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by Larry Elliott on (#WHD5)
The markets expected a lot more – an expansion of QE and deeper deposit rate cuts. Simply put, the ECB president failed to live up to his own hypeThe currency markets and share prices spoke volumes. Financial markets waited for Mario Draghi to fire his big bazooka and when it became clear he was holding a peashooter instead, they bought the single currency and dumped stocks. The euro rose against the dollar and screens showing equity prices went red.The reason for the reaction was simple: markets had expected a lot more. They had been looking for the European Central Bank to announce it was cutting its deposit rate from -0.2% to -0.4%, making it more expensive for commercial banks to hold deposits with the central bank. They got a cut to -0.3%.
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| Updated | 2025-04-26 05:00 |
by Phillip Inman Economics correspondent on (#WHDD)
Restaurants, financial services, IT and transportion continue to feed UK growth, but cannot sustain an economy with a record gap between imports and exportsCarluccio’s opened in Beverley last month. An unremarkable event, for sure, and certainly of little interest to the compilers of Britain’s national income figures.Yet the move by the Italian restaurant chain into the wealthy East Riding town is part of a trend for eating out that has generated much of the UK’s extra services industry growth in the past three years. And it is this desire among households to spend increasing amounts of their disposable incomes in restaurant chains and wine bars that has translated into higher GDP growth.Related: UK services growing at encouraging rate for economy Continue reading...
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by Heather Stewart Graeme Wearden on (#WH0D)
Central bank’s modest moves to revive eurozone economy, including minor reduction in deposit rate paid on reserves, sends markets tumblingEurozone markets have plunged after the European Central Bank president dashed investors’ hopes of aggressive new measures to boost the flagging economy.Mario Draghi had sent strong signals in recent weeks that he and his colleagues on the ECB’s governing council were prepared to “do what we must to raise inflation as quickly as possibleâ€, and news that inflation remained at just 0.1% in November had intensified expectations of decisive action.Related: Eurozone stock markets tumble as ECB stimulus disappoints investors - live updates Continue reading...
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by Larry Elliott on (#WGYW)
International Monetary Fund suggests prolonged period of low oil, coal and gas prices could discourage further adoption of cleaner energy sourcesThe International Monetary Fund has issued a warning before a meeting of the Opec oil cartel that permanently low fossil fuels are choking off investment in renewable sources of energy and hindering the fight against climate change.Oil prices rallied slightly amid reports – later denied – that Saudi Arabia plans to announce a 1m barrels a day production cut at the talks in Vienna on Friday. The price of Brent crude was up more than 2% at just under $43.50 in early trading on Thursday. Continue reading...
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by Heather Stewart on (#WGTF)
Growth in purchasing managers’ index, a guide to health of service sector, has been a key engine of Britain’s economic recovery, say analystsBritain’s key services sector continued to expand at a healthy pace in November, according to a closely watched survey.The purchasing managers’ index, compiled by the Chartered Institute of Purchasing and Supply, rose for the second consecutive month, from 54.9 in October to 55.9 – the fastest growth since July, and well above the 50 mark that signals expansion in the sector.
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by Simon Bowers on (#WGP7)
Report says increasing inability to tax corporate profits means governments are forcing workers and consumers to plug the revenue gapIndividual workers and consumers have shouldered an increasing share of the tax burden in industrialised countries as governments have been forced to become less reliant on taxing corporate profits, according to a report from the OECD.“Corporate taxpayers continue finding ways to pay less, while individuals end up footing the bill,†said Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration.Related: OECD hopes tax reforms will end era of aggressive avoidance Continue reading...
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by Larry Elliott on (#WG5Q)
Faced with flat growth and prices in the eurozone, the European Central Bank is expected to cut rates and expand QE, but the Fed is likely to raise rates in the USA critical few weeks for the global economy will begin on Thursday when the European Central Bank (ECB) decides whether to take fresh steps to boost growth and stimulate inflation in the 19-country eurozone.Financial markets are convinced the ECB’s president, Mario Draghi, will announce cuts in interest rates and a stepping up of the bond-buying programme known as quantitative easing (QE) after its latest policy meeting in Frankfurt.Related: Eurozone inflation data raises prospect of fresh ECB stimulus Continue reading...
