Economics | The Guardian

In an extract from his new book, Andy Beckett gets an extraordinary insight into the 1981 Toxteth riots – from the Liverpool-based economist advising Margaret Thatcher’s government, and a rioter enraged by their controversial policiesFor much of the postwar period, Britain imported more than it exported. The resulting trade deficits were widely seen as a sign of approaching economic doom; that a once-great trading and manufacturing nation could no longer make its way in the world.

Resolution Foundation study reveals overlooked link between firms limiting wage rises to plug pension liabilities of retired staffWorkers expecting Britain’s economic recovery to fill out their pay packets are in for a nasty surprise.While the UK’s collective national income is expected to grow by more than 2% a year until at least 2020, the share distributed in wages is going to be less than many hope. As much as one percentage point could continue to be knocked off annual pay rises because firms need to plug holes in the pension pots of retired staff, according to a report.Related: John Lewis group ditches final salary pension for staff contribution schemeRelated: Baby boomers v the rest: is age the great new divide? Continue reading...

Business confidence stalls as new evidence shows UK growth becoming more reliant on consumer spendingNew doubts have emerged over the UK’s economic outlook after new evidence that growth is reliant on household spending while manufacturers struggle with a strong pound and the fallout from a downturn in China.UK economic growth is expected to hold up during the second half of this year but a sharp drop in business confidence in recent weeks suggests the momentum is under threat, according to a round-up of indicators from accountants BDO.Related: UK manufacturing hit by turmoil in ChinaRelated: Interest rates must rise 'relatively soon', says Bank of England's Martin Weale Continue reading...

Continuing wage growth and inflation mean rate hike likely follow despite recent economic slowdown, according to Bank’s monetary policy committee memberA Bank of England policymaker has said interest rates need to rise “relatively soon”, adding to signs that support is gradually building for the first increase in British borrowing costs since before the financial crisis.Martin Weale, one of the Bank’s rate-setters, also said a rise would give the central bank scope to make cuts if the British economy runs into trouble in the future.Related: Bank of England official raises prospects for early interest rate hike Continue reading...

Reforms of underperforming state-owned enterprises include introducing ‘mixed ownership’ by bringing in private investmentChina has unveiled details of how it will restructure its state-owned enterprises, including partial privatisations, as data pointed to a cooling in the world’s second largest economy.

The chancellor’s higher minimum wage will benefit the low-paid. But the Tories’ trade union bill simultaneously strips them of their bargaining power at workThe backlash has begun. CBI director general John Cridland last week joined the bosses of Next, Whitbread and Wetherspoons in expressing concern about the impact of George Osborne’s “national living wage”, which Cridland described as “a gamble”.It is a gamble. Churlish Corbynites might complain that the £9 or so which over-25s will have to be paid by 2020 is still well below any realistic estimate of the income required to cover basic needs – rent, food, bills and so on.Without the right to strike, few of the past century’s seminal advances in pay and conditions would have been won Continue reading...

Once seen as the ‘decoupled’ vanguards of global financial change, emerging economies suddenly seem as vulnerable as ever to developments in the USBrazil, which saw its credit rating downgraded to junk last week, is only the latest Brics economy to crumble in the face of a strong dollar, a global trade slowdown and the prospect of higher US interest rates.Russia is already in recession; many economists believe China is heading towards a “hard landing”; and South Africa, which managed to append itself to the emerging-markets club in 2010, is on the brink of recession. Continue reading...

Glasenberg faces tricky talks with bankers, plus Britain’s long-awaited pay rise, and Andy Haldane prepares to tweetAs any child knows, an apology doesn’t count if you cross your fingers behind your back while making it. Last week we saw the City version of this approach, when commodities giant Glencore finally gave in to shareholders and admitted it had got it wrong about its balance sheet. Well, sort of.The company announced a programme to cut its debts by about $10bn, including raising $2.5bn of extra funds – essentially giving in to demands from investors. Still, chief executive Ivan Glasenberg’s statement on this enforced U-turn began with the word “notwithstanding”, before going to explain why he was right and shareholders were wrong. Continue reading...

Jeremy Corbyn must deliver a credible economic alternative grounded in a new, modernised KeynesianismJeremy Corbyn’s extraordinary surge to the Labour leadership is part of the same revolt against austerity and the political establishment represented by the SNP in Scotland, Syriza in Greece and Podemos in Spain.By supporting austerity in moderation, Europe’s socialist parliamentary parties, Labour included, have haemorrhaged support to populist parties – in Labour’s case to Ukip; the French Socialists to the Front National. Continue reading...

