Exclusive: Torsten Bell defends Labour's spending plans, saying the status quo is economically and morally bankrupt'Britain's crumbling public services are bad for business, and spending more taxpayers' money to fix them is a pro-growth policy, the pensions minister, Torsten Bell, has argued.Rachel Reeves has been accused by business lobby groups of clobbering the economy with the 25bn increase in employer national insurance contributions imposed in her October budget. Continue reading...
Glencore considering move to New York or elsewhere where it can get the right valuation;' UK inflation rises more than expected as meat, bread and cereals become dearerWhile UK inflation has hit 3%, interest rate cuts are still on track, says Philip Shaw, chief economist at Investec.Today's headline figures are above the 2.8% which the Bank of England had pencilled into its forecasts in its Monetary Policy Report earlier this month. We gain some comfort though that neither core nor services inflation exceeded our expectations, as this points towards inflation strengthening due to volatile' or one-off items.Indeed what matters is not so much the precise peak in inflation, but the length of time it subsequently takes to subside towards the 2.0% target.the many demands placed on consumer discretionary incomes, which combined with the later booking profile and cost headwinds details, may mean profit margins in the year ahead come under some pressure. Continue reading...
With Spanish GDP growth leading Europe last year, diversity is making us richer - not only financially but culturally, tooThe world's fastest growing major advanced economy last year was most likely Spain. According to preliminary official data for 2024, Spain's GDP grew by 3.2%, almost five times the eurozone average and more than the US, which did pretty well too. In December, the Economist ranked Spain first among 37 mostly wealthy countries based on five indicators: GDP, stock market performance, core inflation, unemployment and government deficits. Forecasts for 2025 look good.Why is Spain doing so well? One key reason is immigration. Recent population flows, particularly but not only from Colombia, Venezuela and other Latin American countries, as well as Morocco, have boosted domestic demand and rejuvenated the workforce. According to the main labour national survey, nearly 90% of new jobs were filled by workers of foreign origin or dual nationality. Unemployment is at its lowest level since 2007.Maria Ramirez is a journalist and deputy managing editor of elDiario.es, a news outlet in Spain Continue reading...
White House has raised threat of levies as a means to bolster US economy, ignoring warnings trade wars could derail itDonald Trump stood firm against warnings that his threatened trade war risks derailing the US economy, claiming his administration could hit foreign cars with tariffs of around 25% within weeks.Semiconductor chips and drugs are set to face higher duties, Trump told reporters at a news conference on Tuesday. Continue reading...
by Ashifa Kassam European community affairs correspon on (#6VBMX)
As immigration has increased, GDP has surged and unemployment has fallen to lowest level since 2008From Madrid to Barcelona, restaurants and bars are brimming with people, and reservations have become essential for everything from fine dining to high-end hotels.It's a glimpse of how Spain has become Europe's buzziest economy - named the world's best by the Economist in 2024 - fuelled in part by what analysts have described as the government's strikingly different approach to migration. Continue reading...
Sarah Cardell says role of competition regulator remains the same but it must be wary of perceptionsSigns by the lifts in the Canary Wharf headquarters of the Competition and Markets Authority (CMA) remind staff not to talk about their work in public, given the billions of pounds resting on its decisions.But a very public debate is taking place about how the competition watchdog works and is run, with the Labour government determined to make an example of it. Continue reading...
The president's actions have sent a wave of terror through the community that underpins much of the US economyDonald Trump has ramped up anti-immigration fervor into his second presidency, promising mass deportations, pushing to increase arrests and bolstering public relations efforts to amplify arrests. The moves have sent a wave of terror through the undocumented worker community that underpins large parts of the US economy.Every day I wake up and walk out the door, I go with the hope of going to work, but with the fear of not being able to come back," said a construction worker and single parent in Texas who obtained immigration protection under the Biden administration. She requested to remain anonymous due to fears about her immigration status. Continue reading...
End of de minimis' policy for Chinese goods also expected to hit bigger fashion retailers such as Asos and BoohooMany UK-based independent sellers on marketplaces such as eBay and Amazon could suffer a significant hit to US sales from planned changes to import rules under Donald Trump, with experts comparing the impact to a second Brexit.The new rules, which mean all parcels originating or made in China and being sold into the US must pay import duty - of as much as 15% on fashion items - and an additional 10% tariff, are also expected to impact bigger online clothing retailers such as Asos and Boohoo. Continue reading...
