Sales slump 4.1% in October amid highest mortgage rates in two decades and a dearth of housesUS existing home sales dropped to the lowest level in more than 13 years in October as the highest mortgage rates in two decades and a dearth of houses drove buyers from the market.Existing home sales tumbled 4.1% last month to a seasonally adjusted annual rate of 3.79m units, the lowest level since August 2010, the National Association of Realtors (NAR) said on Tuesday. Home resales are counted at the closing of a contract. Continue reading...
Andrew Bailey fears markets are downplaying risks of persistent inflation, as new figures show UK borrowing so far this year is 16.9bn less than expected
Air fryers, skiwear, hot tubs, kayaks - you never know what you'll find in the discount supermarkets. But you can be sure the keenly priced, limited-time-only products will lead to a scrumI am waiting outside an Aldi in south London at 6.45am. Through the window, I eye my prize. He glints at me from a basket placed tantalisingly close to the entrance. Kevin the Carrot, the limited-edition soft toy released by Aldi once a year, is part of the discount supermarket's Christmas promotion. Such is the demand for Aldi's Kevin drop that the toys routinely sell on eBay for triple the retail price. This year, Kevin is golden, his belly straining against the metallic fabric like a wrestler's bespandexed torso.I text Jayne McGibbon Peberdy, a 39-year-old law student and Kevin collector. She has been waiting outside her local Aldi in Greenock since 4.30am. She sends me a photo of a steaming vacuum flask. In 2019, Peberdy witnessed a stampede for Kevins. The following year, they had to get the police to the shop, because a grown man tried to steal a Kevin out of the hands of a four-year-old," she says. Continue reading...
The chancellor is estimated to have billions to play with and has a range of options from lowering income tax to cutting inheritance taxJeremy Hunt could have more money to play with in this week's autumn statement after a reassessment of the public finances from the independent Office for Budget Responsibility (OBR). One economic consultancy says a combination of higher growth and lower debt bills could hand the chancellor as much as 25bn in extra firepower, up from 6.5bn in the spring. We look at some of his options. Continue reading...
The election of the far-right candidate Javier Milei reflects the seriousness of the country's problems - and threatens to deepen themJavier Milei's landslide election victory, with 55.7% of the vote to his rival's 44.3%, is not only terrible news for Argentina but terrifying for many. In a country celebrating 40 years of hard-won democracy, the far-right economist threatens to turn the clock back.It would be easy to mock the former TV celebrity and tantric sex coach, who wielded a chainsaw at rallies and promised that he would take it to the state. But his election as president is no joke. Among the 53-year-old libertarian's ideas are a referendum to overturn the legalisation of abortion, reducing gun ownership restrictions, making the trade in organs lawful, slashing social spending and abolishing the central bank. He has called the Argentina-born Pope Francis the representative of the evil one on Earth", smeared the victims of the military dictatorship as terrorists" and claimed that their death toll was far smaller than the accepted 30,000 figure. Continue reading...
Around 500 employees of OpenAI have signed a letter saying they may quit and join Sam Altman at Microsoft, unless he is reappointed and the board resigns
President-elect's idea is a gamble that is likely to crash an economy paying the price for mistakes of his predecessorJavier Milei's bigger-than-expected victory in the Argentinan presidential election suggests voters in South America's second biggest country have willingly opted for shock treatment to sort out the country's deep economic malaise.It is perhaps not hard to see why 56% of the electorate backed the rightwing libertarian: Argentina may have the world's best football team but its economy has performed disastrously in recent years. Inflation is running at 140% and a three-year drought has led to a sharp fall in agricultural production. Two out of five people live in poverty and the currency has lost 90% of its value in four years. Continue reading...
Scheme used by designers including Paul Smith and Vivienne Westwood to launch brands at fashion showsThe UK trade secretary, Kemi Badenoch, has been accused of quietly killing off a funding stream for small businesses that had helped fashion brands such as Paul Smith and Vivienne Westwood launch their products at global trade fairs.Specific support has been provided by the government since 2006 to small and medium-sized companies wanting to showcase their products at overseas exhibitions, but after years of budget cuts the initiative has been shelved. Continue reading...
