Zoe Williams puts forward an extraordinary argument (There’s plenty more space for humanity on this ‘tiny’ island, 2 November). She suggests that because “only” 10.6% of England’s land area is urbanised there is room for a great many more people than currently live here. This ignores lots of things, but let’s focus on one: food.Despite an intensive agriculture that depends heavily on pesticides, fertilisers and diesel fuel for tractors, neither England nor the UK is self-sufficient in food. In fact we import 40% of our food, and the proportion is rising. That might not matter if we could be sure that we’ll be able to import food in increasing quantities. Continue reading...

Federal Reserve chair tells House committee that no decision has been made but a rise in rates is still a ‘live possibility’ despite continued low inflationA December interest rate increase is still on the table, US Federal Reserve chair Janet Yellen said Wednesday during testimony before the House financial services committee.Asked by New York congresswoman Carolyn Maloney, a Democrat, whether the risk of raising rates in December outweigh the benefits, Yellen said that the committee has made no decision yet but that December rate hike was still a “live possibility”.Related: Federal Reserve keeps interest rates unchanged but hints at December riseBill Dudley on December liftoff: "I fully agree with the Chair. It is a live possibility, but let's see what the data shows" Continue reading...

Monthly Markit/CIPS services PMI survey shows more job creation and employment in UK’s leisure and IT industriesThe UK’s dominant service sector moved back into growth in October, but the rate of expansion remained weak, a new survey shows.The rate of growth for service industries, which span hotels, restaurants, IT and finance, rose for the first time since June, according to the monthly Markit/CIPS services PMI published on Wednesday. Continue reading...

October’s purchasing managers’ index for the building industry shows the sector in rude health, according to analystsA surge in new work across the UK construction industry in October cheered financial markets and sent the pound close to a 10-week high against a basket of currencies.Building firms took on new work at the fastest rate for a year, according to the CIPS/Markit purchasing managers’ index (PMI) for the construction industry. The index, published on Tuesday, suggests the British economy has recovered quickly from the turmoil caused by China’s dramatic slowdown. Continue reading...

As Australia goes to the races, the RBA resisted a gamble to reduce rates. Follow the reaction to the day’s other big event with Greg Jericho and Martin Farrer4.39am GMTOk. That’s it from me as well. Thanks for reading.There is now a news story on this afternoon’s decision here which I will update with reaction.4.18am GMTWell, fancy that.The Cup winner Prince Of Penzance was the same price as the RBA increasing the cash rate by more than 0.25%, namely $100.4.02am GMT3.58am GMTThe ASX/S&P200 is more or less back to where it was when we started out.After a sharp fall just after the announcement (no cut=no cheap money), it bounced back up when traders digested the fine print where Glenn Stevens gave himself room for a cut in coming months.3.53am GMTAnd so it would seem the RBA is slightly more happy about our economy than it was a month ago. And yet just to keep us all guessing it seems more willing than a month ago to lower rates if need be.What that would suggest is that should the US Fed not lower rates, and should any economic data take a downward turn, the RBA might just be willing to cut rates at least one more time.3.50am GMT3.47am GMTLooking at the statement it would seem the RBA is becoming less worried about housing prices.In October it said that “prices continue to rise strongly in Sydney and Melbourne”. Today they dropped the “strongly” adjective to make it:Dwelling prices continue to rise in Melbourne and Sydney, though the pace of growth has moderated of late.3.46am GMTTraders not quite sure where it’s going after that statement.3.43am GMTOk. Back to Greg, who’s been reading the statement more carefully than me.As Martin and Stephen Koukoulas noted, the big change in the statement is the final paragraph.At today’s meeting the Board judged that the prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting.Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand.3.39am GMTBut it does add:Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand.3.37am GMTRead the full statement from RBA governor Glenn Stevens here.But the highlight is probably this phrase:At today’s meeting the Board judged that prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting.3.33am GMTCould the Melbourne Cup be as exciting?3.30am GMTCASH RATE STAYS AT 2%.3.26am GMTAnd lastly as ever he value of the dollar hovers over the decision. Currently the dollar is trading at around US71.71c, a bit higher than it has been of late but still well below where it has been for the past 18 months:3.23am GMTOne factor that will be in the RBAs thinking is the moves of the big four banks to raise rate independently over the past month. The moves (as I wrote about here) were in response to new measures brought in by the financial regulator Apra.The regulation meant banks had to raise rates if they wanted to maintain their level of profitability.3.18am GMTBut what is going to increase demand? Today the RBA released its latest index of commodity prices and just in case you have been asleep since 2012, it reminded us all that the mining boom is done:3.15am GMTThe other big question though is why would the RBA want to get people taking out more loans to build more houses. Yes construction is a life blood of our economy – and the housing sector is a vital part – but have you seen how much debt we’re in at the moment?The RBA recently revised its calculations for the level of household debt to disposable income. The good news was that it lowered its estimate of total debt, the bad news is its calculations show the levels of debt are rising faster than was previously though.

The chancellor’s maths are finally outrunning his politics. If he doesn’t U-turn he’ll have to keep hitting striving families again and againOver the past five years the biggest question in British politics has been this: how might George Osborne’s cuts be stopped? In a decade that will be defined by austerity, this remains the problem that underpins all the others in our politics. Suddenly, we’ve been given a possible answer.Many lessons can be drawn from the debacle over cuts to tax credits, and the remarkable past fortnight – in which the Sun took up arms against the party it helped create, in which a desperate mother shouted “shame on you” at the Tory she’d voted into government, and the habitually sedated House of Lords stumbled into rebellion.Related: Now austerity is hitting strivers, how will the Tories sell it? | Suzanne MooreOver the next five years, austerity will produce many more episodes like the war over tax creditsRelated: Remember Strangeways, 1990? The bad old days of inhumane prisons are back | Eric Allison Continue reading...

