Official view seems to be rates will rise early next year as recovery takes hold, but a rise in working-age population could keep a lid on salariesBank of England policymaker Ian McCafferty excludes two essential trends from his analysis of the economy. In a speech this week, he said a bounce back from a lacklustre first three months of the year was on the cards. With the recovery will come a steady rise in wages that will last the rest of this year and into the next, resulting in the first of several interest rate rises next spring.It’s not an outlandish statement. An interest rate rise in the first quarter of 2016 is what the market expects, too. Continue reading...

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ONS points to higher GDP reading for first quarter as new figures show building sector performance better than fearedBritain’s economy grew faster than previously thought in the opening months of this year, according to estimates from the Office for National Statistics, after it emerged that the construction sector had a better start to 2015 than feared.

Economic sunshine can no more be guaranteed by statute than sunshine proper. The proposed straitjacket to prevent future governments from borrowing is neither necessary nor credibleViewed from Mars, or indeed from global financial markets, the biggest issue with the UK economy right now is not the government deficit. The tendency for red bottom lines in the balance of payments, uncertainty about relations with Europe, and – above all – the stubborn refusal of productivity to advance as it used to are all more worrying than a national debt that is unexceptional by international or historical standards.George Osborne’s fixation on the public finances was too obsessive in 2010, but at least he then had one serious point – those who lend to the government were watching closely to see whether a new administration would get a grip on borrowing. That is no longer true, and yet he is so keen that the deficit should remain the alpha and the omega of the economic debate that at the Mansion House he will propose a Mr Micawber law to require all future governments to balance income and expenditure, in line with the dictum of the Dickens character. Public borrowing will be banished for good – or that’s the claim. Continue reading...

Bank of England governor to unveil four-pronged attack against ‘ethical drift’ in global markets including a new standards board and stiffer prison sentences

The way financial growth is framed determines everything from how we address poverty and inequality to how we deal with climate changeGrowth is good. We need growth for wealth, for jobs, to help the poor – without it society will collapse. Or, at least, that’s the message we’re surrounded by, even though logic tells us growth can’t go on for ever on a planet with finite resources.Growth is so strongly framed as good and necessary that rational or technical arguments – pointing to the damage to our planetary life-support systems, for example – go in one ear and out the other. Such messages are worth examining. So how is growth framed?The UK economy is performing well. UK growth is solid – Mark Carney, governor of the Bank of England, speech at the University of Sheffield, 12 March 2015Related: Less material consumption is not the end for businessSainsbury sees ‘green shoots’ of recovery as sales beat forecasts – Financial Times, 17 March 2015I think the biggest task for this government has been about getting the economy moving again – David Cameron, speech at Unilever, 9 January 2015Related: Nature gives us everything free – let's put it at the heart of everyday economic lifeHuman beings are a disease, a cancer of this planet – Agent Smith in sci-fi film The MatrixWhen I was a child, I spake as a child, I understood as a child, I thought as a child: but when I became a man, I put away childish things – 1 Corinthians 13:11Related: Companies cannot keep shying away from setting tough climate targets Continue reading...

Cambridge University analysis casts doubt on free market economics showing GDP and productivity grew faster before 1979Margaret Thatcher’s policies of privatisation, light-touch regulation and low income tax failed to boost growth, according to a new study that casts doubt on the merits of free market economies.In a wide-ranging analysis of Britain’s performance in the decades before and after 1979, economists at the University of Cambridge say the liberal economic policies pioneered by Thatcher have been accompanied by higher unemployment and inequality. At the same time, contrary to widespread belief, GDP and productivity have grown more slowly since 1979 compared with the previous three decades. Continue reading...