Rolling coverage of the latest economic and financial news

Authority has debts of 1.8bn after years of local government funding cuts and has failed to find an auditorWarrington council's inability to find an auditor to sign off its accounts has led the credit rating agency Moody's to withdraw its monitoring of the authority, amid mounting concern about the broader crisis in local government funding.In a statement, Warrington borough council said Moody's Investors Service was no longer providing it with a credit rating, a crucial metric used by potential lenders to assess a borrower's creditworthiness. Continue reading...

Governments should use fiscal policies to atone for technology-related carbon emissions, urges report

Across the EU and US, strong anti-incumbency sentiment shows voters in west are unhappy with direction of travel

For 45 years, Britain has been blighted by Conservative ideologies that promised a path to prosperity, but achieved nothing of the sortThe Tory party in three weeks' time promises to be in a more ruinous, even life-threatening position than Labour was in the aftermath of the 2019 general election. Labour at least had a route to recovery after an epic defeat - to blend mainstream and centre-left opinion around a pragmatic programme for government, to eliminate all traces of antisemitism and to marginalise its toxic extremists. The question was whether its leadership, membership and trade union backers would have the capacity and want power sufficiently to pull it off. They have.Today's Tories and their blindly ideological press - which has had such an important role in reducing the party to the political carrion on which Nigel Farage's Reform now preys - has no such shared grasp of the task ahead. There is no longer a strong centre right existing as a coherent formation that could anchor such a recovery, or skilled politicians who might lead it. Instead, over this parliament the party has disintegrated into a babble of rightwing cults ranging from Trussite libertarians to National Conservatives" stressing the traditional virtues of family, faith and national community. The response to the desperate condition in which millions now live and the wider crises of stagnant productivity and investment, intensified by Brexit, is to blame immigration, working-class fecklessness and high taxes - even if those are moderate by European standards. Continue reading...

An improving economy was supposed to boost Sunak's campaign. But growth is flatlining, and there is little hope of an interest rate cut this weekConservative party members could be forgiven for believing that the economy had become their friend after the Liz Truss mini-budget debacle faded from view.Heading into 2024, there was an expectation of a return to growth. And the first three months of data showed that a bounceback from last year's recession was in train and that household disposable incomes were on the rise. Continue reading...

Keir Starmer and Rachel Reeves will need skill and stealth to make progress amid financial and institutional adversity How to reverse austerity? Scrap some of the tax-relief schemes worth 204bnEveryone wants the Labour leadership to be more honest with the electorate about how it will pay for policies designed to drive growth, tackle the climate crisis and improve living standards.Without a jolt to the economy from tens of billions of pounds of extra spending, they argue, growth will remain sloth-like, only inching ahead, and the Labour project will be doomed. Continue reading...

Concerns set out over supply of materials with military applications, and impact of subsidies on global marketChina's role in providing assistance to Russia in its war against Ukraine, and its harmful overcapacity" in the production of cheap goods, have been targeted by G7 leaders despite misgivings from Germany.On the second day of the annual summit, being held in Puglia under the Italian chair, the US drove home a 36-page communique that condemned Chinese subsidies for products such as solar panels and electric cars which it said were leading to global spillovers, market distortions and harmful overcapacity ... undermining our workers, industries, and economic resilience and security". Continue reading...

Rolling coverage of the latest economic and financial news

Senior economists have complained to BBC about Laura Kuenssberg comparing Whitehall spending to taking out a credit cardPoliticians have often struggled to explain how governments borrow money to fund their spending. The implications of higher or lower borrowing are also difficult to assess when the figures run into hundreds of billions of pounds.The temptation is to simplify the arguments by comparing the nation's finances to a household budget or a credit card. The shadow chancellor, Rachel Reeves, has talked about the Conservatives maxing out the credit card", and Keir Starmer and Rishi Sunak have also used the analogy. Continue reading...

Rolling coverage of the latest economic and financial news

Dutch hauliers say facilities at border posts where some trucks are held for up to 20 hours are inadequate

Labour would restore economic growth, and crack down on the waste and fraud that ran rampant under the Tories

Instead of cutting rates, central bank keeps them between 5.25% and 5.5%, where they have been for nearly a yearThe Federal Reserve held interest rates at a two-decade high on Wednesday, as it awaits more signs of inflation cooling.Officials at the US central bank expect to cut rates just once this year, according to projections released on Wednesday after their latest two-day meeting. Continue reading...