The private finance initiative (PFI) fell out of favour with the government in the aftermath of the crash, when borrowing money for 25 years at rates delivering the private investors double-digit returns made no sense even to HM Treasury. Since then, some valuable national infrastructure has been funded by local communities creating social businesses to produce renewable energy, accessing the money of ordinary people and mobilising them not only to invest it in socially and environmentally useful projects but to engage with one of the most pressing issues we face.The decision to remove availability of tax reliefs for community energy projects (Government to cut tax relief for community green energy schemes, theguardian.com, 28 October), coming at the same time as it is clearing the way (contrary to pre-election pledges) for privately owned, profit-driven fracking businesses to operate wherever they choose, makes explicit the governent’s preference to allow private equity, venture capital and hedge funds to profit rather than allow individuals and families to invest in their own communities.Related: Why don’t we save our steelworkers, when we’ve spent billions on bankers? | Aditya Chakrabortty Continue reading...

But financial secrecy index report notes if UK and affiliated tax havens such as Jersey were treated as one, it would top the listThe US has overtaken Singapore, Luxembourg and the Cayman Islands as an attractive haven for super-rich individuals and businesses looking to shelter assets behind a veil of secrecy, according to a study by the Tax Justice Network (TJN).The US is ranked third, behind Switzerland and Hong Kong, in the financial secrecy index, produced every two years by TJN.Related: Inequality is the great concern of our age. So why do we tolerate rapacious, unjust tax havens? | Gabriel ZucmanRelated: Delaware is first choice as tax haven Continue reading...

To block the refugees would fail – but to open Europe’s doors without limit is reckless. Finding a solution means addressing root causes in migrants’ countriesThere are no easy answers to Europe’s migration crisis. Perhaps that fact alone – the reality that all options are insufficient – could be the basis to build a consensus out of the bitter divisions that now grip the continent. The answer to the crisis in the longer term will depend less on migration policy and much more on smarter ways to avoid such crises in the first place.Those brave politicians who welcome the refugees, like German chancellor Angela Merkel, take a stand of basic human decency. People are fleeing for their lives from terror and war. To deny them asylum would violate the most basic standards of compassion. For you were strangers in a strange land, God reminds the Israelites in setting forth the principles of social justice.Related: Is Angela Merkel’s exit strategy shaping German refugee policy? | Christian SchneeRelated: I made an SOS call for the Aegean refugees. Now I’m lost for words | Justine Swaab Continue reading...

Markit/Cips UK manufacturing PMI report shows export and domestic orders picking up, confounding economists’ expectationsBritish manufacturers enjoyed a recovery in output and new orders last month, according to a survey that will raise hopes the sector is finally shrugging off its recession.

A predicted global meltdown passed without event. But there are enough warning signs to suggest we are sleepwalking into another disasterThe 1st of October came and went without financial armageddon. Veteran forecaster Martin Armstrong, who accurately predicted the 1987 crash, used the same model to suggest that 1 October would be a major turning point for global markets. Some investors even put bets on it. But the passing of the predicted global crash is only good news to a point. Many indicators in global finance are pointing downwards – and some even think the crash has begun.Let’s assemble the evidence. First, the unsustainable debt. Since 2007, the pile of debt in the world has grown by $57tn (£37tn). That’s a compound annual growth rate of 5.3%, significantly beating GDP. Debts have doubled in the so-called emerging markets, while rising by just over a third in the developed world.Related: Britain is heading for another 2008 crash: here’s why | David Graeber Continue reading...

Official PMI came in at 49.8 for October, while new export orders were also down for the 13th month in succession

UK and US have outperformed eurozone for same reason they did better in 1930s: they have made fewer macro-economic blundersI told you so. Barack Obama is too schooled in the niceties of diplomacy to put it as bluntly. But he would be well within his rights to utter those four words when he sits around the table with Angela Merkel at the G20 summit next week.Back in 2010, when the half-yearly gatherings of developed and developing countries were in their infancy, the G20 met in Toronto. Up until this point, the summits had shown a welcome unity, with all nations committed to the goal of avoiding a second Great Depression. Continue reading...

George Osborne’s come-uppance in the Lords and Trudeau’s victory in Canada suggest austerity may be losing its grip on the popular imaginationThose of us who have opposed George Osborne’s austerity policies throughout can take some comfort from two successive events on either side of the Atlantic. The first was the resounding victory of Trudeau the younger’s Liberal party in Canada on an unashamedly Keynesian, anti-austerity electoral platform. The second has been the way that the chancellor (indeed chancer) of the exchequer received his come-uppance from the House of Lords over his dishonourable programme of drastic reductions in tax credits.First, some background. Hardly anybody can be found these days who will say that they ever thought the Labour party stood a chance of winning under Ed Miliband. Yet David Cameron was sufficiently concerned to call a referendum on our membership of the European Union in order to ward off a threat from Ukip that might well have let Miliband in. Continue reading...

European Central Bank audit identifies capital shortfall in worst-case scenarioGreece’s four main banks need to find another €14bn (£10bn) of reserves to ensure they could withstand an economic downturn, the European Central Bank said on Saturday.The four banks – Alpha Bank, Eurobank, NBG and Piraeus Bank – have until 6 November to say how they intend to make up that shortfall, the ECB said.Related: Greece prepares to receive first funds after Germans back bailout Continue reading...

