Study of Keynes’s foreign exchange dealings between the first and second world wars reveals a chequered recordMarkets can remain irrational longer than you can remain solvent. Such is the advice John Maynard Keynes is supposed to have given to would-be investors looking to make a killing in the period between the first and second world wars.There is some dispute about whether Keynes ever delivered this warning. What is not at issue is that it was advice he did not always follow, especially when it came to his dabblings in the currency market. Continue reading...

Five years on from pledge to rebalance the economy, manufacturing output is no higher than in 2011, with sector officially back in recessionA Britain “carried aloft by the march of the makers”. That was the country George Osborne envisaged in the peroration to his 2011 budget speech. The message from the chancellor was clear; gone were the days when the economy relied on debt-fuelled spending. The clock was being turned back to the days when Britain actually made stuff.Related: Weak UK manufacturing data hits the pound - business liveRelated: UK's industrial sector ends 2015 on a low note Continue reading...

Austerity does not come naturally to Brazilians, but attitudes are changing as economy suffers what is forecast to be the deepest crisis in more than a centuryWhen it comes to mood making in Brazil, there are few institutions that can match the samba schools of Rio de Janeiro.

Output declined in November, amid Chinese woes and a falling oil price, setting the tone for a difficult 2016The pound has tumbled to its lowest against the dollar since June 2010 as investors reacted to an unexpected and broad-based downturn in Britain’s industrial sector that hit factory output, mining and energy production.Related: Weak UK manufacturing data hits the pound - business liveRelated: March of the makers remains a figment of Osborne's imagination Continue reading...

Despite fighting words from the central bank and Communist party leaders, banks are calling the currency lower, pulling oil and stocks down furtherThe Chinese authorities have resorted to “nuclear strength” weapons to deter an attack on the yuan by short sellers and convince sceptical investors that they are in control of the country’s spluttering financial system.

Government continues to trumpet Trans-Pacific Partnership’s ‘enormous benefits’ despite analysis showing Australia’s growth will be worse than 11 of the other 12 countries in the dealThe federal government maintains the Trans-Pacific Partnership agreement will deliver “enormous benefits”, despite World Bank analysis showing Australia’s economy will grow by less than 1% as a result of the deal.Australia’s increased growth is projected to be worse than 11 of the other 12 countries that signed the deal last year, according to the report on the global implications of the deal. Only the US fares worse. Continue reading...

Leading Wall Street bank says price will keep falling if China’s currency continues its plunge against US dollarThe price of crude oil could tumble to $20 a barrel in the coming months if China’s currency continues to decline against the US dollar, one of Wall Street’s leading investment banks has predicted.On a day when the cost of crude hit a new 12-year low and edge closer to the $30 a barrel level, Morgan Stanley posted a forecast on Monday of $20-25 a barrel for oil based on movements in currencies.Related: China shares fall another 5%, Europe slips back as oil tumbles - as it happened Continue reading...

All the latest economic and financial news, as Shanghai stocks slide again despite Beijing’s claims that its financial system is ‘largely stable and healthy’

If its first week is anything to go by, 2016 could be an even more turbulent year than the last. Is there an antidote to barbarity and economic decline?As the world’s attention was captured by Madaya, the Syrian town suffering mass starvation, supporters of the Assad regime began posting photographs of delicious food to insult those starving. When a Muslim woman stood in silence at Donald Trump rally, wearing a T-shirt saying “I come in peace”, she was ejected – Trump’s supporters baying insults into her face.Meanwhile, groups of apparently foreign men in Cologne staged what look like premeditated sexual assaults on women, prompting a new outburst of the racism barely hidden behind German constitutional reality.Related: High demand for reprint of Hitler's Mein Kampf takes publisher by surprise Continue reading...

Monday’s fall in share prices followed a 10% plunge last week which triggered a global sell-off of riskier assetsChinese shares fell 5% to a three-month low after confusion about the direction of the Chinese currency caused wild gyrations on Asian stock markets.A late rush of selling in Shanghai sent the CSI 300 index down 169 points to 3,192 points – its lowest since the aftermath of the summer crisis.Related: Stock market turmoil: China shares fall another 5% - business liveRelated: Australia bet the house on never-ending Chinese growth. It might not end well Continue reading...