Retailers are angry, exporters are worried and productivity is still poor – then comes worse news from overseasAs he gazes across the Commons to a new shadow cabinet, George Osborne will doubtless be prouder than ever of the long-term economic plan that helped his party stampede to victory in May. For a chancellor who never tires of saying that his stewardship of the UK economy has made it among the best performing of the developed world, now more than ever he will want to paint himself as a safe pair of hands. But Osborne can’t expect an easy ride: he has a bumper in-tray and economic threats from home and abroad. Here are his six big challenges: Continue reading...

A Jeremy Corbyn win could take Richard Murphy from the rural town of Downham Market to No 11 Downing StreetRichard Murphy is a chartered accountant and tax expert from a rural market town in Norfolk. He is also the brains behind Corbynomics, the radical policy platform that has electrified Labour’s leadership campaign – and he is happy for you to know it.

Well done to George Monbiot for his blistering attack on the excesses of the financial world (Opinion, 9 September). But he sets out the problems without offering solutions. Here is one suggestion. The dysfunction of speculative investment could be tackled by slowing down the frenzied activity of stock markets. Suppose it became illegal to part with shares within a year of purchase. This would encourage the view of shares as long-term investments in enterprises with the expectation of regular, but not exorbitant, dividends. Shareholders might then take more interest in the management of the enterprise, including the welfare of its workforce.China is partly doing this, as reported on 11 July by Jennifer Duggan, with shareholders with large stakes in listed firms currently banned from selling for six months. Monbiot’s article should be widely discussed by the many people who have suddenly realised that politics deserves their attention. Perhaps they will begin to clamour for social justice for all and an end to the scandalous practices that he cites. Certainly it should underpin the thinking and decisions of the next Labour shadow cabinet.

United Nations general assembly agrees set of principles on debt restructuring, although US, UK and Germany vote againstThe United Nations general assembly has approved a set of principles to resolve disputes between bankrupt countries and their creditors that the former Greek finance minister Yanis Varoufakis said would have “avoided the pitfalls of the Greek crisis”.The vote, with 136 supporting the scheme to six against, and 41 abstentions, comes after years of lobbying by Argentina and latterly Greece for a debt restructuring process to shield them from draconian cutbacks and reforms that threaten their political and economic stability. Continue reading...

US investment bank expects oversupply to continue into next yearThe price of oil could more than halve again, to just $20 (£13) a barrel, experts at Goldman Sachs are predicting, a shift which would spell big savings for motorists but cast doubt on the viability of North Sea oilfields.

Rate-setting member Kristin Forbes outlines how failure of strong pound to hold down inflation could prompt early riseA senior Bank of England official has raised the prospect of interest rates rising sooner than expected if economists are proved wrong about the power of a strong pound to hold down inflation.

Construction of public housing fell by 15.6%, while the 0.8% growth in private building work was slowest since March 2013, offical data showsBritish construction output dipped unexpectedly in July, reversing a bounce in June, after the biggest annual fall in housebuilding in more than two years.A major driver of the decline was a year-on-year fall in the amount of new housing being built, which dropped by 2.5%, the first decline since March 2013. Continue reading...

Prime minister targets prisons and children in care as he seeks to open up contracts to small businessesDavid Cameron will herald new moves to open up public services to private providers when he hails the role of “insurgent companies” and speaks of the benefit of “breaking state monopolies”.In a speech outlining the government’s approach to the autumn spending review, in which George Osborne will outline £20bn of cuts, the prime minister will cite children in care services and prisons as “standout areas” for reform.Opening up contracts to small businesses spreads entrepreneurship and drives innovation Continue reading...

Downgrade reflects country’s struggle to regain investor confidence as political turmoil drives growing government deficitBrazil’s financial markets have fallen after Standard & Poor’s cut the country’s sovereign rating to junk.The drop from investment grade, which came sooner than many in the market had expected, reflected President Dilma Rousseff’s struggle to regain investor confidence as political turmoil drives a growing government deficit in Latin America’s largest economy. Continue reading...

Clamour for tax cuts and greater public spending likely to rise after low euro fuels rapid growthIreland is on track to maintain its stellar growth record after the low euro helped boost exports in the second quarter of the year.The government predicted GDP would expand by 6% this year, matching last year’s post-crash record and maintaining Ireland as the fastest-growing economy in the eurozone.

Finance minister expects 6% growth this year, as Irish economy maintains position as fastest-growing in the eurozoneIreland’s government expects the economy to grow by about 6% this year, far more than originally forecast after data showed that it grew by 1.9% quarter-on-quarter from April to June.After increasing by more than 5% in 2014, Ireland’s fast-recovering economy was already set to be the best performing in the EU for the second successive year when the government forecast in April it would grow by 4% this year. Continue reading...

