Live, rolling coverage of business, economics and financial markets as McDonald's faces pressure to cut prices and lure back customersA three month view of Bitcoin prices shows the steady price climb in recent weeks, which was boosted even further on the prospect that Trump would clear regulatory hurdles to the cryptocurrency's ascent.A closer look at the rise in cryptocurrency over the past five days: Continue reading...
Regions' vast potential is being blocked by the need for better investments, key partnerships and reforms to global financeAfter Hurricane Beryl stomped across the Caribbean, days after torrential rainfall destroyed thousands of homes in Ghana and Niger, it was evident that the two regions face many of the same challenges. Weeks of catastrophic events underscore the increasing necessity to transform the world's financial architecture to support these areas.Earlier this summer, two big conferences happened simultaneously, about 7,000 miles apart. One in the Caribbean, Antigua, and the other in Africa,Kenya. The themes were similar: the financial conundrum and developmental crises plaguing the regions. Continue reading...
More UK companies are about to trial a four-day week, and all employees could soon get the right to switch off. It's still just baby stepsIn ancient Greece, Aristotle was big on noble leisure", but modern Greece might need a refresher, having just introduced a six-day, 48-hour working week. Opponents have described the measure as barbaric", an erosion of workers' rights in a country that already works the longest hours in Europe.I have been thinking a lot about work recently. OK, I am not exactly formulating an incisive critique of the labour market (most of my thoughts are of dinner or pigeons), but I have been wondering why we still do so much of it. Continue reading...
This week's Bank meeting is unlikely to bring borrowers any joy amid a strong recovery from 2023's mild recessionSavers are always on the lookout for the best interest rates and the UK seems like a good bet at the moment. In recent months, the pound has climbed in value against the euro and the dollar as economists speculate that UK interest rates will remain at 5.25% for longer than previouslyexpected.While the odds of a cut in borrowing have shortened, with a narrow majority of City analysts expecting a reduction, few outside the Square Mile believe a change is imminent. Continue reading...
Labour has enough goodwill with City to increase debt if the money is used for key infrastructureRachel Reeves is preparing to throw the kitchen sink at the Conservatives. To howls of predictable outrage from the opposition benches, the chancellor will tell the Commons on Monday that Labour's inheritance is far worse than anyone could have imagined, backed up by a Treasury audit showing 20bn in spending commitments left unaccounted for by the previous government.Despite the old Tory promise to fix the roof when the sun is shining", made way back in 2010, it has been clear for years that nothing of the sort happened. Reeves can hardly feign shock that the national debt is at the highest level since the 1960s, public services are crumbling and living standards have gone backwards. Continue reading...
Steve Reed hits out at Conservatives' handling of public services as chancellor prepares to detail 20bn black hole'The last Conservative government deliberately covered up" the true state of public finances, a cabinet minister has said, as the chancellor prepares to detail a 20bn black hole" in the public finances.The environment secretary, Steve Reed, said his cabinet colleagues always knew" the inheritance from the Tories was going to be bad", but that since coming to office they had found additional pressures" that had not been disclosed. Continue reading...
Cutting public spending to satisfy an arbitrary financial rule conceived in opposition will confine the UK to sluggish growthBritain's public finances are in a desperate state. That is the key message the chancellor, Rachel Reeves, will deliver in a speech on Monday, which she will use to draw attention to a 20bn black hole in the tax and spending plans bequeathed to her by the last government.Critics will say that this should not be news; it was patently obvious that the Conservatives cooked the books before the last election, baking in impossible-to-achieve spending cuts in order to make their plans for the next five years seem plausible. That did not stop Labour adopting the Tories' projections as its baseline, because it suited the party politically. However, Reeves would be entirely correct in arguing that the unenviable inheritance is as much a product of Conservative neglect and incompetence as it is of external shocks, and that Labour could not know the full extent of the fiscal gap until it was in government and had the opportunity to examine the books carefully. Continue reading...
