Rolling coverage of all the day’s political developments as they happen, including George Osborne and Ed Balls’ post-budget interviews, and the IFS post-budget briefing

Political parties lobbying for curbs on immigration may be missing the bigger picture – Britain needs foreign workers to avoid deeper cuts and higher taxesGeorge Osborne’s sunny economic forecast and much of his claim that Britain is a “comeback country” have more to do with higher than expected levels of net inward migration than his stewardship as chancellor or the falling oil price.That is not a verdict that you are likely to hear from the Conservatives or from Labour for that matter, both of which like to appear as parties opposed to mass migration, but the Office for Budget Responsibility makes clear that it is one key factor fuelling Britain’s economic recovery. Continue reading...

The UK’s macroeconomic policy is uncoordinated and still unduly influenced by political factors, as the new budget proposals showThe lack of coordination of the different parts of UK macroeconomic policy – ­fiscal, monetary and financial­ – has caused problems for some time now. Political, not economic, factors have continued to have undue influence. They are much in evidence currently in the chancellor’s proposal to run budget surpluses in the future, in spite of his earlier quite elaborate extensions to both financial and prudential regulation. If these new arrangements work, there is no need to build up surpluses to offset the effects of a future crisis and this calls into question his motives for doing it.There are important lessons to learn from the years before the financial crisis, when financial liberalisation in the UK and elsewhere led to huge increases in private sector debt based on highly speculative collateral requirements. This fuelled a rapid increase in the consumption-to-income ratio, the major engine of growth in the economy then. After two years of fiscal consolidation, Labour also slackened the fiscal stance in the early 2000s. If the Bank of England had been operating independently as planned, it would have tightened monetary policy, which would also have curbed the asset bubble and limited the excessive risk­taking in the financial sector, as well as acting simultaneously to offset the fiscal relaxation. This, however, did not happen, either due to a complete failure of the Bank to understand these developments or because it was not actually operating independently. Continue reading...

Ed Balls, the shadow chancellor, says the plans laid out in George Osborne's budget cannot be paid for without cuts to the NHS or a rise in VAT. Balls says the chancellor did not explain how he will pay for promises made in the budget on Wednesday. He says Labour would provide a 'better, fairer, more balanced plan' for the economy Continue reading...

The Fed has signalled it’s changing its approach to interest rates – and that means consumers are in for a volatile six monthsThe Federal Reserve isn’t going to be “patient” any more. Dropping that one word from the language surrounding policymakers’ approach to future interest rate hikes may seem minor, but it’s a significant change for savers, investors and borrowers.Last December the Fed signalled that the era of ultra-low interest rates was coming to an end. But it added it would patient about deciding when. Wednesday’s decision to drop the P-word throws open the doors to the first increases in lending rates since 2008, and means that Janet Yellen and her fellow Fed officials will respond to economic data on a meeting-by-meeting basis. Continue reading...

George Osborne, the chancellor, says his budget offered help for workers, savers and first-time buyers because his government has made difficult decisions. Speaking on Thursday in Tilbury, Essex, Osborne says his decisions have allowed him to protect the NHS and to invest in mental health services. The chancellor says that in the upcoming election voters need to understand that a strong economy is necessary for vital services to be maintained Continue reading...

Thinktank warns that extra £20bn will need to be saved – while protecting pensions – even if austerity targets are relaxed as plannedThe Treasury will need to find “unprecedented” welfare savings over the next three years for the government to achieve its public spending plans, according to an influential thinktank.The Institute for Fiscal Studies said the chancellor’s plans require welfare cuts that have eluded ministers over the past five years.

Prospect of tough post-election squeeze overshadows £3bn in pre-election budget’s gains for first-time buyers and savers

Robert Chote says consumers will provide momentum in coming term as chancellor’s amended austerity cuts put pressure on state-funded enterprisesPublic services face a “rollercoaster” ride over the next five years, the government’s fiscal watchdog has predicted, after George Osborne trimmed his austerity plans in the budget.The Office for Budget Responsibility has made radical changes to its public finances outlook after Osborne used his pre-election budget to scrap plans that would have meant the biggest squeeze on public spending since the 1930s by the end of this decade. Continue reading...