Some credit the Fed and Joe Biden for America's relatively painless escape from inflation. It's not a simple answerContrary to the predictions of many economists - and the enduring perception of many Americans - the US inflation rate has, so far, come down without a major decline in economic activity or employment. In fact, the economy has added an average of 204,000 jobs a month over the last three months, well above the labour force's long-term growth trajectory. As a result, unemployment remains under 4%, almost the lowest level since the late 1960s. Meanwhile, annualised GDP growth amounts to 2.3% so far this year, faster than the average rate since the turn of the century. Continue reading...
Chancellor seeks to promote growth ahead of autumn statement that could spark a rebellion among Tory backbenchers defending marginal seatsJeremy Hunt has played down the prospect of immediate income tax cuts, pledging not to do anything in this week's autumn statement that will fuel inflation.Although some Conservative backbenchers are eager for measures that would be quickly felt by households, the chancellor on Sunday sought to emphasise the need to promote growth and indicated that tax cuts were not going to happen overnight". Continue reading...
The Asia-Pacific Economic Cooperation summit in San Francisco is a reminder of the history of US-China relations, writes Hugo WongIt is symbolic that the Asia-Pacific Economic Cooperation (Apec) summit took place in San Francisco, a place of significance in the history of US-China relations and both nations' narratives (Planet Earth is big enough for two': Biden and Xi meet for first time in a year, 15 November). From 1848, San Francisco became the first Chinatown, the de facto capital of the Chinese in America. This was the time of the conquest of the west, when, just annexed from Mexico, California became a symbol of the American dream, helped by the gold rush and the transcontinental railroad, constructed with Chinese labour. That dream was once shared and built by white settlers and Chinese migrants together, until the Chinese Exclusion Act of 1882 would hinder dialogue between America and China for almost a century.Many Americans worried California would become a Chinese colony, the so-called yellow peril", while the Chinese were struggling at home with foreign imperialism. In 1907, Kang Youwei, a famous Chinese philosopher and reformer, exiled in America, wrote: There is no yellow peril. There is no white peril ... The great question that is presented to civilised nations today is not whether their unimportant differences will lead them to clash, but rather whether their inherent similarities and oneness will inspire them to unite in the great global work that needs to be done." Continue reading...
They write books, review papers and oversee research, and they oftentimes get things wrong - very wrongThey're Ivy-League educated, brilliant academic minds and experienced in the ways of markets, governments, data and statistics. Many have access to information not readily available to the general public. They attend meetings, forums and conferences with each other. They write books, review papers and oversee research. They are our nation's top economists. And they oftentimes get it wrong. Very wrong.Both the treasury secretary, Janet Yellen, and Fed chairman, Jerome Powell, were wrong about inflation, having first called rising prices transitory" after Covid disrupted the entire world's supply chain. Nobel winner Paul Krugman publicly admitted his mistakes. They were not alone. Continue reading...
Chancellor is upbeat but there is little chance of autumn statement changing voter perceptions of Tory planIf the opinion polls are right, Jeremy Hunt is on the political equivalent of death row. Voters have passed judgment on the government and it is only a matter of time before the sentence is carried out.That's not the way the chancellor sees it. For a condemned man, he was remarkably cheerful as he did the rounds of the TV studios in the run-up to Wednesday's autumn statement. His message was simple: things may look bleak for the government but all is not lost. There is too much negativity. The long-term prospects are fantastic". The chancellor is confident there will be an 11th-hour pardon from the British people. Continue reading...
