Rate is unchanged in September, raising questions over next Bank of England decision on interest rates

Basic pay outpaces inflation for the first time in almost two years, but fall in vacancies suggests jobs market is cooling

Wages outpace inflation for first time in almost two years, driven by growth in City of London

Ministers likely to be discussing 7.9% increase rather than 8.5% by choosing triple-lock figures selectively

UK stuck between weak economic growth and risk of persistently high inflation, says thinktankThe government has no room for unfunded pre-election tax cuts despite having pushed through a colossal" 52bn a year stealth raid on household incomes on Rishi Sunak's watch, the Institute for Fiscal Studies has warned.Britain's foremost economics thinktank said the dire state of the public finances meant that attention-grabbing tax cuts risked stoking inflation, leading to higher Bank of England interest rates and a lengthy recession. Continue reading...

Rolling coverage of the latest economic and financial news, as Huw Pill warns against declaring premature inflation victory

Huw Pill raises possibility of interest rate rise, saying war between Israel and Hamas may affect oil priceThe Bank of England has more work to do" to ensure inflation is brought back under control, Threadneedle Street's chief economist Huw Pill has said.Raising the possibility of an increase in borrowing costs from the Bank, Pill said the fact that the headline measure of the cost of living was now falling was not enough to claim victory. Continue reading...

Fall from 6.7% in August signals prices are still rising as higher cost of oil feeds throughHeadline inflation eased again in September, official figures are expected to show this week, while pay growth is slowing.Economists polled by Refinitiv expect the Office for National Statistics (ONS) to say annual inflation fell slightly to 6.5% in September from 6.7% in August. However, that is still well above the Bank of England's 2% target. Continue reading...

Rightmove says 0.5% rise is smallest for time of year since financial crisis 15 years ago as higher interest rates hit homeUK house prices are rising at the slowest rate for this time of year since the 2008 financial crash, according to new data that highlights the impact on the housing market of higher interest rates.The average new asking price rose by 0.5% in the month to 7 October to 368,231, but it was the smallest post-summer bump since the 2008 crisis, according to property website Rightmove. Continue reading...

The failure of the Conservative party's flagship project of levelling up is a huge opportunity for LabourDiminished by outsourcing, impoverished by Westminster-imposed austerity, and constrained by one of the most centralised polities in the world, local government in England has endured a miserable first quarter of the 21st century.Levelling up, the Conservative party's response to the regional discontent exposed by the Brexit referendum, contrived to add insult to injuries already inflicted. Too often amounting to a top-down, pork barrel exercise, it required local councils to participate in Hunger Games-style competitions for Whitehall largesse. Many wasted millions of pounds on bids, only to be told that London says no". The various pots of money released in any case failed to compensate for the cuts to council funding from 2010 onwards. Continue reading...

Development minister's comments at World Bank summit in Marrakech acknowledge effect of aid budget cutsBritain has to rebuild its reputation as a global leader in providing assistance to developing countries after the damage caused by the decision to slash the aid budget as part of post-pandemic spending cuts, the development minister, Andrew Mitchell, has admitted.Speaking at the annual meeting of the World Bank in Marrakech, Mitchell - who led a backbench revolt against the decision to abandon the government's commitment to spending 0.7% of national output on aid - said it was vital that the UK played its part". Continue reading...

Just like the Yom Kippur war 50 years before, the current conflict represents a grave threat to an already fragile global economyHalf a century ago a surprise attack on Israel by neighbouring countries marked the start of the Yom Kippur war - an event that signalled the end of the long postwar boom and ushered in a period marked by higher inflation and rising unemployment.So it was with a degree of trepidation that finance ministers, development ministers and central bank governors from around the world gathered in Marrakech last week for the annual meetings of the International Monetary Fund (IMF) and the World Bank. Nobody needed reminding of what happened half a century ago. Continue reading...

The loss of a national asset that would have aided levelling up' shows how little Rishi Sunak is really committed to long-termismOne of the many whoppers to emerge from the recent Conservative party conference was Rishi Sunak's claim that our Brexit freedoms make us ever more competitive".When I was at school, freedom" was used in the singular; but these days, as Cole Porter wrote, anything goes. There are promises of freedoms" all over the place. Continue reading...

