Economics | The Guardian

Exclusive: Rates of 33% to 39% being tested as Treasury source says tax-raising plans are in complete disarray'Rachel Reeves is considering raising capital gains tax as high as 39% in the budget, the Guardian can reveal, amid a scramble to raise funds for crumbling public services.Treasury modelling being reviewed by the chancellor and seen by this newspaper shows officials are testing a range of 33% to 39% for capital gains tax (CGT). Continue reading...

She is losing the tussle between head and heart. The economy is better than it has ever been, but ordinary people don't feel itThe defining question in US politics was asked 44 years ago this month. One week before the 1980 presidential election, Ronald Reagan and Jimmy Carter squared up to each other for a televised debate. A former Hollywood actor, Reagan was also proving a lethal Washington aphorist. At the close, he spoke into the camera: Next Tuesday, all of you will go to the polls. You'll stand there in the polling place and make a decision." Watching at home were more than 80 million Americans. When you make that decision ... ask yourself: are you better off than you were four years ago?" Is it easier to buy things, he asked, is unemployment lower?A few days later, voters gave their answer, handing Reagan a 44-state landslide. Every presidential contest since has been framed in large part by his simple, deadly question. Ask it in the final stretch of this election and you get to the great mystery of why the race remains so close. Continue reading...

An oil price shock and economic downturn are among the likely effects of an attack on Iran's exporting capacityWhen Joe Biden last week said that his administration has been discussing" possible Israeli plans to attack Iran's oil industry in retaliation for Iran's ballistic missile attack, it left the world stunned. Notably because Mr Biden didn't reject these plans outright, in the way that he had the day before regarding a possible strike on Iran's nuclear sites. Oil prices jumped 10%, even though the US president walked back the remark the next day.The historian AJP Taylor wrote that wars are much like road accidents" in that they had profound consequences but did not necessarily have equally profound causes. Targeted Israeli strikes on refinery complexes may not do much more than win domestic applause. Bombing Kharg Island, the heart of Iran's oil-export operations, would cripple its economy. However, such a move might also drive up global oil prices and have an impact on American consumers just weeks before a crucial election. Continue reading...

Trio face one more round of voting by MPs before party members have their say on final twoThe prison system in England and Wales was teetering on disaster" when Labour came to power, James Timpson, the prisons minister said today.Speaking at his first Prison Governors' Association conference in Nottingham since he took on the role, Timpson said:It has not been easy to rehabilitate offenders in a system teetering on disaster.We have to take the tough decisions bringing changes to release to ease the pressure on our prisons. It was quite frankly a rescue effort. If we had not acted our justice system would have grinded to a halt - we would have faced a total breakdown of law and order.Unison said it has given notice to Perth and Kinross Council for strike action by members in schools and early years centres.The union, which is the largest local government trade union in Scotland, hopes targeting the action in Swinney's constituency will bring home to him the importance of finding a fair settlement" to the council pay dispute. Continue reading...

Rolling coverage of the latest economic and financial news, as UK gilt yields rise and water companies face paying 157m to customers

Democratic lawmakers accuse companies of shrinking product sizes while charging consumers the same priceIt's becoming a common experience for Americans going to the grocery store: your bag of chips seems lighter, your favorite drink comes in a slimmer bottle, and you're running out of laundry detergent more quickly than usual. And yet things are staying the same price.On Monday two Democratic lawmakers launched an attempt to get to the bottom of the phenomena, accusing three major companies, Coca-Cola, PepsiCo and General Mills, of shrinking the size of products while charging consumers the same price - a price-gouging practice known as shrinkflation". Continue reading...

BP CEO Murray Auchincloss has dropped a target to cut oil and gas output by 2030, reports Reuters

In letter to chancellor, Tesco and M&S are among firms warning tax could result in widespread store closuresMore than 70 retailers, including Tesco, Marks & Spencer and Ikea, are lobbying the chancellor, Rachel Reeves, for a 20% cut to business rates, warning that the property tax could force tens of thousands of shops to shut.In a letter to Reeves coordinated by the British Retail Consortium (BRC), executives are pushing the Treasury to introduce a retail rates corrector" on the levy, which is a property-based tax charged by local councils and imposed on businesses including retailers, pubs, factories and company offices. Continue reading...

Labour hopes the gathering will encourage a fresh injection of private money to drive its growth agendaThe former Google boss Eric Schmidt has been named as one of the high-profile executives attending the Labour government's first international investment summit.Schmidt, who was Google's chief executive from 2001 to 2011, is expected to play a prominent role at the summit in central London on 14 October, where he will take the stage in conversation with Keir Starmer. Continue reading...

