by Pamela Duncan, Anna Leach, Carmen Aguilar García on (#6BDJ2)
New more-detailed ONS data on UK basket of goods shows how much staples have shot up since 2018The cost of making spaghetti bolognese for a family of four has risen to £10, up 15.6% in the last year alone, according to the most detailed government data yet published on rising pricesThe cost of ingredients for the nation’s most popular pasta dish rose by just 24p between 2018 and 2022 but has now soared to £9.98, a 20% increase since 2018. Continue reading...
Department is worst for publishing spending data, records show, with ministers apparently in breach of guidelinesTreasury ministers appear to have broken government guidelines by failing to publish details of their department’s spending for several months, and in some cases more than two years.Public records show the Treasury is the worst department in Whitehall for publishing key data on what its officials are spending public funds on, despite its role overseeing spending across government. Continue reading...
Expected hike in benchmark rate to a range of 5% to 5.25% could push US into recessionThe US is braced for an interest rate rise on Wednesday that could push the world’s largest economy into recession.The Federal Reserve is expected to announce another quarter of a percentage point rise in its benchmark interest rate, to a range of 5% to 5.25%. It would be the central bank’s 10th consecutive rate rise as it prioritises the fight against rising prices. A year ago interest rates were close to zero. Continue reading...
How could it come up with that decision given what it said in April and the new data we have seen since then?The Reserve Bank’s decision to raise the cash rate on Tuesday to 3.85% suggests a board completely lost to logic and we should be thankful that soon the decision to change rates will be taken out of its hands.Last month, when the RBA decided after 10 straight meetings to keep the cash rate steady, it presented a number of reasons. The chief was that “a range of information, including the monthly CPI indicator, suggests that inflation has peaked in Australia. Goods price inflation is expected to moderate over the months ahead due to global developments and softer demand in Australia.” Continue reading...
Lib Dem leader calls for watchdog to probe reports of big retailers and food multinationals inflating markupsBritain’s biggest supermarkets are facing calls for the UK’s competition watchdog to investigate claims of profiteering amid the cost of living crisis, as industry figures show food price inflation soared to a record high in April.With the rising cost of a weekly shop adding to pressure on households across the country, the Liberal Democrat leader, Ed Davey, called on the Competition and Markets Authority (CMA) to investigate whether any profiteering was taking place among supermarkets and food multinationals. Continue reading...
by Richard Partington Economics correspondent on (#6BBKP)
FSB says business confidence is rising but soaring costs and weakening demand is still slowing growthSmall businesses across Britain are warning that the cost of living squeeze is holding back economic growth, after two in five company bosses reported a drop in sales at the start of the year.The Federation of Small Businesses said that although business confidence was rising among bosses before the summer, soaring costs and weakness in consumer demand were still weighing on activity. Continue reading...
Bird flu, higher costs and the rise of meat-free options are pushing poultry producers to reduce flocks or give up entirelyJames Mottershead’s family has been in the chicken farming business for two decades, but nothing compares with the current situation. “Absolutely dire,” is his summary.Based in Shropshire and operating from six vast sheds that churn out 1.3m chickens a year, the business has been hit by a cocktail of pressures. Continue reading...
Institute of Directors index returns to levels last seen just before Russia’s invasion of Ukraine in 2022Business confidence has increased for the fifth month in a row, according to a regular health-check by bosses’ lobby group the Institute of Directors.The IoD’s “economic confidence index”, which surveys company directors on issues such as the wider economy and their own plans for hiring and investment, rose to -5 in April, up from -13 the previous month. Continue reading...
