Economics | The Guardian

Economy is being anchored by labor market and businesses are boosting investment, potentially holding off a recessionThe US economy grew faster than expected in the second quarter as labor market resilience underpinned consumer spending, while businesses boosted investment in equipment, potentially keeping a much-feared recession at bay.Gross domestic product (GDP) - a broad measure of economic growth - increased at a 2.4% annualized rate last quarter, the commerce department announced in its advance estimate of second-quarter GDP on Thursday. The economy grew at a 2.0% pace in the January-March quarter. Economists polled by Reuters had forecast GDP rising at a 1.8% rate. Continue reading...

US economy remains robust despite the 11 rate rises the Fed has implemented - its most aggressive rate-rising cycle in 40 yearsThe US Federal Reserve raised interest rates to a 22-year high on Wednesday as it continued its fight against rising inflation.The decision to increase rates by a quarter-percentage point to a range of 5.25% to 5.5% comes after the Fed paused its rate-rising cycle last month. Continue reading...

Chancellor's refusal to publish forecast contributed to stock market jitters and run on poundTen months after former chancellor Kwasi Kwarteng's disastrous mini-budget, the public has for the first time been given the chance to see the Office for Budget Responsibility's autumn 2022 forecast on the state of the economy.The Government spending watchdog's pre-budget report was handed to Kwarteng on 5 September, days before he gave MPs details of his growth package, one of the worst-received Treasury measures in recent history. Continue reading...

As the cost-of-living crisis bites, unusual spending trends are emerging, like gambling with grocery money and splurging on Taylor Swift tickets. With a potential recession looming and uncertain times ahead, how are our budgets about to change?Senior business reporter Jonathan Barrett breaks down some surprising changes in our spending and Guardian columnist Greg Jericho reflects on the lessons learned from past recessionsRead more: Continue reading...

Exclusive: Coles and Woolworths have consistently expanded their profit margins in a cost-of-living crisis, outstripping their UK counterparts

Dame Alison Rose admitted to serious error in discussing Nigel Farage's relationship with Coutts with a BBC journalist.

Bill will need to be paid by the Treasury from current spending, hitting Whitehall departmental budgetsHigher interest rates will force the Bank of England to make a loss of 150bn from the sale of bonds bought to shore up the UK's financial system over the last 14 years - an increase from a 100bn deficit projected in April.The bill will need to be paid by the Treasury out of current spending, hitting Whitehall departmental budgets, after successive chancellors failed to set aside funds to cover the losses. Continue reading...

US Fed will also have to raise rates more aggressively than forecast, says Washington-based bodyInterest rates in the UK will need to stay higher for longer than previously forecast in order to tackle stubbornly high inflation, the International Monetary Fund has warned.The IMF's regular update on the state of the global economy singled out the US Federal Reserve and the Bank of England as two central banks that will need to raise official borrowing costs more aggressively than it assumed only three months ago. Continue reading...

Britain's earnings gap is growing as business services, finance and IT workers prosper, thinktank findsBig pay increases for highly paid workers in London and the south-east have masked real wage cuts across large swathes of the economy and led to a widening in the UK's geographical earnings gap, a leading thinktank has said.A study from the Institute for Fiscal Studies (IFS) found that while workers in some sectors - such as manufacturing, education and hospitality - had fallen in inflation-adjusted terms, there had been significant rises for those employed in the business services sector, the City and IT. Continue reading...

At least it makes a great statue Continue reading...

Britain's missing voice in a key global anti-poverty debate reveals how the country is fading into irrelevance on the world stageIn late Victorian Britain, splendid isolation" was celebrated as a testament to the nation's imperial strength. Today, seclusion from global events is not an indication of power but the world's indifference to Brexit Britain's inward turn. A decade ago, the UK would have been at the forefront of anti-poverty efforts. Now it offers the world neither money nor ideas. The upshot is that China, the EU and the US are part of the School Meals Coalition, led by developing nations to push for universal access to free school meals by 2030 as a response to rising hunger. Britain is nowhere to be seen.The coalition was at centre of debates at Monday's UN food summit in Rome. Rising global food prices have left much of the planet poorer. But the main UK parties avoid saying that the state can combat poverty. The Tory indifference to hardship in a cost of living crisis rests on spurious anti-government arguments. Sir Keir Starmer's crippling electoral caution means he won't back universal free school meals for state primary schools in England. It is political arrogance to think that Labour has a right to the support of progressive voters regardless of what the party says and does. Labour's Sadiq Khan knows what's at stake. The London mayor is offering the capital's primary-school children free school meals from this September. Continue reading...