Economics is a religion where rhetoric persuades voters to believe bad policies can have good resultsPaul Krugman, the Nobel prize-winning economist, warned a decade ago against thinking about budget deficits in terms of bond vigilantes" and confidence fairies". He said politicians - mostly, though not exclusively, on the right - argued that unless governments cut their deficits, bond vigilantes would pressurise them by forcing up interest rates. But if they did cut them, the story went, then the confidence fairy" would magically stimulate so much private spending that this would compensate for the loss caused by budget cuts. This fiction was heard across the EU, Britain and the US.Prof Krugman was right. Austerity didn't produce economic growth. The confidence fairy is as unreal as the one looking for children's teeth. But the political rhetoric has not gone away. Every major UK political party wants more economic growth, and the message is that to grow the economy means bearing down on the deficit. The Office for Budget Responsibility forecast in March that the UK economy would grow by about 2%. This looks wildly optimistic. The International Monetary Fund sees two years of about 0.5% growth. It is a dangerous delusion to think that economies can cut their way to growth. Continue reading...

Jamie Dimon says war in Ukraine compounded by last week's attacks on Israel may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships

In an exclusive interview, Akinwumi Adesina, head of the African Development Bank, says the outlook is good for a continent with the workers of the future and the best investment opportunitiesAfrica holds the future workforce for the ageing economies of the west, according to one of the continent's leading financial figures, who also said it was time to ditch the myths around corruption and risk.In an exclusive interview before this weekend's World Bank meetings in Morocco, Akinwumi Adesina said there was a resurgence of belief in Africa's economic prospects and attacked negative stereotyping, adding that there was every reason to be optimistic". Continue reading...

The pursuit of stable government' could become a trap: there will be great pressure from the establishment to keep its privileges intactIn scary enough circumstances, stability" can be one of the most appealing words in politics. When a country has had years of political and economic chaos, as Britain has, who doesn't want life to be more stable? More consistency in the provision of public services, in people's incomes, in the behaviour of governments - things taken for granted in calmer times - becomes something which voters yearn for and which ambitious politicians promise.So far, Keir Starmer's Labour leadership has really been one long, sometimes ruthless exercise in creating and offering stability: for the party after the turmoil under Jeremy Corbyn, for the country after the collapsing policies of the Tories, and for 10 Downing Street, which most observers expect to soon be occupied by Starmer's solid, methodical, largely unchanging personality.Andy Beckett is a Guardian columnist Continue reading...

Chancellor rules out tax rises and vows to cut spending in autumn statement as borrowing rises up to 30bn more than forecast

Developing nations need equivalent of US Inflation Reduction Act, says Nobel prize-winning economistPoor countries should be provided with $300bn (246bn) a year from the International Monetary Fund to finance their fight against the climate crisis, the Nobel prize-winning economist Joseph Stiglitz has said.Speaking to the Guardian at the IMF's annual meeting in Marrakech, Stiglitz said developing nations needed their equivalent of the US Inflation Reduction Act - a package of grants and subsidies designed to promote green growth and jobs. Continue reading...

UK services sector lifts economy back to growth in August, but BoE policymaker Swati Dhingra warns that economy is flatlining

Swati Dhingra says economy has flatlined and millions of mostly young and poorer people could be affected if rates stay high

Kristalina Georgieva says fund had been conducting thinking the unthinkable' scenario-planning before Israel-Hamas war began

Rise in GDP fuelled by business services amid worries that impact of recent interest rate hikes yet to be feltThe UK economy returned to growth in August, as activity picked up after a worse-than-expected slump in July.A modest 0.2% rise in gross domestic product in August was driven by a jump in business services output that offset a downturn in manufacturing and the negative impact of the US film and TV writers' strike, which has closed down large parts of the British film industry. Continue reading...

