Economics | The Guardian

Jeremy Hunt has announced his financial update - here are the main points, with political analysis

In today's newsletter: As the chancellor presents a plan aimed at satisfying the Tory faithful, we look at what he will do and what it will mean for you Sign up here for our daily newsletter, First EditionGood morning, and strap on your Homer Simpson secret nap spectacles: it's budget day. Coming into this one, the big question about Jeremy Hunt is this: is he, as friends of his recently told the FT, realistic enough to know he is unlikely to be chancellor this time next year" - or does he think that his decisions today can give the Conservatives a serious chance of winning the election? Does he want to bolster his economic legacy - or give his many vulnerable backbenchers something to tell voters about?The truth is likely to be somewhere in the middle: tax cuts to satisfy the Tory faithful, with just enough cover on affordability to keep fiscal watchdog the Office for Budget Responsibility (OBR) happy. Today's newsletter is a simple guide to what that means: what the chancellor will do, the dubious sums that will help him afford it, and what it'll mean for you. Here are the headlines.US politics | Joe Biden and Donald Trump cruised to easy victories on Super Tuesday, as both men piled up delegates on their way to their parties' nominations for the presidency. While Nikki Haley did win the Republican primary in Vermont, that was her only success against Trump, and she came under renewed pressure to drop out of the race.Birmingham | Councillors in Birmingham have approved what are thought to be the biggest budget cuts in local authority history. 600 council jobs are under threat, with libraries closed, bin collections reduced, street lights dimmed, and arts grants scrapped. The council also approved a 10% council tax increase for the upcoming financial year.Israel-Gaza war | Negotiations aimed at brokering a ceasefire in the Israel-Gaza war appear to have stalled, days before an unofficial deadline of the beginning of Ramadan. Israel did not send a delegation to the second day of talks in Cairo as hoped, demanding that Hamas present a list of hostages who would be the first to be released.UK politics | Michelle Donelan, the science minister, has apologised and paid damages after accusing two academics of sharing extremist views" and one of them of supporting Hamas. Donelan - whose department covered the damages and legal expenses - had faced a libel action after her allegations led to the two academics' suspension from roles at Research England.Monarchy | The army has removed a claim on its website that the Princess of Wales will attend an event in June, after apparently publishing the information without approval from Kensington Palace. Catherine has been recovering from abdominal surgery for the past seven weeks, with no date yet given for her return to public duties. Continue reading...

Reports that chancellor will cut national insurance by a further two percentage points tomorrow, as UK private sector growth rises

Vast majority of parents in survey say they cannot make the new system workStruggling single parents are being punished" and set up to fail by an unrealistic" government policy that forces them into near-full-time work when their children turn three, according to parents and new research.A year after the chancellor, Jeremy Hunt, forced parents on benefits to work for 30 hours a week or risk seeing their benefits docked, the vast majority of parents say they cannot make the new system work. Continue reading...

Whatever Jeremy Hunt says, traders know the rich will get richer and the poor will get poorer. And they're paid millions to bet on itIn May 2010, I lost $8m in a week. I was 23 years old. Back then, I was an interest rates trader for Citibank in Canary Wharf. I had won that job only three years earlier in a card game while I was a maths student at LSE. At that time, the job was the culmination of a lifetime ambition. It was also an escape route from poverty.What do you do when you are 23, and you have just lost $8m? And you know that if you let slip a few dollars more, you will also lose your job? I did what anyone else would do. I worked. I started bringing my old economics textbooks on to the trading floor, and studied them into the evenings. I wanted to understand where I'd gone wrong. Continue reading...

Global gender gap is far bigger than previously thought, as annual World Bank report takes childcare and safety issues into account for first timeNo country in the world affords women the same opportunities as men in the workforce, according to a new report from the World Bank, which found the global gender gap was far wider than previously thought.Closing the gap could raise global gross domestic product by more than 20%, said the report. Continue reading...

The Treasury watchdog is seen by some Tories as a block to tax cuts - and could be ignored by Jeremy HuntIt has been described as a millstone around the chancellor's neck and the reason Conservative MPs could be disappointed by Jeremy Hunt's budget on Wednesday if he spurns their demands for large pre-election tax cuts.After coming under intense criticism during Liz Truss's premiership, the Office for Budget Responsibility (OBR), the Treasury's tax and spending watchdog, is once again under fire. Continue reading...