Helen Pidd reports that at the local government select committee on Monday Kieran Quinn, the Labour leader of Tameside council, praised George Osborne for being “very clever in as much as he has been able to bully, cajole, persuade other ministerial colleagues to give up some of their powers” (Labour should seize the day on elected mayors, 28 October). Other Labour council leaders throughout the north are lining up for what they see as more powers coming their way from Osborne’s “northern powerhouse”.What is lacking is any democratic involvement in these devolution agreements. Pidd reports that Greater Manchester “gains control over the region’s £6bn health and social care budget”. So who will get the blame for cuts in health and social care? Labour council leaders. Continue reading...

Prices across the single currency region were flat in October, while the Bank of Japan cuts its forecasts again1.47pm GMTTime for a quick recap.

Study shows a fall in infrastructure projects across the northern powerhouse area but the region is leading the way in housebuildingGovernment pledges to spend more on infrastructure projects in the north of England have been coming thick and fast since the UK chancellor unveiled plans for his “northern powerhouse”. But George Osborne has a lot of lost ground to make up, according to a new analysis of construction data revealing a fall in infrastructure activity across the northern powerhouse region.Infrastructure activity fell in London and across the combined regions where Osborne wants to create a network of northern cities to “take on the world”, according to an analysis of the latest construction data by Scape Group, a public sector-owned building consultants.Related: George Osborne has plenty on his plate with the UK economy Continue reading...

If the US fails to ratify the TPP because of fears about immigration, it would be a damaging blow to international cooperationFollowing the conclusion of the Trans-Pacific Partnership by 12 Pacific rim countries, debates about the costs and benefits of trade liberalisation are intensifying. The early leaders in the US presidential campaign – both the Republican Donald Trump and the Democrat Hillary Clinton – have expressed opposition to the TPP, though as secretary of state, Clinton called it the “the gold standard of trade deals”.The right level of trade openness is not a new debate. Historically, trade systems have ranged from rather open to severely restricted by rules, tariffs, or non-tariff barriers, driven by shifts in the relative strength of liberalising or protectionist economic and political forces. But even in closed systems, however severe the penalties they impose on trade, parallel markets usually develop, owing to the “gains from trade” generated by natural economic forces.Related: TPP deal: US and 11 other countries reach landmark Pacific trade pactRelated: From cars to cough medicine: why the Trans-Pacific Partnership matters to you Continue reading...

The central bank keeps its monetary powder dry as it gambles that the government’s other policy initiatives will kickstart the struggling economyThe Bank of Japan has held off expanding its massive monetary stimulus programme, preferring to keep its powder dry in the hope that the economy can overcome the drag from China’s slowdown without extra support.Related: The golden age of central banks is at an end – is it time for tax and spend?Related: Why China's interest rate cut may be bad news for the world economy Continue reading...

Separate surveys find October sales undershot expectations, while shoppers are more uncertain on whether it is a good time for major purchasesWorries about a global downturn have knocked consumer confidence with retail sales losing momentum over recent weeks, according to the latest reports signalling a slowdown in the UK economy.October marked a five-month low on a barometer of consumer mood from the market research group GfK, while a separate survey of retailers by the business group CBI showed sales had undershot expectations following a strong September.Related: GDP growth in the UK slows more than expected to 0.5% Continue reading...

Standard & Poor’s warns country would be downgraded one notch on leaving, which could double if relations with Brussels sourBritain’s credit rating could be cut by as much as two notches if it leaves the European Union, according to Standard & Poor’s, the only big ratings agency to still give Britain the top ranking.A vote to quit the EU would be likely to result in a one-notch downgrade, which could be increased to two notches if relations between London and Brussels deteriorated significantly, the agency’s chief sovereign rating officer told Reuters in an interview.

Gross domestic product increases at 1.5% annual rate after expanding at 3.9% in second quarter, as businesses reduced restocking warehousesUS economic growth cooled in the third quarter despite a pick-up in consumer spending as a glut on inventory led to businesses cutting back on restocking warehouses.Gross domestic product (GDP) – the broadest measure of economic health – increased at a 1.5% annual rate, a significant drop from the 3.9% annual growth of the second quarter, the Commerce Department said on Thursday. The main drag came from businesses stockpiling inventory, however, and economists expect growth to improve in the fourth quarter.Related: Federal Reserve keeps interest rates unchanged but hints at December rise Continue reading...