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by Heather Stewart on (#WG1G)
The European Central Bank president is poised to take action to tackle inflation in the single currency bloc. Here are some of his optionsAfter October’s meeting of the European Central Bank’s governing council, the bank’s president, Mario Draghi, said it was “willing and able to act by using all the instruments available within its mandate, if warrantedâ€. Here are some of the options it might take to fulfil that promise on Thursday: Continue reading...
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by Rupert Neate in New York on (#WEHZ)
Janet Yellen says US economy has seen substantial recovery since Great Recession as she signals what would be first rate increase since 2006A historic rise in US interest rates later this month is almost certain, Janet Yellen signalled on Wednesday. The chair of the Federal Reserve said that the US economy had “recovered substantially since the Great Recession†and she was “looking forward†to increasing rates, which have been held at near zero since the 2008 financial crisis.“The economy has come a long way toward the FOMC’s [Federal Open Market Committee] objectives of maximum employment and price stability,†she said in a speech to the Economic Club of Washington. “When the committee begins to normalize the stance of policy, doing so will be a testament, also, to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession. In that sense, it is a day that I expect we all are looking forward to.â€Related: The Fed and the ECB: when monetary policy divergesRelated: A December rate rise may be a mistake by the Fed Continue reading...
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by Graeme Wearden on (#WCJD)
While Mario Draghi considers more stimulus measures, Fed chair Janet Yellen could soon raise borrowing costs
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by Heather Stewart and Phillip Inman on (#WD5Q)
European Central Bank could expand quantitative easing and cut deposit rate further, while Fed is expected to raise US rates after strong job growth figuresThe European Central Bank president, Mario Draghi, is widely expected to unleash a fresh round of economy-boosting measures on Thursday, after inflation in the eurozone remained at just 0.1% in November.City analysts had expected the inflation rate to increase modestly to 0.2% in line with forecasts with a slow but robust recovery in the eurozone’s fortunes.Related: Markets rally as weak eurozone inflation boosts stimulus hopes - business liveRelated: The Fed and the ECB: when monetary policy diverges Continue reading...
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by Mohamed El-Erian on (#WDF2)
In a perfect world, policymakers would put in place a range of instruments to ensure a better alignment of domestic and global objectivesOver the next few weeks, the US Federal Reserve and the European Central Bank are likely to put in place notably different policies. The Fed is set to raise interest rates for the first time in almost 10 years. Meanwhile, the ECB is expected to introduce additional unconventional measures to drive rates in the opposite direction, even if that means putting further downward pressure on some government bonds that are already trading at negative nominal yields.In implementing these policies, both central banks are pursuing domestic objectives mandated by their governing legislation. The problem is that there may be few, if any, orderly mechanisms to manage the international repercussions of this growing divergence.Related: Eurozone inflation data raises prospect of fresh ECB stimulus Continue reading...
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by Bryan Gould on (#WCRX)
Don’t shoot the messenger – whatever happens over Syria, the party leader’s voice needs to be heard, especially on austerity, and he is far from isolatedJeremy Corbyn’s difficulty in carrying his parliamentary colleagues with him in his opposition to bombing in Syria will be seen by his supporters as a decent man struggling to reconcile his deeply held principles with the exigencies of political leadership, in a society that is easily persuaded that action counts for more than reason. Others, no doubt, will see his willingness to alienate centrist opinion on this and other issues as further evidence of his unfitness to lead.Even those who wish him well, however, will recognise that, after a lifetime of endorsing minority or unpopular causes, bombing in Syria is just one of a number of similar issues, each of which will run the risk of further eroding his precarious support in the parliamentary party, encouraging further outrageous attacks on him from the rightwing media, and discomforting even some of those who voted him into the party leadership.Related: Labour urgently needs to turn its fire on the Tories, not foment civil war | Owen JonesRelated: There is no obvious escape route for Labour from the party’s agonies | Andrew Rawnsley Continue reading...
