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Updated 2024-12-23 23:15
Weaker economy, higher inflation: Bank of England’s dilemma
Differing experts have urged the Monetary Policy Committee to both cut interest rates and to raise themTurn up. Take the temperature of the economy. Raise interest rates. That’s the been the pattern from the responsible technocrats at the Bank of England for more than a year now – and they show no sign of stopping.Between the depths of the global financial crisis in March 2009 and the start of the Covid-19 pandemic, interest rates were changed only five times, and three of those were in response to unexpected shocks: one after the Brexit vote in 2016, and two at the arrival of the pandemic in 2020. There was one period of more than seven years when interest rates were pegged at 0.5%. Continue reading...
Does Britain really regret Brexit? – Politics Weekly UK
It’s been three years since the UK officially left the EU. This week the IMF has predicted we will be the only major global economy to shrink this year. Plus opinion polls suggest people are regretting their vote. The Guardian’s John Harris is joined by columnist Rafael Behr, Brexit correspondent Lisa O’Carroll and economics editor Larry Elliott to look at what Brexit has delivered Continue reading...
Fed announces smallest interest hike in a year as inflation ‘eases somewhat’
Quarter-point increase to a range of 4.5% to 4.75% signals a slowdown in Fed’s fight against soaring inflationThe US Federal Reserve signaled a slowdown in its fight against soaring inflation on Wednesday, announcing its smallest hike in interest rates in almost a year.After its latest meeting, the Fed announced a quarter-point increase in its benchmark interest rate to a range of 4.5% to 4.75%, the smallest increase since March last year. “Inflation has eased somewhat but remains elevated,” the Fed said in a statement adding that “ongoing increases” will be appropriate as it seeks to bring prices down. Continue reading...
The Guardian view on economics in the media: poorly communicated, poorly understood | Editorial
Economics affects us all, yet is too often treated as an abstract field fenced in by impenetrable rulesThe statistical football of this week was lobbed all the way from Washington. From its US headquarters, the International Monetary Fund predicted the UK would be the worst-performing major economy of the year, and the only one to plunge into recession. The news dominated BBC coverage and Westminster debate for the morning, a useful stick both to poke the chancellor, Jeremy Hunt, and to gauge the bleakness of the outlook.But why? Why a mere prediction, rather than an actual economic fact? Why the IMF’s forecast, when it is usually wrong and there are already plenty of other projections that are, in fact, even more pessimistic? Most important of all, why fixate on GDP when the statistic bears no direct relation to most people’s daily lives, and a recent study funded by the Office for National Statistics showed that more than half of Britons don’t even know what the term means? Continue reading...
Truss and Brexit have sunk Britain’s economy – and the right is in deep denial about both | Martin Kettle
The global economy is hardly booming, but the country is at the bottom of the pile of developed nations for two clear reasonsThe International Monetary Fund could hardly have made it clearer this week. The chronic British disease, the underlying one that marks out the UK from the developed world crowd, is our low economic growth.The IMF’s revised forecasts for 2023 certainly make stark reading for Rishi Sunak. Last week, at a cabinet awayday at Chequers, Sunak told colleagues they would be judged on five issues at the next election, of which one would be their success in expanding the economy. Yet just a few days later, the IMF revised its UK growth forecast down from the very modest 0.3% increase it posted three months ago to a 0.6% contraction.Martin Kettle is a Guardian columnist Continue reading...
Republicans aren’t going to tell Americans the real cause of our $31tn debt | Robert Reich
The rich used to pay taxes. Now they loan money to the US government – at a profit that everyone else pays forThe dire warnings of fiscal hawks are once again darkening the skies of official Washington.They’re demanding that the $31.4tn federal debt be reduced and government spending curtailed – thereby giving cover to Republican efforts to hold America hostage by refusing to raise the debt ceiling.Robert Reich, a former US secretary of labor, is professor of public policy at the University of California, Berkeley, and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com Continue reading...