UK policy is to ensure its industry doesn’t suffer collateral damage in the contest for tech supremacyRishi Sunak is readying a billion pounds to subsidise the UK’s fledgling microchip industry. It sounds big. But the British government is merely reacting to US economic warfare against China. Behind the talk of “friendshoring” and resurgent industrial policy is a struggle to avoid collateral damage in the battle between China and the US for tech supremacy.The EU plans almost to match the US promise of $52bn (£42bn) in chip subsidies. India is spending $30bn (£25bn) on its semiconductor mission. Mr Sunak looks to be bringing a peashooter to a gunfight. But Britain does not have a complete end-to-end chip supply chain nor does it aspire to have one. Instead, it is following the slipstream of US power. Washington’s strength is that almost all chip factories contain critical tools from US suppliers. The US has isolated Beijing with export control powers that ban transactions between foreign countries and China. Washington’s legislative arsenal was first deployed against China’s Huawei, whose products Britain has also decided to ban.Do 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...
Deadline of Sunday set for companies such as JPMorgan Chase to table offer for California bank whose shares have plummetedUS regulators are racing to secure the sale of California bank First Republic, which is on course to become the third American lender to fail this year, a sequence of collapses that has drawn uncomfortable parallels with the 2008 global financial crisis.Half a dozen US banks are in the running to take over stricken First Republic, according to reports over the weekend, with leading bidders including JPMorgan Chase, Citizens Financial and PNC Financial Services. Continue reading...
Central banks are keen to blame the surge in inflation on anyone but central banksImagine you are a trade union official deep in negotiations with an employer over pay. Inflation is running at 10% and you know the company has lots of unfilled vacancies. You are seeking a wage settlement that at the very least maintains the spending power of your members.The backdrop to the pay talks is a war that has led to a sharp rise in the cost of energy. Gas and electricity bills have gone up, leaving members of your union with less disposable income. Continue reading...
Congress appears to be facing its biggest debt standoff in years – and the consequences of default could be disastrousAngry at the size of the government debt, House Republicans have passed a bill that ties spending cuts to any lifting of the US’s debt limit. A tense fight is escalating, with Democrats refusing to budge and hardline Republicans digging in. Without a solution, economists and others warn, the US could be plunged into an “economic catastrophe”.You can be forgiven a sense of deja vu. This has all happened before. Only this time, it could be worse. Continue reading...
Polling reveals most voters can now see through the referendum’s lies much more clearly than their leaders‘Half a league, half a league, / Half a league onward. / All in the valley of Death, / Rode the six hundred.” Why does Tennyson’s great poem come to mind as the local garage waits for a spare part to be delivered from Turin to fix a problem with my Fiat?In pre-Brexit days, thanks to Margaret Thatcher’s great achievement in integrating the British economy into the European single market, spare parts for cars, dishwashers – you name it – could be delivered almost overnight thanks to the sophistication of the EU supply chain. Continue reading...
Joe Biden’s American Rescue Plan and other economic policies have had predictable resultsWatch any sport nowadays, and you will be treated to instant replays that give you a detailed – often slow-motion – view of important moments. Watch the news, and you may find yourself feeling like you are similarly watching the past on playback. But these replays – of high inflation, soaring public debt, a brutal ground war in Europe, a new cold war and the rise of potentially destructive technologies – are far from instant, and the stakes are much higher.Readers might recall that I predicted rising inflation and slower growth as early as spring 2021. The former US Treasury secretary Larry Summers did so even earlier. Yet the US inflation figures – the worst since the early 1980s – caught most people by surprise. Continue reading...
Live coverage of business, economics and financial news as eurozone economy grows by 0.1% in first quarter after Amazon earnings beat expectationsCompared with the same quarter of the previous year, GDP increased by 1.3% in both the eurozone and the EU in the first quarter of 2023, after +1.8% in the eurozone and +1.7% in the EU in the previous quarter.In the fourth quarter of 2022, GDP had remained stable/stagnated (depending on your worldview) in the eurozone and had decreased by 0.1% in the EU. Continue reading...
by Kalyeena Makortoff Banking correspondent on (#6B87X)
Banking group says some customers have had to dip into savings because of rising pricesNatWest has reported bumper first-quarter profits on the back of a rise in UK interest rates but said persistently high prices were causing some customers to dip into their savings.The banking group said it was largely unaffected by the banking turmoil that resulted in the collapse of Silicon Valley Bank and Credit Suisse last month, and despite uncertainty, managed to report a 50% jump in profits to £1.9bn in the first three months of the year. That was better than the £1.6bn forecast by analysts. Continue reading...