Investment, investment, investment must be the chancellor's mantra. Instead, he is being urged to give away billions to those least in needIt is time to focus on growth", intoned the chancellor, Jeremy Hunt, on Friday. The economy, he seems to think, has turned a corner. Before Wednesday's autumn statement - the biggest set-piece economic event of the year - anticipation on Tory backbenches and in the rightwing media is beginning to run high, as estimates about his potential largesse balloon. A focus on growth in their eyes can have only one meaning: buying back popularity with tax cuts.It is breathtakingly wrong. Tax cuts, especially the widely mooted deep cuts to inheritance tax that Hunt is said to be considering, will do little for growth - instead choking off a much-needed source of revenue and inflating inequality. That they should be framed as crucial supports to aspiration, enterprise and growth is tribute to the huge rightwing bias in our national conversation, with the reasons for the prolonged stagnation facing us going largely unacknowledged. Britain is suffering from an intensifying four-decade-long investment drought in the public and private sectors - the root cause of the crisis in stagnating productivity and living standards that shapes our politics and daily lives. Every spare pound should be consecrated not to tax cuts but to raising public investment - a key trigger for increased private sector investment and, ultimately, a better future. Continue reading...
by Michael Savage, Toby Helm and Phillip Inman on (#6GFX8)
The chancellor's potential inheritance tax cut in Wednesday's budget would aid millionaires amid a cost of living crisisJeremy Hunt faces a backlash from red wall" Tory MPs if he uses a fiscal windfall of up to 20bn to deliver tax cuts for the rich rather than to help ordinary families with the cost of living, the Observer has been told.The chancellor and Rishi Sunak are this weekend finalising an autumn statement on Wednesday that could include a major reduction in inheritance tax - four-fifths of which would benefit those with more than 1m at their death, according to a new report from the Institute for Fiscal Studies (IFS). Each person with more than 1m would receive an average tax cut of 180,000, the IFS states. Continue reading...
The days of cheap credit that could have fuelled long-term investment have gone. Now chancellors must find a different source of revenueJeremy Hunt's autumn statement is fast approaching and it looks like the public will be treated to the exciting spectacle of a chancellor treading water.Hunt is in no mood to splash the cash when the financial markets still have a wary eye cast in his direction. Investors remember the panic that followed Liz Truss and Kwasi Kwarteng's first and only budget, when the UK's good name was sullied and, as a financial punishment, the cost of borrowing rocketed. Continue reading...
Bond yields fall as retail sales volumes across Great Britain fall to their lowest level since February 2021, amid cost of living squeeze and wet weather
Chancellor could try to win votes with a tax giveaway, but seems unlikely to improve the polls or the economyAn economy going nowhere. Limited financial firepower. Polls suggesting the Conservative party on course for a wipeout at the general election. Tory MPs clamouring for tax cuts. Jeremy Hunt is under real pressure to announce a gamechanging autumn statement on Wednesday. Rarely has a chancellor been so poorly positioned to do so.Hunt has been at the Treasury for just over a year but by the standards of the current parliament, that makes him a veteran. He is the fifth chancellor since 2019 and three of his predecessors - Sajid Javid, Nadhim Zahawi and Kwasi Kwarteng - were so short-lived in office that they failed to produce a single budget between them. Continue reading...
by Richard Partington Economics correspondent on (#6GEH2)
Before autumn statement, industry bosses say more consistency is needed after more than a decade of instabilityBritain's economy has lost billions of pounds in investment since 2010 amid government flip-flopping" on its industrial growth plans as it churned through 11 different economic strategies, according to a report.As the chancellor, Jeremy Hunt, prepares for his autumn statement next week, industry bosses warned ministers that more consistency was required to increase investment levels after more than a decade of instability. Continue reading...
by Richard Partington Economics correspondent on (#6GE1Z)
Chancellor to launch 2.5bn back to work plan' in autumn statement aimed at increasing workforce participationWelfare claimants who refuse" to engage with their jobcentre or take work offered to them may lose benefits, under plans confirmed by the chancellor before next week's autumn statement.The crackdown, first floated by Jeremy Hunt in his Conservative party conference speech in October, is part of a wider government plan to tackle a decline in workforce participation since the Covid pandemic. It could see those sanctioned denied access not just to welfare payments but associated benefits such as free prescriptions or help with energy bills. Continue reading...