Enjoy that refreshed feeling while it lasts – analysts warn that China is in a huge credit bubble, and the jitters can’t be far away for Australian investorsIt’s always great to come back from the holidays ready to get into the new year afresh. Alas, the early signs this year on the economic front are hardly fresh – indeed they seem gloomily repetitive of last year.Related: Australia bet the house on never-ending Chinese growth. It might not end wellRelated: Slowing growth in China raises red flag for global economyRelated: A volatile world is sending stock markets tumbling but don't panicRelated: China interest rate cut fuels fears over ailing economy Continue reading...

Business trends report pinpoints growing job prospects, price cuts and low interest rates

Donor countries are increasingly dipping into their aid budgets to deal with the migration crisisSweden is one of the most generous countries in the world when it comes to international aid. Along with other Scandinavian countries, it has given bounteously to less fortunate nations for many years. With a population of under 10 million, it also takes more than its fair share of asylum seekers - an estimated 190,000 last year, with a further 100,000 to 170,000 expected to arrive in 2016.

George Osborne is now warning of ‘dangerous complacency’ just months after his notably complacent performance in the autumn statementDangerous cocktails were in evidence in many a bar during the Christmas and New Year holidays. I do not know how many the chancellor might have sampled, but his demeanour appears to have been transformed from one of blatant complacency in his autumn statement to pre-budget nerves. He now warns of “a dangerous cocktail of new threats” and, yes, “creeping complacency” in the British economic and political debate.This is not, of course, anything to do with him and the complacency he was fostering as recently as before Christmas. No, this is mainly because of threats to the global economic recovery emanating from a manifest slowdown in China and the impact the collapse of oil prices is having on the economies and finances of oil-producing nations – with the obvious exception of the oil-producing country known as the United States, whose “fracking” boom has made no small contribution to oversupply and falling prices in energy markets. Continue reading...

The economic fundamentals will remain perilous if low- and middle-income workers continue to endure poor payThe US economy ended 2015 with improvement in the labour market. Jobs grew by 284,000 each month on average in the last quarter and if you squint pretty hard at the data you can see a mild acceleration in the pace of nominal wage growth.There will be plenty who will claim this justifies the Federal Reserve’s decisions to raise short-term interest rates for the first time since 2007, and who will argue further that the economic concerns raised by the great recession and its aftermath can now be reshelved. They would then conclude that the focus can return to policy perennials like the need to reduce deficits and ensure that wage and price inflation do not spiral out of control. Continue reading...

Some see China’s share collapse as merely a symptom of middle-class prosperity. Others take a darker view – and if they are right, the global threat is realRarely have financial markets had a more traumatic start to the year. Shares plunged, the price of oil clattered to its lowest level in 11 years, trading on the Chinese stock market was halted twice, and the World Bank warned that a “perfect storm” might be brewing.George Osborne chose his moment well to go public with his concern that the UK faces a “cocktail of threats”. In addition to the $2tn wiped off global stock markets, the North Koreans claimed they had exploded a hydrogen bomb and relations between Saudi Arabia and Iran worsened markedly. Continue reading...

Anxiety grips markets as sharp drops on world’s biggest stock exchanges mirror tumbling shares in BeijingA punishing week has left global stock markets nursing losses of more than $2tn in the first week of the new year after worries about China’s faltering growth and turmoil on its stock exchanges reverberated around the world.Almost £85bn was wiped off the FTSE 100 in its worst opening week to a year since 2000, when the dotcom bubble burst. The blue-chip index closed at 5,912.44 on Friday, down 0.7% on the day and 5.3% on the week. Continue reading...

So George Osborne tells us we face a “dangerous cocktail” of global risks to the economy (Report, 7 January). The Middle East, China, oil prices, US interest rates, terrorism … But I remember he told us that it was just Gordon Brown.

