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by Larry Elliott Economics editor on (#NT02)
Shadow chancellor aims to differentiate not just between Labour and the Tories, but between Corbyn Labour and Miliband LabourThere were no jokes. There was no all-out onslaught on capitalism. It was left to others to deliver the strongest attacks on the Conservative government.But John McDonnell’s debut party conference speech as Labour’s shadow chancellor was anything but dull. A bit more mainstream, certainly, than some might have been expecting (or fearing), but not boring.Related: John McDonnell to be interviewed by Guardian editor Katharine Viner Continue reading...
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| Updated | 2025-01-14 22:15 |
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by Phillip InmanEconomics correspondent on (#NST4)
Report says global trade is still dominated by the export of goods that sold better after a cut in the exchange rateA 10% fall in the value of a nation’s currency can boost exports by an average 1.5% of GDP, according to a study by the International Monetary Fund that reveals the benefits of a cut in the exchange rate for foreign trade.Heightening fears that the global economy is likely to suffer a new round of currency wars, the report said global trade was still dominated by the export of goods such as cars and fridges that sold better after a cut in the exchange rate made them cheaper.
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by James Meadway on (#NSE3)
With world trade contracting, the UK will need to promote renewables to reduce import dependency and boost regional economic growthWorld trade has fallen by its largest amount since the financial crisis of 2008. The crash itself produced a significant shrinking of global trade – the sharpest since the Great Depression. At the time it was possible to believe that this was a temporary wobble. Ongoing technological change, from containerisation of freight transport to today’s ubiquitous digital communications, would lock the economy into a path of deeper and deeper “globalisationâ€, with international flows of goods, services and money overwhelming states and transforming societies.The rapid recovery in global trade in the first years after the crash kindled a hope that the forward march of globalisation would continue. This now looks excessively optimistic.Related: Forget your dreams and follow the money if you want to help the worldRelated: Small scale hydropower can provide stream of new jobs to rural regions Continue reading...
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by Patrick Wintour Political editor on (#NR5X)
Shadow chancellor plans broader remit for Bank of England and will say he understands need to bring deficit under controlJohn McDonnell, the shadow chancellor, will promise to match Jeremy Corbyn’s new politics with a new economics, including a pledge that the next Labour government will live within its means but run a different kind of economy.
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by Nick Fletcher on (#NR5V)
Signs of a global economic slowdown prompt analysts to put back predicted dateThe Bank of England is likely to keep interest rates on hold until the middle of next year rather than raising them sooner, following a gloomier outlook for the global economy, according to the economic forecaster CEBR.The Centre for Economics and Business Research now believes a rise in May or August 2016 is more likely than one in February, its previous prediction. Signs of a global economic slowdown have been growing in recent weeks, especially in the world’s second-largest economy China and emerging markets. This is likely to stay the Bank’s hand despite reasonable growth rates in the UK, with the CEBR warning that the UK’s performance may not be sustainable if economies elsewhere continue to struggle.Related: UK interest rates may have to be cut, warns Bank of England chief economist Continue reading...
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by Heather Stewart on (#NR5Z)
FSA chairman warns of ‘legitimate concern’ that monetary finance proposed by those from socialist tradition would be used to excessLabour’s radical new leader may struggle to win over voters to “Corbynomics†because leftwingers are less trusted with public money, according to former City watchdog Lord Turner.Turner, who chaired the Financial Services Authority at the height of the sub-prime crisis, says the “technical case†for “People’s QEâ€, the policy at the centre of Corbynomics, which involves ordering the Bank of England to create money to pay for infrastructure projects, is “incontrovertibleâ€. Continue reading...
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by Larry Elliott Economics editor on (#NPYM)
Voters will only elect Labour if they trust the party with the economy - but there are some scenarios in which they will give Corbynomics a hearingA reputation for economic competence can be lost in a day and take a generation to win back. Ask the Conservatives. George Soros did for them on 16 September 1992 when his selling of the pound drove Britain out of the Exchange Rate Mechanism. The Conservatives lost three elections on the trot after Black Wednesday.Labour, too, knows how long the rehabilitation process can be. No single event was to blame for Jim Callaghan losing the 1979 election; rather it was the combination of record peacetime inflation, a sterling crisis, a squeeze on living standards and the Winter of Discontent. There followed an 18-year gap before voters were again prepared to trust Labour with their money.Related: I’ve got what it takes to be PM, Jeremy Corbyn tells his criticsRelated: Why we should take Corbynomics seriouslyPeople’s quantitative easing is simply an alternative form of helicopter moneyRelated: UK economic slowdown? Don't panic Continue reading...
