The coalition government came to power in 2010 promising to deliver a stable economy and reduce Britain's deficit. Its chosen method was austerity, a mix of higher taxes and deep spending cuts. But rather than unleashing growth, the UK economy stalled – just as many Keynesian economists predicted it would. But with most major parties committed to degrees of austerity, Phoebe Greenwood asks whether anyone has learned the lesson of the past five years Continue reading...

David Cameron to pledge that income tax, VAT or national insurance will not rise in the next parliament; ‘it’s a desperate gimmick,’ says Labour

The economist is likely to be methodical, detail-oriented and tenacious in his new role – the polar opposite of his maverick predecessor Yanis VaroufakisEuclid Tsakalotos, the Oxford University-educated economist elevated to the top post of bailout negotiations coordinator, is the polar opposite of the Greek finance minister, Yanis Varoufakis. Diffident and soft-spoken, the 55-year-old’s wow factor is limited to a wardrobe of colourful corduroys and a trademark yellow and black scarf.In person he is amiable, low-key and professorial, the embodiment of the academic he has been for the past 30 years. It is a world away from untrammelled narcissism, of which the maverick finance minister has been accused. Continue reading...

Yanis Varoufakis renews outspoken attack on eurozone partners despite being replaced as leader of bailout negotiating teamThe Greek finance minister has denied that he has been sidelined from talks with Greece’s creditors on Tuesday as he resumed outspoken attacks on the country’s eurozone partners.Related: Greece tries to ease tensions with lenders by reshuffling negotiating team Continue reading...

The latest figures indicate that UK economic growth has halved in the three months to the end of March, continuing a slowdown that began six months ago (Report, theguardian.com, 28 April). This is further evidence of how unsustainable the recovery – which is heavily reliant on consumer spending and levels of household debt relative to income – actually is.The general election campaign has, however, been dominated by the major UK political parties looking at how they can impose further austerity, cutting the deficit and the debt through public spending cuts, rather than doing so by investing in the economy to stimulate economic growth.He is the Daffy Duck of politics – confident and self-satisfied, leading to calamity; then he pops up again, unabashed Continue reading...

All the latest economic and financial news, including reaction to Alexis Tsipras’s late-night interview

During the election campaign, the Institute for Fiscal Studies’ genuine impartiality has become a major asset in scrutinising claims and counterclaims

Being upfront with voters about social security cuts that would be necessary to finance tax cuts is not seen as an election-winning strategyBe afraid. Be very afraid. That was the message from the Institute for Fiscal Studies as it dissected the tax and benefit proposals of what are for now the three main Westminster parties.The IFS said the Conservatives, Labour and the Liberal Democrats were as one in trying to hoodwink voters. Despite what is being said on the campaign trail, there is no magic money tree for the politicians to shake. Promises now will be followed by hard choices later.Related: Election 2015: taxpayers worse off under every party, experts sayRelated: Do the parties’ sums add up? How the IFS became the ultimate arbiter Continue reading...

Prime minister uses worse-than-expected GDP figures to warn that a Labour government would put economic recovery at riskBritain’s economic recovery slowed far more sharply than expected in the first quarter, dealing a major blow to the government’s track record on the economy with a little more than a week to go until the general election.The prime minister David Cameron said the recovery could not be taken for granted after the latest official figures showed that the economy grew by just 0.3% between January and March, half the rate of the previous quarter. Economists were expecting growth of 0.5%.Related: GDP figures: a blow for Osborne's growth and austerity mantraRelated: Election 2015: UK GDP growth slows to 0.3% - liveRelated: Drop in UK's economic growth: what the experts say Continue reading...

