Economics | The Guardian

Britain can't afford the tax cuts announced in the budgetAs the dust settles on the budget, it's time to reflect on the real task facing anyone trying to govern Britain.The tax cuts announced are paid for with big spending cuts to come: unprotected departments (like councils and prisons) face 13% (19bn) cuts by 2028-29. Most people think delivering them is impossible, because they've seen the state of public services. But let's focus on why they would also be terrible for our democracy and politics. Continue reading...

Well-intentioned moves are afoot to overhaul the machinery of government'. But it's the policies that are the problemIt was Dr Johnson, not Boris Johnson, who declared patriotism is a last refuge of the scoundrel". Some years have passed since Johnson, Shirley Williams and I were guests of an institute outside Moscow. We were there to explain what we hoped were the wonders of western democracy - the freedom, the politics and the economic policies - to Russian politicians and academics who were glorying in having shaken off the constraints of the Soviet Union.Alas, the glory days were not to last. Along came the so-called oligarchs, and then Putin. The ancient Greek word oligarkhia meant rule by the few". But in the post-Soviet world it came to denote a group of people who stripped the nation of its prime economic assets and became very rich - more plutocrats than oligarchs. We all know the consequences: the collapse of the Soviet Union evolved into rule by dictatorship, with the plutocrats fleeing abroad from Putin. Continue reading...

How should economists address the climate crisis? By focusing not on growth but on the redistribution of wealthWhatever the policy differences between the government and the opposition, both are committed to economic growth (It's not the economy, stupid: wellbeing is the real vote-winner"). What neither has addressed is how this is consistent with the need for policies that adequately address the climate crisis. Claims that green growth or technological innovation will resolve the problem have been shown to be spurious, or will take too long to stop us exceeding sustainable temperature levels.My generation in the global north has had all the pluses life can offer - free education, full employment, affordable housing, good health, good pensions and no wars. My concern is that we will be considered to have been not just the luckiest but also the most short-sighted and selfish generation in history. Ifgrowth is not the answer, we have to consider how we define the role of economics in creating a sustainable future and this has to include a central role for the redistribution of wealth. As Richard Layard shows in his article, a more equal society is also a happier one.

Shadow chancellor will tell high-profile financial audience that mission-led' governments must take a lead in turbulent timesThe shadow chancellor, Rachel Reeves, will pledge to embark on a decade of renewal" if Labour is returned to power at the next election.Speaking at the annual Mais lecture in London on Tuesday, Reeves will tell an audience of bankers and financial executives that she will create a more secure and stable backdrop for private sector businesses to plan and invest in the UK. Continue reading...

The greater the wait until the election, the more reassurance Labour must provide. And that weakens its future mandateWe're at the fag-end of this government, but it's going to burn for a while longer yet. Those who hoped it might finally be stubbed out of its misery on 2 May were set straight by Rishi Sunak on Thursday, when he killed off speculation that he might add to the clutch of local elections scheduled for that day by calling a general one. The long wait for this government to be flattened under the voters' collective shoe goes on.We've lived through fag-end administrations before, but this one is more toxic. Back in the dog days of the John Major era, it was bonking backbenchers and brown-envelope cash for questions that pointed to the political terminus. This time, the rot is graver.Jonathan Freedland is a Guardian columnistDo you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

Kristalina Georgieva invokes John Maynard Keynes as she says fostering fairer economy would raise living standards ninefoldThe head of the International Monetary Fund has warned that the only way to boost global economic growth over the next century is by tackling soaring inequality to achieve a ninefold increase in living standards.Kristalina Georgieva said world leaders had a responsibility to future generations to build an economy that dealt with global heating, deployed AI technology responsibly and slashed elevated levels of inequality. Continue reading...

Talks offer huge opportunities' but come at a delicate time after Ankara held up Sweden's accession to NatoThe UK and Turkey have started talks about a post-Brexit free trade agreement targeting the service sector of the economy.The UK government said there were huge opportunities" for British businesses in exporting to Turkey, as one of the fastest-growing economies in the Organisation for Economic Co-operation and Development group of nations, with trade between the two countries worth 26bn in 2022. Continue reading...