Mars to swallow Hotel Chocolat, and Bank of England's Megan Greene says fall in inflation is good news', but it's too early to think about cutting borrowing costsHere's another clip from Megan Greene's interview this morning:Bank of England policymaker Megan Greene has hailed yesterday's fall in inflation to 4.8% as good news', but warned that it's too early to consider cutting interest rates.The recent data is good news.Inflation came down pretty significantly, in both headline and core, but the biggest contributor was energy. Continue reading...
Premier Foods, which also owns Angel Delight and Bisto, says it plans further reductionsThe maker of Mr Kipling cakes, Angel Delight and Bisto gravy granules has announced price cuts on some of its ranges on the back of a fall in the rate of inflation on associated production costs.Premier Foods said products including Batchelors Super Noodles and Mr Kipling Slices have had their prices reduced to levels seen last summer, and added that it intended to unveil more reductions in the coming months. Continue reading...
With crises hitting us head-on, the shadow cabinet thinks that yesterday's reformism can tackle today's emergencies, says Nick MossAditya Chakrabortty is right that we are experiencing the end of the end of history" and we need to ditch the intellectual complacency that accompanied it (The Westminster panto is in full swing: but there are real dangers waiting in the wings, 9 November). It's not just that we need new ideas. We have a political class that does not take ideas seriously. The Tories throw scare stories to the media, and Keir Starmer and his party just try to dodge the bullets, rather than putting forward a coherent set of ideas to address the chaos of the times.For all its failings, the Corbyn project at least had John McDonnell's economic advisory committee, with critical socialist economists such as Thomas Piketty and Mariana Mazzucato feeding into McDonnell's attempt to develop a new economic strategy. Now, any intellectual energy in the Starmer government-in-waiting comes from Rachel Reeves's securonomics", and even critical centrists like Stella Creasy and Neal Lawson are sidelined. Continue reading...
It is falling global energy prices that have led to a fall in inflation, rather than anything the prime minister has doneRishi Sunak is boasting about his achievement" in halving inflation. Like the fly on the ox's neck congratulating itself on a hard day's ploughing, neither he, nor his government, nor even the Bank of England and its interest rate rises, deserve the credit for falling inflation, which is driven by falling global energy prices.When Russia invaded Ukraine in February 2022, the disruption to oil and natural gas supplies across Europe was immediate, with prices for natural gas surging to 10 times their pre-invasion level. Inflation, which measures average price rises over the previous 12 months, soared to 40-year highs in Britain and for other heavy users of natural gas such as Germany. But as the initial shock wore off and energy prices started to come down from the middle of last year, overall inflation everywhere has started to fall.James Meadway is the host of the Macrodose podcast Continue reading...
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, but cost of living pressures are finally starting to ease.The latest inflation rate for the 12 months to October 2023 means that goods and services cost 4.6% more than they did a year ago - in most cases, surpassing any pay rises workers can expect to receive. Continue reading...
Kemi Badenoch has sought state-level accords post-Brexit but only national trade deal with US would reduce tariffsThe UK's business and trade secretary has signed a deal to increase trade with Florida, the British government's latest pact with a single American state as it awaits a broader, post-Brexit US free trade agreement.The memorandum of understanding, signed on Tuesday by Kemi Badenoch and the Florida governor, Ron DeSantis, is the seventh deal between the UK and individual US states. Continue reading...
Economists expect October's reading to fall almost two points to 4.8%, helped by drop in energy pricesThe annual pace of price rises is expected to have slowed sharply when the latest official figure for October is released on Wednesday, easing fears that the Bank of England could increase interest rates next month.City economists polled by Reuters have signalled that inflation as measured by the consumer prices index (CPI) will fall almost two percentage points to 4.8% from September's 6.7% reading. Continue reading...
Thinktank says government and Bank of England need to take more joined-up approach to solving economic problemsThe Treasury should use price controls and cuts in VAT during the cost of living crisis to prevent the Bank of England from driving the economy into recession through over-aggressive use of interest rates, a thinktank has said.Warning of the need for the two institutions to stop operating from separate silos, the left-leaning Fabian Society said poor policymaking in the past quarter of a century had often been the result of the Treasury and the Bank pulling in opposite directions. Continue reading...