Economists’ opinions are split between those alarmed by ‘dramatic’ slowdown and others confident the figures will soon be revised upwardsBritain’s economic growth rate halved in the first quarter of the year, from 0.6% to 0.3% – dealing a blow to the government’s election hopes.Jeremy Cook, chief economist at the international payments company World First, says Britain has suffered a “dramatic” slowdown:Q1 2015 was the slowest three-month period of growth in the UK since the last quarter of 2012.Industrial and manufacturing numbers from the UK economy through January and February have been poor and, for once, the services sector has not been able to make up that deficit. That, in itself, is worrying.Given that the Conservatives and Liberal Democrats are hoping that many undecided voters will ultimately decide to vote for them due to their management of the economy, this marked slowdown in growth is particularly unwelcome news coming just over a week before the general election.However, the Conservatives and Liberal Democrats can probably argue with some justification that increased uncertainty ahead of the general election has hampered growth, likely leading to business caution – particularly on investment.Related: UK economic growth slows ahead of general electionThis is a sharp drop in GDP growth that few economists saw coming. Our research suggests that businesses have hit pause amid growing political uncertainty over what the next government may look like, and ongoing malaise in the eurozone. The fall in construction is worrying, although the all-party pledge to build more homes after the election may be the shot in the arm that the sector needs.Today’s data is disappointing but unsurprising, with the UK moving from being one of the fastest growing developed economies to posting the weakest rate of expansion in over two years.Given that we’d already seen signs of weakening output earlier this year, the maths was always going to point to a slowdown. Nevertheless, manufacturing has held up with the sector, now seeing eight quarters of growth. And with surveys suggesting industry sentiment is looking reasonably firm, the sector should continue to contribute to growth in the months ahead.Although we expected a slowdown in GDP growth, following weak construction and production figures, the scale of the decline estimated by the ONS understates the true momentum in the economy.It is likely that the services sector rose by more than 0.5% – in particular we are sceptical that business and financial services output was broadly flat in the quarter. It would not be surprising if this estimate was upgraded in due course.Today's disappointing GDP figures will make this look even worse. Unprecedentedly slow growth performance in recovery pic.twitter.com/bInPWjHf91Weak GDP + strong employment = dreadful productivity (compared to pre-crisis trend or internationally). pic.twitter.com/3obZMFJ1vq Continue reading...

Institute for Fiscal Studies issues scathing analysis of tax and spending policies, including Labour’s 10p tax rate and Tories’ personal allowance riseBritish taxpayers should expect to feel worse off under whichever party wins the general election next week, according to the Institute for Fiscal Studies.In a scathing analysis of tax and benefits policies in the runup to the poll, the IFS issued a series of tough criticisms of the parties’ manifestos, with Paul Johnson, its director, saying, “There’s nothing in any of the parties’ proposals that we think will help the good functioning of the economy”.Related: Do the parties’ sums add up? How the IFS became the ultimate arbiter Continue reading...

In the latest of our pre-election series, Aditya Chakrabortty goes back to Edmonton, another suburb failed by the national economy‘You work at the Guardian, but you’re from Edmonton?” That but, and the genuine wonderment packed into it, made me laugh. This was Kate Osamor speaking! Come next Thursday, she will almost certainly be elected as the Labour MP for my old home of Edmonton, in north London. She’ll move into the Palace of Westminster and take up one of the 650 most elite positions in Britain. But before that process of dessication, she can still be impressed by more humble achievements.I’ve heard that tone before: you’re from here? The first temptation is to laugh it off – it’s a newspaper, mate, not a space mission. But soon the questions behind the question start to weigh you down. From outside the Guardian’s offices, a bus runs all the way to Edmonton Green shopping centre. The journey takes less than an hour. The idea of anyone actually making it seems to me as plausible as a fairy handing out coins for fallen teeth.Related: Recession rich: Britain's wealthiest double net worth since crisisDrug-dealers colonise the doorstep of her constituency office, and prostitution goes on behind itThe local Labour-led council has done some heroic work, most notably on building social housing Continue reading...

Trades Union Congress says 2010-2014 unique in seeing drop in real household disposable incomes, which combine wages, benefits, taxes and inflationThe coalition government has presided over the worst five-year period for living standards since modern records began more than half a century ago, according to the Trades Union Congress.In an analysis based on data from the Office for National Statistics, the TUC said the 2010-2014 period was unique in seeing a drop in real household disposable incomes.Conservative plans for extreme austerity after the election risk killing off the recovery again Continue reading...