Investors have been buoyed by the People’s Bank of China’s decision to boost the yuan for the first time in nine days. US jobs showed stronger than expected growth, prompting rate hike talk

It is on posters, mugs, tea towels and in headlines. Harking back to a ‘blitz spirit’ and an age of public service, ‘Keep Calm and Carry On’ has become ubiquitous. How did a cosy, middle-class joke assume darker connotations?To get some sense of just what a monster it has become, try counting the number of times in a week you see some permutation of the “Keep Calm and Carry On” poster. In the last few days I’ve seen it twice as a poster advertising a pub’s New Year’s Eve party, several times in souvenir shops, in a photograph accompanying a Guardian article on the imminent doctors’ strike (“Keep Calm and Save the NHS”) and as the subject of too many internet memes to count. Some were related to the floods – a flagrantly opportunistic Liberal Democrat poster, with “Keep Calm and Survive Floods”, and the somewhat more mordant “Keep Calm and Make a Photo of Floods”. Then there were those related to Islamic State: “Keep Calm and Fight Isis” on the standard red background with the crown above; and “Keep Calm and Support Isis” on a black background, with the crown replaced by the Isis logo. Around eight years after it started to appear, it has become quite possibly the most successful meme in history. And, unlike most memes, it has been astonishingly enduring, a canvas on to which practically anything can be projected while retaining a sense of ironic reassurance. It is the ruling emblem of an era that is increasingly defined by austerity nostalgia.I can pinpoint the precise moment at which I realised that what had seemed a typically, somewhat insufferably, English phenomenon had gone completely and inescapably global. I was going into the flagship Warsaw branch of the Polish department store Empik and there, just past the revolving doors, was a collection of notebooks, mouse pads, diaries and the like, featuring a familiar English sans serif font, white on red, topped with the crown, in English:Few images of the last decade are quite so riddled with ideology, and few ‘historical’ artefacts are so utterly falseRelated: Keep Calm and Carry On: The secret historyAt Jamie’s restaurants you can order pork scratchings for £4 and enjoy neo-Victorian toilets Continue reading...

The creation of 300,000 jobs last month sounds great but wages and manufacturing data are just as important, and both point to weaknessIt seems just like the good old days. Almost 300,000 jobs were added to payrolls in America in the last month of 2015, continuing the upward trend of recent months. The US is once again living up to its reputation for being a gigantic jobs machine.Well, perhaps. Jobs are certainly being created at a good lick and the US has an unemployment rate – 5% – that the eurozone, at 10.5%, would die for. There are signs that people who had given up hope of finding work are being encouraged back into the labour market.Related: China closes 2% higher while US job figures beat forecasts – live Continue reading...

Chinese ‘national team’ of state-owned banks buy yuan sending signal that Beijing is not seeking to devalue currencyOil prices have rebounded and global stock markets recovered after Beijing mustered what analysts called its “national team” to intervene and boost the yuan.The price of Brent crude, the global benchmark, rose more than 2% and later traded 1.8% higher at $34.36 a barrel. On Thursday, it had hit $32.16, the lowest since April 2004.Related: Chinese stock market closes 2% higher after 'national team' intervenes – live Continue reading...

Analysts say narrowing trade gap from £3.5bn to £3.2bn was powered by a big drop in oil imports and UK exports are not improvingBritain’s trade gap remained alarmingly high in November after exports fell to their lowest value since July.Official figures showed the deficit in goods and services narrowed to £3.2bn compared with £3.5bn in the previous month, but this was only after a drop in oil imports and a £2.4bn fall in the value of “unspecified goods”, mainly gold, brought into the country.Related: George Osborne’s ‘cocktail of threats’ will leave us with a hangover | John McDonnell Continue reading...

The chancellor promised 2015 would be the year government borrowing would hit zero, but we’re facing a noxious economic brew of his own makingGeorge Osborne yesterday warned us about a “cocktail of threats” brewing in the world economy. All the ingredients are there for a noxious brew. The emerging markets debt bubble. The ongoing stock market turmoil in China. Recession in Brazil and Russia, and the slowdown in India. The collapse in global commodity prices.I’ve warned about the danger signs elsewhere before. But curiously, Osborne didn’t talk up these “threats” in last year’s autumn statement. He didn’t raise them at the summer budget. They were hardly a centrepiece of his election campaign.Related: George Osborne warns UK economy faces 'cocktail of threats'I doubt even Osborne believes his own stories any more. That’s why he’s getting his excuses in firstRelated: I’m backing George Osborne’s Project Fear – if it helps keep us in Europe | Martin Kettle Continue reading...