Consumer price rises were down from 3.7% in September continuing a downward trend from high of 9.1% in June 2022The rate of US consumer price rises cooled in October amid lower gasoline prices and slowing increases in housing costs.The annual rate of inflation measured by the Consumer Price Index (CPI) - which tracks the cost of a basket of goods and services - slowed to 3.2% last month, lower than the 3.7% reading in September and the coolest rate since July. Continue reading...
Payments designed to help people cope insufficient to meet scale of problem, says committeeMinisters have come under further pressure to expand the financial support for Britons struggling with the cost of living crisis, after a committee of MPs found some had slipped through the safety net".The cross-party work and pensions committee said that support payments designed to help people cope with soaring household bills had proved insufficient to meet the scale of the problem and offered only a short-term reprieve" for many. Continue reading...
Generation Y counterparts in the US have closed living standards gap on previous generationsMillennials in the UK are still bearing the economic scars" of the 2008 financial crisis and are struggling to catch up with the living standards of older groups while their US counterparts have closed the gap, new research shows.In its annual intergenerational audit", the Resolution Foundation compares the fortunes of millennials - born between 1981 and 2000 - with their predecessors, including Generation X, born between 1966 and 1980. Continue reading...
Western nations are caught in a low-growth trap, with tricky political choices to make - but there is a way outThe past 15 years have been the most difficult for western economies since the 1920s and 1930s. Public anger has risen as living standards have been squeezed by a prolonged period of weak growth. American politics is as ugly as it has ever been, while parties of the far right have emerged as powerful political forces in Germany, Italy, Austria, Finland, France and Sweden.The new age of anger is a far cry from the six decades between 1948 and 2008. Sure, there were recessions - often deep ones - during that period, but growth resumed and living standards bounced back. Certainly, there were protests - sometimes prolonged, as in the demonstrations against the Vietnam war - but the young people who marched eventually secured a stake in the system. Continue reading...
When the former PM crashed the economy, working people suffered. We can never let it happen again, writes the shadow chancellorRead more: Labour motion to ban Truss-style budget meltdowns puts pressure on Tory MPs Leadership is not just about having the conviction to take the right decision. It is about having the strength to follow it through. The behaviour of Suella Braverman last week was deeply irresponsible. At a time when those in power should be working with the police to keep our streets safe, she was undermining them. And at a time when our leaders should be working to bring our communities together, she was trying to pull them apart.Rishi Sunak knew this. He knew what she was saying and doing was wrong, but he was too weak to do anything about it. Putting party first, country second. Unable to take the tough decisions. It's a pattern of behaviour we see time and time again from this prime minister - including on the economy. Continue reading...
Party loyalty would force Conservatives to vote against plan for fiscal responsibilityRead more: I challenge Rishi Sunak: vote with Labour to stop a Truss-style disaster happening again,' writes Rachel ReevesLabour will force a Commons vote this week aimed at creating new legal safeguards against fiscal disasters such as Liz Truss's catastrophic mini-budget, which sent the financial markets into meltdown and drove up mortgage rates.The party's plan for a fiscal lock" to protect personal, family and the national finances from reckless politicians will be contained in an amendment to the king's speech that will be voted on by MPs on Tuesday. The manoeuvre will present Conservative backbenchers with a dilemma over whether to back a Labour amendment, or vote against what is a plan designed to embed fiscal responsibility into the budgetary process, and protect it from wild or accidental political misjudgments. Continue reading...
From privatisation to Brexit to its current collapse, the damage done by the Conservative party leaves one longing for the pastWhen thieves fall out, they certainly know how to do it. The sight of former cabinet ministers such as Nadine Dorries slagging off the prime minister, and the home secretary - at the time of writing - plumbing the depths of extreme rightwing prejudice, shows that there are now no depths to which the Conservative party will not sink.They are desperate, and with reason. The chickens bred during George Osborne's austerity chancellorship, and let out of captivity by Boris Johnson's Brexit, are finally coming home to roost. Continue reading...