There are fears in the City of an exodus of bosses to the US, where they reckon they'll be paid the big bucks they surely deserveEvery now and then, somebody lets the fat cat out of the bag. In January, it was the turn of Chris O'Shea, the chief executive of Centrica (the owners of British Gas), to say the unsayable about executive pay. His 4.5m pay package was impossible to justify", he said, so there's no point in trying to do that". In 2016, there was a Please, sir, I want some less" moment, when the then CEO of the Co-Op Group, Richard Pennycook, sought a 60% cut in his pay package as, he argued, his job had got simpler after a restructuring.But such episodes are unusual, and are often drowned out by the collective tutting and teeth-sucking of the top executive class. These admissions cause embarrassment and are not the story the business elite want to tell.Stefan Stern is co-author of Myths of Management and the former director of the High Pay Centre Continue reading...

Pharmacies, banks and pubs retreat from town and city centres knocked by failure of Wilko last yearAlmost 5,000 more chain stores were left empty last year - a rate of about 14 closures a day - as high streets were hurt by the failure of Wilko and the retreat of banks and pubs.Pharmacies were the biggest loser with 787 chain outlets disappearing - although many of these were Lloyds outlets which were taken over by independents. Continue reading...

Fighting deflation, a sinking property market and weak internal demand, Beijing has set itself a challenging goal in 2024Chinese leaders who have been predicting an end to the country's deflation would have been heartened by official statistics this week showing consumer prices had increased for the first time in six months.The news came as the ruling Communist party used its annual gathering in Beijing to declare the economy would clock up growth of around 5%" in 2024. However in his speech, Premier Li Qiang warned dutiful delegates they should not lose sight of worst-case scenarios and should be well prepared for all risks and challenges". Continue reading...

Chancellor's unfunded proposal would be work of many parliaments' and depended on growth of economyJeremy Hunt has admitted his unfunded proposal to scrap employee national insurance could take more than a decade, after conceding it would require a sharp increase in economic growth to avoid making cuts to public services.With the government under growing pressure to explain how the plan could be afforded, the chancellor told MPs on the Commons Treasury committee: It won't happen in one parliament, but it's a long-term ambition." Continue reading...

Human development report finds the pandemic, conflict, globalisation and populism have combined to disproportionately affect lower-income countriesThe gulf between rich and poor countries continues to grow, according to the UN, furthering the reversal of a 20-year trend where the gap steadily shrank until 2020.The latest human development report found that although each of the 38 OECD (Organisation for Economic Co-operation and Development) countries has recovered from the Covid pandemic, only half of the least-developed countries have done so. Continue reading...

CMA says government may need to step in to protect consumers from rising ground rents; watchdog intervenes to free over 500 households from problematic' ground rent clausesAlso today: UK ministers will publish legislation to quash the convictions of hundreds of post office operators who were prosecuted during the Horizon scandal, marking a significant victory for victims after decades of campaigning.The legislation on Wednesday will automatically overturn convictions of theft, fraud and false accounting that were handed down in connection with Post Office business during that period. It will cover prosecutions brought by the Post Office and the Crown Prosecution Service in England and Wales between 1996 and 2018.Although by far not good enough, 2023 ended better than what I had expected at the beginning of the year. Despite losing a lot of Yeezy revenue and a very conservative sell-in strategy, we managed to have flat revenues.We expected to have a substantial negative operating result, but achieved an operating profit of 268m. With a very disciplined go-to-market and buying process, we reduced our inventories by almost 1.5bn. With the exception of the US, we now have healthy inventories everywhere.Our ambition is to return to strong growth and continue our margin expansion, as reflected in our new mid-term guidance Continue reading...

Jim Chalmers says slide in iron ore prices and uptick in jobless rate mean budget will report a much smaller revenue upgrade than in recent years

Figures may seem positive at first glance but the broader picture for UK plc is still one of relative stagnation

Monthly increase of 0.2% after surge in high street and online spending offers relief for government

We're keen to hear from employers in Britain which job openings they have been having trouble to recruit for, and whyEmployers in the UK have cut back on hiring new staff, pushing the number of advertised vacancies down on the quarter by 43,000 to 908,000, while the unemployment rate rose unexpectedly to 3.9% in January from 3.8% in December, according to the Office for National Statistics.We're interested to hear from UK employers whether there have been vacancies in their companies they have been struggling to hire qualified staff for, and why they think that has been the case. Continue reading...

Independent owners are declining fast in a sector now dominated by big companies and private equity

Consumer price index rose at annual pace of 3.2% in February, up slightly from 3.1% the previous monthInflation ticked higher across the US last month as Joe Biden puts the economy at the heart of his re-election bid.The consumer price index rose at an annual pace of 3.2% in February, up slightly from 3.1% the previous month. Continue reading...