Birkenstock to float in New York with market value of $8.6bn (7bn), as IMF/World Bank hold annual meetings in Marrakech

The recognition of Goldin's pay gap analysis is empowering for all of us, but depressingly, her gender is still more newsworthyA few years ago I took a class on the most influential modern economists. It was at an Ivy League institution in the US and dozens of old, white men and their theories made the syllabus. Claudia Goldin was the only woman. On the slide accompanying the lecture in which she was featured, her name was misspelled.On Monday, Goldin won the Nobel economics prize. After Elinor Ostrom in 2009 and Esther Duflo in 2019, Goldin is only the third woman to win, and the first to be honoured solo.Josie Cox is a journalist and broadcaster specialising in business, finance and gender equality Continue reading...

Bank's new president Ajay Banga urges faster action on providing debt relief but says there is no magic wand'

A call for growth from three veterans of the financial crisis rings hollowIt has now been 15 years since the outbreak of the global financial crisis, long enough for memoirs and professional accounts to start to appear. The process was kickstarted with the publication of Crashed by Adam Tooze in 2018, a much lauded first draft of history. A friend recounts being interrupted by a series of men in expensive suits while reading it in a coffee shop in Princeton shortly after its publication. They wanted to know whether they were in it - and, if so, how they came off. The people involved have an eye to their legacies.That may include the three authors of this book, which attempts to apply the lessons of the crisis to current problems. Each has a different perspective. One, Mohamed El-Erian is president of Queens' College, Cambridge and chief economic adviser at the financial giant Allianz. The book recounts how his former employer, the investment management firm Pimco, gamed out the unlikely scenario of Lehman Brothers collapsing in a disorderly fashion, leaving them well positioned to reap rewards for their clients when that actually happened. Another, Michael Spence, is an academic who went from a Nobel prize in economics in 2001 to a position with the private equity firm Oak Hill Capital and a senior fellowship at the free market Hoover Institution. The third, Gordon Brown, is the most familiar. As prime minister, he hosted a G20 summit in London at the height of the crisis in March 2009, convincing the gathered powers to flood financial markets with cash" to the tune of $1.1tn. Continue reading...

With company chiefs in attendance and an endorsement from Mark Carney, shadow chancellor sought to demonstrate economic competenceAt every turn in Labour's annual conference in Liverpool, there are signs of big business on manoeuvres. Exhibition stands for Google, Ineos and Specsavers; slick videos for Amazon and Uber, fringe events sponsored by Deliveroo and Goldman Sachs, while even the parliamentary lounge - a retreat for MPs from the throng of 16,000 delegates - was sponsored by Lloyds Banking Group.Labour was keen to demonstrate economic credibility by basking in the presence of company bosses. For business leaders, it was a chance to check out a potential government in waiting, with many commenting on the marked contrast with the Conservative conference in Manchester. Continue reading...

Labour leader says party has plan to get Britain building again' after security breach where protester threw glitter on him at start of speechLabour has published fresh details of how the community policy guarantee (see 9.43am) will work.On community policingOn Starmer, told that after Reeves' reassurance over economy, his speech designed to paint a picture of hope' & it emotive rather than a big policy drop'> the word cloud on what Starmer's about peppered with don't know and even nothing'. This his chance to hammer home values Continue reading...

Markets surge on relief that bond yields are falling, while gas prices jump following reports that damage to Finland-Estonia pipeline could be deliberate

Britain faces fairly subdued' growth and persistent' inflation, global economic health check finds

Once, Dorling was viewed as a radical. Now his writing on inequality simply seems prescient. He discusses poverty, politics, and how we reached such a parlous stateWhenever I do a potted biography of Danny Dorling, geographer, author, crusader, I miss the late Dawn Foster, thinking of her going through his bibliography in the office ahead of meeting him, saying: Fuck, I can never read all this." His first book, published nearly 30 years ago, had the arrestingly dry title Area Cartograms: Their Use and Creation. Then, in 2010, something changed: well, the government changed, austerity was born and Dorling became, in public, the radical geographer that academic colleagues - first at Bristol, then Leeds, then Sheffield, then for the past 10 years at St Peter's College, Oxford - must have always known him to be. Starting with Injustice: Why Social Inequality Still Persists in 2010, he would write at least one book a year and sometimes as many as three, on justice and equality, until 2018, when he published Peak Inequality. Spoiler: we were not at the peak, but that's not what he meant.I meet him in Greenwich, south-east London, where he is between meetings at a conference on inequality. He has a new book, Shattered Nation: Inequality and the Geography of a Failing State. The picture he draws is delineated carefully through appalling statistics: over the first five years of austerity, the poorest fifth of people in England lost, on average, 11% of their income, while the richest fifth lost nothing. There are now twice as many food banks in the UK as there are branches of McDonald's. The country [is] moving towards a minarchy, or night-watchman state, with minimal power over the rich and minimal support for the poorer of its citizens," he writes. Continue reading...