In response to budget, Labour leader claims chancellor has hushed up the fact that NHS faces even deeper cuts under the next parliament

George Monbiot is right that corruption poses a vast challenge to all economies (Let’s not fool ourselves. We may not bribe, but corruption is rife in Britain, 18 March), but he is wrong to suggest that institutions such as the World Economic Forum are standing idly by waiting for the problem to solve itself. He correctly points out that one of the major problems with tackling corruption is actually measuring it. Here, our annual survey of global executives has been successful in starting debates in countries where it is commonplace. Far better, though, to fix the international system so that loopholes and opportunities for exploitation are not there in the first place.Our eyes are on this bigger prize, which is why we convene leaders from business, civil society and government countless times throughout the year to explore and design ways to build institutions, policies and regulatory regimes that not only promote transparency and ethics but guarantee them. It is why we encourage debate in Davos on income inequality and trust in leadership. This is not lip service: it is action in the interests of every stakeholder. Continue reading...

He poses as a steadfast steward, but the record as well as the budget suggests that he is a man who reliably puts expediency above principleHe is reliably economical with words and in three sparse budget sentences the austerity chancellor reviewed his tenure and set out the Conservative election campaign: “We set out a plan. That plan is working. Britain is walking tall again.” With the UK edging out from the shadows of the great recession, this chancellor’s steadfast stewardship is a powerful election asset – if it is believed.On any objective appraisal, however, steadfast is not a word to apply to George Osborne: review the statistics in the light of all his original promises and he emerges instead as the chancer chancellor. Continue reading...

A little good economic news goes a long way in the chancellor’s budget speechRabbit, rabbit, rabbit, rabbit. The Tory backbenchers were starting to get a bit restless. They wanted their pre-election feelgood rabbit but the chancellor just wanted to rabbit. And cluck. Sudden weight loss, sweaty forehead, pallid features and half-dead eyes; George Osborne had been re-reading Trainspotting.“We choose the future, we choose families, we choose the future,” he began. The second future was a different future to the first future: in the second future you also got a fucking big TV thrown in. The chancellor had first tried his line in junky-chic at the Conservative party conference last September and it hadn’t gone down particularly well then, either. A typical Osborne speech works best as aversion therapy and the Tories generally try to limit his public appearances. For the budget, they have to grin and bear it. Continue reading...

Central bank decision to raise interest rates after six years comes after months of impressive jobs growth, but IMF director warns of market ‘temper tantrum’The US Federal Reserve called time on an era of historically low interest rates on Wednesday.In its latest statement on the health of the US economy the central bank moved away from a pledge to be “patient” before deciding to raise interest rates. Economists expect that interest rates could now rise by the end of the summer, the first rise in more than six years. Continue reading...

Part of Chancellor’s speech claims living standards have completely recovered over course of parliament but metric he is using is not so clean cutIn a sharp rebuttal to Labour accusations that living standards have been squeezed over the course of this parliament, George Osborne said the following during his budget speech:“You can use the most up-to-date and comprehensive measure of living standards which is real household disposable income (RHDI) per capita. In other words, how much money families have to spend after inflation and tax. Continue reading...

Chancellor says stability would be greatly threatened if Athens exited eurozone and defends UK joining Asian Infrastructure Investment BankGreece’s financial crisis and the recent plunge in oil prices pose real risks to Britain’s economy, the chancellor warned in his budget speech, even as he unveiled better than expected growth forecasts for the UK.

Chancellor also signals end of austerity before the end of next parliament in statement packed with pre-election policiesGeorge Osborne delivered a pre-election budget designed to herald a “comeback Britain” on Tuesday, announcing tax cuts for savers and first-time buyers but prompting accusations that the Tories would be forced to slash public spending to levels not seen since 1938.In an effort to woo voters in middle Britain just 50 days before the general election, the chancellor said 95% of taxpayers would not face any savings tax under his plans for a personal savings allowance. Drinkers were also given 1p off a pint of beer and drivers benefited from another freeze in fuel duty as the chancellor repeatedly stressed that his “economic plan” was working.Related: The Guardian view on George Osborne: the chancer chancellor | EditorialRelated: How was George Osborne’s budget performance? Our columnists' verdict Continue reading...

Guardian writers give their reactions to the chancellor’s pre-election budget statement Continue reading...