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by Press Association on (#WCMM)
Non-food shop prices tumbled by 3.3% over the period, driven by reductions in clothing, footwear, electricals, DIY, gardening and hardwareShop prices slumped by a record level last month, driven down by the supermarket price war and fierce competition across the rest of the high street, according to a report.The British Retail Consortium-Nielsen Shop Index said retail prices fell 2.1% in the year to November compared with a year ago, a joint low with March this year. Continue reading...
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by Phillip Inman and Alberto Nardelli on (#WB39)
Chancellor attacked by Labour MPs for failing to acknowledge his target will only be met by increasing number of new jobs and finding migrants to fill themGeorge Osborne came under fire from MPs on Tuesday for refusing to admit that he plans to rely on a strong rise in net immigration to achieve a budget surplus at the end of the parliament.The chancellor said the increase in jobs over the next five years would be taken mainly by Britons, despite figures from the independent Office for Budget Responsibility (OBR) last week showing the government would need to almost double net immigration to hit its target of a £10bn surplus in 2020. Continue reading...
by Jill Treanor on (#WB60)
BoE reviewing lending criteria adopted by firms and puts banks on notice about holding £10bn capital cushion to guard against economic downturnThe Bank of England is scrutinising the terms under which mortgages are being granted to buy-to-let landlords as it decides whether to take action to cool the fast-growing market.The Bank’s latest warning to landlords came in a list of risks to the financial system, as Threadneedle Street put banks on notice thatthey could be forced to hold a special capital cushion of up to £10bn to guard against any economic downturn.Related: UK banks pass stress tests, but RBS and Standard Chartered are weakest - live updates Continue reading...
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by Sam Thielman on (#WAGW)
As territory grapples with $72bn debt and a payment due Tuesday, Alejandro GarciÌa Padilla calls island’s emergency financial measures ‘unsustainable’Puerto Rico’s governor, Alejandro GarciÌa Padilla, told the US Senate on Tuesday that the troubled Caribbean island has “no cash left†and can no longer repay its $72bn debts.The territory announced it would honor a $354m debt payment due on 1 December as Padilla was testifying, but Padilla said austerity measures had not only eaten into essential services but caused tax revenues to crater. With more than $900m due in January, the governor said his options were restructuring or disaster.Related: Puerto Rico poised to miss another debt deadline as financial crisis rages on Continue reading...
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by Patrick Collinson on (#WABQ)
UK pension will be worth 40% of average pay, with a retirement age only matched by those in Ireland and Czech Republic, says OECDWorkers in the UK will have the worst pensions of any major economy and the oldest official retirement age of any country, according to the Organisation for Economic Cooperation and Development.The typical British worker can look forward to a pension worth only 38% of their salary, once state and private pensions are combined. The Paris-based thinktank said on Tuesday that this compares with above 90% in the Netherlands and Austria and 80% in Spain and Italy. Continue reading...
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by Patrick Collinson on (#WA83)
Prices have risen 18.9% over the past 12 months, according to Knight Frank, but 2016 should see reduced pressures on markets across the worldIt’s a country with a war raging on its borders, embroiled in a conflict with Russia, and fighting terrorism on its own soil. Yet Turkey also has the fastest rising house prices in the world, according to figures from global estate agents Knight Frank.Prices in Turkey are up 18.9% over the past year, compared to the 2.7% global average. Ukraine, whose economy has been devastated amid the ongoing dispute with Russia, saw the biggest price falls, down 14.8%. Continue reading...