Several factors restrict the Labour government's room for manoeuvre in its agenda for growthThe economic outlook is improving, but a recovery from last year's recession will be long and arduous without a boost to public investment. Continue reading...
Making billionaires pay their fair share into state coffers would allow Starmer's government to effect real change, but soaking the rich is a hard sell for votersRachel Reeves will this week lay out the full cost of Conservative party economic neglect. Initial findings, according to Labour briefings, put the cost of the repair job at about 20bn, though there is also a strong hint that the final bill, when it is announced on Monday, will be much higher.The exercise is a chance for the chancellor to send a message to her own supporters to ease off on demands for extra spending. Reeves will say the Tories' reckless and inept handling has pushed the government's finances further into the red than was previously understood. Continue reading...
Questions over whether plan to spend billions on weapons will work as a tool to spur economic growthEven in a room full of generals from around the world decked in military braid, the arrival of the prime minister causes a stir. At the Farnborough international airshow this week, knots of advisers and armed police surrounded Keir Starmer as he walked through the stalls, occasionally allowing a favoured chief executive or a nervous apprentice into the inner circle.A few words with the prime minister will always be valuable for bosses of big business. But at this year's version of the biennial aviation and weapons show, defence companies in particular were hanging on his words for any hints of the intentions of the first Labour prime minister since 2010. Continue reading...
Rachel Reeves is expected to accept pay review body recommendations in move that could cost up to 10bnMillions of public sector workers are set for an above-inflation pay rise due to be announced by Rachel Reeves next week after more than a decade of austerity.The chancellor is expected to accept the recommendations of public sector pay bodies for pay increases on Monday - a move economists believe could cost up to 10bn. Continue reading...
Even as Joe Biden touts strongest economy in the world', nearly three in five Americans wrongly believe US is in recessionThe pace of US economic growth accelerated in the last quarter, remaining unexpectedly resilient in the face of high interest rates and persistent inflation.Gross domestic product (GDP) - a broad measure of economic health - rose 2.8% in three months to June, the commerce department reported on Thursday, ahead of economists' expectations and up sharply from 1.4% in the first quarter. Continue reading...
The emergence of artificial intelligence has pushed the tech sector to all-time highs, but other assets have risen, tooThe US stock market has been on a tear over the past two years. The S&P 500 has increased by roughly 40% since Joe Biden assumed office in January 2021 and, along with the Dow Jones and Nasdaq, is repeatedly setting new records. Moreover, the dollar has strengthened sharply against every major currency, while the price of gold soared to an all-time record of $2,470 an ounce earlier this month.Economists and commentators have struggled to explain these trends. While the increase in gold prices could be attributed to elevated risk perceptions stemming from political and geopolitical uncertainties, this explanation does not account for the booming stock market. Conversely, the decline in the Vix volatility index since 2022 might explain the US stock market rally but not the increase in gold prices. Continue reading...
by Richard Partington Economics correspondent on (#6PFAV)
Institute for Fiscal Studies report says interests rate rises have inflicted differing levels of hardshipAs many as 320,000 UK adults have been pushed into poverty by soaring mortgage costs after the sharpest increase in interest rates since the 1980s, a leading thinktank has said.Highlighting the damage caused by Britain's exploding mortgage timebomb, the Institute for Fiscal Studies (IFS) said individuals who needed to renew their home loans or take out new ones in the past two years had experienced a sharp fall in their disposable income. Continue reading...