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by Simon Goodley on (#NPF8)
The ONS “blue book†has a penchant for rewriting economic history as it revises data. It can all be a bit of a soap operaLike the death of Dallas character Bobby Ewing, economics can deliver alternative realities that leave you feeling cheated for having believed the old plotlines.Millions might have thought they’d witnessed the UK economy heading for a triple-dip recession in 2013 – just as soap fans reckoned they’d watched the demise of their hero in the 1980s – but George Osborne in the Treasury (and Bobby’s wife Pamela in her en-suite) were relieved to discover that both events had just been nasty dreams. Continue reading...
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by Heather Stewart on (#NPES)
The chancellor’s charm offensive has impressed Beijing. But the powerhouse of the east is now exporting economic problems all over the worldChinese hard hats are red, we discovered last week. George Osborne, never slow to slip into industrial workwear, had several opportunities to model one during his five-day-long grand tour, as he gladhanded officials, chatted to workers, and urged Chinese firms to help build Britain’s “northern powerhouseâ€.The chancellor’s Chinese jaunt, on which an extraordinary six other ministers joined him at various points, was part of a concerted strategy to paint himself as a forward-thinking free trader at ease on the world stage – and, of course, to suck up to the Chinese authorities.China’s biggest export these days is not plastic toys or iPhone parts: it’s deflation Continue reading...
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by Will Hutton on (#NNR7)
VW’s existential crisis has revealed the weaknesses inherent in western economies. Change must now happenA well-functioning capitalism has, and will always need, multiple and powerfully embedded checks and balances – not just on its conduct but on how it defines its purpose. Sometimes those checks are strong, uncompromised unions; sometimes tough regulation; sometimes rigorous external shareholders; sometimes independent non-executive directors and sometimes demanding, empowered consumers. Or a combination of all of the above.CEOs, company boards and their cheerleaders in a culture which so uncritically wants to be pro-business do not welcome any of this: checks and balances get in the way of “wealth generationâ€. They are dismissed as the work of liberal interferers and apostles of the nanny state. Continue reading...
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by Heather Stewart Observer economics editor on (#NNKP)
Rise of 50p an hour will not cover loss of benefits for 6.5 million people, says Resolution Foundation thinktankA record 6.5 million people – almost a quarter of UK workers – will remain trapped on poverty pay next year, despite George Osborne’s 50p-an-hour increase in the national minimum wage, according to research by the Resolution Foundation thinktank.Adam Corlett, Resolution’s economic analyst, said: “While the chancellor’s new wage floor will give a welcome boost to millions of Britain’s lowest-paid staff, it cannot guarantee a basic standard of living or compensate for the £12bn of welfare cuts that were announced alongside it.†Continue reading...
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by Bruce Watson on (#NMCC)
New report from green think tank Heinrich Boll shows OECD countries grew their economies 16% in last decade – and cut greenhouse gas emissions 6.4%As the world works out how to avoid catastrophic climate change, one of the biggest questions remaining is whether we can continue to grow economically without also increasing greenhouse gas emissions.New research released this week at Climate Week NYC offers more hope that the answer might be yes. Prepared for green thinktank Heinrich Böll by DIW Econ, a German institute for economic research, the study found that, as a whole, countries that belong to the Organization for Economic Cooperation and Development (OECD) have already decoupled their economic growth from emissions. Continue reading...
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by Nicholas Watt and Patrick Wintour on (#NJTN)
Exclusive: shadow chancellor says party will vote in favour of Tories’ fiscal charter but will take radically different approach on cutting deficitJohn McDonnell, the new shadow chancellor, will tell the Labour conference that Britain must always live within its means as he announces that the party will vote in favour of a new fiscal charter proposed by George Osborne.