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by Graeme Wearden on (#W8RC)
Rolling coverage as the Bank of England publishes its annual health check of Britain’s financial sector
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by Phillip Inman Economics correspondent on (#W9QT)
Chancellor George Osborne expected to maintain fiscal course set in July’s budget and last week’s autumn statementGeorge Osborne will stage his first full budget of the parliament on 16 March next year as he seeks to steer the public finances into the black by 2020.The chancellor, who already has an emergency budget and autumn statement under his belt since the Conservatives won the election in May, is expected to maintain a course that will generate a £10bn surplus by the end of the parliament. Continue reading...
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by Sam Thielman in New York on (#W9GP)
The island some have called ‘America’s Greece’ looks poised to default on its $72bn debt for a second time amid anger over territory’s ‘Wall Street captors’Debt-racked Puerto Rico looks all but certain to miss a second repayment deadline on Tuesday – a move that is likely to worsen the financial crisis in the US territory and turn up the political heat on a Caribbean island that has been dubbed “America’s Greeceâ€.Puerto Rico’s government development bank is due to make a $354m payment to bondholders on 1 December but is unlikely to be able to pay. Puerto Rico governor Alejandro Garcia Padilla was still negotiating with creditors late Monday.
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by Heather Stewart on (#W9A5)
Manufacturing PMI falls to 52.7, from 55.2 in OctoberGrowth in Britain’s manufacturing sector has weakened and costs are falling sharply, suggesting inflationary pressure remains subdued, and Bank of England policymakers are unlikely to be in a rush to raise interest rates.The purchasing managers’ index (PMI) for manufacturing, based on a survey of the sector, declined to 52.7 in November, from a revised 55.2 in October. Continue reading...
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by Alberto Nardelli on (#W943)
Guardian analysis shows that without recent upward revisions of net migration numbers, chancellor would not achieve budget surplus by 2019-20George Osborne is relying on rising immigration numbers to reach his fiscal target of a budget surplus by the end of the decade, according to a Guardian analysis of official data.Without the UK’s current levels of net migration, the chancellor would be faced with the choice of missing his fiscal goal or achieving a surplus by adding more spending cuts and tax rises to his existing plans.
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by Amanda McKenzie on (#W85V)
Risks around extreme weather are high for Australian companies, but there are also plenty of opportunities to benefit from the ‘business boom’
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by Katie Allen on (#W65V)
A vote to include the yuan in the International Monetary Fund’s basket of elite currencies looks set to to pay offShareholders in the Washington-based International Monetary Fund have voted to admit the yuan, also known as the renminbi, as the fifth member of its special drawing rights (SDR) currency basket alongside the US dollar, the Japanese yen, sterling and the euro.Related: Chinese yuan to join elite global currency club Continue reading...
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by Katie Allen on (#W70R)
IMF chief says inclusion recognises Beijing’s progress at bolstering its monetary and financial systemsChina’s yuan will be added to an elite basket of global currencies used by the International Monetary Fund, in a boost to Beijing’s global economic ambitions.Shareholders in the Washington-based IMF voted to include the yuan, also known as the renminbi, as the fifth member of its special drawing rights (SDR) currency basket alongside the dollar, the Japanese yen, sterling and the euro.
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by Patrick Collinson and Jill Treanor on (#W714)
Banks could be forced to strengthen capital positions after surge in loans to near-decade high triggers warning from debt charitiesLending to consumers has reached its highest level since before the banking crisis according to figures from the Bank of England, which will reveal on Tuesday if it is imposing restrictions on banks to cool down overheating parts of the economy.According to the Bank, consumer lending increased at an annualised rate of 8.2% in October, the highest level since February 2006. A further category of loans and advances, which includes lending to buy new cars, jumped by 9.6%, the highest for 10 years. Continue reading...
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by Heather Stewart and Harriet Meyer on (#W623)
A sharp rise in personal borrowing has led to fears that families are storing up financial troubleBlack Friday, the day of discounted deals and shopper madness imported from the US, passed last week without the scuffles, fights and mini-riots that came to mark last year’s event. But the relatively quiet aisles and slowly revolving doors of Britain’s high-street stores masked an unseen online spending frenzy that analysts believe happened on Friday and will continue this weekend into Cyber Monday today, another discount day, and will add to a predicted bumper Christmas for retailers.Shoppers are expected to blow a total of £16.5bn between now and the big day, on everything from Star Wars droids to sprouts – up 2.5% on 2014. Continue reading...