The signs are clear that not everything is as rosy in Putin's Soviet-style war economy as Moscow would have us believePresident Vladimir Putin and his authoritarian regime are peddling the false narrative that the Russian economy is strong, and that its war machine is unharmed by western sanctions. This is a lie that must be rebutted. In fact, there are many signs that the Russian war economy is deteriorating. The sanctions and other measures to weaken the Russian economy are effective, but even more can be done. We must continue to increase pressure on Putin's regime and support Ukraine.During the Nato summit in Washington DC, western leaders reaffirmed their commitment to Ukraine's defence. But Russia's war against Ukraine is not only being fought by soldiers on the ground. It is also a war of information, on which the Kremlin spends an estimated $1.5bn (1.2bn) a year, and of economic strength. Putin and his authoritarian regime want us to believe that Russia stands unmoved by sanctions and other efforts made to support Ukraine, freedom and democracy. Thus, it is extremely important that politicians, the media and economic institutions in the west do not take the information coming out of the Kremlin at face value. When taking a closer look at the signals, it becomes clear that everything is not as rosy with the Russian economy as Moscow would have us believe.Elisabeth Svantesson, minister for finance, SwedenStephanie Lose, minister for economic affairs, DenmarkMart Vorklaev, minister of finance, EstoniaRiikka Purra, minister of finance, FinlandArvils Aeradens, minister of finance, LatviaGintar Skaist, minister of finance, LithuaniaEelco Heinen, minister of finance, NetherlandsAndrzej Domaski, minister of finance, Poland
Sales dropped 5.4% last month to a seasonally adjusted annual rate of 3.89m units, the lowest level since DecemberUS existing home sales fell more than expected in June as the median house price set another record high, but improving supply and declining mortgage rates offered hope that activity could rebound in the months ahead.Home sales dropped 5.4% last month to a seasonally adjusted annual rate of 3.89m units, the lowest level since December, the National Association of Realtors said on Tuesday. Economists polled by Reuters had forecast home resales would slip to a rate of 4m units. Continue reading...
The Swedish streaming company said gross margins hit a record high of 29.2% in the second quarter, after cost cuts and growth in subscriptionsThe number of new homes registered to be built across the UK fell by 23% in Q2, compared with the same period last year, the National House Building Council (NHBC) said.The figures are an indication of the stock of houses in the pipeline for construction, since they have to be registered before being built.We know we have a mountain to climb. That is why we're already taking the first steps, starting with an overhaul of our planning system - a reform that will both help build the homes we need and speed up the infrastructure to support them.We are committed not just to an ambitious target for overall housebuilding but the biggest wave of social and affordable housing for a generation. It's a promise that we'll bring back with meaningful housing targets. Continue reading...
UK business secretary Jonathan Reynolds says it is reasonable" to expect Daniel Kretinsky's 3.6bn takeover of Royal Mail would be subject to government reviewThe UK government will need to raise taxes, increase borrowing or make spending cuts unless it can grow the economy by at least three times this year's expected rate, according to analysis by the International Monetary Fund.Economic growth would need to be around 2.6% in each year of parliament from next April before Labour can claim to have stabilised the public finances.Delivering economic growth will require tough choices and difficult decisions.That is why we have already started to take the action necessary to fix the foundations of our economy, so we can rebuild Britain and make every part of our country better off. Continue reading...
by Peter Walker Senior political correspondent on (#6PCN4)
Experts say 5.5% pay increase for public sector not consistent' with spending plans that rule out tax risesLabour is fast approaching a moment of truth over its election pledges on tax and spending, experts have warned, after Rachel Reeves indicated the government could agree above-inflation pay rises for public sector staff.The chancellor promised a full statement on pay board recommendations that teachers and NHS workers should receive 5.5% pay awards, ahead of an autumn budget that is set to be one of the most difficult economic balancing acts in years. Continue reading...
Spending on health and education being cut as nearly half of budgets are used to pay creditors, campaigners sayDeveloping countries are facing the worst debt crisis in history with almost half their budgets being spent on paying back their creditors, a study has found.The report, by the campaign group Debt Relief International for Norwegian Church Aid, says more than 100 countries are struggling to service their debts, resulting in them cutting back on investment in health, education, social protection and climate change measures. Continue reading...
High interest rates are needed to reduce wage inflation but productivity improvements are harder to chisel outI'm due a haircut and in the past week received a message from my barber containing the news that the price will be 10% higher than the last time I went for a trim.If I call in for a coffee on my way to work it will be a similar story. After recent price rises, I can expect to pay the thick end of 4 for a flat white. Continue reading...