Impending tax rises from autumn budget fuel collapse in sentiment and rising redundancy intentions, surveys showUK employers are preparing for the biggest redundancy round in a decade amid collapsing business confidence as firms brace for tax increases from April that Rachel Reeves announced in her autumn budget.In a fresh blow for the chancellor, the Chartered Institute of Personnel and Development (CIPD), which represents human resources professionals, said a survey of 2,000 employers showed redundancy intentions at their highest level in 10 years, barring the Covid pandemic. Continue reading...
Elon Musk's crazed takeover of America's financial plumbing risks shattering confidence in US institutions and in turn global financial stabilityWhen Donald Trump gave an in-flight press conference en route to the Super Bowl last week, it generated a flurry of news, from the fresh threat of steel tariffs to the declaration of Gulf of America Day".Much less remarked upon was a throwaway comment about the US's financial obligations, which underlined the fact that tariffs are far from the only way in which Trump is jeopardising economic stability. Continue reading...
America is in retreat from its underappreciated good works around the world. Europe needs to act - and Brexit only hinders this essential responseIn July 1817, Lord Amherst, the leader of a British delegation to China, stopped on his return journey at Saint Helena and met the exiled Napoleon Bonaparte.Napoleon had seldom been out of the news, but Amherst himself was also in the news for having pointedly refused to kowtow when having an audience with the Chinese emperor. Continue reading...
As her 9.9bn of headroom evaporates, chancellor will have to raise taxes, cut spending or break iron-clad' fiscal rulesWhen Rachel Reeves stood up in the House of Commons on budget day on 30 October as this country's first woman chancellor, she was brimming with pride: To girls and young women everywhere, I say: Let there be no ceiling on your ambition, your hopes and your dreams."Four months on, however, there are few women or men, young or old, at Westminster, who would envy Reeves's lot in charge of the country's finances. The bind she finds herself in is more the stuff of a chancellor's nightmares than dreams. Continue reading...
Demand for fuel has pushed gas prices up - but peace in Ukraine could flood the market and change everythingA scramble to heat homes during a cold winter across Europe has sent gas prices soaring from where they were six months ago. This week, that extra cost will appear in figures that City analysts say will show inflation jumped to 2.8% in January, from 2.5% in December and 1.7% last September.The Bank of England says inflation will keep rising towards 3.7% this year. The National Institute of Economic and Social Research (NIESR) has predicted the rate will rise to 3.2% in 2025. Continue reading...
The huge size of the US economy means that the president can throw his weight around - and we can't say we weren't warnedWhy is Donald Trump so obsessed with tariffs? If you ask me, it's because America is so freaking huge. California's economy is bigger than the entire UK's. Texas's is larger than all of Canada's. Florida's is larger than all of Mexico's. In its entirety the US economy is about eight times larger than both the Canadian and Mexican economies ... combined!Trump is a bully sitting on top of the world's biggest bully - the American economy. Bullies tend to use their fists to overcome others. Sometimes they can be outwitted. But we all know that strength and size means everything. Continue reading...
Trend towards more extreme-weather events will continue to hit crop yields and create price spikes, Inverto saysExtreme weather events are expected to lead to volatile food prices throughout 2025, supply chain analysts have said, after cocoa and coffee prices more than doubled over the past year.In an apparent confirmation of warnings that climate breakdown could lead to food shortages, research by the consultancy Inverto found steep rises in the prices of a number of food commodities in the year to January that correlated with unexpected weather. Continue reading...