George Osborne has unveiled his 2015 budget today: here are the key pointsIn 2015 revised up to 2.5% from 2.4% in the autumn statement.Rowena Mason, political correspondent: This is good news for the chancellor but he is treading carefully when it comes to boasting about growth to make sure voters do not think his work is done when it comes to the economy. He therefore argues the sun has only just begun to shine.RM: This is helping Osborne as it means he will have lower interest on the public debt but he is still way below the 2% inflation target.RM: He says the money raised from the bank sale will be used to pay off national debt and not fund pre-election giveaways in a move that may disappoint Tories fighting marginal seats.RM: Osborne is now able to say his original target has been met of getting the national debt share falling by the end of the parliament – although it is still a year later than predicted in emergency budget in June 2010.RM: The massive fall in the surplus Osborne was predicting for 2018-19 means less opportunity for promised future hand-outs. It is an easing of his plans for austerity that may be designed to kill Labour’s argument that he was shrinking the state to size of 1930s.RM: This decision is a political trap for Ed Balls. Osborne poached the plan from Labour, which said it would be used to pay partly for the tuition fees cut.RM: Labour has made tackling tax avoidance a major campaign issue. This appears to be an attempt to put the Conservatives on the same page when it comes to stopping multinationals shifting profits offshore. However, yet more claims of raising money through cracking down on tax avoidance may be met with scepticism as they rarely seem to raise as much as expected.RM: This appears to undo a big tax rise on the industry in 2011 when the oil price was higher. He makes a political argument that this is only possible because the UK is still together - and could not have been afforded in an independent Scotland.Related: Osborne offers tax cuts and help-to-buy Isas in highly political 2015 budgetRM: There are big cheers from the Tory backbench for this one. It is a tangible cut to red tape that will make a difference to some of their core voters. The abolition of employer NICs for under 21s and self-employed is a bid to boost employment further.RM: A beer duty cut had been widely expected but it is also cheer for wine, whisky and cider lovers - for voters across the drinking spectrum.RM: Osborne has frozen or cut petrol duty for so many budgets in a row it would have been impossible for him to put it up this time.RM: This had been widely trailed - originally a Liberal Democrat policythat the Conservatives have tried to adopt and take credit for since going into coalition. Repeatedly raising the threshold from £6,475 to £11,000 in successive budgets has also been criticised for failing to do anything for the very lowest earners who are already exempt from income tax.RM: This is the rabbit out of the hat. It is a small-c conservative policy to reward saving will please the Tory faithful and give activists something new to talk about the doorstep but it’s not a eye-catching as some may have been hoping for. Continue reading...

A demonstration organised by the Blockupy movement to protest against the policies of the European Central Bank began after it officially inaugurated its new headquarters on Wednesday morning in Frankfurt, Germany. Thousands of protesters took part while riot police equipped with water cannon established a wide security perimeter around the ECB site Continue reading...

Minutes of the March MPC meeting showed members are now concerned that a persistently strong pound could keep inflation well below the Bank’s 2% target for a prolonged periodA strong pound has increased the chance of a prolonged period of very low inflation, leaving the Bank of England in no hurry to raise interest rates, its senior policymakers suggested.

Thinktank says easy money is building up fresh financial stability risks and urges governments to do more to shore up recoveryAbnormally low inflation and interest rates are building up new risks for the global economy, a leading thinktank warned on Wednesday, as it called on governments to play a greater role in shoring up the recovery.

Office for National Statistics said average earnings, excluding bonuses, grew at an annual rate of 1.6% in the three months to JanuaryEarnings growth for Britain’s workers has slowed, undermining George Osborne’s hopes of stoking up the feelgood factor in the runup to May’s elections.On the day the chancellor delivers his pre-election budget, official figures showed that while unemployment has continued to fall rapidly over the past three months, wage growth has faltered. Continue reading...

George Osborne will try to single out workers as the main winners from the budget. But the reliance on low-paid jobs means many will not benefit from a rise in personal allowancesTories and Liberal Democrats will describe today’s budget as a triumph for working people. The chancellor George Osborne will say there have been many triumphs over the last five years, from boosting the living standards of pensioners to cutting corporate taxes, but he and his Lib Dem opposite number Danny Alexander will single out workers as the main winners.The claim hangs by two threads. First is a boom in jobs that has defied most predictions. The second is the £10,000 income tax threshold, which is due to rise to £10,600 after April and may even top that should the coalition agree on an even bigger tax giveaway.Related: Budget 2015: what we know already and what we can expect Continue reading...

The chancellor, George Osborne, delivers his final budget of the coalition government on Wednesday and his performance in the House of Commons is expected to follow a tried and trusted structure. The Guardian's economics editor, Larry Elliott, talks us through what to expect in the 2015 budget. Just watch out for the rabbit Continue reading...