Democratic senator Sherrod Brown endorsed the Sesame Street star's complaint on products getting smaller as prices remain sameThe Ohio Democratic senator Sherrod Brown endorsed a key voice in the American public square - Cookie Monster - in a complaint about shrinkflation.Me hate shrinkflation!" the Sesame Street character posted on social media on Monday, referring to an economic phenomenon Merriam-Webster defines as the practice of reducing a product's amount or volume per unit while continuing to offer it at the same price". Continue reading...

High street shops, pubs and restaurants lose out as Britons relax on the sofa in FebruarySoggy February weather and continued cost of living pressures put a dampener on retail sales last month, with growth slowing to just over 1% as many households saved cash by snuggling up on the sofa.Sales of non-food items slumped by 2.5% in the three months to February - led by declining demand for footwear, household appliances, furniture and clothing - amid weak consumer confidence, according to the latest retail sales monitor from the British Retail Consortium (BRC) and the advisory firm KPMG. Continue reading...

Apple shares drop after it is penalised following investigation into allegations it obstructed music-streaming rivals

Mortgages, bills and highest tax burden in 70 years pile on pressure despite healthy incomes

Buoyed by the AI boom the rally shows no sign of stopping - that's bizarre, given there is little reason to believe it can last

Growing numbers of people are leaving the jobs market because of long-term illnesses. It's coming at a huge personal and national cost, says economics editor Larry ElliottNew figures from the Office for National Statistics suggest there are 2.8 million people classified as not looking for work because of health issues - up from the 2.6 million previously estimated and a one-third increase on the 2.1 million before the Covid-19 pandemic.As the Guardian's economics editor, Larry Elliott, tells Hannah Moore, this is a shocking rise and each of those people will have individual and often complex circumstances. There is no easy fix. But it is a situation that has not appeared out of nowhere: while the Covid pandemic has clearly had a huge effect on physical and mental health, many of the underlying trends have been clear for decades. And NHS waiting lists have tripled in length since the Conservatives took over in 2010. Continue reading...

Despite levelling up efforts, EY data found the capital and south-east of England would benefit most from a return to growthFewer than 20% of levelling up projects finished in EnglandBritain's sharp regional divide is on track to deepen with London's economy pulling further ahead despite the government's levelling up promises, according to a report.Ahead of Chancellor Jeremy Hunt's budget on Wednesday, the accountancy firm EY said it was forecasting stronger economic growth in London and the wider south-east of England than for the rest of the country. Continue reading...

The chancellor should stress tax cuts are neither affordable nor a priority to UK voters

The chancellor is prepared to inflict yet more austerity to pay for a budget bribe. But the UK needs more spending, not lessWhen I was young, it grew on me by the minute

By taking money to fund tax cuts, the chancellor's policy will be as disastrous as that of his predecessorsJeremy Hunt should be honest with MPs and the British public when he delivers his budget on Wednesday. Early in his speech, the chancellor should admit that almost 14 years of successive Conservative administrations have left the economy and the public finances in a far worse position than many of our competitors among the other major industrialised nations.There is the proliferation of food banks and the growing number of homeless people sleeping in shop doorways, alleys and in the woods on the edge of town. Hundreds of schools cannot cope with the growing numbers of pupils who struggle to learn. Local authorities are running out of cash at an alarming rate, and hospital, GP and dentistry services have narrowed the scope of who they cater for and many are dealing only with emergency cases. The police services are struggling, the asylum system remains a shambles, and prison governors complain that the ageing infrastructure and poorly paid staff mean they barely look after the number of prisoners in their care. Continue reading...

Former Treasury aides say the chancellor is courting danger on UK debt and that fiscal rules must goLeading economists warn today that Jeremy Hunt will cost the country dear" if he gambles on pre-election cuts to tax and spending in this week'sbudget.Two former advisers to the Treasury, backed by other economists, said that instead of decisions aimed at sabotaging prospects for the next government", the chancellor should focus on the long-term national interest with measures to spur investment and growth. Continue reading...

Before an election, chancellors often try to woo voters with tax cuts that leave the incoming government in a hole. Here are six poison pill' speechesThere are budgets that fall apart within minutes of the chancellor delivering his Commons speech: think of George Osborne's pasty tax, one of many missteps that meant his 2012 budget will be forever known as an omnishambles.Then there are the poison pill" budgets: the ones that come at the end of a parliament, when the chancellor of the day goes for broke - sometimes literally - to attract voters and attempt to stay in office. If their party loses, the opposition is left to clean up the mess. Continue reading...