UK curbs on international student visas would be ‘act of economic self-harm’
University leaders fear billions being lost as a result of battles within government over immigration policyVice-chancellors fear billions of pounds could be lost because of new restrictions on international students, the result of internal government battles over immigration policy.University leaders have been briefed that No 10 may side with the Home Office in supporting restrictions on international students applying to UK universities that could amount to “an act of economic self-harm”, despite strong opposition from ministers and officials from various departments. Continue reading...
UK house prices fall for fifth month in a row
Average cost of home now 3.2% below August 2022 peak as mortgage demand slumpsHouse prices in the UK continued to fall in January, sliding for the fifth month in a row, according to Nationwide, pushing the average cost of a home 3.2% below the peak seen last August.The cost of a home dropped by 0.6% in the first month of the year compared with December 2022, according to the building society’s monthly survey. Continue reading...
Sorry, Jeremy Hunt – we older people want to work. But bosses just don’t want us to | Dorothy Byrne
The chancellor says that Britain needs us oldies back in employment, but the discrimination we face is an outrageThe chancellor, Jeremy Hunt, a youngster of 56, is concerned that there are about 300,000 fewer people in employment than pre-pandemic, and has urged us oldies to get back into the workplace. He declared last week that “Britain needs you”. However, at the same time, a survey of more than 1,000 UK managers in business and the public services found that only 42% of them were open to a large extent to hiring people aged 50 to 64.To this I say, 64? That’s young. I was 69 when I took my current job as college president of Murray Edwards College, Cambridge University. And, if I may say so, I think I do it very well – not despite the fact that I am old, but because of my age. I’ve got vast experience of managing organisations. I am older than nearly everyone I work with at Cambridge. I enjoy saying to all these awfully clever people: “Speaking with the wisdom of age …”Dorothy Byrne is president of Murray Edwards College, Cambridge, and the former head of news and current affairs at Channel 4 Continue reading...
UK benefit changes have pushed people into dead-end, low-paid jobs, says IFS
Tougher rules have boosted employment but jobs offer scant career progression and contribute little to tax revenueTougher benefit rules have boosted employment in the UK in the past 25 years but only at the expense of trapping workers in dead-end jobs, according to a leading thinktank.The Institute for Fiscal Studies (IFS) said successive waves of welfare changes since the late 1990s had imposed more stringent conditions on those claiming jobless benefits and increased the incentives to find a job. Continue reading...
UK supermarket price inflation hits record high, adding £788 to annual bills
Milk, eggs and dog food were grocery items with fastest price rises, figures from Kantar showBritain’s retailers have said shop price inflation has yet to peak this year, with the cost of basic essentials expected to remain high, after figures showed grocery prices accelerating at the fastest rate on record.The British Retail Consortium said the price of food and drink, clothing and other items sold in shops and online would continue to rise at a rapid pace, even if the UK’s official inflation rate for all goods and services fades over the coming months. Continue reading...
Liz Truss’s growth agenda still haunting the corridors of Westminster
Conservative Growth Group rises out of ashes of shortest-serving PM’s tenure, but Truss herself is keeping a low profile publiclyPolitical rehabilitation is a gruelling exercise: no more so than for Liz Truss, who was consigned to the history books as Britain’s shortest-serving prime minister having shattered the Conservatives’ mantel for careful stewardship of the economy.But she is persisting, once again stalking the corridors of Westminster and keen to ensure her fiery campaign to “go for growth” does not tank like the markets did in response to the mini-budget last September. Continue reading...
Steve Bell on bad news about the UK’s economic prospects – cartoon
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The enemy within? Guardian readers and the 1% | Letter
Tim Worstall is willing to bet a substantial sum that a quarter of the Guardian readership is part of the global 1% by wealthNesrine Malik tells us the system is rigged in favour of the 1% by wealth (Opinion, 23 January). Entry into the global 1%, by the definition used by Oxfam, requires $1m in assets. As the Office for National Statistics tells us, that’s around the 75th percentile of British households by wealth. In other words, 25% of British households are in the top 1% of the global wealth distribution. I’d be willing to bet a substantial sum that 25% of the Guardian’s readership is too. As Pogo said in Walt Kelly’s strip cartoon for Earth Day in 1971: “We have met the enemy and he is us.”