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by Sean Farrell on (#W6KW)
Assets under management fall 12.5% to £283.7bn as investors grow nervous about China and other emerging marketsAberdeen Asset Management’s funds under management fell by more than £40bn last year as clients grew nervous about shares in China and other emerging markets that the fund manager had built its reputation on.At the end of September, Aberdeen’s assets under management were £283.7bn compared with £324.4bn a year earlier – a fall of 12.5%. Net outflows were £33.9bn and equivalent withdrawals from equity funds increased to £16.4bn from £13bn the year before.Related: Aberdeen Asset Management shares hit by emerging market fears Continue reading...
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by Katie Allen on (#W56C)
Internet shopping ‘steals show’ over discounting weekend imported from US, with online sales on Monday forecast to be up by almost third to £943mBritain’s retailers are hoping the flat reaction to Black Friday on the high street, when shoppers preferred trawling the internet to visiting a department store, will pay off on Cyber Monday as the pre-Christmas discounting spree moves online.Imported from the US like its Black Friday cousin, Cyber Monday is forecast to bring in more than £900m for online retailers – up nearly a third on last year. By the end of Cyber Monday, total sales over the four-day shopping event will surpass £3bn in the UK, some analysts have predicted.Related: Four-day shopping spree promises £3bn sales record for UK retailers Continue reading...
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by Katie Allen on (#W41F)
China hopes stamp of approval will improve yuan’s desirability among investors and undermine hegemony of US dollar as global reserve currencyChina’s efforts to make the yuan an international currency on a par with the US dollar are to receive a fillip with the International Monetary Fund widely expected to add it to a special basket of global currencies.
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by Zoe Williams on (#W3YC)
Black Friday was a nonevent, and even children are bored with Christmas tat. Consumerism has finally eaten itselfI’m worried that I’m the only one who watches enough telly to see what’s going on here: the toy industry – and if that sounds niche, remember that this close to Christmas it stands as a proxy for production as a whole – is having some kind of systems collapse. Games that should never have made it past the planning stage – a plastic dachshund that craps yellow pellets and forces you to scoop them up with a shovel – stagger into their fifth year. Over-engineered, nylon-furred tat, going by the name Furbies, take an antisocial glee in the vexation they provoke. The Clever Keet is a plastic bird that mimics the experience of having a live pet, except it doesn’t in any way: it was designed with the unimaginable customer in mind who prefers it when the air is filled with banality.Related: Black Friday sales fall 10% from last yearRelated: Meet Spot the dog, Boston Dynamics' cutest robot yet Continue reading...
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by Jill Treanor on (#W3YE)
Bank’s stress test results will determine whether seven institutions should be forced to hold capital in order to rein in risky lendingBritain’s biggest lenders are braced for a decision by the Bank of England on whether they are strong enough to withstand turmoil in global markets, as Threadneedle Street considers restrictions on their activities to slow down the growth in consumer lending.The results of the annual health check on six banks – Barclays, HSBC, Santander UK, Standard Chartered, Lloyds Banking Group and Royal Bank of Scotland – and Nationwide building society are released on Tuesday and will determine whether the institutions need to tap investors for cash or take other steps to bolster their financial strength.Related: Consumer spending rise troubles Bank of EnglandRelated: European banks sitting on €1tn mountain of bad debt, survey finds Continue reading...