American GDP growth weakened this summer despite solid consumer spending, as firms cut back on their inventories3.16pm GMTIf you’re just tuning in, here’s what you need to know about the slowing US economy:US economic growth braked sharply in the third quarter as businesses cut back on restocking warehouses to work off an inventory glut, but solid domestic demand could encourage the Federal Reserve to raise interest rates in December.Gross domestic product increased at a 1.5% annual rate after expanding at a 3.9% clip in the second quarter, the Commerce Department said on Thursday. The inventory drag, however, is likely to be temporary and economists expect growth to pick up in the fourth quarter given strong domestic fundamentals.Related: US economic growth slows in third quarter as businesses cut back3.08pm GMTThis GDP report doesn’t resolve the confusion over when US interest rates will rise.Although growth slowed, the economy doesn’t look weak enough to rule out a hike this year.Forward-looking surveys have been signalling a slowdown, the strong dollar is hitting corporate profits, business investment is growing at only just over 2%, and inflationary pressure eased in the third quarter.The US central bank would have known what the growth figures were before it met this week. It clearly wants to leave all options open, not least even though a move before the end of the year would probably require a big jump in non-farm payrolls – the key measure of the health of the labour market – in the next couple of months.Related: US interest rates: slowdown in growth is no indicator of pre-Christmas rise2.56pm GMTToday’s growth figures look better if you ignore the fact that US companies reduced their spending on inventory-building.Capital Economics explains:The slowdown in GDP growth to 1.5% annualised in the third quarter, from a very strong 3.9% in the second, was mainly due to a big drag from inventories, which subtracted 1.4% points after making a neutral contribution in the previous quarter.The growth rate of final sales to domestic purchasers, a better gauge of underlying demand that strips out inventories and net external demand, was still as high as 2.9% in the third quarter.2.45pm GMTAlasdair Cavalla, economist at the Centre for Economics and Business Research, believes the Federal Reserve won’t be deterred from hiking rates in December by today’s report.This is a disappointing result for the world’s largest economy, but not disastrous. The rate was expected to fall given evidence from reduced hiring activity compared to earlier in the year, while leading indicators corroborated the slowdown....Yesterday the Federal Reserve revised its guidance. It was interpreted to mean a rate rise in December, barring disastrous domestic performance before then, regardless of what happens in the global economy. (The last proviso had been in doubt.) Today’s slowdown was as expected – something the Fed would have no doubt known yesterday. We maintain our expectation of a December rate rise.2.43pm GMTA reminder that this recovery is historically rather weak:US Real GDP growth during the current expansion: 2.2%. Slowest growth recovery in history. pic.twitter.com/bgygrU1TbzUS Nominal GDP Growth (YoY) falls to 2.9%. In the past, nominal growth has never been this low outside of recession. pic.twitter.com/q5Rj3YvM9A1.57pm GMTIt’s quite possible that US growth will bounce back this autumn.Sky News reckons the slowdown between July and September is a temporary affair:The slowdown was blamed on businesses in the manufacturing, wholesale and retail sectors reducing unwanted stockpiles or deciding not to restock heavily, taking 1.4 percentage points from the third quarter’s growth.However, economists expect that to be a blip - with GDP growth picking up in the current fourth quarter given the looming holiday season, low inflation and stronger wage growth and hiring.US Econony Endures Sharp Summer Slowdown https://t.co/YXqGSybRpu pic.twitter.com/uw9ejSVQqb1.50pm GMTShares are dipping at the start of trading in New York, as investors ponder the health of the US economy.The Dow Jones industrial average has dropped 35 points, or 0.2%, to 17,743 after the opening bell - which was rung by a musical star:The amazing James Monroe Iglehart (Genie in Broadway's "Aladdin") rings the @NYSE bell today $DIS pic.twitter.com/KNgQZkExui1.35pm GMTJames Knightley of ING says the detail of today’s report isn’t all bad:Inventories was a huge drag, subtracting 1.44 percentage points from growth. Investment in non-residential structures was down 4%, but everything else grew and net exports didn’t really take anything away either.1.33pm GMTHere’s Chris Williamson of Markit on today’s growth figures:“In particular, third quarter GDP was dragged down by a far smaller accumulation of inventories than in the second quarter, which is estimated to have reduced growth by 1.4%. This could therefore reverse in the fourth quarter as stock levels are rebuilt.“The composition of growth was also noteworthy from a policy perspective. As expected, exports acted as drag on growth, reflecting sluggish demand in overseas markets and the dollar’s appreciation, as did the energy sector, which is slashing capacity due to falling prices. But, importantly, consumer spending remained robust, with growth of expenditure merely easing from 3.6% in the second quarter to 3.2% and hinting at only a modest slowing of demand in the domestic economy.1.20pm GMTHere’s a breakdown of the key points in the US GDP report:1.13pm GMTThe US economy has now grown for six quarters in a row, since suffering a shock contraction during the bad winter of early 2014.Economic Growth in US cools as companies rein in inventories. US Q3 misses: 1.5% vs 1.6% exp https://t.co/jM7BcZP1eB pic.twitter.com/HocRg7cyQ11.06pm GMTThe Financial Times have helpfully drawn a barchart showing US annualised growth over the last 14 quarters (from their news story, here)12.58pm GMTWe’ve also got data showing that consumer inflation in the US fell during the last quarter.The personal consumption expenditure (PCE) fell to 1.2%, down from 2.1% in the second quarter.#GDP: Meh, tending to yuck. Consumers consuming sorta respectably. PCE Price index falls more to 1.2%. In normal times #Fed w/be cutting now12.52pm GMTBloomberg’s Carl Riccadonna reckons this growth report suggests US interest rates should remain at their current record low:Overall, GDP growth slipped from 2.7% to 2.0%--this will not give the Fed confidence that time is right for liftoff.12.48pm GMTThis excellent spreadsheet shows which parts of the US economy grew in the last quarter (in green) and which shrank (in red):Contributions to Percent Change in Real GDP: pic.twitter.com/CvGztxe6CW12.45pm GMTThe US has grown by an average of 2% so far this year -- is that really enough to justify a rate hike in December?#US GDP at 1.5% in Q3 leaving average quarterly growth so far this year at a rather modest 2% - we are at or a even a little below trendIf you're counting, GDP growth has averaged 2 percent through first three quarters of 2015. Another solid year, not a breakout year.12.41pm GMTToday’s GDP report shows that US consumers drove growth in the last three months.Household spending grew 3.2% in the quarter, suggesting the domestic economy remains strong.12.37pm GMTThis US slowdown means that Britain is growing faster than America, at least over the last three months.UK GDP rose by 0.5% in the third quarter, which equates to an annualised rate of 2%.12.36pm GMTThis growth reading is broadly in line with forecasts:GDP forecasts were quite accurate, it turns out. No big surprises here.12.31pm GMTHere we go! The US economy has slowed sharply in the third quarter of this year.GDP rose by an annualised rate of just 1.5% during Q3, according to data JUST released by the Commerce department. That’s a serious slowdown on the 3.9% recorded in the second quarter.12.25pm GMTComing up at the bottom of the hour, the Q3 Advance US GDP report will be released. Traders expect a 1.6% annualized rate of growth.12.19pm GMTJust 10 minutes to go until we learn how the US economy fared in the last three months.Remember: Wall Street expect a sharp slowdown, from an annual rate of 3.9% in Q2 to around 1.6% in Q3.12.00pm GMTThe UK has made significant progress in creating gender diversity in the UK, but more needs to be done to get the City closer to parity.As flagged up early this morning, Lord Mervyn Davies has called for women to hold at least 33% of all board positions by the end of this decade.There is no evidence to warrant an about turn, but plenty of evidence to show the voluntary regime is working, as each and every month the percentage of women on FTSE boards increases.”Related: A third of boardroom positions should be held by women, UK firms toldImpressive progress with women on boards. Comments on @FT article show there is still some way to go @30percentclub pic.twitter.com/eFTrWleZmK11.26am GMTBack in the UK, the latest snapshot of retail sales has come in weaker than expected, raises further questions about the strength of the wider economy.“Growth in sales and orders for high street retailers remains resilient, but there has been a slight slowdown in the pace of that growth following a strong September.