UK GDP failed to grow in April, as wet weather hit retailers and construction firms, while US inflation has slowed to 3.3%

Move, to be applied provisionally from July, would trigger duties of more than 2bn a year

GDP figures are not strong enough to help in general election but not weak enough to prompt interest rate cut

April growth figure 0% as Britain held back by poor retail and construction activity amid wet weather

Standards of living lag behind G7 countries US, France and Germany, as 50th summit approachesA failure to invest in the UK's main regional cities has held back economic growth and meant standards of living lag behind the US, France and Germany, according to a report before the 50th G7 summit in southern Italy this week.The Centre for Cities thinktank said the major difference between the UK and its main rivals was the low level of productivity in cities such as Manchester, Birmingham, Glasgow, Sheffield and Nottingham. Continue reading...

First cuts not expected until late summer or early autumn despite evidence jobs market is cooling

Latest UK labour market report shows signs of cooling, as jobless rate hits highest since 2021

International cooperation that allowed poorest countries to close gap with wealthiest has fractured, says report

Bank of England will want to delay rate reduction until level of pay increases eases

Thirteen leading businesswomen back Labour's shadow chancellor and her commitment to a genuine plan for economic growth'In our lifetimes, we have seen incredible progress for women - in business, politics and all across society. We have been part of that change, and been supported and inspired by women who went before us.There are, however, telling gaps in the area of economic policymaking. There has still been no woman governor of the Bank of England, or permanent secretary to the Treasury. Damningly, the post of chancellor of the exchequer is more than 800 years old - and every one has been a man. Continue reading...

Investors are rattled after far right parties make gains in European elections, while analysts at JP Morgan say a Labour win would support UK stocksThe euro continues to bob around a one-month low this morning, at $1.0763 against the US dollar:French banks are being hit by the political uncertainty created by Emmanuel Macron's snap election.Investors are assessing Macron's gamble in attempting to reassert his authority after voters shifted en masse to the Far-right during the EU elections, in both France and Germany. The euro has dropped sharply against the dollar, to $1.074, the lowest in a month amid the surprise turn of events. Continue reading...

Antonio Soprano says he was told to walk to a McDonald's for food as there was none at SevingtonAn Italian lorry driver has described the UK's new post-Brexit controls as a mess" after his lorry was held at a government-run border post for more than two days.Antonio Soprano, 62, who was stopped while bringing plants into the country from central Italy, said he was offered nothing to eat during his 55-hour ordeal and instead was told by border officials that he should walk to a McDonald's more than a mile away to get a meal. Continue reading...

Underlining his credentials as a creative thinker, the economist and Labour candidate for Swansea West offers a hopeful vision of the nation's future - spurning leftwing utopianism as well as tackling 14 years of creeping declineAs proposed national rallying cries go, perhaps this one lacks swagger. But its modesty is deliberate, as the economist and Observer columnist Torsten Bell's surprisingly hopeful new guide to halting this country's crumbling decline explains. Chest-beating political promises to put the Great back into Great Britain are, he writes, really just distracting from the real issue, which is that the British are exceptional all right - only not in a good way. We stand out from our pack of medium-sized, richer-than-average countries for our low productivity, chronic wage stagnation and American-style high inequality (but sadly without the higher growth of the US).We have truly world-beating housing costs, higher than any other Organisation for Economic Co-operation and Development (OECD) country but Finland, but magically still deliver less living space per capita in return than famously cramped New York; we boast, if that's the word, fewer hospital beds than all bar one other OECD nation. Continue reading...

TUC says only Costa Rica had similar increase in first quarter as ONS data expected to show further rise in AprilUnemployment is rising in the UK at the fastest pace among 38 of the world's richest countries, according to an analysis by the Trades Union Congress (TUC).In a release a day before official labour market figures are expected to show another increase in joblessness in Britain, the union body looked at data from the Organisation for Economic Cooperation and Development (OECD) covering the first three months of this year. Continue reading...

Experts believe Beijing will retaliate with measures that could hit European exports from cheese to cognacThe EU is expected to notify China that it will impose tariffs on electric vehicle imports this week, firing the starting gun on a potential summer trade war with Beijing.A formal pre-disclosure of tariffs could happen as early as Wednesday, after a lengthy investigation into China's state subsidies for its car manufacturing, which is predicted to conclude that massive support continues to be concentrated on the EV sector. Continue reading...