Report from thinktank warns ‘another recession is a matter of when, not if’ ahead of Tuesday’s GDP figures, which are expected to show slowing economic growthWhatever Tuesday’s first quarter GDP figures show, the next government should brace itself for a hard landing, according to an economics thinktank.A report produced by the New Policy Institute (NPI) has described Britain’s economy as “unbalanced” and warns that another recession is inevitable unless various issues are addressed.If the UK economy can be likened to a four cylinder car, then actually not one of its four cylinders is firing as smoothly as it should. Productivity is in the doldrums. Employment is artificially high due to self-employment. Household income growth has been non-existent. Trade deficits are frighteningly high. Look beneath the bonnet and we find the UK economy both weak and unbalanced.”Labour productivity, a measure of what is produced for every hour worked, grew strongly after the recessions in the 70s, 80s and 90s whereas it has barely grown at all since the recession ended in mid-2009, says the NPI report. “Without productivity growth, real wages cannot grow,” it adds.The total number in work and the employment rate are at record levels but the NPI says this is down to the rise in self-employment, income from which has fallen. “The level of zero-hours contracts points to further weakness behind the headlines,” it adds.Instead of rebounding as it did after each of the last three recessions, real household disposable income is barely up on where it was in 2009, the NPI says. “This makes sustainable growth, let alone growth that feeds through to good living standards, far from assured,” adds the report.Britain has “a huge balance of payments deficit, a too low level of corporate investment and households spending to the hilt,” the NPI report says.The thinktank says the deficit, 4.8% of GDP in the latest financial year, has not come down by as much as the coalition had planned at the outset. “The coalition followed its own plan for about two and half years but then switched tack after two and a half years of low or no growth,” the report says. Continue reading...

Syriza-led coalition appoints economics professor in leading role to overcome mounting European opposition to his controversial colleagueGreece moved to inject fresh momentum into problem-plagued talks with creditors on Monday, reshuffling its negotiating team to try and defuse tensions over its outspoken finance minister.

Government plans to use riches donated by religious devotees to protect nation’s foreign exchange reservesWorkers for the centuries-old Shree Siddhivinayak Temple in Mumbai spent hours unpacking gold coins, heavy wedding necklaces and lustrous pendants from a closely guarded “strong room”. By the time gold-buyers began mingling with worshippers at the sweltering sanctuary last month, the jewellery auctioneers were ready.“This is not a regular gold coin that you would buy from a gold shop – it contains the Lord’s blessing,” a temple board member said, holding up a tiny coin, probably left by a devotee years ago. It eventually sold for four times its face value. Continue reading...

The World Bank’s response (Letters, 22 April) to your article (World Bank ‘increased finance for fossil fuels’, 18 April) incorrectly characterises how Oil Change International (OCI) classifies fossil fuel projects, and in doing so further obscures how much of the institution’s support is going to oil, gas and coal.The World Bank seems to want to solve the problem by changing its label on business as usual to sound climate-friendly Continue reading...

Alexis Tsipras has attempted to kick-start talks with creditors, in a move that appears to sideline finance minister Varoufakis

Experts say that, while inflation and unemployment matter, what’s happening to pay packets makes more difference to pollsThe Conservatives have put the economy at the heart of their election strategy in the belief that it will give them a decisive lead over Labour.This approach will still be justified if there is a swing to the Tories in the last 10 days of the campaign. But so far, despite zero inflation, falling unemployment and rising consumer confidence, David Cameron has yet to reap a significant “growth dividend”. Continue reading...

Bertelsmann Stiftung and ifo Institute study says Brexit could knock 14% off GDP, costing UK economy up to £215bnA British exit from the European Union could cost the UK as much as €300bn (£215bn), or 14% of GDP, according to a German study.The report from two respected German institutes warns of far-reaching consequences for the whole region should next week’s UK general election pave the way for a referendum on EU membership, as promised by the Conservatives, and ultimately a British departure from the bloc. Continue reading...

Federation of Master Builders puts dearth of supplies and tradespeople down to kilns being mothballed and workers laid off during recent recessionIncreasing shortages of bricklayers and bricks threaten to undermine ambitious housebuilding plans laid out by politicians ahead of the election, a leading construction industry group has warned.All the main parties have sought to assure voters they will tackle Britain’s chronic housing shortage but the Federation of Master Builders (FMB) says its members are already struggling to get the skills and materials they need to meet demand. Continue reading...

Just one fifth of firms have increased production in past three months with weak export market holding back output, survey showsFresh evidence of an easing in Britain’s growth rate was highlighted by the CBI when it said manufacturers were expending production at their slowest rate in more than two years.The quarterly snapshot of industry from the employers’ organisation, ahead of first quarter GDP figures on Tuesday, reported that firms were less upbeat than they were at the turn of the year and were mothballing investment plans. Continue reading...

