Short-termist and kneejerk decisions to balance the books' always end up with the exchequer paying out more for lessAs governments across the world assess their responses to four years of successive economic calamities, it is clear the UK's default reaction - to cut corners and adopt the cheapest route out of a malaise - has many hidden costs.Across the public sector, from warships to NHS computer systems and railways, projects are turned inside out and salami-sliced to a point where few can remember the original concept. Continue reading...
Unemployment rate at 3.8% while job gains well above the 192,000 economists expected for the monthThe US workforce added 303,000 jobs last month, far more than expected and the 39th straight month of job gains in the US. The unemployment rate dipped to 3.8%.Joe Biden hailed the report as a milestone in America's comeback". Continue reading...
Live, rolling coverage of business, economics and financial markets as Fitch downgrades debt of parent of water company, saying default is likelyTim Moore, economics director at S&P Global Market Intelligence, which compiles the PMI survey, said:The recovery in service sector output lost a little bit of momentum during March, and more so than suggested by the flash PMI results, but the overall picture remains reasonably positive.Business activity has now expanded for five consecutive months, supported by sustained improvements in new order intakes. The solid growth rate achieved in March reinforces the view that a rebound in service sector performance is helping the UK economy to pull out of last year's shallow recession. Continue reading...
by Richard Partington Economics correspondent on (#6KTWH)
Study shows delivery apps such as Deliveroo and Just Eat still popular after pandemic boom in ordersDelivery app riders pedalling through cities and tailbacks at drive-throughs were familiar signs of Britain's hunger for takeaway food at the peak of the Covid pandemic. Now a study suggests it became an enduring habit.After a boom in orders on Deliveroo, Just Eat and other platforms by locked-down consumers, research by the Institute for Fiscal Studies (IFS) suggests the popularity of takeaways, meal deliveries and food-on-the-go bought from retailer such as sandwiches and crisps has remained above pre-pandemic levels after the removal of Covid restrictions. Continue reading...
Live, rolling coverage of business, economics and financial markets as UK postal service says it wants to cut 1,000 jobs and cut delivery daysThe question on economists' lips after the surprise easing of eurozone inflation is: will the European Central Bank (ECB) cut interest rates as early as this month?The ECB's rate-setting governing council, led by president Christine Lagarde, meets next week. Economists expect the council to cut rates in June, but surprising data and some doveish comments from some members of the council appear to have put an April cut into play.While at first sight this looks like it opens up a possible rate cut in April, the ECB is unlikely to act this month. More data on wage growth will come in May, and the ECB needs to be certain of its path. In President Lagarde's own words: we will know a little more in April, but we will know a lot more in June".Christine Lagarde's previous indication that the ECB may not commit outright to a path of rate cuts suggests a cautious approach, but the consensus among economists leans towards a potential cut as early as June, pending further data on wage growth trends.The challenge here for the ECB is that reaching the last mile target inflation rate of 2% may prove more arduous than anticipated, with incremental decreases seen as most likely.Will the labour market tighten further now that GDP growth looks to be rebounding? We doubt it and, in fact, suspect the unemployment rate will edge up over the coming months.A still-low unemployment rate doesn't necessarily mean wage growth will remain at today's highs, so it need not worry the ECB nor prevent it from starting its easing cycle. We think wage growth will come down, in line with the fall in inflation in recent months as workers' negotiating power diminishes. A recovery in productivity would support wage growth even as inflation eases. We think productivity growth is now improving, but slowly does it. Continue reading...
Output improves to 20-month high and job losses slow but global problems continue to restrict foreign ordersA jump in domestic orders helped pull UK factories out of almost two years of contraction last month, according to a leading business survey.Output from the manufacturing sector improved to a 20-month high in March, marking the end of a period of shrinking activity that started in July 2022. Continue reading...
Retailers cut the price of Easter treats, clothing and electrical items as consumer spending slowedInflation in shop prices in the UK has eased to the lowest level for more than two years after retailers cut prices on Easter treats, clothing and electrical goods amid a slowdown in spending by consumers in the cost of living crisis.Industry figures show prices rose at an annual rate of 1.3% in March, down from a rate of 2.5% in February - the slowest pace since December 2021, according to the latest monitor from the British Retail Consortium (BRC) trade body and the market research firm NielsenIQ. Continue reading...