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by Editorial on (#NJK6)
The code that runs modern cars is powerful and dangerous. It must be much more tightly controlledWe won’t ever know how many people have died as a result of Volkswagen cheating on the emission controls of its diesel engines. But the pollutants emitted by diesel engines do kill just as surely as other poisons and their victims are predominantly people who are not themselves drivers: pedestrians, or those whose families have to live near the kind of heavy traffic that anyone with money tries to avoid. On a global scale, the filthiest engines are found in the poorest countries, so here, too, it is the non-drivers who pay the price for drivers’ selfishness. That particular injustice will necessarily continue whether or not the authorities can decide on and then enforce honest standards from carmakers in the future, since diesel engines have a life of about 15 years (longer if they are more polluting, less if they run hotter to minimise the damage that they do to the rest of us). Even if every diesel engine made in Europe is honest and unpolluting from this moment on, there is still a huge backlog of VW engines that will go on spewing poison for another 10 years or more.This is a very serious crisis, and the spectacle of the boss on whose watch it erupted stepping lightly down on to the cushion of a gigantic pension is frankly repellent. It is an important part of the explanation for the scandal that the executives involved may have believed that everyone else in the industry was at it. They may well have been right. It is also part of the explanation that the industry regulators connived and still connive at a great deal of small scale cheating for such things as fuel economy tests. But none of these explanations amount to an extenuation. In fact they make matters worse, and argue the case for severity, since it will take exceptional disincentives to change behaviour so widely accepted within the industry, as one lesson of the banking crisis suggests. The VW group has lost almost a third of its value on the stock market in the last week. It is only fair that some similar catastrophe should strike at the men personally responsible for this. Continue reading...
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by Katie Allen on (#NJ6X)
New estimate fuels expectations Federal Reserve will raise interest rates in 2015The US economy grew faster than previously thought in the second quarter of the year, according to new figures that have fanned expectations that the Federal Reserve will raise interest rates before the end of 2015.Government data suggested the world’s biggest economy grew at an annual pace of 3.9% between April and June, exceeding economists’ expectations for the GDP estimate to stay unchanged at 3.7%. It marked an even stronger bounceback from the sluggish 0.6% growth recorded in the opening months of 2015 when an especially harsh winter hit economic activity.
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by Sean Farrell on (#NGV6)
Share sale takes taxpayers’ holding in bailed-out bank below 12%, and total recovered to £15bnThe government has sold a further 1% of Lloyds Banking Group, taking taxpayers’ stake in the bailed-out bank to less than 12%.The sale reduces the government’s holding in Lloyds to 11.98% from 12.97% a month ago. The Treasury has raised £15bn from selling Lloyds shares and has used the money to pay off the national debt. Continue reading...
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by Nils Pratley on (#NF6Y)
Most industrial commodities are oversupplied, with the feared slowdown in China only deepening the miners’ woesHow severe is the crisis in the world of over-borrowed big miners? Here’s an illustration. Anglo-American, a company founded in 1917, employing 148,000 people around the world and generating sales last year of almost £20bn, now has a stock market value of £8.7bn.By contrast, Next, the clothing chain with a £4bn turnover, is worth £11bn. Even Whitbread, pumping out Costa Coffees rather than digging for diamonds, coal and iron ore, is within a whisker of Anglo’s market value. Continue reading...
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by Graeme Wearden (until 2pm) and Nick Fletcher on (#ND8Y)
Rolling coverage of the Volkswagen emissions scandal
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by Associated Press on (#NDV9)
Shinzo Abe declares new stage for his economic plan with focus on boosting economy and population growth, and improved social securityJapan’s prime minister Shinzo Abe, fresh from a bruising battle over unpopular military legislation, has unveiled an updated plan for reviving the world’s third-largest economy, setting a GDP target of 600tn yen (£3.2tn).Abe took office in late 2012 promising to end deflation and rev up growth through strong public spending, lavish monetary easing and sweeping reforms to help make the economy more productive and competitive. So far, those “three arrows†of his Abenomics plan have fallen short of their targets, although share prices and corporate profits have soared.Related: Draghinomics – Abenomics, European-style Continue reading...