Regeneration efforts in former coalmining communities have not led to enough job creationPolitics is hard because it invariably involves making choices between conflicting objectives. As Keir Starmer is discovering, the need to prioritise means you can't please all of the people all of the time.Labour wants faster growth, sounder public finances, decarbonisation, prosperity to be shared more evenly between the regions, tougher controls on migration and a reset of Britain's relationship with the EU. Doing all these things simultaneously is near to impossible. Continue reading...

Liam Byrne has warned the chancellor that extra levies on the rich are needed to halt the rise of the populist rightA failure by Rachel Reeves to back a windfall of wealth taxes" in her budget risks fuelling the rise of the populist right, a former Labour cabinet minister has warned.Liam Byrne, a senior figure in the New Labour government and chair of the Commons business and trade committee, said that the rise of Reform UK at the last election meant the chancellor and Keir Starmer must urgently consider raising funds to deal with inequality. Continue reading...

Rebuilding existing infrastructure is key for the government rather than rushed policymaking for new projectsThere is an air of panic about how to fix Britain. We need to move quickly, shift the dial and jump up the rankings of rich countries. Investment is needed in new stuff to make the UK modern and its services delivered on time.It's a political imperative that galvanised Boris Johnson and then propelled Liz Truss from obscurity to becoming an almost revolutionary prime minister. Continue reading...

Swansea West MP Torsten Bell says such a tax would not raise significant revenues'One of Labour's new MPs has defended the decision by the chancellor, Rachel Reeves, to rule out a wealth tax, claiming it would not have much of an impact.Reeves has previously rejected calls for the tax as a solution to what she says is the 22bn shortfall that is blighting public finances. Continue reading...

Rolling coverage of the latest economic and financial news

Huw Pill's comments come a day after governor Andrew Bailey raised prospect of more aggressive' cuts

Job creation unexpectedly accelerated in September as unemployment rate slipped to 4.1%American employers added 254,000 jobs last month in the penultimate jobs report before the US election, defying fears of a slowdown in the labor market.Job creation unexpectedly accelerated in September, while the headline unemployment rate slipped to 4.1% from 4.2% in August. Continue reading...

Andrew Bailey tells the Guardian the Bank could become a bit more aggressive' in cutting interest rates if news on inflation continued to be good

Pound reacts as Andrew Bailey tells Guardian borrowing costs could fall if inflationary pressures continue to ease

Conflict in the Middle East, a strike at US ports, problems at the Panama Canal ... a rush of problems could create a crisis for exportersWith a pandemic that upended global trade through lockdowns and travel restrictions still fresh in managers' minds, international supply chains are again under pressure.Shippers are facing myriad issues, from the conflict in the Middle East and drought in Central America to strike action in the US, and companies are finding it more difficult - and more expensive - to transport supplies. Continue reading...

Oil prices rose by more than 4% as Israeli troops moved into Lebanon and Iran launched missiles on IsraelAs Israeli troops moved into Lebanon and Iran launched a missile attack on Israel, the risk of a jump in oil prices that could trigger another global inflation shock appeared to be materialising.Oil prices rose by more than 4% to about $75 a barrel on Tuesday. Continue reading...

Rolling coverage of the latest economic and financial news, as UK factory growth slows and eurozone inflation dips below 2%

Former home secretary says the phrase stop the boats' was an error' and it was too complicated a problem to distil into a soundbite. This live blog is closedRobert Jenrick has used a campaign rally just outside the Conservative conference to paint the issue of migration in highly stark terms, saying his party will die" if it does not commit to quitting the European convention on human rights. (See 8.23am.)Speaking to supporters in a studio theatre at Birmingham Rep, Jenrick repeated his styling of the issue in Brexit terms, saying the choice was between the leave" of leaving the ECHR or remain" of staying in it, and that this was a chance to get migration done".This is more than just, leave or amend' - frankly, our party doesn't have a future unless we take a stand and fix this problem. It's leave or die for our party - I'm for leave.Foreign national offenders in our country,who we have struggled to deport because of our membership of the European Convention on Human Rights - that's the issue I was raising.What is the biggest challenge we face as a party?Our biggest strategic challenge is the fact that the average age above which you are more likely to vote Conservative than Labour is now over 60. Continue reading...

Rolling coverage of the latest economic and financial news

Nevada, once known for its low living costs, has seen house prices soar and rents climb - can Trump take advantage?

Exclusive: Harris Poll for Guardian finds Democrat put forward four of top five most popular economic proposals

The economy is one of the election's major issues - but do you know which policy was put forth by which candidate?