The new government has promised things will be different: but when it comes to spending, we seem stuck on old Tory policiesThe election campaign mantra of change, change, change" reminded me of those people down on their luck who approach you in the street and ask got any change, guv?"Until this month's welcome result in the polling booths, the Labour party had certainly been down on its luck. From the moment in 2010 when the new chancellor, George Osborne, capitalised on departing Labour chief secretary Liam Byrne's joke that there's no money left", Labour was fighting an uphill battle. Continue reading...
Alan Wenban-Smith on the intersection between wealth creation and making money and Jennifer Highwood on politicians buying seatsTwo excellent articles this week - by Nesrine Malik (Hidden behind the celebration of Labour's landslide' win is a depressing disfranchisement, 15 July) and by George Monbiot (Labour can end austerity at a stroke - by taxing the rich and taxing them hard, 14 July). But while they tease out the dire societal consequences of the economic assumption that making money and creating wealth are mutually supportive, they don't nail this as the original crime. This is ironic since both articles demonstrate the effect of normalising such an assumption: its use in rightwing media to further vested interests, and being baked into public and political discourse.Wealth creation is a broad concept: delivery of the things we need, want or enjoy. It includes things such as a healthy environment and secure social fabric, as well as goods and services. Making money is about establishing a personal claim on marketed wealth, whether produced by ourselves or others. Draw a Venn diagram of the activities in these two categories and it becomes clear that, while there is an overlap, it is very far from being an identity. A current example is provided by the water industry: lots of money is being made, but wealth less so.
by Amy Sedghi (now); Nadeem Badshah, Tom Ambrose and on (#6PAF1)
Lib Dem leader had declined meeting with campaigner in May 2010, saying I do not believe it would serve any useful purpose'McFadden also told the Horizon IT inquiry of course I wish I had done more" to question the Post Office over its Horizon IT system.In his witness statement, the Labour MP and Cabinet minister said:The Post Office's insistence that the Horizon system was robust and reliable was proven over time to be wrong, with terrible human consequences. Their reliance on court judgments to back up that position was also to be proven wrong in the subsequent court actions that were pursued over the years in order to overturn earlier verdicts.Rereading this correspondence now, and knowing the injustice done to so many subpostmasters, of course I wish I had done more to ask the Post Office if they were really sure their IT system was as robust as they suggested.At the root of all this was the Post Office's insistence that its IT system was robust and not to blame for accounting errors and their willingness to bring prosecutions through the courts over many years.This resulted in many innocent people being convicted or being held liable for debts they did not owe in the civil courts. Continue reading...
Europe is overrepresented while China is underrepresented, and the US will need to give up its vetoIn July 1944, exactly 80 years ago, representatives of 44 countries met in an obscure New Hampshire village to negotiate the Bretton Woods Agreement establishing the International Monetary Fund. For many, reaching the ripe old age of 80 would be cause for celebration. For the IMF, the anniversary only highlights the urgency of reform.Some necessary reforms are straightforward and widely agreed, raising the question of why they haven't been adopted. First, the IMF should provide its members with regular annual allocations of its in-house financial instrument, special drawing rights. This would provide an alternative to the US dollar as a source of global liquidity while also addressing the problem of chronic global imbalances. Continue reading...
There is to be action but not a tax-and-spend splurge - just patient changes that will take time to pay offThe message from the king's speech was clear. After 14 years in opposition, Labour is back with a plan to get the economy moving. The brakes on growth are coming off, says the prime minister.In a way, the measures outlined to achieve the government's mission" hark back to Labour governments of the past. There is to be more nationalisation, more centralised control of planning, more power for workers, an industrial strategy council and a national wealth fund to boost investment in infrastructure projects. Economic policy under Keir Starmer will become more interventionist and have a discernible social-democratic tinge to it. Continue reading...