Exclusive: most renters surveyed by Harris Poll say the areas they live in have become so unaffordable they are barely livable'The American dream of owning your own home is dead, according to the majority of renters surveyed in a new poll shared exclusively with the Guardian, and the areas they live in have become so unaffordable they are barely livable".The poll, conducted by the Harris Poll Thought Leadership and Future Practice, asked survey takers to identify themselves as renters or homeowners, along with other demographic information. Those polled were asked their opinion on home ownership in the United States. For many, especially renters, the outlook is bleak. Continue reading...

Most employers are holding on to staff, but more people are either not looking or not available for work

Employers cut back on hiring new staff in three months to January as slowdown bites

Exclusive: Incoming UN summit president calls on governments to stay on track, as majority of global population go to the polls

Countries are placing a higher priority on resilience and security in the wake of the pandemic and as tensions growIn 2012, shortly before becoming China's top leader, Xi Jinping visited the Port of Los Angeles to discuss boosting trade. What then looked like a locus of cooperation has now become another site for suspicion as Sino-American relations remain tense. Last month, the Biden administration announced $20bn of funding for port infrastructure, much of it to replace cargo cranes that have almost all been made by a state-owned Chinese firm. The US is concerned because the sophisticated pieces of equipment manage information about containers and their contents, their origins and their destinations - and can be remotely programmed and controlled. It wants to restart domestic production of the cranes, which have not been made in the US for decades.The move comes amid a much broader economic rethinking: what the EU foreign affairs chief, Josep Borrell, last year described as a paradigm shift from the primacy of open markets to the primacy of security; from just in time' to just in case'". The pandemic was a wake-up call, forcing nations to scrutinise their supply chains, and ask whether they had sacrificed resilience for efficiency. The climate crisis is already affecting logistics: low rainfall in Panama has forced the authorities to limit vessels using the canal. Cyber-attacks by criminal actors are another concern.The Japanese port of Nagoya was put out of action by a ransomware attack last summer. But current conflicts and geopolitical dividesaredrivingthe changes. Continue reading...

Fears grow party is poised for another U-turn akin to ditching of 28bn green pledge as business groups call for pragmatismIn his pre-election budget last Wednesday, Jeremy Hunt rehearsed a new attack line against Labour, alongside familiar arguments on tax and spend: Keir Starmer's party would, the chancellor said, destroy jobs".Remarks fed to newspapers in advance of Hunt's moment in the spotlight talked of the 70 new burdens on employers" that Labour would impose. Continue reading...

Live, rolling coverage of business, economics and financial markets as exchange-traded funds help bitcoin rally above $71,800The biggest European stock markets are all in negative territory (with the smaller exception of Switzerland).The FTSE 100 in London is down by 0.4%, with mining companies the biggest losers.The FCA continues to remind people that cryptoassets are high risk and largely unregulated. Those who invest should be prepared to lose all their money. Continue reading...

Strong sales of Taylor Swift's 1989 (Taylor's Version) help format make an impact, as air fryers also join list

Former prime minister will tell thinktank the Treasury is in danger of retreating into comfort zone'Britain needs to be put on an economic war footing" if it is to break out of a vicious cycle of low growth, the former prime minister Gordon Brown will say on Monday.In a speech to the Institute for Government thinktank, he will call for the creation of a National Economic Council, jointly chaired by the prime minister and chancellor with a mission to deliver annual growth of 3%. Continue reading...

Unfunded pledges and election gimmicks - from Tories or Labour - are last thing Britain needsBefore his budget last week, Jeremy Hunt said he knew voters could see through gimmicks. And we are not going to do gimmicks on Wednesday". Fast forward and what did the chancellor offer? A tax-cutting budget where taxes were still actually rising, and the promise of more funding for public services grounded in a 20bn austerity drive.Having made very few new pledges that hadn't been leaked to the media, the most attention-grabbing promise Hunt made was to declare an ambition to abolish employee national insurance - an unfunded commitment worth more than 40bn; equivalent to the annual transport budget. Continue reading...

The PM's admiration for Washington's economic model may backfire amid looming US banking and stock market disastersOne of the consistent themes of the Conservative economic narrative is an admiration for the US and its ability to grow quickly. The way it has bounced back from the pandemic and how it has ridden out the impact of Russia's invasion of Ukraine should serve as a blueprint.A neoliberal Conservative analysis puts the emphasis on tech, innovation and a myth-like entrepreneurial spirit that the UK would do well to emulate. What it ignores is the way the US economy zips ahead on fantastical stock market valuations and off-balance-sheet accounting reminiscent of the years before the 2008 financial crisis. And how both these habits could bite back in a big way, much as they did in 2008, and pretty soon. Continue reading...