David Willetts suggests policy would help spread wealth among millennials amid deepening inequalitiesMinisters should hand all 30-year-olds a 10,000 citizens inheritance" amid fears a 1.5tn wealth transfer to millennials will deepen inequalities, a Conservative peer has urged.David Willetts, who leads the Intergenerational Centre thinktank, called for the next government to implement a major new policy to spread wealth in Britain. Continue reading...

From a huge budget deficit to weak GDP and a record rise in tax, we look at the background to the Tory budgetJeremy Hunt will attempt to use next week's budget to reboot the Conservatives' flatlining performance in the opinion polls before the next general election, with the chancellor widely expected to announce sweeping tax cuts.But while Rishi Sunak will be hoping his chancellor delivers a near-term bounce from crowd-pleasing giveaways, his government is facing growing pressure over the Tories' management of the economy over the past 14 years. Here are 10 charts outlining the Conservatives' record since 2010. Continue reading...

Huw Pill needs to see more compelling evidence that the underlying persistent component of UK CPI inflation is being squeezed

As the chancellor prepares next week's budget, Labour says it is staring at a dire inheritance. The voters look likely to agreeThe past 14 years have been a white-knuckle ride for the British economy. Record low interest rates, money creation from the Bank of England on an industrial scale, Brexit, millions of workers furloughed during the pandemic, the biggest fall in output in at least a century - all that, and a record number of people inactive through long-term ill health. Boring it hasn't been.At the end of it all, there is a sense of deja vu as Jeremy Hunt puts the finishing touches to next week's budget. When Liam Byrne departed the Treasury in 2010 he left a note - meant as a joke - for his successor as chief secretary, which said: I'm afraid there is no money." After almost a decade and a half of economic underperformance, Byrne's words have come back to haunt the Tories.Economists say George Osborne blundered when he imposed severe austerity measures on a still-fragile economy Continue reading...

The president wants young voters to know he hasn't given up on fixing student debt - but convincing them he has a decent track record is proving challengingMaxwell Frost, the only gen Z member of Congress, was front and center when Joe Biden announced last week that he was canceling $1.2bn of student loan debt for more than 150,000 Americans.President Biden knows that canceling student debt is an important issue for young people across our country," said Frost, who has been a surrogate for Biden's campaign. The president's actions on student debt are in stark contrast with Donald Trump, who spent his entire time in office sabotaging efforts to aid borrowers who are just trying to make ends meet." Continue reading...

Ex-Treasury official and adviser to David Cameron will replace Ben Broadbent, making MPC majority female for first timeThe Bank of England's interest-rate-setting committee is set to become majority female for the first time, after the appointment of a former key adviser to David Cameron and George Osborne as one of its deputy governors.Clare Lombardelli, the chief economist at the Organisation for Economic Co-operation and Development (OECD), will sit on the nine-member monetary policy committee (MPC) when she joins as the Bank's next deputy governor for monetary policy. Continue reading...

Dr Angus Holford, Dr Greta Morando and Dr Julian Costas-Fernandez respond to news about falling numbers of overseas students coming to BritainThe focus of recent articles on international student numbers (Warnings of economic damage to UK as international student numbers fall by a third, 29 February; Are international students taking over UK universities? No - in fact, they're propping them up, 31 January) has been on their overall value to the UK economy or to universities' financial positions, or their impact on opportunities for British students. But it's also fair to ask what impact they have on the British students that they studyalongside.Our recent peer-reviewed study looked at the entire English higher education system and found that having foreign peers has zero impact on how likely home students are to graduate or how well they do in their degree, and noimpact on their chances of finding employment afterwards. Continue reading...

The Body Shop is to cut 489 jobs within six weeks, while supermarket chain Sainsbury's plans job cuts in cost-cutting drive

Stephen Moore, who withdrew from Fed consideration after sexist remarks were uncovered, co-author of radical Project 2025 effortStephen Moore, a conservative economist whose controversial remarks about women cost him a seat on the Federal Reserve board in 2019, is now co-author of a plan to radically reform the US treasury as part of Project 2025, a vast rightwing effort to advance radical policy proposals for Donald Trump's possible White House return.Project 2025 is all about forcing a far-right agenda on to everyday Americans," said Tony Carrk, the executive director of the progressive watchdog Accountable.US, which produced an extensive report on Moore's views and positions. Continue reading...