Developments in China were ‘the main focus of the committee’s decision’ to leave interest rates unchanged, the Bank’s minutes showBank of England policymakers have offered a reassuring verdict on the impact of China’s market meltdown, insisting that while it would “add to the global headwinds” facing the UK, their plans to raise interest rates remained on track.One member of the Bank’s nine-member monetary policy committee, former CBI economist Ian McCafferty, voted for an immediate increase in borrowing costs from their record low of 0.5% at the meeting that concluded on Wednesday – the same voting pattern as in August.Related: Bank of England votes 8-1 to leave UK interest rates unchanged - live updates Continue reading...

Despite another slew of poor data sending stock markets down, Beijing will meet its 7% growth target and promises it will never start a currency warChina’s economy faces challenges and downward pressures but there is no risk of a hard landing as the government is fully capable of supporting growth, premier Li Keqiang said on Thursday.

Britain does not have a strike problem – so why the need for new legislation? The government should be working constructively with unions to raise productivityThe Conservative government plans legislation later this year that will heavily circumscribe workers’ already limited freedom to take industrial action.Neither the coalition, nor the previous Labour government, saw any need to revisit strike legislation. So, what has changed?Related: Government's trade union proposals not fit for purpose, watchdog saysThe Conservative proposals are ideological rather than practical and have a weak evidential and legal basisRelated: The Guardian view on trade union reform: partisan politics and rotten policy | Editorial Continue reading...

The jobless figure fell as expected last month from 6.3% in July and the total number of people in work rose by 7,400 driven by part-time jobsAustralia’s unemployment rate fell to 6.2% in August despite disappointing economic growth and turmoil on the world’s stock markets.Related: Economic management is now Tony Abbott's weakest claim to re-election | Stephen Koukoulas Continue reading...

Japan’s Nikkei surges by 7.7%, its biggest gain since 2008 after China pledges new spending measure to support growth

Surge of 7.7% in Nikkei 225 index comes after prime minister’s pledge of corporate tax cuts, though long-term questions over ‘Abenomics’ remainJapan’s stock market soared on Wednesday after the prime minister, Shinzō Abe, promised to cut corporate taxes and maintain the ultra-low borrowing costs that have supported the country’s economic recovery over the last two years.The Nikkei 225 index rose by 7.7%, its biggest one-day rise since the 2008 global financial crisis, as Abe, fresh from his recent re-election as LDP leader, said he planned to cut corporation tax by three percentage points and sounded optimistic on reaching a trans-Pacific trade deal. Continue reading...

Willem Buiter, chief economist at Citi and former Bank of England policymaker, warns China’s woes are set to spreadA “hard landing” for China is likely to plunge the world economy into recession in the next two years, Willem Buiter, chief global economist at Citigroup and a former Bank of England policymaker, has said.As the Federal Reserve in Washington prepares to decide whether to defy warnings of economic fragility and push up interest rates next week, a research note by Citi’s experts warns of a 55% probability of global recession. Continue reading...

Fragile world economy takes toll on manufacturing as trade deficit widens to £3.4bn in July from £2.6bn in JuneFears are growing about the strength of Britain’s economic recovery, after sharp falls in exports and manufacturing output offered the first evidence the global slowdown may be taking its toll.Britain’s overall trade deficit in goods and services widened to £3.4bn in July, from £2.6bn in June, according to the Office for National Statistics (ONS).Related: UK manufacturing hit by turmoil in China Continue reading...

AGR says women must be ‘actively encouraged’ to apply to UK grad schemes as proportion of female hires remains stagnant for last five years

Germany leads the way as better than expected eurozone performance this year sends FTSE 100 and Dow Jones soaringGlobal markets yesterday shrugged off a big fall in China’s monthly imports after figures showed the eurozone economy strengthened this year.Related: Markets rally on stimulus hopes after Chinese imports slump - as it happenedRelated: China plans stock market 'circuit breaker' to curb volatility Continue reading...

Eurozone growth figures are stronger than first estimated, but a big fall in Chinese imports and exports show its economy remains shaky

UK government survey records only 57% of 21 to 30-year-old graduates are in high-skilled employmentYoung graduates in England have enjoyed a pick-up in average pay, but the proportion in high-skilled work has fallen, according to government figures.Echoing other reports on the high proportion of graduates in non-graduate roles, the Department for Business Innovation and Skills (BIS) said 57% of graduates aged 21-30 were in high-skilled employment in the second quarter of this year. That compares with 63% in 2006. Continue reading...