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by Larry Elliott on (#W373)
Climate has changed since WTO round began in 2001, with extreme nationalism rising again on back of economic hardship triggered by system failureIt’s November 2001. The terrorist attacks on the United States on 9/11 are still fresh and raw. While George Bush plots revenge, a meeting of trade ministers takes place in the Gulf state of Qatar.The gathering has two purposes. At one level, it is intended as a show of global solidarity with the US, a signal that the international community can unite in its opposition to fanaticism. But trade ministers also think the time is right to break down barriers to the free movement of goods and services around the world. After all, the last successful round of trade liberalisation negotiations was completed eight years earlier in 1993.Related: Borders are closing and banks are in retreat. Is globalisation dead? Continue reading...
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by Staff and agencies on (#W365)
Gertjan Vlieghe of Bank of England says he wants to see growth stabilise or pick up before considering increaseA Bank of England policymaker has said UK economic growth must stabilise or pick up before he will be persuaded of the need to raise interest rates.Gertjan Vlieghe said in a newspaper interview he was relaxed about waiting to raise them from record low levels.Related: The UK economy may be growing, but in a highly unbalanced way Continue reading...
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by Peter Preston on (#W2P4)
Economic pundits may be a clever bunch, but the chancellor has fooled them all over the past few weeksRobert Chote, chairman of the Office for Budget Responsibility, used to be director of the Institute for Fiscal Studies. Paul Johnson, who used to look after public services at the Treasury (among many other things) was a colleague of Sharon White, who is married to Robert Chote. Five years hence, for all I know, White may be director of the IFS, Johnson could be chairing the OBR, and Chote could be boss of Ofcom (White’s current berth). Or any of them could be economics editor of the FT, where Chote made his name.This, in short, is a close-knit world of similar and similarly able economists, not some canyon of conflict between OBR and IFS. Doors revolve constantly. Forecasts are continually refined (or changed) by the same sort of independent analysts. Which leads to one observation that, gently, the assembled commentocracy of press and broadcasting failed to make last week amid the pother about U-turns, discontinued austerity and abracadabra. Continue reading...
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by William Keegan on (#W2HZ)
This Thatcherite chancellor’s dependence on communist China for energy is just one of many symptoms of his erratic approach to capital expenditureOur chancellor could not resist it. Once again, while presenting the latest revisions to his “long-term planâ€, he dragged up the Labour chief secretary Liam Byrne’s line in 2010 that “there’s no money leftâ€. I say line, because it was not a spoken remark but a phrase contained in the customary written note from the outgoing chief secretary to the incoming one, who happened – for what turned out to be a very short time – to be the Liberal Democrat David Laws.This was meant to be a joke, and Treasury officials thought it was bad form for Laws to publicise a private letter. But the joke rebounded on Byrne and Labour, and the Conservatives are still milking it all these years later. And last week shadow chancellor John McDonnell tried a deliberately more public joke with his production of Chairman Mao’s little red book. This backfired too, and the Tories will milk it mercilessly as well. Continue reading...
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by Lucy Rock on (#W2HY)
The Seattle CEO cut his own salary to give his employees a much higher basic pay, an experiment some describe as ‘lunatic’, others pioneering. It’s about values, he says, and hopes others will follow his lead in tackling inequality. But will they?It’s Monday morning and a dozen people sit round a conference table in an office on an industrial lot in rain-splattered Seattle. A woman writes on a white board. Coffee is sipped. The clock ticks: it’s just after 8am. I’m at a meeting of division heads in a credit card processing firm and everything seems, well, a bit grey.A latecomer slips in and takes a seat among them. With his unkempt hair, jeans and trainers, he could be just another member of staff. But his presence brings a shot of Technicolor to the proceedings because this is the boss and Dan Price is probably the best boss to work for in the world.Tammi Kroll, 52, found Price’s mission inspiring enough to take an 80% pay cut and move from San Jose to Seattle Continue reading...