New report suggests British economy almost stalled in July as consumers limited spendingThe pound has suffered its longest stretch of daily falls since the start of the Covid-19 pandemic amid growing speculation in the currency markets that a weakening economy will limit further increases in UK interest rates.With a new report released on Monday saying the UK economy almost stalled in July, sterling lost ground for a seventh day in a row against the US dollar - its worst run since March 2020. Continue reading...

UK private sector growth slowed to six-month low this month, while DHL workers have cancelled Gatwick strikes and other strikes are suspended

Make UK report says post-Brexit structural shift in trade is particularly hurting factories in north-west and West MidlandsFactories in England and Wales are seeing a downward trend in the share of their trade going to the EU, an analysis from the manufacturers' trade body shows.Make UK said that between Britain's divorce from the EU in 2020 and 2022, only Scotland and Northern Ireland increased their share of exports to the EU, leaving the majority of English regions and Wales suffering a decline in the proportion of sales going to the bloc. Continue reading...

A new push to offer free school meals across the globe won't end world hunger but it's a very good startDuring the pandemic the Manchester United footballer Marcus Rashford turned food into a hot political issue in the UK with his campaign for every child in a low-income family to be guaranteed a free school meal.Since then, things have moved on. The problems facing low-income families - not just in Britain but everywhere - have worsened owing to rising global food prices. Consumers in the western economies have seen the cost of their weekly shop rise sharply. Food bank use in Britain has surged as a result of a cost-of-living crisis that has seen grocery bills rise by almost a fifth in the past year. Continue reading...

Xi Jinping's 31-point strategy may not be enough to halt the economy's declineRishi Sunak and Keir Starmer are both putting faith in a five-point plan. Never knowingly undersold, China's government announced last week that it's going for a 31-point strategy.Last week, there were alarmed faces in Beijing at the news that its GDP had improved by just 0.8% in the second quarter of 2023, prompting a sense that China's economy needs a rapid boost. For the past few years, the private sector has been a target for high-profile crackdowns by the Chinese Communist party (CCP), worried that companies such as Tencent and Alibaba were enjoying too high a profile. Now, it says it wants to make the atmosphere for entrepreneurs bigger, better, and stronger". Continue reading...

After years opposing the blight of austerity, Starmer is embracing it as he embraced the failed dream of Vote LeaveIn its 13th year of Conservative economic stewardship, the UK has become, in the words of the Resolution Foundation thinktank, stagnation nation". But we should remember the conclusion of Edward Gibbon in his voluminous history of the decline and fall of the Roman empire: All that is human must retrograde if it does not advance."Yes, if there is one thing on which Rishi Sunak and Keir Starmer are agreed, it is that the British economy needs growth. It must advance. Continue reading...

Russia's end to Ukrainian grain export deal set to benefit local farmers during their fourth consecutive year of healthy harvests

Planned tube strikes next week called off after talks breakthrough; government borrows 18.5bn in June, third-highest June borrowing on recordAfter a small drop yesterday, average mortgage rates have ticked up again, despite a sharp slowdown in UK inflation to 7.9% and expectations that interest rates probably won't have to rise above 6%, as previously feared.The two-year fixed residential mortgage rose to 6.8% today from 6.79% yesterday, while the five-year fix edged up to 6.32% from 6.31%, according to Moneyfacts.I don't think it can end with this apology... It may not end for chief executive Alison Rose, in particular, and for the banking industry. You can't have what is essentially a kind of a fundamental utility type industry deciding who will say what and who's free to give political opinions and who isn't. It kind of strikes at the core of democracy and I don't think it can end here now.I mean, the big issue really is what Alison Rose knew about this, was this decision to de-bank Farage actually run by her personally, was she briefed about it, or was it taken at a lower level?It depends entirely on on how much she knew, and when. And the regulator, the Financial Conduct Authority, will be quite interested in the briefing that went on before the full story broke.Alison Rose's mantra has always been inclusive. Inclusivity is at the heart of our organisation. Continue reading...