Economists expect latest figures to show that growth has fallen from 0.6% to 0.5% since end of 2014George Osborne’s stewardship of the economy is expected to take a dent on Tuesday when the latest official figures show last year’s healthy growth has lost momentum.With just over a week until the election, the chancellor will come under pressure from critics following a run of poor figures from the manufacturing and construction sectors that City economists predict have slowed growth in the first quarter.

Owen Jones seems to be unaware of the history of the party he urges everyone to vote for (The difference between Miliband and Cameron is a woman called Sue, 22 April). In the late 19th century there were two main political parties in the UK: the Tories who, as now, nakedly reflected the interests of the ruling class, and the Liberal party, whose establishment reformism received substantial support from recently enfranchised working-class (male) voters. The newly born Labour party – then called the Labour Representation Committee – won just two MPs in the 1900 election.Of course, the Owen Joneses of the day would have argued that voting for the nascent Labour party, however unhappy one was with the Liberals, would split the anti-Tory vote. “An independent Labour organisation will not catch a single Tory vote. Such votes as it does carry away will be Liberal votes … it may hamstring and even cut the throat of the Liberal party”, argued Lord Rosebery, then the Liberal prime minister, in 1894.New Labour, in accommodating the worst excesses of neoliberalism, may be the author of its own electoral misfortune Continue reading...

For a nation of renters, pledges by Ed Miliband on private-sector rents and David Cameron on right to buy are merely attacking the symptoms, not the causes

The new chief executive tried to be bullish about the grocer’s larger stores as he revealed a £6.4bn loss last weekThe idea that big supermarkets are heading for extinction may be a myth, according to Tesco boss Dave Lewis. The former marketing man revealed last week that his largest stores, seen by many as the dinosaurs of retail, had shown the fastest recovery of all the chain’s formats in the past three months. It was a valiant effort to project a positive message as he unveiled a towering £6.4bn loss for the UK’s biggest retailer.Lewis suggested the much-touted trend towards convenience shopping could just as well mean shoppers head for one big store that provides every need, rather than nipping to several places that are handy and local. Continue reading...

The SNP’s anti-austerity rhetoric is a pose, and the Greens are playing fantasy economics. Only voting Labour can protect the UK from savage and unfair cutsThis is an appeal to the idealists, the dreamers, the hankerers after a new, sunny kind of British politics, where the spending axe is buried and a thousand flowers bloom. Please don’t be beguiled into throwing away your vote.Watching the seven-strong leaders’ debate, which already seems an age ago, anyone on the left found it heart-warming to see the economic argument being turned upside down. Instead of starting from the grim necessity of deficit reduction, the Greens’ Natalie Bennett, Plaid Cymru’s Leanne Wood and the SNP’s Nicola Sturgeon rejected austerity, and instead prioritised human decency and fairness.It’s hard to see how the Conservatives' hoped-for cuts could be achieved without a fundamental reshaping of the state Continue reading...

Too much debate about cuts and not enough clear outlines of how to run the country for everyone’s benefitFrom the hushed atmosphere of the Institute for Fiscal Studies’ basement lair in Bloomsbury, central London, the broad outlines of next month’s general election appeared crystal clear, laid out in red, blue and yellow lines on a kaleidoscope of charts. Britain’s public sector deficit, running at about 10% of national income when the coalition came to power five years ago, has been halved. All the major parties want to reduce it further, but the Conservatives plan to do so more rapidly – they would make much deeper, “unspecified” cuts to public spending.Yet the IFS, so often the voice of common sense during this drawn-out election campaign, castigated all the major parties for leaving voters “in the dark” about what kind of future they could expect over the next five years. Continue reading...

The standoff between a leftwing government and the financial powers of the EU is near to breaking point. What if the worst happens?This time it’s real: Greece has wriggled out of looming national bankruptcy on numerous occasions over the past five years, but now it has just a few weeks left before it must sign a new debt deal with its eurozone partners and the IMF – or find itself heading for an exit door that leads back to the drachma.Related: Greeks’ view of the debt crisis: ‘What lies ahead is great, great hardship’ Continue reading...