First men's summer tournament since pandemic plus favourable European kick-off times will boost long-struggling UK pubs and bars

Data shows that when Americans' preferred party is in the White House, they're more likely to boast of a booming economy - even if it's untrueWhen he delivered his State of the Union address in March, Joe Biden framed the state of the American economy as a true success story, pointing to the historically low unemployment rate and falling inflation as signs of the country's robust recovery from the early days of the coronavirus pandemic.I inherited an economy that was on the brink. Now, our economy is literally the envy of the world," the US president said. And it takes time, but the American people are beginning to feel it." Continue reading...

Tax bombshell' claims undid Labour in 1992 but the Conservatives' catalogue of chaos' and the PM's actions mean fears are misplaced

With Brexit fast becoming a tragedy, Keir Starmer needs to forge a closer relationship with EuropeOn the day before the 1992 general election, the bookmakers at Ascot were offering odds of 6-1 against John Major's Conservatives winning. I was with the economist Roger Bootle, and we agreed that Labour, well ahead in the polls, was bound to win. It was pointless betting on the Tories, even at those odds. When the results came in we kickedourselves.When I told Lord Kinnock, the Labour leader at the time, this story years later, he jokingly said I should have telephoned him from Ascot. He said that on driving back from canvassing in south Wales the previous week he and his wife, Glenys, had had an uneasy feeling that, notwithstanding the polls, the election was slipping away" from them. Continue reading...

Resolution Foundation report suggests parties are dodging the economic challenges facing the countryRishi Sunak's pre-election claim that the UK economy is now going gangbusters" is undermined today by a report which argues that growth since 2010 has been unspectacular" and has been the result of a rising population, caused principally by high levels of immigration.The study, Life in the Slow Lane, from the politically independent Resolution Foundation, will add to the consensus among economists and academics that the fundamentaleconomic problems and challenges facing this country are being dodged by the parties during the general election campaign. Continue reading...

Neither Labour nor Tories have committed to axing already announced rises, Resolution Foundation warns

The ruling ANC is on a pioneering path to transform the Covid grant into a scheme that aims to combat povertySouth Africa is facing the most dramatic political shift since the end of apartheid after the African National Congress lost its majority in the general election of 29 May. Weeks of difficult negotiations between the ANC and its rivals on how best to form a governing coalition are expected.One commitment that unites most parties - including the incumbent ANC and its biggest rival, the Democratic Alliance - is to maintain or increase income support for adults, which includes monthly Covid payments to the poorest households. Continue reading...

Figures show unexpected resiliency of job market as Fed keeps interest rates high try to tamp down 3.4% inflationThe US economy added 272,000 jobs in May, a sign the labor market remained strong amid high interest rates, the Bureau of Labor Statistics announced on Friday.The number of May jobs was far higher than the 190,000 economists had expected and topped April's gains, when a revised 165,000 jobs were added to the economy. The report offered a mixed view of the jobs market. The unemployment rate rose to 4% for the first time since January 2022, up from 3.9% in April. Continue reading...

Average price of a home dipped by 0.1%, says Halifax, bringing cost of typical property down to 288,688

Institute for Government calls for credible vision' to tackle crisis engulfing NHS, prisons and local councilsPolitical parties must be honest with Britain about the immediate crisis of collapsing public services facing the next government, according to a hard-hitting report that lays bare the crisis affecting the NHS, criminal justice system, prisons and local government.In a direct challenge to Rishi Sunak and Keir Starmer to come clean with voters, the Institute for Government thinktank said most state services are performing worse than at the time of the 2019 general election, and substantially worse" than when the Conservatives first took office in 2010.NHS waiting times had been the longest on record, and targets for elective care, A&E and cancer treatment have not been met since 2016. The number of people waiting for more than 12 hours in A&E has tripled to 1.5m since 2019.People are struggling to see their doctor, despite more appointments being delivered than ever. The numbers of patients per GP had risen by 18% since 2015.Prisons were at a crisis point. Capacity would be used up shortly after the election, resulting in further early releases of prisoners and delayed court cases. Even so, funding was set to fall by 5.9% each year relative to demand in the next parliament.In the last six years, there had been six times the number of section 114 (bankruptcy") noticed filed by local authorities than in the previous three decades, forcing cuts to key services. Residents in those areas face rising council tax bills and vastly reduced services such as libraries, waste collection and adult and children's social care. Continue reading...