Supporters believe fully automated luxury communism is an opportunity to realise a post-work society, where machines do the heavy lifting and employment as we know it is a thing of the past

Allegations of a cover-up at Scotland Yard show that the British are as prone to malfeasance as any other nationIt just doesn’t compute. Almost every day the news is filled with stories that look to me like corruption. Yet on Transparency International’s corruption index Britain is ranked 14th out of 177 nations, suggesting that it’s one of the best-run nations on Earth. Either all but 13 countries are spectacularly corrupt or there’s something wrong with the index.Yes, it’s the index. The definitions of corruption on which it draws are narrow and selective. Common practices in the rich nations that could reasonably be labelled corrupt are excluded; common practices in the poor nations are emphasised.Related: Police watchdog to investigate claims Met covered up child abuseRelying on the World Bank to assess corruption is like asking Vlad the Impaler for an audit of human rightsRelated: Westminster child sex abuse claims: missing pieces remain in inquiry jigsaw Continue reading...

Here are six key graphs to consider as George Osborne presents his latest spending and savings plans, and growth forecasts, in his pre-election budgetGDP up 0.5%: recovery is on track & plan is protecting Britain from the economic storm. 2.6% growth in 2014 fastest of any major economyZero-hours workers earn nearly £300 a week less than permanent employees http://t.co/HOjzFOj7Nn Continue reading...

The deputy prime minister, Nick Clegg, tells Phoebe Greenwood that he and chief secretary to the Treasury Danny Alexander have agreed to the Budget due to be presented to the Commons on Wednesday by the chancellor, George Osborne. The Lib Dem leader says the coalition's last Budget before the general election will make the tax system fairer. Clegg will not be drawn on whether he will offer Osborne a pat on the back this time around

The economic dynamics that are driving a growing gap between the two currencies are unpredictable and chasing higher US yields could be a mistakeThe US dollar is hitting new 12-year highs almost daily, while the euro seems to be plunging inexorably to below dollar parity. Currency movements are often described as the most unpredictable of all financial variables; but recent events in foreign-exchange markets seem, for once, to have a fairly obvious explanation – one that almost all economists and policymakers accept and endorse.French President François Hollande, for one, has ecstatically welcomed the plunging euro: “It makes things nice and clear: one euro equals a dollar,” he told an audience of industrialists. But it is when things seem “nice and clear” that investors should question conventional wisdom. A strong dollar and a weak euro is certainly the most popular bet of 2015. So is there a chance that the exchange-rate trend may already be overshooting?If the dollar continues to rise, US economic activity and inflation will weaken Continue reading...

We have to face the facts: our vast assets in fossil fuels may become worthless. It’s yet another reason to keep it in the groundFor over 200 years, modern civilisation has been built on fossil fuels; now climate science says we must phase out fossil fuel pollution in just a few decades. That’s a colossal challenge – especially if we are to keep anything resembling current lifestyles while also ending the poverty that blights the lives of more than 1 billion fellow human beings.We are already seeing a significant shift in thinking. The Rockefeller Foundation is divesting from coal and tar sands. Oxford University is considering similar action. And the Bank of England is analysing the impact on financial systems of fossil fuel investments becoming “stranded assets” – in other words worthless – if the world gets its act together on climate change.Related: Ed Davey backs divestment from 'very risky' coal assets Continue reading...

Disgruntled rightwingers or disillusioned generation, we must recognise the importance of their grievancesUnder the scorching Rio de Janeiro sun and only metres from the famous Copacabana shoreline, even the most committed of Sunday’s demonstrators seemed to give in to the indolence of the place, with an often surreal result: a handmade placard calling for the president’s impeachment in one hand, a refreshing caipirinha in the other.And even if this did not feel like your usual carefree Sunday stroll down Copa’s Avenida Atlântica, it was nowhere close to the enraged and politically conscious crowd that shook the country just over two years ago.As in the European south, Brazil is about to be trapped by the unrelenting demands of global capitalRelated: Brazil: hundreds of thousands of protesters call for Rousseff impeachment Continue reading...

As the May election draws nearer, a Post-Crash Economics society poll shows how voters struggle with concepts like GDP, quantitative easing and deficit

We will not see a crash in the bond market unless central banks tighten monetary policy very sharply or there is a major spike in inflationThe prices of long-term government bonds have been running very high in recent years (that is, their yields have been very low). In the United States, the 30-year Treasury bond yieldreached a record low (since the Federal Reserve series began in 1972) of 2.25% on January 30. The yield on the United Kingdom’s 30-year government bond fell to 2.04% on the same day. The Japanese 20-year government bond yielded just 0.87% on January 20.All of these yields have since moved slightly higher, but they remain exceptionally low. It seems puzzling – and unsustainable – that people would tie up their money for 20 or 30 years to earn little or nothing more than these central banks’ 2% target rate for annual inflation. So, with the bond market appearing ripe for a dramatic correction, many are wondering whether a crash could drag down markets for other long-term assets, such as housing and equities. Continue reading...