Why is the UK economy doing worse than the rest of the G7?
Factors behind IMF’s latest forecast which shows UK will be only large economy to contract this yearThe International Monetary Fund has warned that Britain is expected to be the only large industrialised country to face a shrinking economy this year.The Washington-based fund upgraded its forecast for most leading economies but said it expected the UK economy to contract by 0.6% this year – a level 0.9 percentage points worse than that which it had pencilled in just three months ago, and slower even than that for sanctions-hit Russia. Continue reading...
Britain to be worst-performing major economy this year, warns IMF; UK mortgage approvals tumble and company insolvencies surge – as it happened
Britain is the only G7 economy forecast to shrink in 2023, the IMF says, as higher energy prices, rising mortgage costs and increased taxes hit growth.
Bad economics at the BBC enabled Tory austerity and its aftermath – and it knows as much | James Meadway
Too many journalists don’t get ‘basic economics’, an internal review says. Imagine the effect that’s had on UK politicsHow different might the last decade of British politics have been if the public had been better informed about economics? It’s the inescapable thought I had when reading through the BBC’s newly published “thematic review” into its coverage of “taxation, public spending, government borrowing and debt output”.Would a public not spoon-fed mush about the supposed perils of government borrowing have been so ready to accept David Cameron and George Osborne’s austerity in the early 2010s? Would Labour’s then leadership have felt so compelled to support spending cuts – a position that helped lay the ground for Jeremy Corbyn’s anti-austerity leadership bid? Might the Brexit vote have gone differently?James Meadway is director of the Progressive Economy Forum Continue reading...
Business insolvencies jump 30% as 22,000 firms go bust in 2022
Figures for England and Wales likely to worsen as UK goes into recession, say analystsBusiness insolvencies jumped 30% to a 13-year high in 2022 as government support programmes that offered companies protection from their creditors during the pandemic came to an end.Soaring costs and weakening consumer demand in the second half of last year also combined to force many firms into liquidation, said analysts who predicted the situation was likely to worsen as the UK economy moves into recession this year. Continue reading...
UK demand for mortgages slumps as interest rates deter buyers
Bank of England figures also reveal many households are dipping into savings, rather than using credit cardsDemand for mortgages has collapsed to its lowest level since the depths of the 2020 lockdown as potential homebuyers are deterred by rising interest rates, the latest official figures show.The Bank of England said the number of home loan approvals had dropped to 35,600 in December from 46,200 in November – the fourth monthly fall in a row. Continue reading...
UK held back by staff shortages, Brexit and mortgage costs, says top economist
Paul Johnson responds to IMF warning that UK will be weakest major G7 economy this year
Can a trillion-dollar coin end the US debt-ceiling standoff?
Advocates say such a coin would be one option to bypass the debt ceiling, but others believe the measure would not be legally soundPicture this: debate over the debt ceiling is in the 11th hour and the US is almost reaching default.Members of Congress are hurrying around the US Capitol, holding press conferences and getting into arguments. As Republicans and Democrats rail against each other, an unlikely savior appears. A platinum coin is minted as a machine stamps it with “One Trillion Dollars”, which is then given to the US central bank. Continue reading...
Britain the only G7 economy forecast to shrink in 2023
IMF says UK economy is likely to contract 0.6% as rising interest rates and higher taxes take tollBritain is expected to be the only major industrialised country to see its economy shrink this year after the impact of Liz Truss’s brief premiership prompted a sharp growth downgrade from the International Monetary Fund.Adding to growing political pressure on Rishi Sunak after the sacking of the Conservative party chair Nadhim Zahawi, the Washington-based IMF warned on Tuesday it expected the UK economy to contract by 0.6% this year – 0.9 percentage points worse than it had pencilled in just three months ago and slower even than sanctions-hit Russia. Continue reading...
Germany on brink of recession as economy shrinks; central banks may raise interest rates to 15-year highs this week – as it happened
German GDP shrank by 0.2% in Q4 2022, worse than expected, as investors anticipate borrowing costs to be hiked again this week
Poor customer service costs UK firms billions – so why can’t they get it right?