Cost of repaying loans is 15% of income and likely to be higher after this year's rate hikes, as fund predicts GDP growth of 1.2% next year

Business will welcome Labour's message of stability, but it may be too little, too late for our ailing health and education systemsThere was a distinct lack of rabbits out of the hat in Rachel Reeves's speech at the Labour party conference. Setting up a commission to investigate dodgy deals during the Covid-19 pandemic and tightening up government use of consultancies and private jets played well to conference, but will raise just a few billion pounds - a negligible figure.Instead, Reeves concentrated on ramming home the key messages of the leadership: stability, security and, more than anything else, growth. It is certainly a message voters are in need of hearing after one of the most tumultuous periods in British economic history since the global financial crisis. It is also a message that business probably wants and needs to hear after yet another U-turn on transport infrastructure in the shape of the abandoning of the Birmingham-to-Manchester leg of HS2.Josh Ryan-Collins is associate professor of economics and finance at the UCL Institute for Innovation and Public Purpose Continue reading...

Shoppers search out deals in September and sunnier weather lifts sales of ice-cream and burgers

Credit card spending figures show shift towards saving as retailers report dip in visitsCash-strapped Britons are cutting back on eating out and reining in on buying takeaways to save up for the expensive Christmas season splurge.The amount spent on going out to restaurants plunged 10.8% month on month in September, a significant slowdown compared with the decline of 5.8% registered in August, according to the latest UK consumer card spending figures from Barclays. Continue reading...

Rachel Reeves' plans for stable growth contrast favourably with the Tories' record of wasteful, corrupt and inept administrationIt's the economy, stupid. That was the message from Rachel Reeves, the shadow chancellor, to her Conservative opponents in her speech to Labour's party conference. Ms Reeves is not a showy politician. Her style is to be all substance, and her message was that she is capable and decent. This is smart politics. The Conservative party has proved to be incompetent in its stewardship of the economy just when the issue topped the political agenda.Ms Reeves set out her party's stall by promising to boost business investment, build homes and ease planning rules - especially around green industries - to spur growth. Often seen as a hard-headed pragmatist, the shadow chancellor played on her party's heartstrings with a call for a Labour government to rebuild public services and create jobs. She also hit home by creating dividing lines with the Tories by contrasting her plans for stable growth with the Conservatives' record of wasteful, corrupt and inept administration. The biggest cheer was for her proposed anti-corruption commissioner to recover money lost to fraud during the pandemic. Continue reading...

Carney says it is beyond time we put her energy and ideas into action' in video shown to Labour conference after shadow chancellor's speechThis morning Sharon Graham, the Unite general secretary, told the Today programme that she wanted Labour to be more ambitious. Restating an argument that she made in an Observer interview at the weekend, she said:Whilst I think Rachel is doing a good job, I don't think we're going get this sort of growth that they're talking about quickly. We haven't had high growth since the 1970s.And so what I'm saying is that we need to look at the economy differently. We need to do some big ticket ideas. And the renationalisation of energy is one of those ideas. It is absolutely affordable and Labour needs to act more like a 1945 transformative government rather than being so timid.I'm under no illusions about the scale of the task that I will face if I become chancellor of the exchequer next year.The public finances are in a dire state, growth is on the floor, public services are on their knees.My feeling about them is that they don't expect Labour to support independence in Scotland, but they do want us to show an empathy towards those who do support independence.I think that we need to gain a hearing from ex-SNP voters, I think that's going to be very important indeed if we're going to build our support and win the seats that we need at the next election.It looks increasingly as if Scottish Labour will deliver seats to build a UK Labour majority in the next parliament after the election. I think importantly, in return, a Labour government, should it be formed, must then deliver to Scotland and the Scottish people ahead of the Holyrood elections in 2026. And that's got to be the basis, in my view, of our appeal and of our project.I'm very clear that for Labour as a whole to strengthen its appeal in Scotland we need to present a convincing economic growth plan to benefit the whole of the UK including Scotland, and that's something the SNP can't do. Continue reading...

