Slower price growth, due partly to tighter Treasury purse strings, won't lift the gloom of a flatlining economyUK inflation could be found to have fallen below 5% for the first time in two years when figures for October are published this week. It would be a landmark moment for Rishi Sunak, who in 2022 promised to halve inflation from its 10.7% level.The prime minister made inflation one of the five pledges by which the nation should judge his premiership. And a drop to less than 5% in the consumer prices index could well be one of the few pledges he can comfortably say has verifiably been achieved. Continue reading...

Company cites continued political polarization' and risks to the nation's fiscal strength as reason for changeThe credit ratings agency Moody's reduced its outlook on the US government from stable to negative, citing division in Washington DC and risks to the nation's fiscal strength.While Moody's maintained the US's current top-grade AAA rating, it raised the prospect that this may be cut. Continue reading...

In 1923, the country was rocked with hyperinflation, now the retreat from globalisation is exposing the fragility of its industrial modelGermany has come a long way in 100 years. Back in November 1923, people were trundling wheelbarrows stacked high with cash through its streets to buy a loaf of bread. Now its reputation is that of an economic powerhouse.That episode of hyperinflation left deep scars on the nation's psyche. Government printing presses were working flat out to produce mountains of worthless bank notes and the currency collapse was so severe a single US dollar was worth 1tn marks. Never again" has been the mantra ever since. Continue reading...

Institutions asked to model impact of sharp price movement in wake of Liz Truss market chaosThe Bank of England has asked more than 50 City institutions to model the impact of a sharp movement in bond prices caused by a severe geopolitical shock as part of its first financial system-wide stress test.The request comes after the September 2022 crisis in bond markets and sterling that followed Liz Truss's mini-budget, when pension funds came under pressure and some were driven to near-collapse. A sharp shift in bond prices and the corresponding interest rates, or yields, laid bare major risks that certain kinds of liability-driven investing (LDI) posed to retirement savings. Continue reading...

Rolling coverage of the latest economic and financial news, as UK GDP is unchanged in July-September

Bank of England is unlikely to cut interest rates any time soon and Treasury unlikely to cut taxes due to fear of higher inflation

Zero growth also underlines impact of inflation on consumer spending and business activity

After two bad years for investors the smart money' is piling back inThe last two years have been catastrophic for investors in US Treasury bonds. By one measure, 2022 was the worst year for such investors since 1788. Bond prices are poised to fall again in 2023, making this the first time in US history that they declined for three consecutive years.But now the smart money" is jumping back in. With interest rates on 10-year Treasuries close to 5%, more than triple the levels of two years ago, yields are attractive. If the fundamental factors driving them haven't changed dramatically, then it's possible that interest rates will fall and bond prices will recover now that the inflation scare has passed. Continue reading...

Major banks are accused of a staggering lack of compassion as more borrowers fall behind on their mortgagesNewsflash: The number of mortgages in arrears has risen, partly fuelled by a jump in buy-to-let landlords falling behind on their payments.Trade association UK Finance has reported that there were 87,930 homeowner mortgages in arrears of at least 2.5% of their outstanding balance, in the third quarter of this year. Continue reading...

Nationwide's two-year fixed rate deal offered at 4.99% as lenders jostle for customers

War, economic breakdown and the climate crisis spell the end of the end of history'. But the comedy villains in charge are obliviousThe hall is shrouded in blackness, the audience ensconced in plush red seats. All heads are turned to the bright lights on stage for that annual ritual, the panto.In front of us stands Cinderella or Aladdin or Peter Pan, lost in their usual patter, and blind to the baddie looming up ...Aditya Chakrabortty is a Guardian columnist Continue reading...

Andrew Bailey says free trade demands greater international cooperation on financial rule-makingThe governor of the Bank of England has called for greater cooperation on financial rule-making, warning that Brexit has affected the openness of the UK economy".In an apparent swipe at those calling for the UK to develop a separate rulebook for banking and insurance activities, Andrew Bailey said free trade needed strong regulation based on agreements with foreign watchdogs. Continue reading...