Politicians believe tariffs will revive a lost era of American manufacturing. But they won't improve people's everyday livesDonald Trump appears to be testing the boundaries of the power he can accumulate and then exert upon his allies, with a singular ambition: to coerce them into submitting to US supremacy. Though the president temporarily walked back his threat to unleash severe universal tariffs on Mexico and Canada, he has since imposed 25% tariffs on all steel and aluminium imports, which will primarily hit Canada, Mexico and China, and has announced a new plan for reciprocal tariffs" on American trading partners. Above all, he clearly intends to wage a trade war against China. His brash, bombastic and belligerent threats reflect the reactionary political energy that drove his rise, which feeds on displays of dominance and disruption. His trade war won't work to restore US economic dominance - but it tells us a lot about how both sides of the political aisle blame the US's economic precarity on China's economic ascent.Over the past decade both Democrats and Republicans have blamed growing economic discontent on the sharp decline of American industry. The share of the US workforce employed in manufacturing has been in decline since the 1950s: today, just over 8% of American workers are employed in manufacturing, compared with 32% in 1953. The postwar era holds a powerful resonance for both the right and the left, and is often romanticised as a period when unionised male breadwinners in the industrial working class enjoyed far greater economic stability and prosperity than working and middle-class people do today. Viewed through this prism, since the decline of US manufacturing has occurred at the same time that China has emerged as a global manufacturing powerhouse, China's gains equate to the US's - and its workers' - losses.Melanie Brusseler is a political economist and the US programme director at the thinktank Common WealthDo 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...
by Richard Partington Economics correspondent on (#6V8G4)
While UK may not be in direct line of fire, knock-on effects on global trade has British businesses worriedWe're vulnerable at the moment," says Fiona Conor, the managing director of Trust Electric Heating, a Leeds-based radiator manufacturer, who has been considering expanding into the US market.After a predictably unpredictable start to Donald Trump's second term as US president, Conor is worried her options could be limited, as businesses across the UK brace for a global trade war. Continue reading...
The US president announced what he called reciprocal tariffs' on all other countries on ThursdayThe UK government will wait and see" whether tariffs announced by Donald Trump actually come to pass", a senior minister said.The US president announced what he called reciprocal tariffs" on all other countries on Thursday evening, claiming it was fair to all". Continue reading...
Despite growth in 2024, living standards fell. Inequality, weak public investment and government cuts threaten prosperity. Labour must offer voters something differentThe picture painted by official data for the UK economy in 2024 reveals a country broken by 14years of Conservative party rule. True, the economy grew - somewhat unexpectedly - but GDP per head fell, showing prosperity didn't reach most people. There are a few reasons for this decline but none suggests a healthy society. One is runaway wealth inequality, with gains hoarded at the top. Another is stark regional disparities, with some areas falling further behind despite national GDP rising. A third is rising immigration without enough job creation - more workers, but not enough well-paying positions.A growing economy means little if it doesn't improve living standards. In 2024, it didn't. This political reality has shaped recent years, and not in a good way. It's worth recalling a Newcastle woman's tart response to the political scientist Anand Menon in 2016 when he warned that Brexit would hit GDP: That's your bloody GDP, not ours." That continuing frustration explains the current backlash against mainstream politicians. No wonder SirKeir Starmer wants his party to be one of disruption.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...
Bank to offer first two-year deal under 4% with rivals likely to follow suitThe first sub-4% mortgages for months are going on sale, handing a much-needed boost to first-time buyers and those worried about refinancing their home loan.Santander on Thursday will start offering fixed rate deals at 3.99% lasting for two and five years. However, eligible borrowers need a 40% deposit, or a sizeable amount of equity to access the deals. Continue reading...
Analysts say measures so far have been less than feared but traders still cautious as uncertainty about US policy has basically exploded'Asian markets were mixed on Tuesday as traders kept a nervous eye on Donald Trump's next moves after he signed off on 25% tariffs for steel and aluminium imports, having warned of more measures to come.The president has lived up to his campaign pledges to resume his hardball trade diplomacy to extract concessions on a range of issues, including commerce, immigration and drug trafficking. Continue reading...
Ex-treasury secretaries caution against administration's subversion of checks and balances, specifically MuskA group of five former US treasury secretaries are warning that the Trump administration has put the country's key payment systems under siege" and is undermining the checks and balances of the federal government.The secretaries warned that the administration had compromised roles historically given to non-partisan career civil servants and had replaced them with political actors", according to a New York Times op-ed published on Monday. The secretaries specifically called into question Elon Musk's so-called department of government efficiency", or Doge, and the appointees that Musk has installed within agencies, including the treasury department. Continue reading...
FTSE 100 hits record high as pound falls after US president says he will impose 25% levies on steel and aluminium importsUK steelmakers have warned that the imposition of new US tariffs would be a devastating blow" to the industry, after Donald Trump said he would announce 25% tariffs on steel and aluminium imports into the US.Gold reached a record high and aluminium prices rose as financial markets were rattled by the US president's comments, which caused concern in the UK and the EU. Continue reading...