The sector is facing many challenges, not least the cost of living crisis that could push the price of a pint to 7

Jeremy Hunt says government needs to keep fiscal discipline as it attempts to halve inflation

Warning from ex-governor adds to concerns about economy with Bank tipped to raise rate above 5%The Bank of England could plunge the UK into a recession by raising rates too far, the former governor Mervyn King has said.In a broadside a fortnight before Bank officials are due to meet to decide the next step for interest rates, Lord King said the signals from the credit markets in 2021 that indicated inflation was about to rocket were now showing that price growth was about to drop sharply. Continue reading...

Moscow criticised as concern grows about impact of climbing agricultural commodity prices on poorer countriesWheat prices have been climbing on global markets, just days after Russia pulled out of an agreement that guaranteed safe passage for ships carrying cereals through the Black Sea, reigniting fears of the impact on poorer, grain-importing countries, as well as on western nations dealing with stubbornly high inflation.Russia has carried out heavy air strikes on Ukraine's grain stores, as well as port infrastructure in the coastal city of Odesa after the Kremlin's decision to terminate the UN-brokered Black Sea grain initiative between Russia and Ukraine. Continue reading...

Small drops in average rates for two- and five-year fixed mortgages follow easing of inflation rate in JuneBorrowers received a glimmer of good news after average rates on new two- and five-year fixed mortgages fell for the first time since May.News of the small falls came 24 hours after it was announced that UK inflation fell further than expected in June, which immediately prompted speculation that the Bank of England would not raise interest rates by as much as previously expected. The pricing of fixed-rate mortgage deals is closely tied to expectations of future interest rate rises. Continue reading...

CMA says stores not stoking food inflation as it looks into competition on key categories such as milk and baby foodSupermarkets must make prices clearer, the UK's competition watchdog has said after finding that confusing labels were preventing shoppers from getting the best deals.Food retailers and their suppliers will be subject to a detailed investigation into competition in 10 product categories including milk, bread, and baby formula as part of efforts to ensure households benefit from competitive prices as cost inflation falls. Continue reading...

Premier Foods reports 21% rise in sales but pledges no more price rises this yearThe maker of Mr Kipling cakes, Oxo cubes and Bisto gravy granules has said it believes recent food cost inflation has peaked, and it is not planning any more price rises for its food products for the rest of the year.The news came as owner Premier Foods reported a 21% increase in sales in the first quarter of the financial year, compared with a year earlier. Continue reading...

Competition regulator tells business committee of significant change' in retailer's fuel pricingAsda's profit margins on fuel have tripled since before the pandemic, according to the competition regulator at a bad-tempered parliamentary hearing where the supermarket chain's co-owner repeatedly refused to explain its pricing strategy.Mohsin Issa declined to answer multiple questions on whether Asda had increased its profit margins on fuel since its takeover in 2021, prompting MPs on the business select committee to become increasingly furious as the retailer insisted it had not changed its strategy. Continue reading...

Rents jump by record 5.1% in a month as rental market struggles to meet demand from priced-out buyersBritain's housing market is expected to avoid a slump triggered by rising interest rates, despite a drop in house price inflation to zero in May, according to analysts.The Office for National Statistics said a decline in month-on-month growth from 0.5% in April to 0% in May meant the annual rate of house price inflation dropped to 1.9%. Continue reading...

FTSE 100 jumps and gilt yields tumble after larger-than-expected drop in UK inflation last month

Annual rate is still four times the government's objective but is below level expected by financial markets

Whether you are working or retired, a homeowner or business owner, here is all you need to know

From sugar to olive oil and holiday centres to pet products, how costs have soared

Annual rate back on downward path, which eases pressure on Bank of England

This online tool will help you discover what is contributing to your household's cost of living increasesInflation has been soaring in the UK, with people being hit by higher prices for everyday essentials.The latest inflation rate for the 12 months to June 2023 means that goods and services cost more than 7.9% more than they did a year ago - in most cases, surpassing any pay rises workers can expect to receive. Continue reading...

We routinely ignore the cost of events such as the Commonwealth Games or Formula One because of mythical benefits while fixating on the price tag of good social policy

Grocery price inflation has dropped to 14.9%, still painfully high, while over 2,000 companies collapsed in June

British drivers upgraded their cars often in the era of cheap lending - but that could change

IPPR report undermines Rishi Sunak's argument that larger wage settlements would be inflationaryHigher pay increases for public sector workers would not be inflationary, a leading thinktank has said.In a report undermining Rishi Sunak's central argument against larger wage settlements, the Institute for Public Policy Research (IPPR) said raising pay by 10% on average for public sector workers would not add significantly to inflation. Continue reading...