New research estimates that staff spend an average of one day a week dealing with problems. But as our readers tell us, some companies find a way to go the extra mileSince the Covid lockdowns, many companies have scaled down customer service, extending deadlines for complaint resolution and reducing staff. Some have removed helplines, leaving customers reliant on ineffectual chatbots.As a result, traders are taking record amounts of time to resolve issues, and taking record hits to their profits and reputation.I ordered a dress from fashion brand Nancy Mac. It was beautifully made but, sadly, not right on me. I emailed the company to ask its advice. It sent me two more dresses in different sizes and lengths to see if they would be more suitable. It also offered to make a dress in a preferred length at no extra cost, and the owner telephoned me to check I was happy with their garments. The returns were free. I have rarely come across such excellent and personal customer service.
Bank of England poised to raise interest rates for 10th time in a row
Policymakers face balancing act between driving inflation down and risk of deepening economic slumpThe Bank of England is poised to raise interest rates for the 10th time in succession when its policymakers meet this week in a further squeeze on the finances of mortgage holders and businesses.Financial markets expect a 0.5 percentage point increase in the central bank’s base rate to 4%, its highest level since the 2008 financial crisis. It comes after nine straight rate increases from the Bank’s monetary policy committee (MPC) since December 2021. Continue reading...
Dividends from UK-listed firms up 16.5% in 2022, far outstripping pay rises
Rise in share income particularly steep for investors in banks and oil companiesThe regular dividends that investors receive from owning shares in UK-listed companies soared by 16.5% in 2022, far outstripping wage growth in either the private or public sector.Investors’ returns from underlying dividends – excluding volatile one-off payouts – reached £84.8bn during the year, partly owing to a £3.8bn boost from the weakness of the pound, which inflated the figures for dividends paid in dollars. Continue reading...
Sunak’s sitting on the sidelines is penny wise and pound foolish in uncertain times | Richard Partington
PM needs to unfreeze from headlights of dire UK economic position and partner business in boosting investmentAs he stood on the steps of Downing Street for the first time as prime minister, Rishi Sunak said the task at hand was simple. Britain was facing a profound economic crisis, reeling from the mistakes of his predecessor, the Covid pandemic and Russia’s war in Ukraine. Confidence and stability had to be restored.This week Sunak will reach 100 days in power – already more than twice Liz Truss’s disastrous tenure. But while progress has been made since last October to repair the damage of the “true Tory budget”, stopping the bleeding was the easy bit. When it comes to restoring confidence with a vision for the future of Britain’s economy, no clear direction has been set. Continue reading...
Hunt became chancellor after a Tory tax calamity. History suggests he’s doomed
Like Roy Jenkins and Kenneth Clarke before him, he can do little but tackle a crisis bequeathed to him by Conservative follyJeremy Hunt has set a course for the Conservatives that will surely send the party to defeat at the nextelection. The chancellor, emulating two of his predecessors, can do little and achieve even less over the next 18 months other than his twin objectives – to oversee a fall in inflation and restore trust in the UK’s public finances.The sense of “declinism” that he said on Friday was undermining Britain’s recovery will become more prevalent, not less, under his stewardship, playing into Labour’s hands. Words rather than action will be the order of the day for him, because bringing down the annual budget deficit will deny him the funds needed to boost public spending. The right wing of his party will also prevent him from intervening to solve problems that should, in their view, be left to the market. Continue reading...
Why UK house prices could plunge by 20% after the latest interest rate hike
Property market has defied gravity for years but analysts say rising mortgage rates will mirror the 1980s price crashBritain’s estate agents normally radiate optimism but they will be watching anxiously at noon next Thursday when the Bank of England is expected to announce the latest blow to a rapidly weakening property market.Crunch time has arrived for a sector that for years has appeared to defy gravity. Threadneedle Street’s monetary policy committee (MPC) is poised to raise official borrowing costs for a 10th meeting in a row, with mortgage approvals already running 30% below their pre-pandemic levels and house prices down by 4.3% from last August’s peak, according to the Halifax bank. Continue reading...