UK jobseekers say employers are hiring fewer staff - whom they expect to do more for less payThis is the worst I've ever experienced in the job market, including the aftermath of the 2008 financial crisis, which also left me unemployed for a time, and the pandemic," said David Hoghton-Carter, 46, a corporate strategy professional from Leeds.Hoghton-Carter was among the 1.57 million people in the UK who were trying to find work between September and November 2024, and is still hunting after nearly two years. Continue reading...
US president accused of shifting goalposts' by premier of Ontario for adding further tariffs on top of existing metal duties, as China's fossil fuel levies come into forceDonald Trump has said he will announce new 25% tariffs on all steel and aluminium imports into the US on Monday that would affect everybody', including its largest trading partners Canada and Mexico, in another major escalation of his trade policy overhaul.Trump's pre-announcement came as China's retaliatory tariffs, announced last week, came into effect. The measures target $14bn worth of products with a 15% tariff on coal and LNG, and 10% on crude oil, farm equipment and some vehicles. Continue reading...
A 25% tariff on all steel and aluminium imports, as flagged by the US president, is more evidence that Australia cannot rely on our ally to do good by usNews that the US president, Donald Trump, was going to place a 25% tariff on all steel and aluminium imports in to the US came as it generally does with such things - out of the blue, with no reasoning, and little to no understanding of whether Trump even knows what he is doing.Speaking to reporters on Air Force One on the way to the Super Bowl, Trump talked about reciprocal" tariffs. As an aside he said that we'll also be announcing steel tariffs on Monday" and when asked who they would affect he said everyone". When further asked about aluminium he replied aluminium too" (because hey why bother to mention that upfront?). Continue reading...
Base rate cuts may ease borrowing costs but without stronger public spending and targeted tax relief, economic stagnation will persistIt will be welcome news to many that we have been able to cut interest rates again," said Andrew Bailey, the Bank of England governor, last week. Plenty of mortgage holders would agree. Savers might not share Mr Bailey's sentiments. However, he justified the cut, made despite inflationary risks, by arguing that falling worker bargaining power would see price pressures subside. Without rate cuts, the Bank warned, there wasthe risk of anaemic economic growth.The chancellor, Rachel Reeves, backed the Bank, saying its action would ease cost of living pressures". That is true, but the benefits of lowering the burden of borrowing won't outweigh the costs of Ms Reeves' fiscal choices. She is counting on up to six base rate cuts by mid-2026 to buoy consumer sentiment. But relying solely on monetary policy is not effective economic management. Continue reading...
The US president has recognised something that is rarely acknowledged: monetary policy is political. The question is how to make it democraticIf I asked you to list the things that make democratic politics meaningful, what would you include? Most likely elections and education. Perhaps the NHS, or the armed forces, or the justice system. I'm guessing that interest rates didn't come to mind, which is strange, because they're crucial to democracy. Last week, Donald Trump reignited a debate about who should be in charge of the monetary system that controls a country's interest rates. You may disagree with Trump on a lot of things, but he's not wrong to recognise that monetary policy - a subject that can seem dull and horribly technical - is fundamentally political, and tells us a lot about democracy.Interest rates shape everything. They influence whether you can buy a house, and how many houses get built. They affect which businesses expand, what new technologies emerge, and which towns thrive or flounder. In the 1990s, central bankers hailed the great moderation", a period of low and stable prices dominated by central bank independence. Then came the financial crisis, the eurozone crisis, and then the pandemic. The giant bailouts that followed these events were often described as unconventional". But perhaps they simply uncovered a fact that was always there - that monetary policy is not as apolitical as some would like people to believe.Leah Downey is a junior research fellow at St John's College Cambridge and the author of Our Money Continue reading...
New research suggests that spending on those with the most complex needs can release so much financial benefit that it should be regarded as an investmentOne of the reasons Rachel Reeves wants faster growth is the taxes it generates and the possibility of spending them to refurbish the public sector.It's troubling that, seven months on from last July's election victory, Labour is still struggling to piece together a coherent answer to the question: where should the government direct its limited funds to spur a surge in growth? Continue reading...