Live, rolling coverage of business economics and financial markets as Kantar data shows pressure easing on UK shoppers, and the Fed hints at nearer term rate cutsCineworld has reportedly launched talks with its commercial landlords, including Landsec and Legal & General, about plans to cut a quarter of its cinemas in Britain as part of a restructure plan.Sky News is reporting that the property owners, which together own about 30 of its multiplexes, are in active discussions with Cineworld ahead of a hearing about its restructuring. Continue reading...
by Emma Vincent Miller, Catherine Fletcher, Minesh Pa on (#6P847)
After years of austerity, the government's plans imply another reduction in funding that public services simply cannot takeThe Resolution Foundation has estimated that Labour's spending plans commit the party to around 18bn of annual budget cuts over the next parliament. As they stand, these would affect unprotected" areas of government such as the Department for Work and Pensions, the Ministry of Justice, local councils and higher education - and a funding shortfall for a depleted NHS. Ahead of this week's king's speech, when the new government will lay out its legislative agenda, five public sector workers give their verdict on Labour's approach.Emma Vincent Miller is a solicitor at Osbornes Law Continue reading...
Families cannot afford to wait until UK government says there is money to spare to make such a decisionThe first real test of Labour's hardline approach to public spending has surfaced within a week of the party taking office - and it is a big one.The issue is child poverty and in particular the two-child benefit limit introduced by the Conservatives in April 2017. This prevents households from claiming universal credit or child tax credit for a third or any subsequent child born after this date. Continue reading...
The focus on growth to ease the UK's economic ills will not be nearly enough, but there is a way to raise the sums neededNever let your opponents define the terms of a debate. All too often, Labour has allowed the Conservatives and the billionaire press to demonise the notion of tax and spend". It went to great lengths before the election to assure voters it had no such intention. Now it drives home the message: instead, our needs will be met by growth, growth, growth". But tax and spend is the foundation of a civilised society.Few of the changes this country requires can be achieved while adhering to the tough spending rules" the new government has imposed on itself. We urgently need massive public investment in the NHS, social care, schools, environmental protection, social housing, local authorities, water, railways, the justice system and virtually all functions of government. We need a genuine levelling up, across regions and across classes. The austerity inflicted on us by the Conservatives was unnecessary and self-defeating and Labour has no good reason to sustain it. Continue reading...
In the rush for growth, the cabinet has hit the ground running; but a temporary boost to public borrowing may be the only way to get quick resultsFor a chancellor targeting a decade in power, Rachel Reeves is in a hurry. After 14 years in the wilderness for Labour, and several centuries of Britain awaiting its first female chancellor, it's not surprising she is keen to get on with the job.So far, two ideas have predominated: blaming the Conservatives for the worst economic inheritance since the second world war, and laying the foundations for national renewal at breakneck speed. Continue reading...
The $99bn figure comes as data shows exports growing at fastest rate in 15 months while imports fellChina posted a record $99bn (76.4bn) trade surplus last month amid signs of importers bringing forward orders to beat higher tariffs on goods from the world's second biggest economy.The latest official figures from Beijing showed exports growing at their fastest rate in 15 months, while the weakness of China's domestic economy resulted in falling imports. Continue reading...
by Richard Partington Economics correspondent on (#6P524)
Exclusive: Chancellor is making appointments for new body that will help guide Labour's national mission' of economic renewalRachel Reeves is poised to announce the creation of a new council of economic advisers to help guide Labour's number one national mission" of expanding the economy.After last week's general election landslide, the chancellor of the exchequer has lined up the appointment of a leading academic from the London School of Economics (LSE) to chair the council, which will help to inform the government's growth policies. Continue reading...
by Callum Jones in New York and agencies on (#6P4TR)
Joe Biden says in statement that falling prices and rising wages are thanks to my economic plan'Prices unexpectedly fell in the US last month, lifting hopes that the Federal Reserve is on the verge of cutting interest rates.As inflation fell 0.1% on a monthly basis in June, having been unchanged in May, the consumer price index's annual increase was also the smallest in a year. Continue reading...