The Guardian view on Tory austerity: an unpopular policy returns | Editorial
Public spending is needed to green the economy and repair public services. But the chancellor plans £100bn in cutsSir Rod Stewart is a Tory who backed Boris Johnson in 2019. So it was a surprise to hear the 78-year-old singer, when asked about recent strikes by NHS workers over pay, telling Sky News this week that he was on the nurses’ side not the Conservatives’. “I personally have been a Tory for a long time, but I think this government should stand down now and give the Labour party a go at it. Because this is heartbreaking for the nurses. In all my years of living in this country, I’ve never seen it so bad.”Polling suggests this is a widely held sentiment. The country is in a mess and everyone but ministers can see it. It is not “declinist” to say so. The government bears the bulk of the responsibility for failing to keep the trains running, the classrooms open or the emergency wards working. Public sector workers are fed up seeing their wages fall behind the cost of living. They have every right to feel aggrieved. Private sector industrial disputes are being sensibly settled – with pay awards outstripping those in the public sector. Yet the government doesn’t seem bothered about resolving industrial disputes. Continue reading...
Jeremy Hunt overdoes the Es: why his economic plan is a letdown
Speech on ‘enterprise, education, employment and everywhere’ contained only vague, empty promisesBrexit will shake Britons out of their comfortable torpor, turn them into risktakers and put the UK at the forefront of the digital revolution – that was Jeremy Hunt’s message in his much-trailed speech on growing the UK economy.The chancellor came to Bloomberg’s HQ in the City of London on Friday seeking to raise the country’s spirits, hail the split with Brussels and dispel the “declinism” he says saps Britain’s energy. Continue reading...
How to fight inflation? (Spoiler alert: not with interest rate rises) | Joseph Stiglitz
US inflation is mainly supply-side driven so further rate hikes will have little to no effect – and cause deep problems of their ownDespite favourable indices, it is too soon to tell whether inflation has been tamed. Nonetheless, two clear lessons have emerged from the recent price surge.First, economists’ standard models – especially the dominant one that assumes the economy always to be in equilibrium – were effectively useless. And, second, those who confidently asserted it would take five years of pain to wring inflation out of the system have already been refuted. Inflation has fallen dramatically, with the December 2022 seasonally adjusted consumer prices index coming in just 1% above that for June. Continue reading...
Jeremy Hunt to promote low-tax and private sector ‘retooling’ of industry
Chancellor also expected to tell markets that government spending will remain within strict limitsJeremy Hunt will defend the government’s vision for Britain’s economic future in a speech to City executives in London on Friday, when he will lay out plans for investment and growth.The chancellor will say he wants to promote policies that allow the private sector to retool the UK’s industrial base and reskill the workforce to generate strong growth over the next decade. Continue reading...
Britain is on track in the race to £1tn in exports | Letter
Minister for exports Andrew Bowie responds to a report saying the UK will reach its £1tn target 15 years lateRe your report (UK will be 15 years late in hitting £1tn annual export target, figures show, 22 January), we already knew that exports were previously forecast to hit £1tn by 2035 when we launched our export strategy. Indeed, that is precisely why we launched it – to speed up our “race to a trillion”, with an ambitious goal to hit that target by 2030.The Office for Budget Responsibility’s projection of £739bn of exports for 2022, used in your article, is already out of date. In the year to November, total exports of goods and services reached £741bn. The total for the whole year is likely to be around £800bn. Continue reading...
US economy grows strongly but interest rate rises starting to slow momentum
Gross domestic product increased at 2.9% annualized rate in fourth quarter but economists expect recession later this yearThe US economy maintained a strong pace of growth in the fourth quarter as consumers boosted spending on goods, but momentum appears to have slowed considerably towards the end of the year, with higher interest rates eroding demand.Gross domestic product – the broadest measure of economic health – increased at a 2.9% annualized rate last quarter, the commerce department said in its advance fourth-quarter GDP growth estimate on Thursday. The economy grew at a 3.2% pace in the third quarter. Economists polled by Reuters had forecast GDP rising at a 2.6% rate. Continue reading...