Thinktank says stronger than expected tax revenues have given chancellor scope for bold package in autumn statementJeremy Hunt risks condemning Britain to a decade in the doldrums unless he uses this month's autumn statement to announce a 30bn-a-year investment plan to upgrade public infrastructure, a leading thinktank has warned.The National Institute for Economic and Social Research (NIESR) said the chancellor should ignore calls by Tory MPs for pre-election tax cuts and instead focus on measures to boost growth through improvements to transport, digital networks, skills and housing. Continue reading...

Retailers hope new version of top-selling board game plus Dog-E will help fuel festive sales recoveryA new version of Pictionary that pits artist against artificial intelligence and a pet robo-dog" with a wagging tail are among the toys destined to appear on Christmas lists this year as retailers pray for better sales during the key festive trading period.With the cost of living crisis looming large over another year's celebrations, the Toy Retailers Association's annual DreamToys list of the 20 hottest" gifts includes a dozen that are under 50. Among them is Pictionary vs AI (24), a new version of the classic board game that pitches (terrible) human sketches against the might of AI processing power. Continue reading...

Upmarket estate agent says prices will start to bottom out in 2024 as interest rates fall and will return to growth in 2025Britain's housing market is past peak pain" and prices look likely to bottom out by next summer, according to the estate agency Savills.The average UK house price is projected to fall by 3% in 2024, after a 4% drop this year, the upmarket estate agent and property advisory firm said in its five-year outlook. Continue reading...

Upbeat comments by Associated British Foods CEO come as grocery price rises fall to single digits for first time in 18 monthsFood inflation could be all but gone by Easter, according to the owner of Kingsmill bread, Twinings tea and Silver Spoon sugar - as long as there are no further shocks to the global system.George Weston, the chief executive of Associated British Foods (ABF), which also owns the Primark budget clothing chain, said: Food price inflation hit 20% last year and by the back of 2024 I think it will be close to zero. Continue reading...

The yield on UK government bonds drops as the City expects interest rates cuts next summer, as German factory output falls againHere's Victoria Scholar, head of investment at interactive investor, on today's grocery inflation data:UK Kantar grocery inflation drops into single digits for the first time this year.In the four weeks to 29 October, grocery inflation hit 9.7%, the lowest level since July 2022 and down from 11% in the previous month. Some prices have been falling year-on-year including for butter, dried pasta, and milk, however most prices are still going up. Although it is moving in the right direction, grocery inflation is still stuck sharply above the headline rate of inflation in the UK, highlighting the squeeze on individuals and families from the rising price of food items.Consumer spending on promotions has now hit 27.2% of total grocery sales - the highest level we've seen since Christmas last year. This is a big gear shift from October 2022 when this figure was less than a quarter. Continue reading...

Butter, dried pasta and milk among items to show drops as supermarket price rises slow

Drop in retail sales also because of consumer worries over high energy bills and mortgages, surveys suggestFears that the UK is heading for a recession this winter have intensified amid signs Britain's hard-pressed households are cutting spending as they save for Christmas and higher fuel bills.Two monthly snapshots of retail activity found shops and online outlets struggling because of consumer budgets being squeezed by dearer mortgages and the UK's lingering cost of living crisis. Continue reading...

Record level of stressed households as all but four of 39 economists in survey tip Melbourne Cup Day hike

Price tag' of non-communicable diseases, malnutrition, poverty and harm to planet is 10% of global GDP, says UN food agencyThe health and environmental damage caused by food production costs the world $10tn (8tn) a year, or 10% of global GDP, the UN said.Conditions such as diabetes and heart disease, the consequence of poor diets, account for $7.3tn, according to the Food and Agriculture Organization (FAO), which has put a price tag" on the hidden costs of the global food industry in its annual report, published on Monday. Continue reading...