Public sector workers and food bank users don’t need the Bank’s chief economist to tell them who is worse off and who not, says Janet Dubé. Plus letters from David Redshaw, Mike Alcock, Austen Lynch and Andy StelmanHuw Pill says “in the UK, someone needs to accept that they’re worse off” (Britons ‘need to accept’ they’re poorer, says Bank of England economist, 25 April). If he wants to tell “someone” his private opinion of our economic situation, being chief economist at the Bank of England surely puts him in a good position to find a candidate.It’s simply not true that “we’re all worse off”, as Mr Pill claims. Neither the prime minister nor King Charles appear to be in that category. Public sector workers and food bank clients don’t need a senior economist to tell them who is worse off and who isn’t. Continue reading...
Annual pace decelerates to just 1.1% as fears of recession this year grow despite strong consumer spendingUS economic growth slowed sharply in the first quarter of the year, despite strong consumer spending resilient to interest-rate rises designed to tame historic inflation.The latest GDP figures released by the US commerce department show that the world’s largest economy slowed sharply from January through March, to just a 1.1% annual pace as businesses reduced inventories amid a decline in housing investment. Continue reading...
Supermarket chain and consumer goods company insist they are protecting shoppers from inflation surgeSainsbury’s and the Marmite maker Unilever have both insisted they are protecting shoppers from inflation, amid accusations that some companies are profiteering from the cost of living crisis.“We are not profiteering in any form,” the chief executive of Unilever, Alan Jope, said as the consumer goods company insisted it was only passing on three-quarters of its increased costs to customers. Continue reading...
by Kalyeena Makortoff Banking correspondent on (#6B73J)
Venkatakrishnan says bank remains cautious about months ahead despite first-quarter profit of £2.6bnThe British economy is still not “out of the woods”, according to Barclays’ chief executive, who said the bank would remain cautious in the months ahead despite making its strongest quarterly profit since 2011.CS Venkatakrishnan said: “The macro-economic outlook around the world – not only the UK or in the US – is a little better today than it was six months ago. That doesn’t mean they’re out of the woods.” Continue reading...
Thinktank urges ministers to make reducing long-term sickness health equivalent of drive for net zeroBritain’s poor record on health is costing the economy £43bn a year and cutting the annual incomes of individuals affected by long-term sickness by up to £2,200 a year on average, a report says.With official figures showing more days lost to sickness than at any time since 2004, the Institute for Public Policy Research said improving the country’s health was vital both for the economy and to boost the incomes of disadvantaged groups. Continue reading...
‘We’re all worse off,’ says the Bank of England. At a time of soaring pay to company bosses, this is ugly politicsStruggling households, sinking businesses: the Bank of England wants you to swallow some bitter news for your own good. You “need to accept” that you are poorer. Stop asking for wage rises. Do not sneak up prices. Surrender your “reluctance to accept that, yes, we’re all worse off”. Such thoughts only produce higher inflation – and that simply won’t do, according to the Bank’s chief economist, Huw Pill. In an interview this week, he accused families and business of indulging in a game of “pass the parcel” – pushing higher costs between themselves when what they really need to do is admit that “we all have to take our share”.If Mr Pill himself displays such Zen-like acceptance, it may owe something to the fact that he received £88,000 for his first five-and-a-bit months at Threadneedle Street, equivalent to an annual salary of £180,000. Another advocate of serenity is the Bank’s governor, Andrew Bailey, who last year told workers not to make big pay demands, while raking in half a million pounds. Ordinary Britons may detect a touch of Versailles here, of being advised to chow down on brioche because no bread is to be found. Such statements do not enhance one’s authority, as Marie Antoinette could attest. Continue reading...