Rishi Sunak failed during TV debate to make clear how he had calculated Labour's spending policies, says OSRThe UK's statistics watchdog has warned the Conservatives over Rishi Sunak's claim that Labour would raise taxes by 2,000, saying it failed to make clear how the figures were calculated.In a rap over the knuckles for the prime minster, who made the claim during a leadership debate on ITV on Tuesday evening, the Office for Statistics Regulation (OSR) said the case demonstrated how all party campaigners needed to offer the public a transparent view of tax and spending policies. Continue reading...

Exclusive: ONS official's remarks, not intended as comment on overall state of the economy, were later used by SunakThe UK's statistics watchdog has closed an investigation into remarks made by an official about the economy going gangbusters" that were cited by Rishi Sunak.It was looking into the comments made by chief economist of the Office for National Statistics (ONS) last month amid concerns that politicians could misuse economic data in the run-up to the election. Continue reading...

European Central Bank lowers borrowing costs for first time in almost five years, but won't pre-commit to further cuts

ECB reduces rate to 3.75% across eurozone, putting it ahead of US Federal Reserve and Bank of EnglandThe European Central Bank has eased the pressure on borrowers across the eurozone after cutting its main interest rate for the first time in almost five years.Citing a sustained fall in inflation, the ECB said its deposit rate would be cut to 3.75% from a record high of 4%, putting it ahead of the US Federal Reserve and the Bank of England, which have yet to cut interest rates. Continue reading...

Exclusive: After ruling out rises in VAT, income tax or NICs, shadow chancellor said to be weighing other options to raise cash in an autumn budget

A 0.25 percentage point cut to main lending rate is forecast amid growth in Germany, Italy and SpainThe European Central Bank is expected to cut interest rates for the first time in almost five years at its meeting on Thursday after a survey of private sector businesses showed activity expanded at the fastest pace in a year while inflation cooled.The latest HCOB purchasing managers' index (PMI) data, compiled by S&P Global, showed private sector output expanded in most economies covered by the euro currency after growth in Germany, Italy and Spain was only marginally offset by a downturn in France. Continue reading...

All you need to know about Rishi Sunak's tax claim, from who costed the figures, and how, to why it's so controversialTax dominated the first head-to-head debate between Rishi Sunak and Keir Starmer with the prime minister making an eye-catching claim about what Labour's plans would involve.Sunak claimed independent Treasury officials" had costed Labour's policies and they amount to a 2,000 tax rise for everyone". Starmer dismissed the claim as absolute garbage". Today, Labour's frontbench have gone further, accusing Sunak of telling a big desperate lie". Continue reading...

Small and medium-sized firms badly hit as huge drop in apparel sales helps fuel 18% slide in all-non food exportsUK exports of clothing and footwear to the EU have dived since Brexit, according to a new study that shows the extent to which complex regulations and red tape at the border have deterred firms from sending goods across the Channel.Exports of clothing and footwear sold to EU countries have fallen from 7.4bn in 2019 to 2.7bn in 2023, helping fuel an 18% slump in sales of all non-food goods exports to countries covered by the EU single market, according to the consultancy Retail Economics and online marketplace Tradebyte. Continue reading...

Firms that employ millions in manufacturing, hospitality and construction already struggling to plugs gaps after BrexitThe battle between the Conservatives and Labour to show they are tough on migration risks damaging sectors that are vital to the economy, industry figures have warned.Rishi Sunak unveiled a Conservative pledge to cap visas awarded to migrant workers on Monday, promising bold action to reduce immigration" amid pressure from a Reform party reinvigorated by the return of Nigel Farage as leader. Continue reading...

Labour and the Conservatives want to reduce national debt, but Resolution Foundation says promises detached from reality'Britain's next government will need to fill a shortfall of up to 33bn in the public finances unless it is prepared to push through a fresh round of severe austerity measures, a thinktank has warned.The Resolution Foundation said the debate between Labour and the Conservatives over the funding of specific pledges was detached from reality", with election promises based on cuts that would be hard to deliver. Continue reading...