“Internet sales are starting to ramp up again as we head towards Christmas and we would expect them to continue this positive pattern until the end of the year.11.15am GMTCity veteran George Magnus makes a typically astute point:Too late. Countries w/o state interference in fertility had lower birth rates. It's called getting richer https://t.co/5ljCTEVnxhParty: we'll leave the one-child policy to the property market instead.11.14am GMTWe should remember that China’s one-child-per-family policy had already begun to be relaxed before today’s news.In 2013, Beijing said couples could have two children if one of them was an only child (fairly likely, given the old policy)You could have a second child if you or your partner were yourself an only child. That alongside the fact it was already possible to buy yourself an exception and it didn’t count if you were a rural family whose first child was a girl meant there were quite a few loopholes. And in 2007, via JPM, a family-planning official in China estimated the one-child policy applied to less than 40% of the population. .Better hope this attempt goes better than that 2013 attempt to shake things up. As Cap Econ said of that move, “Partial easing of the policy in late 2013 – the government allowed couples to have a second child if one of the parents is an only child – didn’t increase the birth rate by as much as the government had anticipated.My man @DavidKeo has the definitive piece on China's latest tweak to the rules on number of children allowed https://t.co/jzxsxRubch11.04am GMTThe New Zealand dollar is also getting a boost; its dairy industry could benefit from faster population growth in China.New Zealand Dollar flies as #China drops one-child policy. pic.twitter.com/ZpK5ktWSoe10.48am GMTShares in French consumer giant Danone have jumped by 2% after news broke that China is ending its one-child-per-family policy.Danone is a major producer of baby food and formula, so should benefit quite quickly from the change.10.44am GMTBig news breaking in China... Beijing is abolishing the one-child per family policy as part of its attempts to boost growth.That’s according to the official newswire, Xinhua, which is reporting that all couples will be allowed two children.Xinhua: China is targeting "medium-high" eco growth for 2016-2020. Clarida on @bsurveillance says if this a departure from figures, it's NB.Long-run GDP is basically population growth times productivity. Expect #China's new two-child policy to have an impact in 20 yearsImpact of the #China decision to allow 2-child families won't be felt yet, but will be massive for the next generation in Asia, circa 2035+10.31am GMTWe also have new consumer confidence figures for the eurozone, which show a small deterioration this month.CHART: Italy's consumer confidence higher than Germany's for the first time in 5 years. France remains an outlier. pic.twitter.com/6ve3HoHQM210.27am GMTThe latest survey of European economic confidence is out, and it shows that firms are a little more optimistic.The Commission’s Economic Sentiment index has risen to 105.9 in the eurozone, up from 105.6 in September, and closer to the wider EU measure.10.07am GMTTraders in Frankfurt aren’t too impressed by Deutsche Bank’s new turnaround plan.Shares in the company have slumped by 6% this morning, as investors digest the thousand of job cuts announced by John Cryan today. His decision to axe dividends in 2015 and 2016 has not helped the mood.“We still believe there are major risks here and therefore think a capital increase in 2016 is still highly probable,” Citi analysts said in a note.A trader said: “Investors are very disappointed. Two years of no dividends and CEO Cryan cautions 2016 and 2017 won’t be strong in terms of business either. That’s a long time and shareholders are wondering why they should stay invested.”9.53am GMTSomething for London property owners to ponder...UBS Real Estate Bubble Index shows majority of of world cities significantly overvalued. London is especially bubbly pic.twitter.com/4RcmbR9lfv9.41am GMTToday’s US growth report (due in under three hours) could be less grim than some economists predict, reckons Ilya Spivak, currency strategist at DailyFX.He believes that Wall Street forecasts may not capture the latest economic data, such as better-than-expected trade figures released yesterday. So the slowdown might not be quite as severe....The preliminary set of third-quarter US GDP figures is in focus. The annualized growth rate is expected to register at 1.6%, down from 3.9% recorded in the three months through June. US economic news-flow has improved relative to consensus forecasts recently, hinting analysts’ models are underestimating the economy’s vigor and opening the door for an upside surprise.Such a result may boost the likelihood of a 2015 Fed rate hike in the minds of investors, pushing the US Dollar higher. The impact on risk sentiment trends is unclear for now but whatever happens may help establish a dominant paradigm in the days and weeks ahead.9.23am GMTDeutsche Bank has also revealed that 4,000 of its 9,000 job cuts will fall in Germany.Staff who survive the cull could also be also hit in the pocket. John Cryan says it would be “unacceptable” to not share the consequences of recent poor behaviour.9.15am GMTIt’s a black morning for Deutsche Bank staff, as new chief executive Jon Cryan wields the axe at Germany’s biggest bank.“We must reduce Deutsche Bank’s complexity”8.50am GMTThose disappointing results from Barclays and Royal Dutch Shell have helped to wipe almost 1% off the FTSE 100 this morning.The blue chip index is down 53 points at 6383, with mining stocks among the big fallers.Miners in the bad books again. $FTSE pic.twitter.com/U51OpSBvwcHelping drag the commodity sector as a whole further into the red was Shell; announcing its third quarter results less than 48 hours after revealing its latest ($2 billion) write-down in relation to its failed Carmon Creek project, the oil giant slipped to a $6.1 billion loss after the cost of ending multiple long term projects added up to a whopping $8.2 billion.This pushed Shell nearly 2% lower after the bell, worsening the situation in an already loss-loving sector.8.34am GMTShares in Barclays have fallen by 3.5% in early trading, after the bank missed profit forecasts and posted a 10% drop in adjusted earnings.Barclays also revealed that ring-fencing its retail banking arm will cost £1bn, on top of £2.3bn bill on legal costs and compensation.As its new boss, Jes Staley, pledged to clean up the bank’s reputation, Barclays said it was facing £290m redress costs as a result of an internal review relating to rates for foreign exchange transactions between 2005 and 2012.The figures were released a day after Barclays named Staley, a US investment banker, as its new chief executive. He is on a £10m pay packet and will start on 1 December.Related: Barclays legal bill hits £2.3bn in nine months8.25am GMTThe UK government has taken another step towards untangling itself from the banking sector, by selling more shares in Lloyds Banking Group.8.12am GMTMorgan Stanley reckons the Federal Reserve will be feeling pleased with itself:MS: Fed was aiming for markets to adjust to better price-in a December hike. At close-to 50/50 now, the Fed got what it was looking for.8.10am GMTBritain’s economy may be slowing down, but house prices are still rising.“Over the past five months annual price growth has remained in a fairly narrow range between 3% and 4%, broadly consistent with earnings growth over the longer term.While this bodes well for a sustainable increase in housing market activity, much will depend on whether building activity can keep pace with increasing demand.8.04am GMTThis explains why the markets are taking the Federal Reserve’s comment about considering a rate rise at its “next meeting” so seriously:JPM's Feroli: the statement's direct reference to the 'next' mtg was the first such mention of possible action at a subsequent mtg since '997.59am GMTToday’s US GDP report will probably show that growth has fallen back below the 2% trend rate.The Wall Street Journal explains:The economy has grown at little better than a 2% pace since the recovery began in mid-2009. That’s largely because a quarter or two of above-trend growth has been upended by a weak performance.If the third-quarter data turns out as economists project, growth for the year will have decelerated from last year’s 2.4% increase.7.53am GMTBefore last night’s Fed meeting, investors were only pricing in a 35% chance that US borrowing costs would rise in December. It’s now a 48% chance:Morning Note: 1. Premier Li floats 6.5% target. 2. DB plans to scrap dividend. 3. And there was a Fed meeting... pic.twitter.com/6IZW1ryiXy7.49am GMTIn a few hours we find out how badly the US economy has suffered from the problems in emerging markets, and China’s slowdown.7.32am GMTGood morning , and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Today we’ll be mopping up the reaction to last night’s Federal Reserve meeting, where US policymakers floated the serious possibility of raising interest rates in December.“In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation.”A new sentence in the Fed monetary policy statement has put a December rate hike by the Fed back on the table.G10 currencies slid against a resurgent US dollar, while the worst was left for emerging market currencies. The Korean won, Indonesian rupiah and Malaysian ringgit saw the heaviest selling in Asia.#Dollar at 2-1/2-month high after Fed keeps Dec rate hike on agenda. Euro trades <$1.10. https://t.co/3tvmIjbBv3 pic.twitter.com/MEpU4ADLhJDeutsche Bank posts €6bn Q3 loss.LATEST: Barclays 3rd-quarter adjusted pretax profit is £1.4 billion ($2.1 billion), down 13% https://t.co/CodSGQmEeQ pic.twitter.com/xNmRCIrgwmOil Giant Shell Slumps To £4bn Quarterly Loss https://t.co/c7oH8bYvny pic.twitter.com/MmSaJXMYd0CITY AM: the 33% club #tomorrowspaperstoday pic.twitter.com/NZ6Svjjda8 Continue reading...