Why should we all just ‘accept we’re worse off’, when corporate greed and global shortages are really to blame?The Bank of England’s chief economist, Huw Pill, provoked derision this week when he claimed that inflation means those in Britain need to accept that “we’re all worse off, and we all have to take our share”. Echoing comments made last year by the Bank’s governor, Andrew Bailey, on the need for pay “restraint”, Pill claimed the “pass-the-parcel game” of wage and price rises was “generating inflation”.I disagree: they are both almost entirely wrong, and the clumsy messaging reflects the failure of conventional thinking and policy in tackling the cost of living crisis.James Meadway is director of the Progressive Economy ForumDo 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...
UK foreign secretary warns a war across Taiwan strait and likely destruction of semiconductor industry would have global effectsA Chinese invasion of Taiwan would destroy world trade, and distance would offer no protection to the inevitable catastrophic blow to the global economy, the UK’s foreign secretary, James Cleverly, warned in a set piece speech on Britain’s relations with Beijing.In remarks that differ from French president Emmanuel Macron’s attempts to distance Europe from any potential US involvement in a future conflict over Taiwan, and which firmly support continued if guarded engagement with Beijing, Cleverly said “no country could shield itself from the repercussions of a war in Taiwan”. Continue reading...
Retailer will extend online click & collect service to London and expand into Texas after strong resultsPrimark is to extend its online click & collect service to London and expand in the southern US after reporting strong first-half sales.The cut-price retailer said it had benefited from a return of tourists and office workers across UK cities, who had bought more items than a year before despite a 7% rise in prices. Continue reading...
Huw Pill says someone in UK needs to accept that they’re worse off and stop trying to maintain their real spending power through higher wages or prices
Chief economist Huw Pill says workers and firms should stop trying to pass on rising costs by hiking prices or demanding better wagesBritish households and businesses “need to accept” they are poorer and stop seeking pay increases and pushing prices higher, the Bank of England’s chief economist, Huw Pill, has said.Pill said a game of “pass the parcel” is taking place in the economy – as households and companies try to pass on their higher costs. Continue reading...
Since 1989 my family has gone from farm labourers to high achievers. Something similar has happened to my countryWhen the iron curtain was swept away on that miraculous night of 9 November 1989, it exposed some of the deepest differences between geographical neighbours the world has ever recorded. The 13:1 GDP per capita gap between Poland and soon-to-be united Germany was twice that between the US and Mexico.That same night, my pregnant mother and her brothers were workers in the shadow economy on an eco-farm near Frankfurt, helping to meet the needs of a newly minted class of environmentally aware Germans. My family admired that country where “you never got lost on a highway”. People in Germany drove immaculately clean cars and manual labourers could play Stille Nacht on several instruments – which they did at the farm for Christmas 1989 – leading my mother to marvel at an education system that could so universally equip people not just with marketable skills but also with an ingrained sense of beauty.Anna Gromada is a social scientist and co-founder of the Warsaw-based Kalecki Foundation Continue reading...
Automation too often erodes conditions and job quality creating anxiety and overwork. To build ‘good work’, we must invest in people as well as techThe UK economy is at a pivotal moment. Two years on from Covid, and it remains the only country in the developed world where people have continued to drop out of the labour market in greater numbers beyond the pandemic.Rates of economic inactivity have risen and vacancies in the hospitality, health and technology sectors are proving hard to fill. At the same time, automation and the acceleration of artificial intelligence (AI) technology risk spreading fear and anxiety among workers. The UK is experiencing new forms of polarisation between good and poor-quality work. Continue reading...
Cost of living squeeze continues, led by price rises for eggs, milk and cheese, say analysts KantarShoppers increasingly turned to supermarkets’ cheapest own-label products as grocery inflation remained above 17% over the past month, keeping the pressure on already strained household finances.Sales of the very cheapest value own-label lines jumped 46% in the four weeks to 16 April, compared with a year earlier, dropping in to nearly one in five baskets as consumers sought to make savings. Continue reading...