Navinder Singh Sarao faces extradition to the US over claims he helped cause the 2010 Wall Street ‘flash crash’. But was he really responsible?What’s the big deal? As the name indicates, the “flash crash” in the US stock market on 6 May 2010 didn’t last long. The loss of $1 trillion of stock market value was temporary. Calm – and normal share prices – returned within half an hour. The vast majority of investors – millions of people with long-term savings or pension money invested in US companies – didn’t lose a dollar. Most weren’t even stressed by the stock market’s rollercoaster ride. They were busy getting on with their lives.Unfortunately, the flash crash cannot be dismissed so lightly. The reason it still matters and the reason why the alleged role of Navinder Singh Sarao – dubbed the Hound of Hounslow in a nod to the 2013 film The Wolf of Wall Street – is so intriguing – is that it may have been a near miss. Continue reading...

Three months on from Alexis Tsipras’s victory, hope is ebbing away and support for his party is haemorrhagingAnother week. Another crisis. Another make-or-break meeting that may, or may not, throw Greece into the unchartered waters of default, eurozone exit, destitution and despair.Related: What happens if Greece can’t pay its debts? Continue reading...

Greek finance minister reportedly told he is “a time-waster, a gambler and an amateur” at a highly critical meeting in Riga

IFS sounds warning over flagship Tory policy, saying sale of best council stock also risks widening gulf between rich and poor

Greece owes money to the International Monetary Fund, the European Central Bank and the European Union following its two bailouts in 2010 and 2012

For years the right has made the political running. But the argument is winnableFood banks are everywhere, and all the volunteers – like the many reports that have asked why food banks have proliferated – are agreed on the cause. It is cuts, delays and sanctions to benefits that have made Britain a hungrier nation than it was at the beginning of the Cameron term of government.After 2010 a historic assault on the ideal of social security gradually emerged. But now, with the Conservatives threatening another largely unspecified £12bn in welfare cuts if they win the general election – the equivalent of 24 bedroom taxes, by the way – it’s time to stop interpreting the war on welfare. It is time instead to ask how to fight back.Related: Food banks: benefit sanctions leave clients hungry for monthsThe right’s great advance against social security has come through waging a culture war Continue reading...

Ministers privately believe deal is possible, but point at which Syriza must either capitulate to Brussels or leave euro growing closerThere is still time for Greece to stitch together a deal with Brussels before it runs out of money, according to eurozone finance ministers speaking privately at last week’s International Monetary Fund spring conference. And the betting must be that crisis-plagued Athens will eventually find a way to retain its membership of the eurozone with a messy compromise.But the odds are getting slimmer with every passing week. On Friday, finance minister Yanis Varoufakis meets his counterparts in the Latvian capital Riga in what many analysts believe is the penultimate gathering to work out a deal before Athens’s coffers run dry. Continue reading...

Thinktank challenges Conservatives to explain where cuts would come from and insists SNP is not anti-austerity

Many EU member states and the US still fear the consequences of Greece leaving Europe. They need to get their voices heard in BerlinIn Berlin, views on Greece’s possible exit from the eurozone are shifting. “We have never been closer to a Grexit, and we are close,” said a senior official. The last time a Greek departure looked likely, in 2012, Angela Merkel worried that it would provoke panic in financial markets and pulled back from the brink. This time, Germany’s leaders think a Grexit would not destabilise the eurozone.Merkel’s officials say that she would be willing to compromise with Greece – if prime minister Alexis Tsipras, whose Syriza party was elected in January, came up with a serious reform programme. Germany wants his socialist government to commit to fighting corruption, improving tax collection, strengthening fiscal discipline, modernising labour markets and attacking vested interests. But three months after being elected, Tsipras seems unwilling or unable to do any of these things.German officials are remarkably sanguine about the impact of a Grexit on the rest of the eurozoneRelated: Greek eurozone exit edges closer as markets brace for Athens default Continue reading...

Consumers might be more cautious about spending windfall gains if the boost to their real incomes caused by the fall in inflation was thought to be temporary

Institute for Fiscal Studies clearly thinks the Conservatives are winging it but Labour have failed to cash in politically

Pre-election lift for chancellor as borrowing in 2014-15 falls to £87.3bn from £98.4bn last year

March data adds to concerns that economic growth slowed at the start of the yearUK retail sales showed a surprise fall last month, driven by a slump in petrol sales, adding to concerns that economic growth slowed at the start of the year.The first-quarter GDP numbers will be released on Tuesday, just over a week before the general election. Continue reading...