Nationwide says yearly rise in house prices increased by 3.2% in September putting the average home at 266,094

Research concludes Labour warnings of tough budget may have sapped optimism about the economyUK business confidence has dropped to its lowest level since the general election, as firms grow more pessimistic about the economic outlook.Amid fears that the Labour government's warnings of a tough budget in October have hurt the economy, the latest Lloyds Bank Business Barometer has found that business optimism weakened this month to its lowest level since June. Continue reading...

Neither an Osborne-style handbrake or a Truss-style brick on the accelerator will do. Success depends on changing fiscal culture

The renewal Britain desperately needs requires borrowing and optimism. Isn't that what we voted for?John le Carre, who taught at Eton for a time, once said the trouble with that school was that it taught people to win, but not to rule.Now, as my Greek master used to say, one should beware of generalisations. Nevertheless, in the case of two recent Old Etonian prime ministers, I think le Carre's observation was spot on. I refer, of course, to David Cameron's monumental misjudgment in calling the 2016 referendum that landed us with the mounting cost of Brexit. And to Boris Johnson's role in that fiasco, not least in wrecking Theresa May's attempt to save something from the ruins by staying in the customs union, if not the full works of the single market. Continue reading...

Anura Kumara Dissanayake wants a better deal from the IMF to reduce suffering during the country's punishing debt crisisSri Lanka is at a historic juncture. Faced with its worst economic crisis since the Great Depression and having defaulted on its external debt for the first time, the country recently saw unprecedented protests demanding systemic change. The former president Gotabaya Rajapaksa was literally chased away in 2022, as protesters stormed his residence and swam in his pool. The political parties and their offshoots that have ruled the country since independence are unravelling. Take Anura Kumara Dissanayake. He polled just 3.8% of the vote during the previous presidential election in 2019. This week, he was sworn in as president.The new president belongs to the Janatha Vimukthi Peramuna (JVP) party and leads the new centre-left National People's Power (NPP) coalition. The JVP engaged in two major insurrections in the early 1970s and late 1980s, which resulted in the loss of tens of thousands of lives - mass violence was committed by both the JVP and the state. But the party has come a long way from its mix of revolutionary Marxist-Leninism and Sinhala ethno-nationalism, having moved into the centrist mainstream. From its roots in the rural south of the country, the party remoulded its base in the suburbs and small towns and even wooed the middle classes by taking up the issue of corruption. Its electoral capture of state power was contingent on the unprecedented economic crisis, as it waited patiently for the political winds to turn. Continue reading...

S&P 500 index of major US companies registers near 34% gain on year ago amid expectation of interest rate cutsA fall in US inflation expected to pave the way for further cuts in interest rates pushed stock markets to record highs on Friday.Ending a week of gains that began when the Chinese authorities approved a huge economic stimulus package, the S&P 500 index of major US companies soared above 5,750 to register a near 34% gain on a year ago. Continue reading...

Exclusive: Rachel Reeves said to have dismissed concerns about policy, even though some claim it contains basic errors'

The chancellor has signalled that she may change some of the government's fiscal rules in her speech. What are they - and what could that mean?Rachel Reeves is considering changes in next month's budget to the government's so-called fiscal rules, which govern how much it can spend.The changes are aimed at paving the way for billions of pounds more investment in the UK economy, to help decarbonise the economy and reboot growth. Continue reading...

Readers respond to an editorial about the chancellor dismissing a return to austerity in her speech to Labour conferenceYour leading article was right to highlight the challenge that the chancellor faces in demonstrating fiscal responsibility while reviving the economy (23 September). As it pointed out, the London School of Economics published a report in January - of which I was a co-author - that made a compelling case for an increase in annual public investment of about 26bn per year, equivalent to 1% of GDP, to jolt UK productivity and economic growth out of its rut. This would pull the UK out of bottom place in the G7 league table for public investment, and would promote confidence in private investors that having skin in the game would mean the government would provide supportive policies to ensure healthy long-term returns.Our report made a further case that the strongest returns would be secured from green investment that accelerates the transition to a sustainable, inclusive and resilient economy by tackling even more effectively damage from climate change, biodiversity loss and other environmental degradation, including air and water pollution. Continue reading...

Welfare politics | Economic growth | Jam tomorrow | Cleo Sylvestre | Class sizesOnly toffs can afford nannies (The right calls it the nanny state'..., 23 September). So for the rest of us the jibe nanny state" is irrelevant and should be barred. What we need are supportive parents, and many are insufficiently resourced to provide fully for their children. So we need the maternal" - alias welfare - state rather than the current Thatcherite austerity ill-fare one.