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by George Monbiot on (#ND67)
The people behind a manifesto for solving environmental problems through science and technology are intelligent but wrong on their assumptions about farming and urbanisationBeware of simple solutions to complex problems. That is a crucial lesson from history; a lesson that intelligent people in every age keep failing to learn.On Thursday, a group of people who call themselves Ecomodernists launch their manifesto in the UK. The media loves them, not least because some of what they say chimes with dominant political and economic narratives. So you will doubtless be hearing a lot about them.“A growing manufacturing base has long been a crucial way to integrate a large, low skilled population into the formal economy, and increase labour productivity. To grow more food on less land, farming becomes mechanised, relieving agricultural workers of a lifetime of hard physical labour.â€â€œCities both drive and symbolise the decoupling of humanity from nature, performing far better than rural economies in providing efficiently for material needs while reducing environmental impacts.â€â€œIt turns out that while density does equal efficiency, “megacity†does not necessarily equal density. Megacities do encompass those places that we typically associate with dense and culturally vibrant urban centres: New York City, Tokyo, London. But what’s not often taken into account is the fact that to keep them running, these cities also require surrounding areas such as industrial lands, ports, suburbs. In other words, the environmental benefits of a city’s dense urban core can be outweighed by the resource-inefficient, yet essential, areas on its periphery. They are, in fact, two sides of the same coin.â€â€œThe long-term evolution of social, economic, political, and technological arrangements in human societies toward vastly improved material well-being, public health, resource productivity, economic integration, shared infrastructure, and personal freedom.â€â€œA word you won’t find in the Ecomodernist Manifesto is inequality. ... There is no sense that processes of modernisation cause any poverty. ... There’s nothing on uneven development, historical cores and peripheries, proletarianisation, colonial land appropriation and the implications of all this for social equality. The ecomodernist solution to poverty is simply more modernisation.“... From ancient Mesopotamia to modern China the evidence is clear: development implies underdevelopment, material wealth implies material poverty, freedom implies slavery and so on. These couplets are not two ends of a historical process, with modernisation ringing the death knell for the misery of the past, but contradictions within the modernisation process itself.†Continue reading...
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by Patrick Wintour Political editor on (#NCD4)
Emmanuel Macron believes a win-win situation could be achieved for Britain and France in reforming the eurozoneBritain’s plans to create new relationship with the European Union could be coordinated with far-reaching EU treaty changes to create an integrated eurozone, the controversial reforming French economics minister has said.This would be a win-win for Britain and France, Emmanuel Macron told the Guardian in an interview, but he said it depended on the precise details of what Britain was proposing. Continue reading...
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by Heather Stewart on (#NC9K)
Researchers say extra GDP output could come from reforms, such as allowing more women in workforce in countries where they currently face restrictionsTackling gender inequality and boosting women’s opportunities in the labour market could add $12tn (£7.8tn) to annual global GDP over the next decade, according to new research.The McKinsey Global Institute has measured gender inequality across 95 countries, using 15 different indicators, including not just women’s role in the workplace, but everything from the availability of contraception to access to bank accounts.
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by Patrick Wintour Political editor on (#NC2B)
Paper co-authored by shadow health secretary underlines difficulties facing Jeremy Corbyn with MPs in his administration so at odds with his ideologyVoter distrust of Labour’s use of taxpayers’ money is an existential threat to the party, and members who deny it by claiming the public are against austerity are flying in the face of evidence, according to a pamphlet co-authored by Heidi Alexander, the new shadow health secretary.Liam Byrne, MP for Birmingham Hodge Hill, and Shabana Mahmood, the former shadow Treasury chief secretary who has refused to serve in Jeremy Corbyn’s shadow cabinet, also contributed to the pamphlet. Probably the starkest document yet to emerge from Labour’s election rubble, it underlines how hard it will be for Corbyn to send out a cohesive message when MPs, including those in his administration, are fundamentally opposed to his ideology.Related: Labour housing policy 'must be credible' to win back Tory votersRelated: Can Corbynomics guru Richard Murphy fix Britain? Continue reading...
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by Helena Smith in Athens on (#NBYG)
‘Our goal is recovery and reconstruction,’ says Yannis Dragasakis, deputy premier, as conservatives say they don’t see anti-austerity coalition lastingA new government charged with taking Greece out of its worst crisis in modern times assumed office on Wednesday, three days after the leftwing Syriza party returned to power.The 27-member cabinet, faced with a forbidding agenda set by creditors keeping the debt-stricken country afloat, was sworn in as the prime minister, Alexis Tsipras looked on.Related: Greece: Alexis Tsipras retains economics team in cabinet with unenviable taskRelated: Get back to grassroots, Syriza – and show us a radical vision to transform Greece | Marina PrentoulisRelated: Greece keeps Euclid Tsakalotos as finance minister after election win Continue reading...