Hindu nationalism in India is writing an epitaph for the country’s experiment with multi-ethnic secular democracyBecoming the world’s most populous nation allows India to burnish its credentials as a global economic and political heavyweight. With a population that is much younger than those of China, the US and the EU, there will be renewed interest in India’s potential to be a beacon of liberal values. The west is eager to draw a democratic giant into its orbit. China and India will together account for about half of all global growth this year. But India risks emulating its bigger northern neighbour’s economic ascent under tight political control by a dominant authoritarian party.Hindu nationalism in India is writing an epitaph for the country’s experiment with multi-ethnic secular democracy. Narendra Modi’s Bharatiya Janata party (BJP) has weakened institutions meant to keep the state both transparent and accountable. Information is censored, civil society hounded and protests suppressed. It is absurd that opposition leaders have been targeted to the extent that Mr Modi’s main rival – Rahul Gandhi – is currently disqualified from parliament. Such is the polarisation in politics that India’s last parliamentary session was the least productive since 1952. Continue reading...
‘Pretty much nailed on’ that the rate will halve in next six months, according to Andy HaldaneThe former chief economist of the Bank of England has predicted that inflation will fall rapidly in the coming months, and advised interest rate setters to consider pausing further increases in borrowing costs.Andy Haldane, who left the Bank in 2021 to lead the Royal Society of Arts thinktank, said it was “pretty much nailed on” that inflation would halve in the next six months, hitting a target set in January by the prime minister, Rishi Sunak – because of an inevitable slowdown in energy price increases. Continue reading...
Ministers should aim to support households and bolster Britain’s often overlooked supply chainNot a single item in the average British grocery shop is falling in price. From basic essentials such as bread, milk and cheese to sugar and tea, the cost of a weekly food shop is rising at the fastest annual rate since 1977.More than a year into the worst period for living standards in modern records, Britain’s cost of living crisis is taking a horrifying turn. First came rocketing energy prices. Now the baton is being passed from our gas and electricity bills to the supermarket till receipt. Continue reading...
There are serious inequalities in how Britons save for retirement and in the health of those who have retired. Why?The pensions system has fallen under the gaze of the Institute for Fiscal Studies, and not before time.Retirement is a vexed subject and little discussed in the UK, where there has always been a feeling among policymakers that a higher birthrate than most developed countries and buoyant levels of immigration – almost exclusively of working-age people – meant Britain was immune to a global problem with ageing. Continue reading...
by Richard Partington Economics correspondent on (#6B12T)
Report shows fastest rebound in private sector output in a year, with interest rate rise likely next monthConsumers splashing out on holidays has helped put Britain’s economy on track to avoid predictions of a contraction in the first three months of the year, paving the way for the Bank of England to raise interest rates next month.The latest monthly snapshot from S&P Global and the Chartered Institute of Procurement and Supply (Cips) showed the fastest rebound in private sector output in a year, fuelled by rising spending on travel, leisure and entertainment. Continue reading...
The Bank of England has so far failed to return the annual rate to its 2% target – so what are the options?Inflation has remained stubbornly high in the UK, with the latest data released this week showing it dropped only slightly in March, staying above 10% for the eighth time in the past nine months.The government has so far mostly relied on the Bank of England to try to return the annual rate of price rises to its 2% target, something it has clearly failed to do. Continue reading...
Increase to 4.5% will be last rise in current cycle, former rate-setter Michael Saunders predictsThe Bank of England is likely to increase interest rates one more time in May, to 4.5%, before inflation falls “sharply” over the rest of the year, a former rate-setter has predicted.Michael Saunders, who was a member of the monetary policy committee until August, said the UK was nearly at a “turning point” for interest rates, which have risen sharply over the past year as policymakers tried to curb a surge in prices caused by an increase in energy costs. Continue reading...
UK inflation failed to drop into single-digit levels last month as food prices kept soaring, meaning central bank expected to raise borrowing costs again