Andy Haldane says there should be cause to pause' amid Treasury fears policy will not raise any money

Saudi Arabia is reportedly ready to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output

Chancellor hopes to open up more spending headroom in budget by arguing changes could drive up growthRachel Reeves is pushing for the UK's tax and spending watchdog to upgrade its national growth forecasts to reflect the economic boost Labour says can be achieved from its blitz of planning reforms.In a development that could open up additional spending headroom for the chancellor before next month's budget, the Treasury has held talks with the Office for Budget Responsibility to try to persuade its officials that unblocking the planning system could drive up growth. Continue reading...

Democratic nominee says she is better equipped to manage US economy and says rival made promises he did not meet'Kamala Harris sat for her first solo interview as the Democratic presidential nominee on Wednesday, laying out her plan to boost the middle class and condemning her rival, Donald Trump, on his comments over abortion.During the interview with MSNBC's Stephanie Ruhle, which was held in Pittsburgh, Pennsylvania, the vice-president painted Trump as a candidate focused on the rich at the expense of the middle class, and herself as better equipped to handle the economy. Continue reading...

Democratic presidential nominee fleshed out economic vision for middle class and small businessesMillions of Americans are struggling to make ends meet, Kamala Harris has said, as the Democratic presidential candidate fleshed out the economic agenda she hopes to adopt in the White House.Conceding that the cost of living in America is still just too high", the vice-president argued this was true long before" the Covid-19 pandemic ravaged the global economy, and she took office with the president, Joe Biden. Continue reading...

Exclusive: Watchdog may conclude that emigration of wealthy individuals could actually cost Treasury revenueKeir Starmer's promised tax crackdown on non-doms could yield no extra funds for the Treasury, leaving a 1bn hole in the government's planned spending for schools and hospitals.

Forecast upgrades UK to joint second after US but it is still expected to have highest inflation among G7 countries

Stephen Timms, DWP minister, says cut to winter fuel payments could encourage more pensioners to claim pension creditIn an interview with Sky News, Wes Streeting said waiting lists would be demonstrably lower" than they are now. He said:By the next general election, waiting lists will be demonstrably lower because I know that's how I will be judged, how the prime minister will be judged, how the government will be judged - people will judge us by our actions, not just our words ultimately.Advances in genomics and data mean the healthcare of the future will be more predictive, more preventative and more personalised than ever before.Detecting from birth a child's risk of disease so we can act to keep them well; spotting cancer earlier, saving countless lives; treating patients with targeted medicines.If the wealthy are told to wait months for treatment, they can shop around. But working people can't.And if they pay top dollar, the wealthy can be treated with cutting-edge equipment and technology. But working people can't. Continue reading...

This year's party conference is taking place in a city where Covid and austerity have led to high levels of economic inactivity

As the budget looms, where the party stands on investment in the UK economy, workers' rights and moreFor a second year running, corporate Britain descended on Liverpool for Labour's annual conference, in an event so packed with executives that some insiders joke the socialist gathering has developed into a full-blown Davos on the Mersey".Like last year, the exhibition and conference fringe had sponsored events, lounge areas and advertising from exhibitors including Gatwick, National Grid, Ikea and Specsavers. This year, however, business leaders were looking for clues about how Labour will govern after July's election landslide. Continue reading...

Rolling coverage of the latest economic and financial newsUK mortgage rates continue to fall, even though the BoE left Bank rate on hold last week.Data provider Moneyfacts has reported that the average 2-year fixed residential mortgage rate today is 5.43%, down from 5.45% yesterday Continue reading...

Central bank's governor warns consumers not to expect a return to near-zero rates

Trading relationships at breaking point' because of delays and costs, garden centres and nurseries warnExporters of plants and flowers from mainland Europe are turning their backs on supplying Britain as painful" new Brexit border checks are putting some trading relationships at breaking point", garden centres and nurseries have warned.The Horticultural Trades Association (HTA), which represents garden retailers and growers, said long-held links between British nurseries and EU suppliers were now being put under strain because of the delays and costs associated with the new border processes. Continue reading...

The People's Bank of China announces a host of policy support measures but some experts fear they may not be enoughChina's central bank unveiled its strongest suite of economic stimulus measures since the start of the Covid pandemic, underlining the difficulty it faces in reviving an economy grappling with a prolonged property crisis and strong deflationary pressures.Governor Pan Gongsheng said the People's Bank of China will cut the amount of cash that banks must hold as reserves - known as reserve requirement ratios (RRR) - by 50 basis points. The People's Bank of China will also cut a key policy rate by 0.2 percentage points to 1.5%. Continue reading...