Our nightlife isn't universally suffering. What it needs is participation, not elegiesHaving fun is big business. Without the factories and mills that first drew hundreds of thousands to towns and cities, today's modern metropolis is expected to sustain itself and its residents through the manufacturing of leisure and the commodification of a good time. The zeitgeist phrasing is telling: the night-time is now its own economy - one worth an estimated 66bn in the UK. Cities are no longer expected to sleep - sleep is wasted consumption time, after all. But from nightclubs to pubs and restaurants, the story being told about British nightlife is clear: it is in deep trouble.A report published this month by the Night Time Industries Association (NTIA) looked into the economic and cultural impact of electronic music in Britain, and found that - while it is thriving on digital platforms, at festivals and in terms of global impact - the bricks-and-mortar world of clubland is in crisis. And what is dance music without any dancefloors?Dan Hancox is a freelance journalist, focusing on music, politics, cities and culture. His new book, Multitudes: How Crowds Made The Modern World, is published later this year Continue reading...

London business group says clarifying funding for providers could deliver 11bn economic prize by freeing more adults to work

Women's groups urge chancellor to ignore calls for tax cuts in next week's spring budgetFurther cuts to public services in England will put gender equality into reverse", according to women's groups and unions that have urged the chancellor to ignore calls for tax cuts from the right of his party in next week's spring budget.The Fawcett Society, the TUC and Women's Aid are among those who have written to the chancellor to demand that women are not hit by further government cuts to public services". Continue reading...

State's one-third share in the bank, now worth about 6.7bn, is left over from the 84% holding taken during the 2008 financial crisisThe UK government will look to raise as much as 3bn-4bn from selling a chunk of its shares in NatWest bank to the public in a measure expected to be announced by the chancellor in his budget next week.Jeremy Hunt said in his autumn statement last year that he would explore options" for a retail offering of part of the state's remaining one-third share in the bank, now worth about 6.7bn. Continue reading...

Shadow chancellor criticises Tory years of failure and says national mission is needed to kickstart economyThe shadow chancellor, Rachel Reeves, has admitted it would take time for a Labour government to turn Britain around, as she accused the Conservatives of vandalising the economy over the past 14 years.Speaking before next week's budget, Reeves said the party that wins the next election would have the worst inheritance of any incoming government since the war and that a national mission was needed to kickstart the economy. Continue reading...

Levy on vapes could make them unaffordable for children, as IFS warns over unfunded tax cuts

Competition helped offset impact of Red Sea shipping crisis in February, says analyst Kantar

Chancellor should resist temptation to announce unfunded tax cuts in March budget, advises leading thinktankJeremy Hunt's financial planning is dubious" and lacks credibility" and the chancellor should not announce tax cuts in next week's budget if he cannot lay out how he will fund them, an economic thinktank has said.The Institute for Fiscal Studies (IFS) calculates that Hunt would need to find 35bn of cuts from already threadbare public services if he plans to use a Whitehall spending freeze to pay for pre-election giveaways. Continue reading...

Shoppers helped by falling energy costs and supermarket competition as meat, fish and fruit prices dropTumbling energy costs and a price war between Britain's supermarkets have slowed food inflation to its lowest rate for nearly two years in a boost for households trying to cope on stretched budgets.The cost of meat, fish and fruit dipped in February, meaning food prices rose 5% on last year, down from 6.1% in January and the lowest since May 2022, according to the British Retail Consortium (BRC) shop price index. Continue reading...

Chancellor is considering cutting billions more from public spending to pay for reductions in tax or NIBritain's stretched public services will buckle under the weight of the spending cuts being planned for after the election, economists have warned, as Jeremy Hunt prepares for another round of tax reductions in next week's budget.Experts say the level of public sector spending pencilled in for the next parliament would mean cuts equivalent to those undertaken by David Cameron's government from 2010 to 2015. Some have warned the next government will not be able to implement them, and will be forced either to raise taxes or borrow more to fund emergency spending. Continue reading...