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by Brian Eno and Yanis Varoufakis on (#W052)
Brian Eno, producer, composer and former Roxy Music keyboard playerYanis Varoufakis, former finance minister for Greece’s Syriza governmentThe British musician and producer Brian Eno meets Yanis Varoufakis, former finance minister for Greece’s Syriza government, at Eno’s recording studio in west London. Both are stylish, shaven-headed men famous for their radical ideas. Eno, 67, started out playing synth and wearing leopardskin shirts in the 1970s with Roxy Music and went on to produce, among others, David Bowie and Talking Heads. Varoufakis, 54, who turns up in his trademark leather jacket, describes himself as a libertarian Marxist and has taught economics in the UK, Australia, the US and his native Greece. He and Eno are friends, and recently attended a U2 concert together. Both are phenomenally well-read men, keen theorists who regard themselves primarily as activists.Brian Eno How did you get here?When the going is really tough, art is stifledThe future is a choice between Star Trek and The MatrixI don’t remember a single political conversation with Bryan Ferry – maybe because we knew it would be catastrophicI am an optimist. I think that what you believe is what you make happen Continue reading...
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by Katie Allen on (#VXGD)
Consumers continue to fuel economic recovery as widening import-export gap proves record drag on growthThe UK economy has slowed after poor overseas trade figures put a record drag on growth, leaving household spending to drive the recovery and casting further doubt on George Osborne’s hopes that strong tax receipts will help him hit ambitious budget targets.Official figures confirming that GDP growth slipped in the third quarter came alongside a warning from a leading credit rating agency that the chancellor’s latest package of tax and spending measures left him at risk of missing his goal to run a surplus on the public finances by the end of the decade. Fitch Ratings said the chancellor was heavily reliant on economic growth holding up to balance the books. Continue reading...
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by Phillip Inman on (#VY47)
The services sector continues to outpace manufacturing, still suffering from export volatility, as people rush to borrow moreEvery time the latest GDP figures appear, the Treasury would have us use the occasion to look at the sunny image of the economy in the round.The third quarter data indeed confirms that the economy is on track to grow by 2.4% this year and many City economists have pencilled in 2.5% next year. Even the Office for Budget Responsibility (OBR), reckoned a cautious forecaster, has picked 2.4% as the most-likely growth rate.Related: Weakening UK trade puts the brakes on GDP growthRelated: UK manufacturers fear bleak outlook as export orders tumble Continue reading...
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by Graeme Wearden on (#VWZQ)
Rolling coverage of the day’s economic and financial events, including a new health check on the UK economy
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by Jana Kasperkevic in New York on (#VXJW)
Reverend Billy Talen and his group are returning to New York City this Black Friday to deliver a simple message to Americans: resist consumerismJustin Bieber has pulled out of the Macy’s Thanksgiving Day parade. But don’t worry: the Reverend Billy is still planning to entertain the holiday crowd on Black Friday and maybe, just maybe, add a few Beliebers to his Church of Non-Shopping.The holiday season is a busy time for Bill Talen – the performance artist, actor and activist who styles himself as Reverend Billy. Last week at Joe’s Pub, the downtown music venue where Adele recently performed three of her songs to an intimate crowd of 184 people, Talen was warming up for the big day.Related: Number of people killed by US police in 2015 at 1,000 after Oakland shooting Continue reading...
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by Phillip Inman Economics correspondent on (#VW60)
Market researcher Gfk says its November survey reflects concerns over economy despite boost to disposable incomesConsumers confidence slumped last month to its lowest level since the summer as British households expressed concerns about the prospects for the economy next year.The GfK consumer confidence index dropped one point to +1 from the previous month and a high of +7 in July, after respondents said the prospects for the global economy had weakened. Continue reading...