Greco-German relations reach new low, as Greek finance minister faces criticism over giving-the-finger video clip from 2013The Greek prime minister, Alexis Tsipras, has been invited to Berlin during a new low in Greco-German relations, after the Greek finance minister, Yanis Varoufakis, was forced to deny “giving the finger” to Germany in a two-year-old YouTube video.The German leader, Angela Merkel, invited Tsipras for his first visit to Berlin since he came to power in January on an anti-austerity platform that has led to clashes with Greece’s creditors, including Germany.@myrovolos No editing on my video. And if you watch it, he references the finger also for Argentina. @MarcusSchwarze pic.twitter.com/E77Nb7C4Qi Continue reading...

Proportion expecting higher output and orders smaller than in 2014, but British firms more optimistic than counterparts in other major economies, says MarkitUK businesses are looking forward to a buoyant 2015 despite jitters over the outcome of the general election and the impact of the stronger pound on the recovery.The optimistic outlook in Britain is in contrast with much of the world – with the exception of the eurozone, where a growing number of firms that expect this year to be better than the last.

Its contents have not only changed but have expanded greatly since the price of a ‘typical’ shopping basket began being record in 1947 to help calculate inflationWhat’s in, what’s out? It’s time for the annual reshuffle of the shopping basket used to measure inflation in the UK, almost 70 years since it was first compiled.

The chancellor promised many things in the 2010 ‘emergency’ budget. How close has he come to delivering?When George Osborne delivers what could be his last budget on Wednesday, just weeks before the election, it will be a time to look forward: the chancellor’s annual day in the spotlight will set the tone of the Tories’ campaign, and perhaps even lay the groundwork for a future leadership bid.But lest we get too swept along by the theatrics of the occasion, and the practised rhetoric of this consummate politician, it’s worth comparing his record over the past five years with the task he set himself in the “emergency” budget of 2010.On prosperity being shared by “all sections of society”, the chancellor's record is woeful Continue reading...

The chancellor will be trumpeting jobs, growth and helo for families in his budget speech - and his opponents will have their ammunition readyGeorge Osborne will fire the starting gun on the 2015 general election campaign on 18 March when he delivers his sixth budget since becoming chancellor in May 2010. All budgets are political but pre-election budgets are the most political of all, offering one last chance to grab the headlines with some eye-catching measures.Back in 2010, the chancellor pledged to sort out Britain’s budget deficit in one parliamentary term and wean the economy off its dependency on debt-driven growth. Although things have not gone according to plan, Osborne has a political narrative and will stick to it. Here are five statements from the Chancellor to look out for on Wednesday – and the likely counterpunches from the government’s opponents.Incomes per head are the same now as in 2006, and business investment has fallen for the past two quarters Continue reading...

Academic heads see 59% pay increase while lecturers decry secrecy at the topA pay increase for university vice-chancellors of nearly 60% in the last two decades cannot be justified by their performance in the job, research suggests.University heads have seen their salaries soar during recent years to an average of £260,000, with some receiving packages worth more than £400,000 a year. The salary levels have been criticised by lecturers’ unions, the Commons public accounts committee and business secretary Vince Cable. Now a study by Brighton University, which looked at the remuneration between 1998 and 2009 of 193 vice-chancellors leading 95 UK institutions, has uncovered a real-term pay increase of 59%. On average, vice-chancellors received pay awards that were four times those of lecturers and the differential has widened over time. Continue reading...

Spokesman for German chancellor says issue of Greece’s economic future is about more than two nations as Syriza government battles to avoid ‘Grexident’The spokesman of the German chancellor, Angela Merkel, has denied a “private feud” has broken out between Berlin and Athens, as the radical Syriza government battles to avoid leaving the single currency – a risk euro-watchers have dubbed “Grexident”.

Central bank lowers rate by one point, continuing easing cycle begun in JanuaryThe Russian central bank has cut interest rates by one percentage point, sending a strong signal that it sees the rapidly declining economy as a more serious worry than high inflation.The bank cut its main interest rate to 14%, continuing an easing cycle that began in January when it unexpectedly cut the rate by two points. Continue reading...