Julian Richer, a landlord himself, says markets have created only disaster and the nation must shift from its focus on ownershipBritain is a nation obsessed with home ownership. A fundamental necessity for all turned commodity to speculate on, it is featured on daytime TV as entertainment, the sure-fire profit-spinner open to anyone.The truth, as we all know, is that the prospect of home ownership is drifting increasingly out of reach for millions. Figures released last week show that as few as 7% of local authorities in England and Wales have homes that can be bought for less than five times workers' earnings and are therefore deemed affordable". In 1997 the figure was 88%. Continue reading...
The Conservatives' pernicious reign, defined by a toxic belief in self-organising markets, has brought Britain to its knees. But we now have an opportunity to turn things around - by reimagining the UK as a we' society rather than an I' societyIf there is any consensus in our otherwise fractured, toxic national debate it is that we cannot go on like this. Our economy is in crisis, exemplified by an annual 100bn shortfall in public and private investment, which must be lifted decisively for Britain to break out of today's triple whammy of stagnant growth, productivity and living standards. Society reels from alarming gaps in the provision of crucial public services and the yawning unfairness in the distribution of income, wealth and opportunity. Our democracy and state seem incapable of acknowledging the full extent of these deformities, let alone adequately responding to them. Our international standing has plummeted at a time of geopolitical peril. A transformative response is an imperative. My new book, This Time No Mistakes: How to Remake Britain, tries to address the origins of this interlinked crisis - and offer a feasible way out. Nothing is immutable. We are agents of our own destiny.The heart of the problem is a misconception about how capitalism and society work. Capitalism must be managed and regulated to work for the common good, just as society has to be curated to provide fairness and opportunity for all. Crucially, the vitality of the two are interdependent. Capitalism must be organised so it provides economic ladders that every individual can climb while a social contract must offer a floor below which they cannot fall. Britain's problem is that the Conservative party, in power for all but 13 of the last 45 years, does not accept these truths or interdependencies. Worse, even if it did, neither the dominant culture and practise of our capitalism, nor the structure of our democracy, state and media would have made it easy to fashion the necessary responses. Continue reading...
The shadow chancellor is often criticised for her centrist positions, but Labour's plan for a long-term rescue is a vital difference between the partiesWhen preparing to become Labour's chancellor in 1964, James Callaghan used to go up to Oxford for economics lessons at Nuffield College. The present shadow chancellor, Rachel Reeves, is already steeped in economic knowledge, including that of the UK's economic history, as her recent Mais lecture at Bayes business school made clear.I was amused by some of the pre-lecture media speculation that Reeves might express her admiration for Margaret Thatcher. On the contrary, she let it be known, in an aside not in the printed text, that distaste for Thatcherism was one of her motives for going into politics. Continue reading...
by Presented by Jane Lee and Matilda Boseley; Series on (#6KQXJ)
Guardian Australia's Full Story co-host Jane Lee and reporter Matilda Boseley investigate the mystery of who screwed young people out of affordable housing, education and secure workWith rising house prices, a decade of wage stagnation and ballooning student debt, young people in Australia are living through what author Jill Filipovic describes as a series of broken promises'. In episode 1 of this new series from Guardian Australia, Full Story's co-host Jane Lee and reporter Matilda Boseley sort through these broken promises, investigating why young people are living in a time of such economic strain.In this episode, we hear from a handful of experts featured in Who screwed millennials?, including author Jill Filipovic, youth researcher Intifar Chowdhury, author Malcolm Harris, Guardian Australia editor Lenore Taylor and former Greek finance minister Yanis Varoufakis about how millennials became the first generation to be worse off than their parents Continue reading...
Live, rolling coverage of business, economics and financial markets as minister says water company's leadership has been a disgrace'The UK government has said it is prepared for a range of scenarios" for Thames Water.A government spokesperson said:Like any company needing to secure new investment there are a wide range of options available to water companies, including the injection of new equity from any prospective investors.Ofwat, as the financial regulator of the water sector, continues to engage with Thames Water to improve its financial resilience.I don't want to pollute rivers, and nor does anyone in Thames Water. I would point out that E coli has many different sources. It's not just from sewage; it's also from land run-off, it is from highway run-off; it is from animal faeces. All of those things contribute to the problem.And I am absolutely determined that at Thames, that we will pay our part in cleaning up the problem, and so the Thames is a river that people can use as they would like to every day. Continue reading...