The rising tide of illiberalism and nationalism threatens to break up the EU. What is needed as an urgent priority are policies to boost demand, job creation and growthThe recent victory of the conservative Law and Justice (PiS) party in Poland confirms a recent trend in Europe: the rise of illiberal state capitalism, led by populist rightwing authoritarians. Call it Putinomics in Russia, Órbanomics in Hungary, Erdoğanomics in Turkey, or a decade of Berlusconomics from which Italy is still recovering. Soon we will no doubt be seeing Kaczyńskiomics in Poland.All are variations on the same discordant theme: a nationalist leader comes to power when economic malaise gives way to chronic and secular stagnation. This elected authoritarian then starts to reduce political freedoms through tight-fisted control of the media, especially television. Then, he (so far, it has always been a man, though France’s Marine Le Pen would fit the pattern should she ever come to power) pursues an agenda opposing the European Union (when the country is a member) or other institutions of supra-national governance. Continue reading...

The American economy is performing far better than the fall in annual growth from 3.9% to 1.5% suggestsNothing about the world’s biggest economy is clear at present. Will the Federal Reserve raise interest rates before Christmas? Nobody is really sure. Is the economy still recovering well or is it on the cusp of a fresh downturn? The jury’s out on that and the latest data doesn’t help much either.Related: US economic growth slows in third quarter as businesses cut back Continue reading...