Treasury select committee chair said ONS lacked intellectual curiosity, was prone to silly mistakes and was unresponsive to consumer needsAndrew Tyrie, the chairman of the Treasury select committee, has redoubled his criticism of the Office for National Statistics (ONS) for falling behind its international peers and jeopardising policy decisions with poor quality data.

Decision to abandon mechanism came after it was tripped for a second time in a week when market fell 7% within minutes of openingChinese authorities sought to bring an end to new year stock market turmoil with a dramatic U-turn on a new mechanism that Beijing had hoped would prevent sharp selloffs.On Thursday, in a tacit admission that the new circuit breakers introduced only this week were having the opposite effect to that intended, China’s main stock exchanges said they were suspending the mechanism. The move came after the breaker was tripped for the second time in a week as the market fell 7% within half an hour of opening.Related: China share trading halted after market plunges 7% in opening minutes Continue reading...

I see clutter (Suzanne Moore, G2, 7 January) more as a “symptom” than a “problem”. Clutter and consumerism are symptoms of excessively cheap products with the true price being paid somewhere else down the line in the form of exploitative labour practices, environmental degradation or excessive use of fuel. The explanation is simple: our homes are full of “tat” because all that stuff is so cheap to buy. The solution is to put an end to the perpetual shopping spree that is modern life. If we created the economic conditions (using taxation, tariffs and regulation) so that far more everyday items were manufactured closer to home, this would quickly declutter everyone’s homes because, when you pay the full cost of locally produced shirts (for example), rather than sweatshop-produced ones, you demand higher quality, you buy far fewer, you appreciate them more and you wear them longer. The result: your clutter disappears.

Chancellor’s ominous speech to business leaders in Cardiff suggests he knows some nasty piece of news we don’t – possibly about the budget deficitBritain faces a “dangerous cocktail” of threats. There is a culture of “creeping complacency” that the economy is problem free. The biggest risk is that people forget about the recession and assume that it is “job done”.Business leaders who turned up to listen to George Osborne in Cardiff on Thursday could be forgiven for wondering what’s happened to the chancellor who delivered such an upbeat autumn statement six weeks ago.Related: Lies, damned lies, national statistics: Bean accounts for the counters Continue reading...

Rolling coverage of all the day’s political developments as they happen

Motorists purchased 2.63m new cars last year, which represents a 6.3% increase compared with 2014New car sales reached an all-time high in Britain in 2015 as improving consumer confidence, wage growth and low-interest finance deals from manufacturers boosted the market.

Put human beings in close proximity to money, and it’s inevitable that the greed impulse will flare out of control. The question is: what do we do about it?Bernie Sanders has a problem. Sometimes greed is good.Imagine, for a minute, that your employer tells you that he’s going to pay you 25% more a year and give you an extra week of vacation. In exchange, all you have to do is agree to come in an hour earlier every day, leave an hour later every day, and make you responsible for finding a way to cut your division’s annual budget by 5%. Do you take the offer?

Slowdown in Chinese economy and rising US output plunges price to new low with huge knock-on effects for UK’s North Sea oil industryThe price of North Sea oil has fallen to just above $32 per barrel, 72% lower than the peak of $115 reached in the summer of 2014.The value of Brent crude was hit for the fourth day in a row, this time by figures from the US showing oil production had risen even higher despite the enormous supply glut.Related: Oil prices could continue to slide with Saudi sights set on shale Continue reading...

The chancellor says global storms justify a course of continued austerity. Yet he crows about British economic recovery. He needs to get his story straightThe chancellor teeters along a tightrope in a high wind. Weeks ago it was all glory and gloat: best ever, greatest success in EU and on track for his long term plan. But today in Cardiff he tips the other way: mission not accomplished, dangerous cocktail of threats and: “The biggest risk is that people think that it’s ‘job done’.”Which is it? What’s up? There is truth (and some lies) in both postures. No one doubts the global storm, with China again suspending trading in its stock market after another precipitous fall, and jitters reverberating round the world. Continue reading...

National average house price now 5.58 times earnings, in sign of continued lack of homes for sale to meet demandUK house prices rose by 9.5% in 2015, figures from the country’s biggest mortgage lender show, in the biggest increase since 2006, before the financial crisis.Halifax’s latest monthly report showed the average price of a home in the UK rose by 1.7% in December 2015, to hit a new high of £208,286.Related: Number of unbuilt homes with planning permission hits record levels, LGA says Continue reading...