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by Helena Smith in Athens on (#NBRV)
Familiar names Dragasakis, Tsakalotos, Stathakis and Houliarakis assume office to meet bailout demands and rebuild economyA new government tasked with taking Greece out of its worst modern-day crisis has assumed office, three days after the leftist Syriza party was triumphantly returned to power. The 27-member cabinet, faced with a forbidding agenda set by the creditors keeping the debt-stricken country afloat, was sworn in on Wednesday as prime minister Alexis Tsipras looked on. “Our goal is recovery and reconstruction,†said Yannis Dragasakis, the deputy premier, after the ceremony.In the spirit of rebuilding Greece’s shattered economy, Tsipras retained the economics team that had negotiated Athens’s latest EU bailout during his first term in office. The Oxford-educated economist, Euclid Tsakalotos, who led the talks that finally sealed the €86bn rescue, returned as finance minister. Giorgos Stathakis resumed duties as head of the national economy ministry – renamed the ministry of growth and development – while Dragasakis, a former communist MP, remained as deputy prime minister to oversee the far-reaching fiscal consolidation programme that Athens now has to enforce.Related: The Greek election in mapsRelated: Get back to grassroots, Syriza – and show us a radical vision to transform Greece | Marina Prentoulis Continue reading...
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by Larry Elliott Economics editor on (#NBHB)
Bank of England deputy governor claims skew towards low-skilled employment helps explain weak productivity and payLow-skilled migration and a reluctance to invest have been cited by a leading Bank of England official as possible factors depressing wage growth and harming Britain’s productivity since the deep recession of 2008-09.Ben Broadbent, one of Threadneedle Street’s four deputy governors, said the skewing of employment growth towards the lower-paid and lower-skilled helped explain why pay pressures were so weak.Related: Low pay, low inflation and low interest rates? This is not 1975Related: UK interest rates may have to be cut, warns Bank of England chief economist Continue reading...
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by Graeme Wearden (until 3.30) and Nick Fletcher on (#N9K5)
Winterkorn denies any wrongdoing but will leave in “the interests of the companyâ€
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by Anatole Kaletsky on (#NAAH)
The Federal Reserve will likely start raising rates in December, but monetary tightening will be motivated by concerns about financial stability, not inflationThe US Federal Reserve’s decision to delay an increase in interest rates should have come as no surprise to anyone who has been paying attention to Fed chair Janet Yellen’s comments. The Fed’s decision has merely confirmed that it is not indifferent to international financial stress, and that its risk-management approach remains strongly biased in favour of “lower for longerâ€. So why did the markets and media behave as if the Fed’s action – or, more precisely, inaction – was unexpected?What really shocked the markets was not the Fed’s decision to maintain zero interest rates for a few more months, but the statement that accompanied it. The Fed revealed it was unconcerned about the risks of higher inflation and was eager to push unemployment below what most economists regard as its natural rate of about 5%. Continue reading...
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by Marina Prentoulis on (#N9Z3)
Alexis Tsipras’s party is in power again, but there’s no painless way to fix the Greek situation. Syriza must work for ordinary people while building alliances within and outside EuropeSyriza’s second general election victory was in some ways more significant than its first. On 25 January hopes had been high that the Greek people would be able to break free from the debt they had not themselves accumulated, and from the imposed austerity measures of the Eurozone memoranda. But after eight difficult months there was a very different mood this time around: people’s aspirations had been crushed by the 12 July agreement.Related: The Greek election in mapsThe government now needs to reconnect with its grassroots and rebuild its base in civil societyRelated: The lenders are the real winners in Greece – Alexis Tsipras has been set up to fail | Yanis Varoufakis Continue reading...
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by Associated Press on (#N9FM)
Global investors unsettled as survey shows China’s factories cut output, staffing and prices at a faster pace as both new export orders and overall new orders fallChinese manufacturing activity fell to its lowest in more than six years in the latest sign of the slowdown in the world’s second-biggest economy, according to a survey released on Wednesday.The latest data was worse than economists had expected and unsettled global financial markets. Uncertainty about the extent of China’s slowdown has been on the radar of investors, particularly after the Federal Reserve mentioned China as one of its reasons for not raising interest rates last week.Related: Xi Jinping defends China's stock market interventions on first US visit Continue reading...
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by Greg Jericho on (#N9AM)
The Reserve Bank is relatively upbeat about Australia’s economic prospects in the face of falling commodities as the lower dollar helps domestic travelLast week the Organisation for Economic Co-operation and Development (OECD) revised down projections for China’s growth over the next two years, and the price of our major exports has fallen 30% in the past year. Despite this the governor of the Reserve Bank, Glenn Stevens, remains upbeat about Australia’s economy. One of the reasons is the performance of the services sectors – notably the tourism industry. With a falling dollar, Australia has again become a good place to visit – and an expensive place to leave.Related: Mining boom gouged a wider wealth gap in Western Australia, report findsRelated: Mining boom a 'once in a century' lost economic opportunity, report findsRelated: Australian minister declares end of mining resources boom Continue reading...