Bank warns inflated prices are a bubble at risk of bursting with prices decoupled from incomes, and says new investors should expect no medium- or long-term gainHouse prices in London are the most over-valued of any major city in the world and are in “bubble-risk territory”, a report by economists at UBS has found.Foreign investment, the help-to-buy scheme, “alluring” yields for buy-to-let landlords, and ongoing population growth have all led property prices in the city to decouple from local incomes, and there could be a “substantial price correction” if the conditions for investment deteriorated, the report said.Related: Cost of average London home rises to £500,000Unaffordable housing points to high dependence on foreign demand. So the risk of a price correction, should that demand weaken, is elevated, and the long-run appreciation prospects lower,” it said. Continue reading...

CBI warns of challenges ahead caused by weakening global economy and retail price competition, but says outlook for sales growth remains ‘decent’Retail sales growth has slowed sharply in recent weeks following a strong September, according to a business survey.The latest snapshot of sales in the UK from the CBI undershot retailers’ expectations and follows a series of indicators pointing to the UK economy losing momentum. Official figures this week showed UK GDP growth eased in the third quarter. Continue reading...

Your report (Portugal faces political crisis as leftists vow to topple new government, 26 October) does not do justice to what is happening in that country. There has just been a general election. A leftwing coalition campaigning on anti-austerity policies has won 50.7% of votes cast. It also possesses a majority of seats in the assembleia. The president, however, has not simply expressed “grave reservations” about whether this grouping should take power; he has blocked it on the grounds that this is “the worst moment for a radical change” and is trying to install a pro-troika government led by the very centre-right forces that the electorate has rejected. This is a coup d’état! Come on, Guardian, we expect better from you.

Fed policymakers vote to leave rates near zero after two-day meeting but indicate rate hike is near by dropping warnings about economy’s fragilityThe Federal Reserve on Wednesday kept interest rates unchanged at their record low of near-zero, but raised the likelihood of a rate hike in December by dropping previous warnings about the fragility of the global economy.

It’s almost Halloween and pumpkins are out in full force – but they’re not just decorating front door stoops or used for pie filling. Since the Pumpkin Spice Latte was introduced by Starbucks 12 years ago, pumpkin has become a flavor in products from hummus to beer to dogfood Continue reading...

Fates of Redcar mill and Tata and Caparo plants in balance as business secretary calls emergency summit on steel industry and trade regulationsDavid Cameron has pledged to award backdated compensation for high energy costs to struggling British steel producers as soon as the government gets clearance from Brussels.The prime minister’s promise was delivered as steelworkers travelled to Westminster to make the case for political intervention in the industry.Related: Life after steel: can Redcar rise from the ashes?Related: Government promises support for British steel industry Continue reading...

The government wants us to believe our economic growth is sustainable, and that budgetary surplus will fix all our problems. But these are dangerous mythsBritish public life has always been riddled with taboos, and nowhere is this more true than in the realm of economics. You can say anything you like about sex nowadays, but the moment the topic turns to fiscal policy, there are endless things that everyone knows, that are even written up in textbooks and scholarly articles, but no one is supposed to talk about in public. It’s a real problem. Because of these taboos, it’s impossible to talk about the real reasons for the 2008 crash, and this makes it almost certain something like it will happen again.I’d like to talk today about the greatest taboo of all. Let’s call it the Peter-Paul principle: the less the government is in debt, the more everybody else is. I call it this because it’s based on very simple mathematics. Say there are 40 poker chips. Peter holds half, Paul the other. Obviously if Peter gets 10 more, Paul has 10 less. Now look at this: it’s a diagram of the balance between the public and private sectors in our economy:Related: ‘Living within our means’ makes no economic sense. Labour is right to oppose it | Ha-Joon Chang Continue reading...

According to figures from the Office for National Statistics, construction output fell by more than 2% while industry contracted for a third successive quarter Continue reading...

The UK has become an easier place to do business in past year, says World Bank, after reforms to red tape and corporate taxThe government’s drive to cut red tape and corporate tax has seen the UK move up the international league table for doing business in a year that has seen both rich and poor countries strive to ease regulations on setting up and running companies, the World Bank said.Britain rose from eighth to sixth place in the Washington-based organisation’s rankings and was the highest placed of the G7 group of leading industrial nations. Continue reading...

Sector outpaces wider economy in third quarter, up 5.9% on previous three months thanks to productions such as Star Wars: Rogue OneBritain’s film and music industries have confirmed their status as two of the fastest growing sectors in the country, according to the latest GDP data.The film, video, TV and music publishing industries outpaced the wider economy between July and September, up 5.9% on the previous quarter, thanks to productions such as Star Wars spin-off Rogue One, which was shot at Pinewood Studios over the summer.Related: GDP growth in the UK slows more than expected to 0.5% Continue reading...