Fear adds to Russia-Ukraine conflict risk and increases probability of European and of US recession'A global recession could be set in motion by the conflict in the Middle East as the humanitarian crisis compounds the challenges facing an already precarious world economy, two of Wall Street's biggest names have warned.The downbeat comments come as the City braces for another gloomy update on the UK economy, with the Office for National Statistics due to provide an update on how it fared during the third quarter on Friday. Continue reading...

In her new book, Endangered Eating, Sarah Lohman chronicles disappearing foods - and why they need protectingThe American buff goose. Amish deer tongue lettuce. The Nancy Hall sweet potato. The mulefoot hog. When food historian Sarah Lohman stumbled on these fantastical-sounding ingredients in a database of vanishing foods called the Ark of Taste, she set off on a journey across the United States to discover more ingredients and traditions that had been abandoned in the annals of history.The endeavor was the latest installment of a storied career that has included cooking 19th-century recipes at a living history museum and chronicling American cuisine in her book Eight Flavors, which documents how foods like black pepper and sriracha have helped reshape what Americans eat. Continue reading...

Britain is in a low-growth bind and too many policies have political rather than economic goalsThe prospects are bleak. For more than 70 years the British economy has grown steadily, if not always spectacularly. There have been setbacks - not least the 1970s energy shock, 1990s property crash, and 2008 financial crisis - before eventual recoveries took hold. This time is different.Should last week's forecasts from the Bank of England come to pass, Britain is heading for the weakest sustained period of economic growth of the postwar age, and quite possibly of the past century or more. Continue reading...

Donor fatigue is setting in among western states. But a Russian victory would embolden its leader to sow economic chaosUkraine's top general has admitted the fightback against Russian aggression has reached a deadlock, and the prospect of a deep and beautiful breakthrough" is unlikely.A deadlock is exactly what Russian president Vladimir Putin wants, because it allows him to plant the idea of perpetual stalemate in the minds of western leaders who, staring at a difficult economic outlook for 2024, want a settlement. Continue reading...

This live blog is now closed, you can read more on this story hereKeir Starmer is delivering his speech to the North East Chamber of Commerce now.He starts by saying they are near the A1, where there is a stretch of road that Rishi Sunak recently promised to upgrade.It's a story you see right across Britain. Infrastructure projects, some with billions already committed, businesses planning around the structures developed in rooms like this.But the projects and investment get blocked by objections, consultations, legal challenges, ballooning costs delays, delays, delays - until it's easier just to give up and move on. Continue reading...

Market cools as number of jobs added comes in lower than the 180,000 that economists had been expectingThe US added fewer than expected jobs in October and the unemployment rate rose amid signs that the white-hot US jobs market is cooling.There were 150,000 jobs added last month, according to closely watched figures from the Bureau of Labor Statistics, which was below the 180,000 predicted by economists. The unemployment rate picked up to 3.9% from 3.8%. Continue reading...

Danish company has axed 6,500 of those roles already, with global economic slowdown taking toll

Interest rates left unchanged at 5.25% as Bank signals 50-50 chance of recession by mid-2024

With a weak economic outlook and shrinking inflation the Bank risks leaving rates too high for too long

Chief says firm making record gains in market share after passing on savings to shoppers with discounted groceries

Human rights expert says US companies trap workers in poverty, forcing them to rely on food stamps and MedicaidThe UN special rapporteur on extreme poverty and human rights has called on the CEOs of Amazon, Walmart and DoorDash and the US government to address allegations that top US corporations pay such low wages that they trap workers in poverty, forcing them to rely on government-assistance programs to survive.Olivier De Schutter has written to the three major US corporations and the US government, requesting responses to numerous allegations. They include a 2020 US Government Accountability Office report that found Amazon and Walmart were listed among the top 25 employers with workers relying on the supplemental nutrition assistance program (Snap), formerly known as food stamps, or Medicaid in nine states studied, with Walmart ranked first and Amazon ranked sixth. Continue reading...

