It’ll take more than one good policy to rebuild Labour’s economic credibility, so entrenched is the idea that the party caused the crashJohn McDonnell’s new fiscal rule tweaks a policy the Labour party first came up with 19 years ago. Back then, in May 1997, Gordon Brown called it his “golden rule”. The details have shifted around a bit since, but the essentials haven’t changed. Then and now the Labour party believes governments should balance the books on day-to-day spending, but borrow to invest.The idea has stuck because it’s a good one. Almost all macro economists support governments borrowing to make productive investments, and most of them worry when ministers like George Osborne make a fetish of surplus budgets at the expense of stronger growth.When it comes to economic trust, the messenger as well as the message needs to look the partRelated: ‘Living within our means’ makes no economic sense. Labour is right to oppose it | Ha-Joon ChangRelated: Labour’s economic rock stars will expose the Tories as a one-hit wonder | Anne Perkins Continue reading...

Shadow chancellor’s strategy of investing billions in infrastructure projects goes all the way back to John Maynard KeynesA pivotal moment during the 2015 general election campaign came when Ed Miliband was asked by a member of the public on Question Time whether Labour had overspent when it was in power. To howls of derision, Miliband said: “No, I don’t.”The exchange went to the heart of Labour’s problem: a large number of voters thought the recession of 2008-09 was due to the Gordon Brown government spending and borrowing too much. The polls showed that George Osborne was better trusted than Ed Balls to manage the nation’s finances.Related: Labour promises 'iron discipline' to shore up fiscal credibility Continue reading...

The European Central Bank has thrown the kitchen sink at the eurozone, by slashing the headline interest rate to zero and increasing the bank’s money-printing programme

Rolling coverage of all the day’s political developments as they happen, including David Cameron and Jeremy Corbyn at PMQs and the Commons debate and vote on Sunday trading

These contracts are a symbol of an insecure labour market in which the balance of power is tilted decisively in favour of employersThe phrase “zero-hours contract” was virtually unheard of in Britain a decade ago. That’s not surprising, since in the years leading up to the start of the financial crisis in 2007 few people were employed on one.Today, after an eightfold increase in the past 10 years, everybody knows what a zero-hours contract is and what it represents. It is a symbol of an increasingly insecure labour market in which the balance of power is tilted decisively in favour of employers.Related: What are zero-hours contracts? You asked Google – here’s the answer | Dawn Foster Continue reading...

British manufacturing bounced back in January but slump in oil prices continue to affect industrial productionBritain’s factories bounced back from a dismal 2015 to post a solid increase in output in the first month of the new year, official figures have shown.The Office for National Statistics said manufacturing production rose by 0.7% between December and January, bringing to an end three successive months of decline. Continue reading...

Growth-friendly fiscal policies are needed to avert a new crisis, warns International Monetary Fund

George Osborne’s fixation with flattering the books is jeopardising much-needed investment in the UK’s future power generationIt is a good thing this winter has been so mild: the lights didn’t go out. But there will be another potential crisis next winter, and the one after that, as Britain’s geriatric coal and nuclear power stations are slowly taken out of production, not least to meet important new obligations to decarbonise electricity supply by 2020. Anyone looking for the catastrophic consequences of failing to invest in a timely way in infrastructure, and fixating instead on borrowing off the books behind the taxpayer’s back, need look no further.This is not the first UK government that has got energy wrong. Tony Blair dithered for nearly 10 years before giving the go-ahead to a new generation of nuclear power, during which time much expertise had wasted away. The plan for a third generation European pressurised reactor (EPR) in Somerset, to be known as Hinkley Point C, was approved five long years ago. But George Osborne’s obsession with flattering the books has condemned this questionable and costly project to raising cash on the open market. It involves still unproven technology, EDF – which has the contract to build the new power station – is heavily indebted already. The market doesn’t much care to invest despite – or perhaps because – the UK, Chinese and French governments are all heavily involved. According to some reports, two thirds of the funding is yet to be raised. Continue reading...

All the day’s economic news, as finance ministers consider the deadlock between the Greece government and its lenders

David Cameron is under fire from the press and Tory MPs. It would become him to act more courteously to the pro-Europeans on the other side of the houseThe cuts are getting closer to home. Last weekend, an 86-year-old near neighbour died in a house fire when he might have been rescued had the fire brigade not been suffering from a programme of cutbacks.One can never be sure in such cases, but the London secretary of the Fire Brigades Union, Paul Embery, pointed out the fire engines were significantly later on the scene than they should have been. Thanks to the cuts to local authority budgets which are an integral feature of George Osborne’s austerity policy, and reductions in the fire service being energetically pursued by the mayor of London, the borough of Islington has reportedly lost 60% of its fire cover in the past three years. The Islington Tribune – a newspaper David Cameron says he regularly subscribes to – reports that this leaves “just two engines for a borough with a population of more than 200,000”. Continue reading...

Oil price rose 4% after Australian market shut on Friday, while gold and iron ore both lifted by about 1% and Wall Street closed higherThe Australian share market is expected to open up to 40 points higher on Monday on the back of strong surges in oil and base metal prices.And all eyes will be on interest rate signals at home and abroad over the coming week.Related: Commonwealth bank admits failing customers over heart attack claimsRelated: ANZ to ‘vigorously defend’ interest rate rigging case Continue reading...

Share index turnaround of 12% since February contributes to mood of cautious optimism in CityWas that it? The year began with warnings to sell up and hunker down for another financial crisis. But now investors have been left scratching their heads after the FTSE 100 enjoyed its third week of gains to soar back to where it started 2016.The index rallied 1% on Friday to close at 6,199.43, just shy of the 6,242.32 level at which it opened the year and above the 6,093 where it closed on the first trading day of the year. Continue reading...

Despite the end of the boom, resources is still the most important sector, ably supported by building houses and buying things to put in themThe early signs for the GDP figures were not good – capital expenditure was weak and the outlook terrible, and on Tuesday the latest balance of payments figures showed that net exports would contribute nothing to GDP growth in the December quarter.But then the figures came out on Wednesday showing that in seasonally adjusted terms the economy grew by 0.6% in December and a very solid 3.0% for the year. Continue reading...

All the day’s economic and financial news, as markets suffer another volatile day