Bulgaria's eternal optimist' in favour with European finance ministers after first five-year stint encompassing Covid and UkraineThe head of the International Monetary Fund, Kristalina Georgieva, will run for a second five-year term after being nominated by a string of European countries to lead the global lender.The Bulgarian economist and champion of policies to tackle the climate crisis will be given the support of her home country, which said she had accepted the nomination for another term starting in September. Continue reading...

Layoffs climb sharply with last month's rate the highest of any February since 2009 but expert says job gains remain solid'Employers added 275,000 jobs across the US last month, as the labor market continues to grow at a clip in the face of the high interest rates.Job growth exceeded expectations of 200,000 on Wall Street in February and rose from the previous month's revised rate of 229,000. Continue reading...

Economists say making the policy an election pledge could cost 40bn, which is badly needed for health, education and elsewhereRishi Sunak has been warned against fighting an election on an unfunded plan to abolish employee national insurance amid projections the move could blow a 40bn hole in the public finances.As the pre-election battle on the economy between the Conservatives and Labour intensified, the prime minister was on Thursday under mounting pressure to explain how the measure could be afforded while public services were crumbling. Continue reading...

Rolling coverage of the latest economic and financial news, as economist warns OBR productivity forecasts are much too optimistic

A single man would gain 346 from tax cuts, compared with 279 for a woman and just 85 for the typical lone mother

The chancellor's 2p cut in workers' contributions has prompted suggestions the payments could be axed. What would that mean for you and your money?

Toughest outlook for public finances for 80 years means next government must find tens of billions in cuts or tax rises, says leading thinktank

Household incomes on course to fall despite national insurance cuts in budget, says Resolution Foundation

Critics say extra funding to key battleground constituencies proves government happy to ignore regional inequality'The phrase levelling up" may once have conjured a vision of northern towns and cities scarred by deindustrialisation - but Jeremy Hunt's budget suggested the government's definition now stretches to Buckinghamshire, Canary Wharf and Cambridge.In the section of his speech on historic underinvestment in our nations and regions", Hunt hailed new devolution deals for Surrey and Buckinghamshire. Continue reading...

Borrowing and stealth taxes fund 14bn giveaway, but public spending squeeze looms after election

Office for Budget Responsibility says national insurance and tax cuts will be paid for by average 8bn-a-year borrowing to 2028-29The chancellor will raise government borrowing to help fund a 2p cut in national insurance contributions from April, according to an assessment of the spring budget by the Treasury's independent forecaster.The Office for Budget Responsibility said the chief measures to pay for Jeremy Hunt's budget measures, including the cut in national insurance and a reduction in capital gains tax, would come from an average extra 8bn of borrowing in each of the years to 2028-29. Continue reading...

The Guardian's John Harris is joined by the former Conservative chief secretary to the Treasury David Gauke and the economist and Labour candidate Miatta Fahnbulleh to go through today's budget announcements Continue reading...

Headline cut to national insurance rate echoes measure taken in autumn statement, which made little impact on votersJeremy Hunt has spent weeks managing expectations over potential tax cuts in his spring budget, with Tory MPs desperately searching for ways to avoid election defeat as household finances buckle under a record tax bill and the cost of living crisis.As the chancellor's fiscal headroom shrank in the run-up to the budget, so did his plans for spending in areas such as housing and defence, as he promised he would not take any risks" with the British economy despite all the political pressure. Continue reading...

NI cut of 2p announced, along with new tax on vapes, end of tax relief for holiday lettings and more cash for NHS IT system

Chancellor's 10bn national insurance cut funded by scrapping non-dom' tax breaks is final major economic intervention before election

Use our interactive tool to see how you have been affected by the chancellor's tax and spending announcements Continue reading...

How Hunt's measures on tax, NI and benefits affect single people, couples and those receiving pensions in England, Wales and Northern Ireland Continue reading...

These latest tax cuts were not the gamechanger the Tories need before the electionJeremy Hunt is in favour of delaying the election until the autumn, and it showed. His second budget had all the hallmarks of a holding operation from a government hoping the summer will bring better economic news and leave open the possibility of another package of measures in six or seven months' time.Sure, there was the much-heralded cut in national insurance contributions, which formed the biggest chunk of a front-loaded 14bn stimulus package. Certainly, he took every opportunity to have a pop at Labour in a deeply political speech. This will be the last budget before the election, but it did not feel like the last roll of the dice for the government. Continue reading...

Rolling coverage of the latest economic and financial news

Jeremy Hunt said his budget measure will benefit 27 million people - here's how it will work