is among highest, says VisitBritainThe number of Chinese tourists visiting the UK soared 37% in the first nine months of last year, taking the total to more than 200,000 in 2015.Chinese visitors collectively spent just 4% more than in 2014 – or £435m – according to the tourism body VisitBritain. However, that was a bounce back from a 1% fall in the same period a year before, after a 68% surge in 2013.Related: VisitBritain aims to attract Chinese tourists with new names for landmarks Continue reading...
Labour’s economic rock stars will expose the Tories as a one-hit wonder | Anne Perkins
The Labour leadership is recruiting Mariana Mazzucato and Thomas Piketty to revolutionise thinking about the way the UK economy should workFord is trying a bold new strategy to persuade the car-buying classes that, without quite going for the Ratner strategy of rubbishing its own product, it is now building something of novel and world-beating excellence. #Unlearn is a smart way of selling the idea of a change of direction.My interest in cars expires with a recognition of the strategy, so I’ve no idea whether the product matches the claim. But I like the idea. Labour could use some of this. In fact, it is on it already.Related: The Guardian view on the UK economy: the foundations are looking shaky | EditorialRelated: How Labour will secure the high-wage, hi-tech economy of the future | John McDonnell Continue reading...
Investors' worries over Brexit lead to increased sterling volatility
Measures in pound’s volatility reach levels that close in on last year’s pre-general election confusion, with buyers keen to seek protection from a slide in valueInvestors’ jitters over the Brexit referendum have reached levels not seen since the 2015 general election as financial institutions seek protection from a fall in sterling, according to market data.Measures of volatility in the value of sterling indicate mounting fears that Britons may vote to leave the EU and further weaken the British pound. Continue reading...
France hit by day of protest as security forces fire teargas at taxi strike
Twenty people arrested, with teachers, farmers and air traffic controllers also taking industrial action across country
Mark Carney warns Brexit adds to UK current account risks - as it happened
Bank of England governor says “certain developments” could mean UK assets are seen as riskier, as EU referendum approaches
The Episodic Career: finding happiness in a tough economy – and despite yourself
Journalist and policy analyst Farai Chideya tackles how to survive in a time of broadening inequality and dwindling job market prospectsOn the frontlines of economic upheaval, author Farai Chideya tackles the conversation of a generation head on, and asks the big question: how can all of us establish a life of relative financial security at a time of broadening inequality and dwindling job market prospects?In her latest book, The Episodic Career, the journalist and political analyst offers a guide for American workers operating in an age of disruption and new career rules. Continue reading...
Ghana's success story built on gold, oil and cocoa is foundering | Chris Matthews
Soaring prices for electricity, water and fuel have triggered protests amid concern that politicians are mishandling Ghana’s economic downturnDressed in the red and black clothing traditionally worn at funerals, waving anti-austerity placards and accompanied by drums and bellowing horns, thousands of Ghanaians descended on the Kwame Nkrumah Circle in Accra in mid-January.These workers marching through the capital and other cities were showing their dismay at recent price hikes and taxes, which have increased the cost of electricity by 59%, water by 67% and fuel by 28%.Related: Ghana’s cocoa farmers turn to smuggling as profits dwindle | Mark Anderson and Billie Adwoa McTernanRelated: Ghana’s plea to IMF a sad recognition of the perils of prosperity | Monica MarkRelated: Ghana’s big business and informal traders alike hit by crumbling economy | Billie Adwoa McTernan Continue reading...
Brexit 'would trigger economic and financial shock' for UK
Credit Suisse analysts predict leaving EU would cause snap recession, hit share and house prices and knock up to 2% off GDPA UK vote to leave the EU would trigger a snap recession, prompt a fall in share prices and house prices and knock as much as 2% off GDP, according to analysts at the investment bank Credit Suisse.Wading into the debate over the upcoming referendum, they predict the UK will probably vote to stay in the bloc. But were the public to opt for Brexit, the consequences would be “drastic and long lasting”, say the analysts.Related: We are perfectly positioned within Europe. Why change it?Related: Unilever says its 7,500 UK jobs will not suffer in case of Brexit Continue reading...
UK manufacturers suffer further drop in orders, CBI survey shows
Demand in January fell faster than in December although companies are keener to invest and recruitUK manufacturers have suffered a further drop in orders this month, according to a poll that suggests the slowing global economy is hurting demand for exports.The latest snapshot of industry from the CBI showed order books deteriorated again in January, at a faster pace than December and more sharply than City economists had been predicting.
Could a basic income solve the biggest challenge of the digital economy? | Andrew White
With growing numbers of jobs threatened by automation, reviving old ideas of an unconditional income may be the best way to protect workersAt a time of global economic insecurity, an insightful commentator identified the existential threat that technology poses to work:Related: Dutch city plans to pay citizens a ‘basic income’, and Greens say it could work in the UKRather than lamenting what automation robs us of, why not use it to generate greater opportunities? Continue reading...
Asian shares edge higher as oil price rallies
Japan’s Nikkei and the Shanghai Composite Index nudge up nearly 1% helped by expectations central banks will ease monetary policyShares in Chinese and other Asian markets began the week on a firmer note, extending gains from Friday after a rally in battered oil prices prompted a rise in global equities.