The visit of International Monetary Fund chief Christine Lagarde has placed an uncomfortable spotlight on the fiscal woes of Africa’s biggest oil producerWhen Christine Lagarde, the managing director of the International Monetary Fund, visited Nigeria this week, she called for more flexibility on the exchange rate, encouraging those who believe the naira could be devalued again very soon.Her visit placed an uncomfortable spotlight on the fiscal woes of Africa’s biggest oil producer. Many Nigerians feel we are in a tough corner, and concern is growing over what President Muhammadu Buhari will do to plug the foreign exchange gap, boost revenues and diversify an economy that Lagarde said is too reliant on oil. Continue reading...

Chancellor to urge Britain to address its ‘creeping complacency’, after new year already hit by oil price and markets turmoilGeorge Osborne has warned of the risks to the UK from the shaky global economy, saying 2016 has opened with a “dangerous cocktail of new threats”.The chancellor was using a speech in Cardiff to say that the turmoil in financial markets that saw 5% wiped off oil prices on Wednesday should act as an antidote to the “creeping complacency” that Britain is immune from what is happening in the global economy.

Dealers to announce record sales of 2.6m cars in 2015 with commercial vehicles set for 15% annual rise fuelled by surge in online shopping deliveries

Minutes reveal some policymakers remained concerned about stubbornly low inflation but economists believe rate hike will be first of several to come in 2016The Federal Reserve’s decision to raise interest rates in December – the first rate rise in almost a decade – was a “close call” for some policymakers, according to minutes of the Fed’s meeting released on Wednesday.

Reports say investigation into gilts trading is not industry-wide despite recent criticism of regulator for dropping review into culture at major banksThe City regulator is investigating whether traders at Lloyds Banking Group manipulated the price of government bonds, in a sign that the authorities are continuing to seek out rigging of key markets.Following a series of fines across the industry for rigging interest rates and foreign exchange markets, the Financial Conduct Authority has been asking Lloyds for information about trading in gilts. Continue reading...

Simultaneous slowdown in Brics economies would jeopardise chances of pick-up in global growth this year, report saysThe risk of the global economy being battered by a “perfect storm” in 2016 has been highlighted by the World Bank in a flagship report that warns that a synchronised slowdown in the biggest emerging markets could be intensified by a fresh bout of financial turmoil.The Bank said the possibility that Brazil, Russia, India, China and South Africa – the so-called Brics economies – could all face problems simultaneously would put in jeopardy the chances of a pick-up in growth in the coming year. Continue reading...

Thousands of customers could be affected by move eight years after B&B was rescued by taxpayers during 2008 banking crisisThousands of customers of Bradford & Bingley face the prospect of having their mortgages sold off to another lender as the government prepares £17bn of home loans for sale.The vast package of mortgages is in government hands because B&B had to be rescued by taxpayers during the 2008 banking crisis. The mortgages could be sold off in parcels or as one giant bundle of loans.Related: MPs to look into £13bn sale of Northern Rock mortgages to Cerberus Capital Continue reading...

Weaker yuan revives fears of a currency war, a global conflict by other means that directly affects millions of workersThe phrase “currency war” speaks to a seemingly phoney battle between the world’s major trading powers over the price of exports. It has all the attributes of an illusory conflict because no one ever agrees that a genuine dispute has taken place. And as long as everyone denies they have drawn swords to slash their currency to compete with rival powers, talk of a war fizzles and dies.There is a fringe constituency of analysts who have long argued that, much like the hundred years’ war of intermittent battles between England and France, currency wars make headlines only when there is a lurch in policy, which is the equivalent of deploying archers and unleashing the cavalry.Related: Oil hits 11-year low as weak Chinese data spooks markets - business live Continue reading...

Expectations for business activity over next 12 months slumps to near three-year low in the face of growing uncertaintiesThe impact of government spending cuts, jittery world markets and the prospect of an EU referendum vote have dragged down expectations of UK services growth this year.The sector, which accounts for more than three-quarters of economic activity and ranges from shops and hotels to banking, maintained its solid growth in the run-up to Christmas, but a survey found that expectations for business activity over the next 12 months was the weakest for almost three years. Continue reading...