President halts plan to put tariffs on low-value packages but says he will impose duties on more countries next weekDonald Trump halted a key part of his tariff attack on China on Friday, as he threatened to impose new US duties on goods from many more countries next week.Plans to ensure shipments from China to the US worth less than $800 still face tariffs - removing the longstanding duty-free status of low-cast packages - have been delayed to give more time to federal agencies to prepare for the change. Continue reading...
by Heather Stewart and Richard Partington on (#6V4HE)
The US president hopes tariffs will help close the huge trade gap by potentially pressuring Beijing into a new dealDonald Trump postponed his threat to tax all imports from Mexico and Canada this week, citing action by those countries against migration and drug smuggling; but it was telling that tariffs on China went ahead.When it comes to the US's neighbours, Trump's Treasury secretary, the hedge fund manager Scott Bessent, made clear in a Fox News interview that tariffs are essentially a negotiating tool - partly aimed at achieving non-economic goals. Continue reading...
Campaigners and retailers say Britain should follow US and EU in phasing out exemption on duties for low-value parcelsTax campaigners have joined retailers in urging the UK government to close a tax loophole to prevent a massive influx" of cheap goods from companies such as Shein and Temu flooding the market.It comes after the EU said it was joining the US in phasing out an exemption on customs duties for low-value parcels that has been used by the companies to export goods from China cheaply. Continue reading...
by Richard Partington Economics correspondent on (#6V4EJ)
Chief economist warns that cautious' approach to further interest rate reductions is requiredThe Bank of England is not in a position to declare job done" in tackling inflation amid concerns over rising prices hitting households, Threadneedle Street's chief economist, Huw Pill, has said.Speaking a day after the central bank cut interest rates and slashed its growth forecasts for 2025, Pill warned that a cautious" approach to further interest rate reductions would be required as inflation pressures remained. Continue reading...
US economy added 143,000 new jobs last month, fewer than expectedHong Kong's appeal to the WTO (see earlier post) comes as Donald Trump's new trade war is further blurring the lines between Hong Kong and Beijing.This is threatening to erode the city's main selling point as a global financial hub, reports Bloomberg, explaining:When Trump slapped a 10% levy on China this week, that action for the first time also applied to Hong Kong goods, after the president in 2020 signed an executive order to remove the city's special privileges.One day later, the US Postal Service put a ban on incoming Chinese parcels that also swept up the commerce center, before reversing course hours later.Early indicators of housing demand point to another month or two of decent performance for the housing market ahead of the Stamp Duty changes.But over 2025 as a whole, we think that the housing market will show only a modest improvement, given the Bank of England's gradual and cautious approach will see interest rates fall slowly against a backdrop of stretched housing affordability." Continue reading...
Labor department data shows 143,000 jobs added with unemployment rate steady at relatively low 4%Hiring across the US economy moderated in January, but the labor market continued to grow at a steady pace during the transition period between Joe Biden and Donald Trump's presidencies.New data from the labor department released on Friday showed 143,000 jobs added to the economy in January, short of the 168,000 expected by economists. The unemployment rate remained steady at a relatively low 4%, edging slightly downward from 4.1% in December. Continue reading...
by Richard Partington and Heather Stewart on (#6V4JD)
UK economy expected to grow by just 0.75% this year, in fresh blow to Rachel Reeves's attempts to raise confidenceRachel Reeves's plans for growth suffered a double blow after the Bank of England halved its forecast for the year and warned households would face mounting pressure from rising prices.In a downbeat assessment as it cut interest rates for a third time in six months, Threadneedle Street warned people would face a fresh squeeze on living standards from rising inflation even as the economy stalled. Continue reading...
The stock market is not the economy - as shown by the new closing high after the Bank of England's rates cutNever confuse a stock market index with a symbol of national economic health. The truth of that old piece of wisdom was demonstrated on Thursday as the FTSE 100 went on a rip-roaring run - up 104 points, or 1.2%, to a new closing high of 8,727 - while the Bank of England cut interest rates because the UK economy was flat on its back.The point always to remember about the Footsie is that its constituents are an international crew, or at least they operate internationally. Goldman Sachs' analysts calculated recently that, in aggregate, only 22% of the revenues of FTSE 100 companies were generated in the UK. North America, at 29%, and the Asia-Pacific region, at 23%, are more important. Think of the likes of index heavyweights AstraZeneca, BP, GSK and Shell: their UK revenue exposures are measured in low single-digit percentages. Continue reading...
Economics | The Guardian