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by Fergus Ryan in Beijing on (#N9AN)
China’s economy shows fresh sign of weakness despite president’s assurance that markets are in ‘self-recovery’ and that Beijing is against currency warsChina’s president, Xi Jinping, has sought to reassure global concern about the world’s second-largest economy, defending his government’s actions in the stock market and saying growth will be maintained.
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by Editorial on (#N7YV)
The chancellor’s reluctance to be clear about British strategy with regard to China carries big political and democratic costsGeorge Osborne’s visit to China this week is an event of genuine significance. But what is principally significant is not the sight of a chancellor of the exchequer auditioning for the post of prime minister, interesting though that is. What matters much more is that Mr Osborne seems to be using the visit to set out – though without quite admitting it – the essential economic statecraft strategy of the current Conservative government. That strategy, given added immediacy by the higher-than-expected borrowing figures announced today, is to make Britain increasingly dependent upon inward investment by rich, often authoritarian, nations in order to help finance UK economic growth while maintaining a low-tax regime at home.There are broad echoes of the Gordon Brown era in this. Mr Brown had to face the conundrum of how to supply the Scandinavian levels of public spending the public would like to see while maintaining the American levels of taxation that the public appears willing to pay. His stealthy strategy was to give the UK financial sector its head in return for taxation which he would direct into extra spending on the NHS, the working poor and the elderly. It was a more socially ambitious plan than anything Mr Osborne has admitted to, but both men took as read the political unpopularity that would follow the use of higher direct taxation to finance public goods. Like Mr Osborne, Mr Brown never quite levelled with the public about what he was doing. The strategy was never put to the electorate in a general election. As now, the strategy only became apparent in retrospect, through the chancellor’s actions. Continue reading...
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by Heather Stewart and Nick Fletcher on (#N7ZP)
London’s leading share index closed below 6,000 on a day when Glencore’s shares were suspended twiceRenewed alarm about the fragile state of China’s economy sent mining stocks plunging and wiped £44bn off the value of Britain’s top companies on a day of tumultuous trading in financial markets.Mining shares bore the brunt of the selling, with commodity companies making up five of the top 10 fallers in the FTSE 100, which closed 3% lower, some 172.87 points, at 5935.84. Glencore fell to its lowest level since it floated at 530p a share in 2011, down to 99.5p, before recovering to 106.35p, still down nearly 11% on the day. Continue reading...
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by Graeme Wearden and Nick Fletcher (now) on (#N61K)
German automaker admits 11 million cars affected by emissions scandal, and sets aside €6.5bn to cover the costs
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by Larry Elliott on (#N7XS)
Thinktank says richest countries must unite to solve problem in Europe and help health workers remain in poorer countriesThe west’s richest countries have been warned by their own influential thinktank that the prospect of a million asylum seekers this year will require an urgent and collective response to the unprecedented refugee crisis that has developed over the past two years.The Paris-based Organisation for Economic Cooperation and Development (OECD), which counts 34 of the wealthiest countries in the world as its members, called for a comprehensive plan that would provide both immediate humanitarian assistance to asylum seekers and help to integrate them.Related: EU governments push through divisive deal to share 120,000 refugees Continue reading...
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by Zoe Williams on (#N7TB)
The Joy of Tax author thinks we should clobber tax avoiders and pump money into social housing rather than the banks. Does this wonkish former accountant have the masterplan to reshape the country?Richard Murphy, author of Corbynomics and, more pertinently for our purposes, author of The Joy of Tax, steps out of a tax conference to go to a cafe to be interviewed. Murphy is now the key thinker of the opposition to Her Majesty’s Government, or, to put it another way, a threat to national security and your family’s wellbeing. This charge is even more hilarious attached to Murphy than it is to Jeremy Corbyn – corduroy-ey even when he’s not in corduroy, he looks far more like the accountant he started out as than the renegade tax-hunter he became. He is married and lives in Norfolk with his wife, who is a GP, and their two sons of 13 and 14.Not all of Murphy’s ideas have made it on to Corbyn’s economic platform; but at the same time, there was nothing on that platform – at least as it was first delivered in the middle of July, at the Royal College of Nursing in Cavendish Square – that didn’t come from him. The central planks are to close the tax gap (the money Murphy identifies is lost through tax avoidance and evasion by high-net-worth individuals and corporations), and claw back some of the £93bn currently spent on “corporate welfareâ€; set up a National Investment bank to invest in infrastructure, such as housing, transport, rural broadband and green energy; and bankroll that investment with “people’s QEâ€, money created for a social purpose rather than for banks. Continue reading...