Gulf between rich and poor increases risk of climate breakdown as well as entrenches poverty, says letter to UN and World BankFailure to tackle the widening gulf between the world's rich and poor will entrench poverty and increase the risk of climate breakdown, a group of more than 200 leading economists have said.In a letter to the UN secretary general, Antonio Guterres, and the World Bank president, Ajay Banga, the signatories from 67 countries call on the two bodies to do more to reverse the sharpest increase in global inequality since the second world war. Continue reading...

Data shows the economy grew just 0.8% in the June quarter, down from 2.2% in the first three months of 2023China's economy expanded 6.3% in the second quarter from a year ago, falling short of market expectations as export demand remained tepid and sinking property prices sapped consumer confidence.Compared with a year earlier, China's GDP in the April-June period was 6.3% larger, the national bureau of statistics said on Monday, quickening from the 4.5% annual growth pace for the first three months of 2023. Economists had forecast growth to accelerate to 7.3%, according to a Reuters survey. Continue reading...

Critics note government estimates that suggest membership of CPTPP will add just 1.8bn a year to UK economy after 10 yearsThe business secretary, Kemi Badenoch, has signed off UK membership to a large Indo-Pacific trade bloc that the government argues will bring British businesses a step closer to selling to a market of 500 million people with fewer barriers.Badenoch signed the accession protocol for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in New Zealand on Sunday. Continue reading...

City economists predict annual rate will fall from 8.7% recorded in April and May but will still be higher than in eurozone

Rishi Sunak used just-go-for-it route in Covid crisis but Treasury and Bank of England now play with straightest of batsThe England cricket team are winning friends and admirers after adopting a style of play known as Bazball. Named after the side's coach, Brendon (Baz) McCullum, it is an aggressive, carefree approach to the game in which risks are taken with bat and ball. It doesn't always come off but, win or lose, it has made the England team a lot more fun to watch.Rishi Sunak is a cricket fan and in his early days as Boris Johnson's chancellor he was a strong advocate of an economic form of Bazball. This was early 2020 and, in truth, the Treasury and the Bank of England had no choice but to throw caution to the wind because a global pandemic was raging. Sunak borrowed more than any other peacetime chancellor so that furloughed workers still received wages. The Bank cut interest rates to a record low of 0.1% and pumped billions of pounds into the economy through its bond-buying programme known as quantitative easing. Continue reading...

This week's CPI figures look set to highlight a trend: that prices in the UK seem to rise faster than they do elsewhereThe UK has a longstanding problem with inflation. Since the 2008 banking crash, bouts of inflation felt across the world have sent prices higher in the UK than its G7 rivals.In July 2009, during the recession that followed the banking crisis, UK inflation was 3.1 points above the G7 average. Two years later, when recovery sent oil prices soaring, it stood about 2% above the G7 average. In March this year, however, it stood a full 3.5 points above the G7 level. Continue reading...

Exclusive: Labour leader urges left to care more about growth' and rules out spending vast sums of money'

The new round of austerity is guided by older voters' insistence on keeping their subsidies and tax breaks - can't they show some generosity?The Tory-voting baby boomer has some tough choices to make over the next year.Fearful that their accumulated wealth is being threatened by one economic shock after another, they could choose to support the government's return to austerity. Or they might consider sharing their lucky gains from the property market and a private occupational pension system that clearly benefits older generations. Continue reading...

Australian Airports Association tells parliamentary inquiry market dominance has allowed the two airlines to jack up profit margins

Strike action involving baggage handlers and check-in staff will inevitably" cause severe delays, disruption and cancellations, Unite union says

ONS finds one in 20 households have run out of food in the past and could not afford moreBritain's cost of living crisis is forcing more people to dip into savings to make ends meet, according to official figures showing renters are at the greatest risk of financial vulnerability.The Office for National Statistics said three in 10 people it surveyed were using savings because of the rising cost of living, an increase from a quarter of adults reporting this in late April. Continue reading...

Firms in Kent uncertain as government's strategy for checks from this autumn remains unclearEvery day, from early morning to late at night, lorries pull up at an inconspicuous-looking warehouse located just off the M20 near Lympne in Kent.Less than half an hour by road from both the Port of Dover and the Eurotunnel terminal at Folkestone, trucks loaded with fresh produce come to a facility run by the logistics company PML to get consignments of goods arriving from overseas inspected, cleared for customs and sent on their way. Continue reading...