Greater fall per head and latest trade data illustrate longer term decline of economy Blow for Sunak as revised figures confirm UK went into recession last year
Although there are significant financial and emotional benefits to returning to the nest, it should be a choiceThe 2021 census already confirmed it: more adult children than ever are still living with their parents. But the Financial Times has recently revealed just how drastically the scales have tipped: about 40% of 18- to 34-year-olds now live with their parents, making it the most common domestic arrangement for this age group. Previously, it was living as a couple with children.It's not just an epidemic of Young, Dumb and Living Off Mum - I've moved back home twice since graduating in 2018, and I know plenty of young well-to-do professionals who have felt obliged to do the same, or not moved out at all. There are also plenty of people who are unable to live in their family home due to distance and perhaps wish they could. Continue reading...
The Israeli-American's book, Thinking, Fast and Slow, was a worldwide bestseller with revolutionary ideas about human error and biasDaniel Kahneman, a psychologist who pioneered theories in behavioural economics that heavily influenced the discipline, and won him a Nobel prize, has died at age 90.Kahneman, who wrote bestselling book Thinking, Fast and Slow, argued against the notion that people's behaviour is rooted in a rational decision-making process - rather that it is often based on instinct. Continue reading...
Prime minister has ruled out May election but households face high prices for sometime to comeThere had been feverish speculation it would be this week. The drive to Buckingham Palace, police outriders and news helicopters in tow. The lectern on Downing Street. The prime minister announcing a general election.Tuesday is the final day Rishi Sunak could dissolve parliament if he were to send voters to the polls on 2 May, one of the key dates in the 2024 election-watchers' diaries, when local elections are also taking place. However, after the prime minister ruled out the possibility earlier this month, the waiting game continues. Continue reading...
Despite being called continuity Hunt, the shadow chancellor has set out a proposal for meaningful changeChancellor Jeremy Hunt likes to tell business leaders not to worry about political instability and more policy upset. He claims to be carefully building policy that will survive - win or lose the next election. If the shadow chancellor, Rachel Reeves, succeeds him, accepting nearly all his proposals, be reassured, he says, there will be continuity rather than change. In the run-up to her important Mais lecture last week, the pre-briefings seemed to warrant his judgment.She would reaffirm her iron attachment to fiscal rules and budgetary discipline, we were told. After all, she had beaten a wholesale retreat from Labour's cornerstone 28bn green spending commitment. In successive fiscal events", she has accepted all the proposed tax cuts, not even reinstating the cap on bank bonuses. There was chatter describing her as continuity Hunt". Even Margaret Thatcher, we read, would be invoked as a change agent she admired. Unite sharpened its claws, writing off the lecture even as Reeves spoke as for the birds". Only a sustained rise in public investment in infrastructure", declared general secretary Sharon Graham, can turn the tide on decline". Two days later, columnist Owen Jones resigned from the Labour party, citing the refusal to challenge catastrophic Tory policies in a race to the bottom". Continue reading...
The 25-year-old pay floor is justly celebrated but doesn't tackle issues that mean exploitation and misery for manyNext month will mark 25 years since the national minimum wage was first paid in Britain: a quarter of a century during which what was once seen as a radical leftwing policy has won broad cross-party support.Over the past 14 years, the Conservatives have appropriated and expanded the policy, despite adopting a laissez-faire approach to other aspects of labour market regulation. Continue reading...
by Richard Partington Economics correspondent on (#6KJBC)
Resolution Foundation points to legacy of Covid as it warns that near-record 2.7m people are too ill to workBritain is going through the longest sustained rise in the number of working-age adults who are too sick to work since the 1990s, according to a report warning that a benefits crackdown is unlikely to solve the country's jobless crisis.The Resolution Foundation said economic inactivity due to long-term sickness - when people aged 16-64 are neither in work nor looking for a job because of a health condition - had increased in each year since July 2019, the longest sustained rise since 1994 to 1998. Continue reading...
We'd like to hear from people who decided not to take up a job offer because they could not find affordable housing close enough to the workplaceWe're interested to hear from people who have recently opted to turn down a job offer they were interested in because they found housing in the area of the workplace too expensive.Whether you turned down a job because of unaffordable sale or rental prices for property within a reasonable distance to the workplace in question, and whether you chose to pass on the job offer or had no other choice, we'd like to hear from you. Continue reading...