Mexico, Brazil, South Africa and Turkey have shown economic resilience despite wave of defaultsAs finance ministers and central bankers convened in Marrakech for the International Monetary Fund and World Bank annual meetings on 9-15 October, they faced an extraordinary confluence of economic and geopolitical calamities: wars in Ukraine and the Middle East, a wave of defaults among low- and lower-middle-income economies, a real estate-driven slump in China, and a surge in long-term global interest rates - all against the backdrop of a slowing and fracturing world economy.But what surprised veteran analysts the most was the expected calamity that hasn't happened, at least not yet: an emerging market debt crisis. Despite the significant challenges posed by soaring interest rates and the sharp appreciation of the US dollar, none of the large emerging markets - including Mexico, Brazil, Indonesia, Vietnam, South Africa and even Turkey - appear to be in debt distress, according to the IMF and interest rate spreads. Continue reading...

Long period of high interest rates expected, meaning higher costs for homeowners whose fixed-rate deals are coming to an endLabour has warned that more than half a million homeowners face a surge in mortgage costs before the local elections in England in May, as ministers battle to contain the damage from what is expected to be a long period of high interest rates.With the Bank of England widely expected to hold its key base rate at 5.25% on Thursday, the party released analysis that showed 630,000 more homeowners would be hit by higher borrowing costs before local elections next year. Continue reading...

An expected announcement on the future of the country's biggest steel plant has been delayed, after reports that thousands of jobs could be lost

Ireland posts biggest decline, while Germany contracts by 0.1% and France grows by 0.1%

Western companies that sell their Russian assets restricted from taking proceeds in dollars and eurosRussia has reportedly imposed additional currency controls in an attempt to prop up the falling rouble, restricting western companies that sell their Russian assets from taking the proceeds in dollars and euros.International companies that want to exit Russia after its invasion of Ukraine have to sell their assets in roubles under new government restrictions, according to the Financial Times, which cited people familiar with the matter. Continue reading...

Bank criticised by MPs for being too slow to reward savers as it announces 15% rise in net interest income and $3bn share buybackHigher interest rates helped HSBC to more than double its profits and hand over $3bn (2.5bn) to shareholders, as MPs criticised the largest UK banks for being too slow to reward savers.The London-headquartered bank said it was launching a share buyback, and paying a dividend worth 10 cents a share, after what its chief executive, Noel Quinn, hailed as three consecutive quarters of strong financial performance". Continue reading...

Rolling coverage of the latest economic and financial news, as German GDP shrinks slightly in the third quarter of the year

Remortgaging at lowest level since January 1999 as borrowers face higher repaymentsUK mortgage approvals slumped in September amid mounting signs of stress in the property market, according to official figures before the Bank of England's next decision on interest rates on Thursday.Figures from the central bank showed net borrowing of mortgage debt decreased from 1.1bn in August to a net repayment of 900m in September - the lowest since April this year. Continue reading...

Escalation of Israel-Hamas war into Middle East-wide conflict would disrupt oil supplies and stoke food prices, says BankOil prices could soar to a record high of more than $150 a barrel if the war between Israel and Hamas leads to a repeat of the full-scale conflict in the Middle East witnessed 50 years ago, the World Bank has warned.In the first major assessment of the economic risks of an escalation of the war beyond Gaza's borders, the World Bank said there was a risk of the cost of crude entering uncharted waters".A small disruption" scenario, in which the global oil supply would be reduced by 500,000 to 2m barrels a day -roughly equivalent to the reduction seen during the Libyan civil war in 2011. The oil price would rise to a range of $93 to $102 a barrel.A medium disruption" scenario - roughly equivalent to the Iraq war in 2003 - where the global oil supply would be reduced by 3m to 5m barrels a day. Oil prices would rise by 21% to 35% initially, taking them to between $109 and $121 a barrel.A large disruption" scenario-comparable to the action taken during the Yom Kippur war of 1973 - in which the global oil supply would shrink by 6m to 8m barrels a day, resulting in a 56% to 75% increase in prices to between $140 and $157 a barrel. Continue reading...