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by Editorial on (#VVK9)
He promises a revolution in the funding of local government, but the chancellor will badly hurt some of our poorest places. AgainTip for Labour frontbenchers: next time you’re looking for a quote, ditch the Mao for a splash of Lenin. Specifically, this bit: “There are decades where nothing happens; and there are weeks where decades happen.†This week, George Osborne made a decade happen in local government. As a result of his spending review, independent economists predict a “genuine revolution†will sweep England’s town halls. It may not be as eye-catching as a quick U-turn on tax credits – but it will mark a permanent and drastic change in how local councils fund the provision of core services. It will certainly prompt the scrapping of many of those. And it will also lead to something that governments of all stripes have tried to avoid for decades: a postcode lottery, in which where you live determines how frequently your bins are collected, whether your streets and parks are kept clean, whether street lights go on after dark – even whether your mum or sister can count on a decent level of care.David Cameron came to power promising localism – then promptly stripped out the cash that might have made that transition a smooth one. By the end of this decade of cuts, the department for local government will have had the biggest cuts of all, with a total of 79% lopped off its day-to-day spending since 2010. Money from Whitehall is not the only thing that counts for town halls, but it’s still a major component of council budgets. Mr Osborne’s clear calculation was that cuts to local government services would largely be blamed by voters on their councillors, not Downing Street. It was a shrewd political calculation that has had disastrous effects on some of the poorest places in England. As the Institute for Fiscal Studies points out, those councils most reliant on central government grants have already suffered a near 40% drop in their spending power. That is twice as big a hit as those at the opposite end of the scale – and it is compounded by the way the welfare reforms introduced by the coalition government have, in the words of economists Steve Fothergill and Christina Beatty, hit “the poorest places hardestâ€. Put those two forces together, and a leafy shire such as Mr Cameron’s west Oxfordshire has got off relatively lightly, even while deprived places such as Blackpool have been kicked to the floor. Continue reading...
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by Letters on (#VVKA)
There are three things to say about the UK’s spending review. First of all it shows that this government is susceptible to pressure in reversing the tax credit and police cuts, and secondly, despite the inadequate BBC scrutiny and analysis, this was about consolidating austerity. Tax credit and police cut reversal was not new money. It was just not a cut. Meanwhile we are on course for public spending to be 36% of GDP, which means that public funding will kept at the cut level it is now. This is not enough for social care, libraries, children’s centres, housing benefit, youth clubs, fire services, policing, employment support allowance and social housing. Finally the OBR is forecasting five years of continuous growth, which means at the very least that the economy is stabilising. So we have a choice to fund the public services we need, and that is the alternative.
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by Letters on (#VVKC)
John McDonnell makes a very important point by brandishing Chairman Mao’s Little Red Book in parliament (McDonnell throws the (Mao) book, 26 November). George Osborne is not just enabling the Chinese state to own British state assets. He is actually subsidising Chinese state enterprises to do so, as well as structuring UK public sector contracts in such a way as to favour the Chinese. What’s more, with recent Chinese engagement in energy, he is effectively selling to China future UK tax revenues.
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by Katie Allen, Rowena Mason and Heather Stewart on (#VTHY)
IFS says there is 50-50 chance Osborne will have to revisit spending plans, while Resolution Foundation says some families could lose £3,000 a year by 2020The government has been forced to deny claims that George Osborne’s spending review is a continued assault on Britain’s poorest families, after two respected thinktanks warned future benefit cuts would leave some families more than a thousand pounds worse off.Both the Institute for Fiscal Studies and the Resolution Foundation said they believe millions of working families would be worse off by 2020 because of welfare changes than they would have been under the current system, despite Osborne having reversed his planned cuts to tax credits.Related: Spending Review leaves 2.6m working families worse off, says IFS - live updatesRelated: George Osborne in conflict with Iain Duncan Smith over universal credit Continue reading...
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by Larry Elliott on (#VV53)
The chancellor’s plan to run a surplus by 2020 is a cast-iron promise. If it goes off track, raising taxes or losing face are his only optionsNapoleon would have approved of George Osborne. “I know he’s a good general,†the French emperor once said. “But is he lucky?â€The answer to that question, according to the Institute for Fiscal Studies, is yes. The chancellor got lucky when the Office for Budget Responsibility raised its forecasts for tax revenue and cut its predictions for interest payments on the national debt. That gave Osborne some much-needed wiggle room to delay welfare cuts, choke back on austerity and spend a bit more on infrastructure.Related: Autumn statement: IFS warns on tax rises and spending cuts Continue reading...
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