Rolling coverage as Britain’s growth figures miss forecasts, with manufacturing and construction both shrinking, while US data also disappoints

Leading economists and experts give their take on the slowdown in British economic growth over the third quarterThe UK economic recovery has lost momentum, with growth slowing to 0.5% in the past three months, from 0.7% in the previous quarter. Here is what economists made of the official figures.The main reason for the slowdown was the sharp fall in construction, a sector which is traditionally volatile and erratic. However, our strong services sector continues to keep the recovery on track.Our economic growth remains unbalanced ... The trade deficit also widened in this quarter, and we are still heavily reliant on consumer spending.Today’s findings don’t give huge cause for celebration, but neither are they too gloomy. The economic recovery may be built on relatively fragile foundations, including the imbalance between different sectors, but growth is still ticking along for now. Certainly employment levels and household spending power are improving domestically.The key threat on the horizon comes from a cooling global economy alongside a less-supportive inflationary environment next year. Cebr still expects the UK economy to expand comfortably above the 2% mark this year, but this will be followed by a gradual slowdown over the next few years.”The preliminary estimate of GDP confirmed that the economic recovery cooled in the third quarter. We think that this will be only temporary. Nonetheless, the news clearly further reduces the chances of an interest rate rise in the near future.”We expect a better growth number in the fourth quarter. The economy is creating jobs again in significant numbers, wages are rising nearly 3% in real terms and consumer confidence is at high levels. This suggests that the domestic growth story looks good. Inflation is also set to start rising as the falls in commodity prices seen late last year drop out of the annual comparison and rising domestic costs (most obviously wage costs) are increasingly passed on to the end consumer. Consequently, we continue to look for a rate rise in the second quarter of 2016 – after the Federal Reserve, but well ahead of market expectations of late 2016/early 2017.”A slowdown in growth does not necessarily mean that rate hikes should be deferred. But either way, today’s GDP surprise is small so will not have first order implications for the upcoming inflation report forecast, due for publication next Thursday.The really key issue for the MPC to address next week is whether/how to push back against market rate expectations, which are not pricing in the first Bank rate hike until Q1 2017. Our call remains that the MPC will begin to tighten policy in Q1 2016!”It was not a weak report, but obviously undershooting the Bank of England’s 0.6% assumption.To put it in context a 0.5% q/q reading in the US (later in the week) would be an upward surprise, so the UK economy is still posting a respectable pace of growth.The cause for concern here is that the business surveys indicate that the slowdown is spreading from the struggling manufacturing sector to the far larger services economy, meaning growth looks set to slow further in the fourth quarter.There are signs that companies are becoming more risk averse as global growth worries intensify, pulling back on their hiring, investment and spending intentions, which could lead to the slowdown becoming deeper and more entrenched. The economy therefore looks to be on course to grow by 2.3% in 2015, down from 2.9% in 2014 and below its long term trend rate.” Continue reading...

The alarms bells are not ringing yet but the British economy is coming off the boil with even the services sector showing some early signs of coolingGeorge Osborne has plenty on his plate at present. The chancellor is in a fine old mess over tax credits; now the latest evidence is that the economy is coming off the boil as well.In the short term, it will be digging himself out of the hole over welfare reform that will be causing Osborne the most concern.Related: UK GDP growth slows more than expected to 0.5%Related: UK economic growth slows to 0.5% - live updates Continue reading...

ONS data likely to delay any rate rise but construction slump and manufacturing recession deals blow to George OsborneThe already remote prospects of an interest rate rise from the Bank of England this year have all but disappeared after a recession in manufacturing and the biggest slump in construction output in three years slowed the UK economy by more than expected in the third quarter of 2015.City analysts said news that the economy’s rate of expansion eased to 0.5%, from 0.7% in the previous quarter, had ruled out an increase in the cost of borrowing until the spring or summer of next year.Related: UK GDP growth figures released - live updatesGDP is 0.5%. UK continues to outperform other major economies. But global risks mean we go on with tough decisions to live within our means Continue reading...

The chancellor will still take £4.5bn from the low-paid in tax credit cuts, but the rebellion is a political setbackThe drama of the House of Lords vote was essentially an absurdist spectacle. The Tory press harrumphed against the outrageous impertinence of unelected peers, the government was browbeaten with dark threats. But since the Tories have no intention of reforming the 800-heavy upper house, Liberal Democrat and Labour peers who are committed to an elected chamber are absolutely free to sabotage its present idiotic conventions. And so they did. After strong criticisms of tax credit cuts from all sides of the house, they voted for a delay, demanding that George Osborne fully reveal the impact of the cuts.The constitutional sideshow highlights the full monstrosity of the government’s benefit cuts: worse is still to come. Ministers and minions have been sent out to spread shameless deceptions about the impact of cuts announced so far. Osborne refuses to produce an impact assessment with a distributional analysis of who is hit and how hard. Andrew Tyrie, the Treasury select committee chair, has lost patience with evasive and bamboozling figures designed to mislead and wants a full document by 31 October. Don’t hold your breath for straight answers.Related: Tax credits vote: PM accuses Lords of breaking constitutional conventionThere is no tweak to fix this – except to put the well-targeted tax credits back into the pockets of those who need them Continue reading...

Official figures on Tuesday offer a first take on the country’s performance in the third quarter, with most economists predicting a slowdownThe UK economy looks like it has been losing momentum, stymied by China’s downturn, a construction slump and ailing manufacturers.Related: UK GDP growth figures released - live updatesBritons have found a job, and then a shop. The UK recovery has relied on this surge in domestic demand in the last five years, which has proved resilient to a handful of risks such as the general election and, recently, the emerging market rout and China slowdown.”The manufacturing sector is the biggest cause for concern, where several surveys and official data point to a marked slowing in activity. Indeed, manufacturing is already in its third recession in less than a decade, and the level of activity in August 2015 was some 7% below its 2007 peak.”Construction output nosedived 4.3% month on month in August after a drop of 1.0% in July ... Barring any revisions to the July/August data, construction output will need to have grown 8.2% month-on-month in September to have just been flat quarter-on-quarter in the third quarter.” Continue reading...