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by Tony Yates on (#N7HH)
The Bank’s independence prevents the government being tempted to finance pet projects with money-printingJeremy Corbyn’s proposed “People’s QE†has provoked consternation in the academic and central banking world. Even Mark Carney, governor of the Bank of England, has weighed in, despite the perils of central bankers speaking out on matters of political controversy. PQE has divided opinions in the economic commentariat, but it has united all in getting us extremely hot under the collar.PQE involves the government instructing the Bank of England to print money (or rather, the modern equivalent, creating electronic reserves) to purchase bonds issued by a Corbyn-established National Investment Bank. This NIB would then use the money to fund public infrastructure projects, or, in fact, whatever the government fancied.Related: Modern capitalism needs an opponent. It needs Jeremy Corbyn Continue reading...
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by Phillip Inman Economics correspondent on (#N71R)
CBI survey suggests sterling, eurozone woes and slowdown in China persuaded has forced a standstill in manufacturing growthBritain’s factory output remained stagnant this month ending a two-and-a-half-year run of growth after a fall in orders and a squeeze on prices sapped the manufacturing sector’s confidence, according to an industry survey.A decline in export orders took the biggest toll on the sector in September, dragging the total order book to its lowest level for six months. Firms said the outlook was still positive, although much less rosy than seen in August.Related: UK manufacturing hit by turmoil in China Continue reading...
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by Phillip Inman Economics correspondent on (#N6GN)
Chancellor under pressure ahead of spending cuts review as higher Whitehall spending and a dip in self-assessment revenue boost deficitA fall in income tax receipts sent Britain’s deficit spiralling to £12.1bn in August, the widest shortfall in government funding since 2012.The Office for National Statistics said a dip in corporation tax receipts was also to blame for the worsening situation, which will put pressure on George Osborne ahead of tough expenditure decisions due in November when Whitehall agrees its five-year spending targets.Related: UK tax and benefit changes worsening inequality, IFS warnsRelated: UK budget deficit narrows after boost from taxes and duties Continue reading...
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by Patrick Wintour Political editor on (#N68V)
Chancellor says loose monetary policy to end due to UK and US economic success following suggestions China slowdown could keep rates downBritish interest rates are more likely to go up than down thanks to the success of the UK and US economies, George Osborne has said, as he toured China to foster closer political and business ties.The chancellor told BBC Radio 4’s Today programme on Tuesday that a rise in interest rates signalled by Mark Carney, the Bank of England governor, reflected the “robust growth†of Britain’s economy, adding “the general signal coming from the Bank and the Federal Reserve in the US is that the exit from very loose monetary policy is going to comeâ€. Continue reading...
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on (#N5JM)
The Manila-based organisation says China will only grow by 6.8% this year, down from 7.2%, blaming weaker exports and investmentThe Asian Development Bank has cut its growth forecast for the region’s biggest economies, citing a softer outlook for China and India and a delayed recovery in the world’s advanced nations.The Manila-based organisation said in a report on Tuesday that it now predicts the region’s economies will expand 5.8% this year and 6% next year, down from the 6.3% it forecast in March for both years.Related: It’s not the Chinese economy that’s on life support | Martin Jacques Continue reading...
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by Phillip Inman Economics correspondent on (#N569)
Institute for Fiscal Studies says that in-work benefits help close the gap between rich and poor over a worker’s lifetimeA leading thinktank has warned the government it risks worsening inequality during workers’ lifetimes by cutting tax credits and reducing income tax rates for the richest.The Institute for Fiscal Studies said the long-term positives of higher in-work benefit payments were clear, citing a study of workers’ finances over the past 70 years. In the absence of higher income tax rates, top-up payments from tax credits and other in-work benefits were the main reason the income gap closed over a worker’s lifetime. Continue reading...