Ex-Bank of England governor's backing for shadow chancellor shows how far Labour's economic message has travelled

Shadow chancellor says in Labour conference speech that next election will be fought on economic issues

Harvard professor becomes only the third woman to win the prestigious prize

Joe Biden's Inflation Reduction Act spurred similar efforts worldwide, but care must be taken when targeting subsidiesIndustrial policy is back. It is back with a vengeance in the US, where for decades the dominant ideology and policy minimised government efforts to influence the structure of the economy. Now, in contrast, we have the Infrastructure Investment and Jobs Act, the Chips and Science Act, and the Inflation Reduction Act, all with significant industrial policy components.And what happens in the US doesn't stay in the US. Other countries, similarly seeking to preserve and enhance their industrial bases, have responded with comparable measures. The question is whether the return of such government-led efforts should be welcomed. Continue reading...

Shadow health secretary interviewed by Guardian editor-in-chief Katharine Viner at Labour party conference in LiverpoolQ: You oppose the Rwanda policy because you don't think it will work. If the supreme court rules it is legal, and deportations start and it is seen to be working, would you still reverse it.Yes, says Starmer. He says it is the wrong policy. It is very expensive, and it only affect only a small number of people. And the policy does not deal with the problem at source. Continue reading...

Cautious Labour approach at conference has risks yet something more transformative may raise concerns about trust

At the fund's annual meeting this week in Morocco, ambitions for climate and debt relief may be overwhelmed by events - againLast week's turmoil in the global bond markets will be playing on the minds of finance ministers and central bank governors when they gather in Marrakech this week for the annual meetings of the International Monetary Fund and the World Bank.After the triple shocks of the Covid pandemic, the war in Ukraine and the surge in inflation, the mood may be less febrile than it was a year ago, but few if any of those travelling to Morocco - which suffered a devastating earthquake last month - would dare say that the crisis era is over. Most will be wondering what might go wrong next. Continue reading...

The PM's messianic zeal to dismiss consensus - over HS2, health, education - echoes the errors of the Thatcher yearsIt's all about him. That much was clear from Rishi Sunak's conference speech last week and the interview he gave the BBC soon afterwards. I want to change our country," he told his interviewer, before adding: I want to change the way we do politics."There was the occasional reference to the government, other members of the cabinet and the Conservative party, but mostly we found out what his plans were going to be after almost a year in No 10. Continue reading...

The Nobel prize winner and author of new book Economics in America argues economists must get back to serving societyWhen Angus Deaton arrived in the US four decades ago, he imagined he had something to say about economic inequality and how to tackle it that Americans might want to hear. Instead, the great economic minds of the time told him to shut up.The Scottish-born winner of the 2015 Nobel prize for economics struggled at first to understand why there was so little interest in a subject most European economists regarded as a central concern of post-war policies to reduce poverty and build more equitable societies. Continue reading...

Rolling coverage of the latest economic and financial news, as US non-farm payroll shows surge in hiring last month

Data comes as central bank seeks to guide the US economy to soft landing' to avoid a recessionThe US workforce added 336,000 jobs last month, much more than expected, as the world's largest economy remained resilient in the face of higher interest rates.The sharp acceleration in hiring saw non-farm payrolls rise during September by almost double the rate anticipated by economists. Readings for July and August were also revised higher, with 236,000 and 227,000 jobs added, respectively. Continue reading...

Persistently high interest rates have had chilling effect on consumer spending, says trade bodyThe World Trade Organization has halved its forecast for global trade growth this year in response to rising interest rates that have dented consumer spending power in the US, Europe and Asia.The 164-member trade body slashed its estimate from April that predicted the global trade in goods would grow by 1.7% in 2023, saying it needed to be scaled back to 0.8%. Continue reading...