Trading would be suspended for half an hour if the indexes fall by 5% according to a proposal by the securities regulatorChina is planning a “circuit breaker” mechanism to prevent any further losses on its volatile stock markets.Related: Weak Chinese trade data fuels slowdown fears - business liveRelated: China's market turmoil: leaders' refusal to learn lessons makes more volatility a sure bet Continue reading...

Yanis Varoufakis is among signatories to a letter asking Britain and the EU to sign up to a nine-point UN code putting democratic rights – and not the market – at the heart of international governanceLeading economists have demanded that Britain and the EU back a proposal to the UN that aims to protect heavily indebted countries including Argentina and Greece from predatory hedge funds, which they claim bring already struggling nations to their knees.The former Greek finance minister Yanis Varoufakis, the Texas University professor James Galbraith and Martin Guzman, a specialist in sovereign bankruptcy at Columbia University, are among the signatories to a letter in the Guardian calling for rules that would also have prevented Brussels from forcing Athens to accept harsh austerity without offering substantial debt relief.Related: Europe should back debt crisis principles at the UN | Letter from Yanis Varoufakis, James Galbraith and others Continue reading...

New research finds 3.2 million families spent at least 25% of their gross monthly pay servicing unsecured debt in 2014The number of households struggling with problem debt grew by a quarter between 2012 and last year, as stagnating wages forced a growing number to borrow to get by, according to the TUC.By 2014, 3.2 million families were spending at least 25% of their gross monthly pay on servicing unsecured debts, the definition of problem debt. The figure for 2012 was 2.5 million, according to research commissioned by the TUC and Unison. Continue reading...

On 10 September, the United Nations general assembly will vote on nine principles concerning the restructuring of sovereign debts. Abiding by such principles would have avoided the pitfalls of the Greek crisis, in which political representatives gave in to creditor demands despite their lack of economic sense and their disastrous social impact. This public interest resolution must be supported by all European states and brought into the public debate.The Greek crisis has made clear that individual states acting alone cannot negotiate reasonable conditions for the restructuring of their debt within the current political framework, even though these debts are often unsustainable over the long term. Throughout its negotiations with creditor institutions, Greece faced a stubborn refusal to consider any debt restructuring, even though this refusal stood in contradiction to the IMF’s own recommendations. Continue reading...

Rolling coverage of the latest events across the world economy and the financial markets

If Fed raises interest rates every time there is a sign of wage growth, workers’ share will be ratcheted down – never recovering what was lost in the downturnAt the end of every August, central bankers and financiers from around the world meet in Jackson Hole, Wyoming, for the US Federal Reserve’s economic symposium. This year, the participants were greeted by a large group of mostly young people, including many African- and Hispanic Americans.The group was not there so much to protest as to inform. They wanted the assembled policymakers to know that their decisions affect ordinary people, not just the financiers who are worried about what inflation does to the value of their bonds or what interest-rate hikes might do to their stock portfolios. And their green T-shirts were emblazoned with the message that for these Americans, there has been no recovery. Continue reading...

World Economic Forum report on fostering equality has Britain underperforming compared to other advanced economiesThe UK must tackle its gender pay gap and improve access to education if it is to reduce inequality, according to a new report from the World Economic Forum (WEF) on how governments can foster inclusive growth.The Forum, the body behind the high-powered annual Davos summit, has produced 15 measures of how well countries foster equality as they grow their economies. Continue reading...

The Aussie dollar hits another six-year low amid ongoing concerns about China and speculation over a possible US interest rate riseThe Australian share market fell at the start of trading on Monday amid continued uncertainty about the Chinese economy and US interest rates.The S&P/ASX200 dipped more than 1% points to 4,985 points after falls last week on Wall Street and in Europe. The Nikkei in Tokyo also opened down 130 points or 0.7% as Asian investors nervously eye the reopening of the Chinese markets after a four-day break for last week’s military parade in Beijing.Related: China's central bank governor says yuan has stabilised against the dollarRelated: The Guardian view on global currencies: it’s the economy, stupid | Editorial Continue reading...

Manufacturers’ organisation halves forecast for sector as economic slowdown in far east compounds export woesThe economic downturn in China has compounded pressures on UK manufacturers and hit their output and exports, a leading business group will warn on Monday as it slashes its outlook for the sector.Sales to the domestic consumer market and booming car production have not been enough to make up for a drop in overseas demand, says the manufacturers’ organisation EEF. Those manufacturers making mechanical equipment have been particularly hard hit as waning orders from China coincide with flagging demand from the oil and gas sector, itself hit by a plunging oil price. Continue reading...