Bank's survey finds expectation of 4.5% base rate by end of 2024 amid encouraging signs' on inflationBank of England policymakers signalled at least three interest rates cuts this year after seeing encouraging signs" of falling inflation as they kept interest rates on hold at 5.25% for a fifth time.The financial markets expect three cuts of 0.25 percentage points this year, forecasting the first to take place in June. The Bank said its survey of financial companies found that they expected rates to fall to 4.5% before the end of 2024. Continue reading...
Hawkish rise 10 days before local elections is seen as a signal of independence from politicsTurkey's central bank unexpectedly raised interest rates to 50% on Thursday, citing a deteriorating inflation outlook and pledging to tighten further if it looks like inflation is significantly and persistently worsening.The hawkish move came 10 days before local elections and was seen by analysts as a signal that the central bank was independent from any political constraints and determined to tackle price rises. Continue reading...
by Presented by John Harris with Craig Oliver and Gab on (#6KGNR)
Jeremy Hunt has implied the election will be in October, but even with a boost from falling inflation figures, can Rishi Sunak really hold this zombie government together for the next seven months? And what does Rachel Reeves's Mais lecture tell us about Labour's economic vision in these grim times? John Harris is joined by former No 10 director of communications Sir Craig Oliver and Guardian columnist Gaby Hinsliff Continue reading...
Rates to stay at 25-year high of 5.25% to 5.5% as central bank says inflation has eased over the past year but remains elevated'The Federal Reserve announced on Wednesday that it would leave US interest rates at a 25-year high as it continues to assess their impact on cooling inflation and the wider economy.After a two-day meeting, the Fed announced rates would be unchanged at 5.25% to 5.5%, where they have been since July. But the Fed signaled it still expects to cut rates three times this year. Continue reading...
Promising to reform the planning system, boost investment and improve skills is all very well, but the detail is missingThe pursuit of growth is an obsession for politicians the world over. Olaf Scholz thinks more growth would make him a more popular German chancellor. Xi Jinping sets growth targets in China and they are invariably met. Here in Britain, Rachel Reeves mentioned the word 58 times when she delivered the prestigious Mais lecture this week.The almost fetishistic worship of gross domestic product as a measure of how well a country is doing is curious, because even the statisticians responsible for producing economic data accept it is an incomplete performance measure. GDP rises as a result of cleaning up after oil spills, but takes no account of the benefits of unpaid work. As a yardstick, it is clearly flawed. Continue reading...
Chancellor says date would allow a spending review to be carried out in time for next AprilSir Jacob Rees-Mogg, the Tory MP and former business secretary, has described as barmy" a ruling from Ofcom saying that GB News broke impartiality rules because it allowed him to present news during his show on the channel.Ofcom said GB News had broken these rules on five occasions - two relating to programmes presented by Rees-Mogg, and three relating to programmes presented by Esther McVey, the Cabinet Office minister, and her husband, the Tory MP Philip Davies.This strikes me as completely barmy that reporting, in a programme that lasts for an hour, an event that has happened, where somebody has been stabbed, where does due impartiality come into somebody's being stabbed?I just think this is a really eccentric judgment on that particular issue. It's just a strange thing to say that there's a question of impartiality on a stabbing. Stabbing people is wrong.We recognise the factual nature of the content delivered by Jacob ReesMogg, which did not include any partial comment on, or discussion of, the wider issues involved.However, as set out above, there are additional protections afforded to news because of its fundamental importance in a democratic society.Yes I saw that and I didn't think that that was appropriate.Well, I think in describing objects, in museums and galleries, I think the creator has an important role to look at history to make sure that their objects are understood. But these are matters for those individual institutions.Punch and Judy is seen as traditionally British, but it evolved from the 16th-century Italian street performance commedia dell'arte.Although aimed at a family audience, the original narrative in its Victoria heyday featured domestic violence, hangings and racist caricatures - a jarring and inacceptable combination for modern audiences. Continue reading...
HMRC's self-assessment phone line will be closed between April and September each year and open only to taxpayers with priority queries" between October and March.