Industry leaders want three-year policy to be extended in next month's autumn statementJeremy Hunt is poised to reject business calls to use next month's autumn statement to extend a 10bn tax cut aimed at boosting corporate investment in the UK, despite growing concerns over the economy.At the spring budget in March, the chancellor introduced the multibillion-pound full expensing" investment relief by saying he wanted to make it permanent as soon as we can responsibly do so" to help kickstart economic growth. Continue reading...

Resolution Foundation says higher interest rates have led to a fall in house prices and pension potsThe recent rise in interest rates has been blamed for ending Britain's wealth boom and causing total household wealth to plunge by a quarter since the Covid-19 pandemic.A report by the Resolution Foundation, a thinktank, and Financial Fairness Trust - an independent charity historically funded by Standard Life now known as abrdn - said the fall was due to a drop in house prices and pension pots, which account for about 4 out of every 5 of total wealth, and played a leading role in rising wealth across the country over the 40 years leading up to the pandemic. Continue reading...

With wages growth and job vacancies slowing, the monetary policy committee should hold interest rates again if it wants to avoid storing up troubleThe Bank of England has waited a long time for the jobs market to cool down, and now it has.On Thursday, the central bank's interest rate setters will meet at their Threadneedle Street headquarters, and the expectation is that a rise in unemployment, a fall in vacancies and a weakening of wages growth will persuade them to leave interest rates unchanged at 5.25%. Continue reading...

Collaboration and funding are key to reversing the regional divide, but both are in short supplyThe idea that governments should act to level up Britain is nothing new. For at least a century there has been an acceptance that something needs to be done for those parts of the country initially hit by the long-term decline of cotton, coal and shipbuilding, and subsequently at the sharp end of the deindustrialisation of the 1980s.But only in recent years has regional policy become sexy, and for that we have Brexit to thank. The EU referendum was a wake-up call to Britain's political class. Continue reading...

Taxes spent wisely improve lives and attract investors - and in fact leaving the EU has made cutting them harder than everOne of the phrases which do little to help public discussion of economic and social policy is the tax burden". Often when I come across it I am reminded of a master at my grammar school who used to delight in annoying his pupils by informing us that we were the taxpayer's burden".Now, some taxes are no doubt wasted, and people have a right to approve or disapprove of the projects to which their taxes are put. But taxation is necessary for a civilised society and, as the population ages and the demands on the public purse grow, taxes are increasing as a proportion of the national income. Continue reading...

Constrained on multiple fronts by finances and resistance from both wings of his party, the PM still has a few vote-winning optionsExhausted by scandals, deflated by byelection defeats and uninspired by their leader at Conservative party conference, many of Rishi Sunak's MPs are not looking forward to the next year in politics. It's hard to muster the enthusiasm to come out fighting given everything that has happened," said one Tory adviser.But Sunak appears still to be energised by the prospect of governing for at least another 12 months - and has explicitly said he wants to get things done in the next year. What can a country achieve in 52 weeks? Watch this space," his new promotional video said this week. Continue reading...

Russian central bank says current inflationary pressures have significantly increased to a level above its expectations

Two-point rate rise surprises analysts as central bank blames 6.6% inflation on consumer demand

The future that technology elites like to imagine looks remarkably similar to the one we're inDo you support sustainability, social responsibility, tech ethics, or trust and safety? Congratulations, you're an enemy of progress. That's according to the venture capitalist Marc Andreessen.In his new self-published Techno-Optimist Manifesto, Andreessen presents his case for the advancement of technology under capitalism as virtuous" and capable of creating abundance that lifts all humans". Along the way he champions trickle-down economics (famously effective at increasing inequality), claims technology can solve any problem and suggests that slowing AI development is akin to murder. Continue reading...