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by Helena Smith in Athens on (#N4PC)
The mood in Athens is as sombre as the weather as weary Greeks contemplate further spending cuts under fifth prime minister since eurozone crisis beganA huge storm, violent, dark and loud, rumbled through Greece, thunder and lightning skittering through the skies. After Sunday’s general elections it was not lost on many: Athenians saw in the tempest a perfect metaphor, an omen even, that the old was finally being washed away.“People voted for change, for what they believed would be a fresh start,†Lefteris Pavlis, who owns a chain of eateries in the city centre, said on Monday. “They voted to give Alexis Tsipras a second chance, which says a lot about the state of the opposition.â€Related: The lenders are the real winners in Greece – Alexis Tsipras has been set up to fail | Yanis Varoufakis Continue reading...
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by Yanis Varoufakis on (#N43E)
The Greek leader won on three promises the troika will make it hard for him to keepAlexis Tsipras has snatched resounding victory from the jaws of July’s humiliating surrender to the troika of Greece’s lenders. Defying opposition parties, opinion pollsters and critics within his ranks (including this writer), he held on to government with a reduced, albeit workable, majority. The question is whether he can combine remaining in office with being in power.Related: Greece election: Tsipras triumphant as Syriza returns to powerThe prime minister’s plan for weathering this storm is founded on three pledgesRelated: Greece election result: the key numbersRelated: Q&A: What Syriza's victory means for Greece and the EU bailout Continue reading...
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by Larry Elliott on (#N3XA)
Thinktank says member states and six biggest emerging economies should use sum to tackle climate change insteadRich western countries and the world’s leading developing nations are spending up to $200bn (£130bn) a year subsidising fossil fuels, according to a report from the Organisation for Economic Cooperation and Development.The Paris-based thinktank said its 34 members plus six of the biggest emerging economies – China, India, Brazil, Indonesia, Russia and South Africa – were spending money supporting the consumption and production of coal, oil and gas that should be used to tackle climate change. Continue reading...
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by Larry Elliott on (#N1C2)
Alexis Tsipras’s renewed mandate will allow him to push for more debt relief and an easing of austerity conditionsWhat a difference eight months can make. When Syriza came to power in Greece in January it did so on a wave of voter enthusiasm. There was talk of an austerity party breaking the mould of post “great recession†politics. Europe’s political establishment looked on in horror. The financial markets trembled.Related: Greek election live: Syriza on course for 'clear victory' as New Democracy concedesTsipras will step up the pressure for debt relief now that he has his new mandate Continue reading...
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by Larry Elliott Economics editor on (#N0XX)
Sustainable development summit must address inequality that makes people undertake dangerous journeys to the westThe contrast could hardly be sharper. Razor wire fences are being constructed to keep the uprooted poor out of the European Union at the very moment the United Nations meets to agree anti-poverty goals for the next 15 years.No question, the gathering in New York will be a regular jamboree. There will be mutual backslapping about the progress that has been made over the past 15 years, a good deal of it justified. Countries will solemnly pledge to meet the 17 sustainable development goals, with 169 specific targets, by 2030. They will turn a blind eye to what is happening in Serbia, Hungary, Croatia and Austria.
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by Suzanne McGee on (#N0F1)
Thursday’s announcement that the Fed is neither a cause for panic nor celebration – but it does mean investors must cope with uncertaintyCan a meeting of Federal Reserve policymakers at which nothing much happens – at which interest rates remain unchanged – still be significant for investors? You betcha, and here’s why.This wasn’t an ordinary Fed meeting, something to which Leo Grohowski, chief investment officer at BNY Wealth Management, can testify. “We did a call for our clients and had 300 people on the line, and I can’t remember even doing a call of this kind for a regularly scheduled Fed meeting before. This time, we felt compelled to do so,†because the meeting was seen as such a turning point in the Fed’s policymaking. Continue reading...
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by Robert Shiller on (#N0BS)
Because we can be manipulated or deceived, free markets can persuade us to buy things that are good neither for us nor for societyAdam Smith famously wrote of the “invisible hand,†by which individuals’ pursuit of self-interest in free, competitive markets advances the interest of society as a whole. And Smith was right: free markets have generated unprecedented prosperity for individuals and societies alike. But, because we can be manipulated or deceived or even just passively tempted, free markets also persuade us to buy things that are good neither for us nor for society.This observation represents an important codicil to Smith’s vision. And it is one that George Akerlof and I explore in our new book, Phishing for Phools: The Economics of Manipulation and Deception. Continue reading...
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