The Dalys in Norwich say budget made little difference and they are sticking to cost-saving measuresI think we've got used to it," says Jess Daly with some resignation of the experience of juggling family finances in a cost of living crisis that is now into its third year.The latest UK inflation data for February is due out on Wednesday, with analysts expecting the headline rate to fall to 3.5%. In January the figure remained unchanged at 4%, as rising gas and electricity bills were offset by the first fall in food prices in more than two years and winter sale bargains. Continue reading...
Shadow chancellor to outline plans to shake up department after Labour election victoryThe Treasury under a Labour government would hardwire" raising Britain's growth rate into its budget tax and spending decisions as part of plans to shake up Whitehall's most powerful department, Rachel Reeves is to announce.The shadow chancellor will use a lecture in London on Tuesday to say that a decade of national renewal must start with day one" reform after a Labour election victory to make growth more pivotal to the Treasury's work. Continue reading...
China's Longi looks to slash costs as renewable energy sector faces tough headwinds from inflationThe world's largest solar manufacturer has slashed nearly a third of its workforce after a cost-cutting drive that included telling staff to only print in black and white fell short and as a chill ripples through the renewable energy sector.China's Longi is to cut as much as 30% of its workforce, in an acceleration of cost reductions that began late last year, Bloomberg reported. Continue reading...
Surge in requests for help reported as nearly 30% of 18- to 24-year-olds miss three or more credit or bill paymentsA record 6.7 million people in Britain are in financial difficulty, a campaign group has claimed, as the cost of living crisis pushes more households into debt.A survey for Debt Justice found that 13% of adults had missed three or more credit or bill payments in the last six months, a figure that rose to 29% among 18- to 24-year-olds and a quarter of 25- to 34-year-olds. Continue reading...
High rates only prolong economic stagnation and the farce of big bank profits while Britons can't feed themselvesAs 2021 ended, an article in the Guardian by the economist Isabella Weber went viral. Its online spread was lubricated by heresy. Dr Weber doubted interest rate hikes would bring down inflation. Instead, she argued that post-pandemic prices were rising because corporations were exploiting bottlenecks in supply chains to charge more and scoop windfall profits. Hence, attempts to lower inflation with higher rates, which decrease real wages and reduce employment, would not work.The problem was the pricing power of capital not workers. Dr Weber suggested using price controls, which had been successful in keeping inflation in check after the second world war. She was prescient. When Russia's invasion of Ukraine sent energy prices spiralling in 2022, governments around the world either adopted Dr Weber's advice or sought her help. Critics ate their words. Continue reading...
Big obstacles to rising living standards remain, from populism to protectionism, military conflict to the climate crisis, and China to Wall StreetCentral bankers are feeling smug. The fears of 12 to 18 months ago that the global economy was likely to crash as a result of rising interest rates have proved unfounded. Inflation has subsided without the expected sharp increase in unemployment.Although it hasn't been reflected in Joe Biden's opinion poll ratings, the US's performance has been especially impressive, with growth remaining strong and not even the hint of recession. Other parts of the developed world - such as the UK and the eurozone have performed less well but have demonstrated a degree of resilience not predicted when inflation hit its highest level in 40 years back in 2022. Continue reading...
US small businesses employ almost half of private sector workers, but that number is decreasing due to various reasonsSmall businesses are hiring fewer people. It's a worrying trend given that in the US small businesses employ nearly half (46.4%) of private sector employees.The numbers speak for themselves. According to data from software maker Intuit, employment at US small businesses with one to nine employees decreased by 23,400 in February compared with January, with all of the 12 industrial sectors and regions tracked also reporting declines. The payroll provider Paychex says that once fast-growing sectors such as leisure and hospitality have also seen wage declines, with job growth in the western part of the country falling into negative territory for the first time since 2021. Continue reading...
A deeper recession was avoided only thanks to record immigration, and the MPC is bound to be cautious about cutting interest ratesIt may be too little, and too late, to rescue Rishi Sunak from a thumping election defeat, but there are signs the UK economy is on the turn. After two years of drift, some green shoots of recovery are finally appearing.Last week's growth figures suggest the economy is emerging from a short and shallow recession in the second half of last year. Surveys of consumer and business sentiment have been more upbeat since the beginning of the year. More houses are changing hands and property prices have started to rise. Continue reading...
Economics | The Guardian