Former shadow chancellor is one of the authors of a new academic paper on how to bridge the regional divideBritain needs a 20-year cross-party consensus to level up the economy and unleash the untapped potential of regions outside London and the south-east, the former Labour shadow chancellor Ed Balls has said.Balls, one of five co-authors of an academic paper on bridging the UK's regional divide, said it was vital that Labour and Conservative politicians put aside their differences in order to embed necessary funding and governance reforms. Continue reading...

As the budget looms, the chancellor has very little scope to deliver the sort of measures that might make people vote ToryFor many of us, the dream is a detached home with a garage and an acre of land, according to the most searched property terms of the last year. The dream is out of reach for most people, and so is another popular item - an annexe - which entered the top four in Rightmove's list for the first time in 2023.This could be one reason why the gambling industry generates annual sales of 15.1bn, and 4.2bn in tax for the exchequer. Continue reading...

Kyiv could require $500bn to get the country back on its feet. But Moscow has so little debt that even sanctions have not done much damage ... yetFactories destroyed. Roads blown to pieces. Power plants put out of action. Steel exports decimated. A flood of refugees out of the country. Ukraine - the poorest country in Europe - has paid a heavy economic price for a two-year war against Russia waged almost entirely on its own soil.The figures are stark. More than 7 million people - about a fifth of the population - have been plunged into poverty. Fifteen years of human development have been lost. In the first year of the war, the economy contracted by 30%. Continue reading...

Rolling coverage of the latest economic and financial news, as UK's budget surplus doubles year-on-year... and BT Tower is sold to hotel chain

Analysts say figures give chancellor slightly more leeway for tax cuts before general election

Beijing must be more ready to support countries facing distress, says deputy chief economistChina holds the key to speeding up debt relief and ending the silent crisis" that is holding back attempts to tackle poverty in the world's poorest countries, a senior World Bank official has said.Ayhan Kose, the Bank's deputy chief economist, said Beijing needed to be more active in negotiations to provide financial support for those countries already in, or close to, debt distress. Continue reading...

Readers respond to articles by Yanis Varoufakis, Polly Toynbee and George Monbiot on Labour's economic policiesYanis Varoufakis makes a compelling argument for a more ambitious economic offer from Labour (Why is Labour still using the self-defeating, discredited maxed out credit card' analogy?, 15 February). What makes economic sense to those of us on the left is, in an election year, unlikely to cut through to an electorate of small-c conservatives, backed by a big-c Conservative press.Since Margaret Thatcher erroneously equated a national economy with a household budget, borrowing to invest comes up against the mythical creature of national debt. There is a not unjustified sense in the country that whatever economic policy is enacted, the less well-off will pay for it. I suggest that it is inequality that makes cowards of us all.

Andrew Bailey tells MPs there are signs that UK economy is picking up, after GDP shrank in the last two quarters

Bank's governor predicts Britain's economy will receive a boost when interest rates start to fall later this yearBritain is showing signs of recovery from its mild recession and will receive a boost when interest rates start coming down later this year, the Bank of England governor has said.Andrew Bailey rejected accusations that Threadneedle Street's reluctance to cut borrowing costs despite falling inflation meant it was behind the curve" and made it clear rate cuts were coming. Continue reading...

America's robust economic indicators under the president have not been reflected in opinion polls - but that could be changingJoe Biden has spent most of his presidency insisting to Americans that the economy is on the right track. Poll after poll has shown that most voters do not believe him. That may be changing.After months of resilient hiring, better-than-expected economic growth and a declining rate of inflation, new data shows that Americans are becoming upbeat about the US economy, potentially reversing the deep pessimism Biden has struggled to counter for much of the past three years. Continue reading...

Insecure jobs and high housing costs make it hard to maintain decent living standard, says abrdn Financial Fairness TrustBritain's insecure jobs market and high housing costs are leading to the growth of a precarious middle class struggling to maintain a decent living standard on household incomes as high as 60,000 a year, a report has said.A study released by abrdn Financial Fairness Trust, a research body set up by the fund manager, said the uncertain nature of work meant there was a one in three chance that someone earning a middle income today would not be doing so next year. Continue reading...

TUC call follows admission by CBI president that it is pushing party to soften its plansUnion leaders have warned business groups against pushing Keir Starmer to dilute plans for sweeping reforms of workers' rights and for a ban on zero-hours contracts.As the Labour leader comes under pressure from industry to scale back its shake-up of employment laws, the Trades Union Congress (TUC) said the plans were extremely popular" with voters and good for the economy. Continue reading...