One year on, Syriza has sold its soul for power | Costas Lapavitsas
Alexis Tsipras has embraced wholesale the austerity he once decriedToday marks a year since a radical left government was elected in Greece; its dynamic young prime minster, Alexis Tsipras, promising a decisive blow against austerity. Yanis Varoufakis, his unconventional finance minister, arrived in London soon after and caused a media sensation. Here was a government that disregarded stuffy bourgeois conventions and was spoiling for a fight. Expectations were high.Related: The crucifixion of Greece is killing the European project | Seumas MilneRelated: Greek general strike: Petrol bombs and teargas during anti-austerity protest - as it happened Continue reading...
Northern cities head list of UK's low-wage, high-welfare economies
Centre for Cities urges the government to address the geographical divide by continuing to increase investment in regional economiesAlmost half of the UK’s biggest cities have low-wage, high-welfare economies, according to a healthcheck on urban Britain that underscores the challenges for the government’s benefit-cutting agenda.George Osborne used his first budget of the Conservative government last summer to advocate a “higher wage, lower tax, lower welfare country”. But a report published on Monday warns that his vision will take several parliaments to create, given current shortfalls in education, a housing crisis and inefficient jobs programmes.
Europe's big banks remain wary of doing business with Iran
Sanctions have been lifted but uncertainty over US authorities’ stance means banks are reluctant to handle paymentsA week after the lifting of sanctions against Iran, major European banks are still reluctant to handle Iranian payments as they remain wary of being the first to test the reaction of US authorities.
Free love or genocide? The trouble with Utopias
Ever since Thomas More wrote Utopia 500 years ago, visionaries from William Morris to Ursula K Le Guin have dreamed of ideal worlds. But beneath the fig-leaf of fiction, the results are often bland – or bloodyA quarter of a century ago, the whole idea of utopia seemed irredeemably sullied. At the start of the 1990s, the largest social experiment in human history – the USSR – imploded, and with it went the notion that imagining a radically different society was a serious activity. It seemed that the rewards of such experiments were always so enticing that genocide inevitably ensued.That was the lesson drawn from any totalitarian regime informed by the highest (or lowest) idealism: the Khmer Rouge, the Videla regime in Argentina, Nazi Germany, you name it. Back then, it was thought best not to fantasise too much about a better world, but to learn to live in this one. The academic and political atmosphere in the 1990s was decidedly pragmatic, rather than optimistic. It was an era in which the liberal democracies celebrated (prematurely, of course) “the end of history”. The story of humanity was a march to freedom, we were told, and we had arrived. This was as good as it got, and the idealists and unrealists should stop fantasising, because it was a dangerous hobby.Related: Utopias, past and present: why Thomas More remains astonishingly radical Continue reading...
UK GDP figures to be released amid global economic jitters
Data expected to show modest growth in 2015’s last quarter but this could be constrained by fears over China’s economy and EU referendumThe resilience of the British economy in the face of stuttering global markets will be tested this week, with the publication of official UK growth figures due on Thursday.The first snapshot of GDP in the final months of 2015 is expected to show that growth held up at a modest pace, helping the UK outperform other advanced economies during last year as a whole.Related: Why is the global economy suffering so much turbulence?Related: UK unemployment falls but wage growth weakensRelated: Sluggish economies are the new western norm. But we can act to lift the gloom | Gavin Kelly Continue reading...
Market panic’s over – but ingredients are there for more thrills on the rollercoaster
After a few wild days for share prices, investors should keep an eye on oil prices, China’s slowdown and the US Fed’s interest rate to gauge the world’s economyBlink and you missed last week’s turmoil on the financial markets. On Wednesday, billions were wiped off share prices; on Thursday and Friday they were wiped back on. The FTSE 100 index ended the week higher than it started. Just a bout of new year jitters? Can investors now settle back and enjoy a period of calm?Probably not. It is easy to laugh, or groan, at markets’ ability to swing from gloom to optimism, but volatility tends not to appear out of thin air. Take a step back from this week’s excitement and remember that London’s blue-chip index has lost about 1200 points since its closing peak of 7104 in April last year. The factors driving that 17% decline are unlikely to disappear quickly. Last week’s brief panic suggests investors fear it wouldn’t take much to intensify the pressure. Continue reading...
Shell’s plan to take over BG is still in the pipeline
Despite the plunging oil price, no one wants to rock the boat with the powerful Anglo-Dutch firmIt’s nine months since Shell announced it was buying BG Group in an agreed £47bn deal and almost everything has changed. Back in April, the oil price appeared to be recovering from its fall below $50 a barrel but the price has since plunged below $30. The International Energy Agency warned last week it could fall further in a world “awash” with oil.Shell and BG shareholders vote on the takeover this week but, despite the industry’s dire state, they will approve the deal, now worth £35bn to reflect Shell’s depressed share price. This is partly due to faith in the ability of Shell’s chief executive, Ben van Beurden, to make it work. It’s also because most big shareholders don’t want to rock the boat in public with a company as powerful as Shell. Only Standard Life has broken ranks by declaring it would vote against. Continue reading...
We are perfectly positioned within Europe. Why change it?
Being in the EU but outside the euro and Schengen is highly advantageous - and far better than anything that could be achieved by leaving and renegotiating‘We should miss Britain a lot. But Britain would miss the European Union even more.” The speaker was a senior member of the Italian government, in response to a question about the attitude of Italians to the thorny issue of Brexit. The occasion was the annual Venice Seminar, where members of the Italian government speak frankly, but not for direct attribution, on the political and economic scene.For many years the views expressed at those seminars about the Italian economy have been a triumph of hope over experience. For example, the Italian economy managed, after the initial impact of the great recession of 2008-10, to contract further in 2011 and 2012 when even the British economy was beginning to recover. Continue reading...
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