Scotland may have to rethink free university places pledge, analysis shows
IFS says if Holyrood’s health and climate policies remain in place other public spending will also sufferThe Scottish government could be forced to reconsider spending pledges to provide free university places and free personal care for older people in light of a squeeze on payments from the UK Treasury over the next two years, according to analysis by the Institute for Fiscal Studies.The thinktank said the Scottish National party administration would face “difficult trade-offs” if it pursued plans to increase health spending and meet net zero climate targets from a budget adjusted for inflation that is on course to shrink. Continue reading...
UK households will face more pain, says Bank’s former chief economist
Andy Haldane says starting mortgage rate rises sooner would have nipped inflation in the budThe former chief economist of the Bank of England has warned there is “more pain to come” for households and the wider economy as mortgage rate increases hit people’s bank accounts and weigh on spending.Andy Haldane, who is now chief executive of the Royal Society of Arts, said it was painful to see the effects of rising interest rates since he left the Bank of England and its rate-setting monetary policy committee in June 2021. Continue reading...
Britain, here’s a plan: stop applying old fixes to new problems. And stop obsessing about growth | David Edgerton
Crises in productivity and wealth inequality won’t be solved with ideas from the 80s. It’s not about a bigger pie – we need a different oneAccording to our politicians and most of the media, the central problem facing the British economy is a lack of growth. We need growth, we are told, to pay for this or that public service, or good wages, or housing. Just this week it was reported that the chancellor would need to plan further cuts in expenditure as a result of the Office for Budget Responsibility downgrading the UK’s growth prospects.But we should beware framing the lack of growth as the main affliction. In any case, the solutions to the growth problem have been tried and largely failed, whether the austerity of the Cameron years, the tax cuts proposed by Liz Truss and Kwasi Kwarteng or the innovation promised by all governments since the 1990s. The problems of the present are genuinely novel, and require not so much growing the British economy as transforming it. Continue reading...
$18 a dozen: how did America’s eggs get absurdly expensive?
Producers blame avian flu for the soaring costs, but one farmers’ group is airing accusations of price-gougingThe egg carton has become the symbol of inflation. By the end of 2022, prices had shot up 60% year-over-year putting a strain on holiday budgeting for households across the country.Some Americans got creative with their sourcing. Attempts to smuggle eggs across the US-Mexico border have surged, US border patrol says, with the agency reporting that the number of egg and poultry seizures rose 108% from 1 October to 31 December. Shoppers are also seeking out local farms, which can be cheaper. Egg farmers on TikTok have poked fun at this boon, calling themselves “egg dealers”, weighing their produce as if it were a kilo of drugs. Continue reading...
Inflation has hit 7.8% over the past year – so why aren’t Australians running for the hills? | Greg Jericho
Despite the highest inflation growth in 32 years, the figures suggest a peak has likely been reached
Vegetable box firm Riverford doubles payout to founder despite profits plunge
Appetite for organic food continues from Covid boom but firm warns inflation and rising costs are eating into profitsThe organic vegetable box company Riverford doubled its dividend to its founder, Guy Singh-Watson, to £850,000 last year and tripled its workers’ bonus pool to £2.4m despite a dive in profits.Sales rose 1% to £110.8m in the year to 30 April 2022, managing to top the pandemic boom. However, the company said that trading conditions and cost pressures this year and next could be some of the worst in its 36-year history after profits dived 56% to £5.2m. Continue reading...
Drop in UK growth forecast limits chancellor’s budget wriggle room
OBR tells Jeremy Hunt he will have £9bn less income to factor in amid falling tax receipts
UK business activity drops at fastest pace in two years as cost rises bite
High energy prices, rising interest rates and falling demand point to risk of recession, say analystsBusiness activity contracted at its fastest pace in two years in December as the high cost of living restricted household spending and companies cut investment, raising the prospect of a UK recession.The services sector, which accounts for about three-quarters of private sector output, faced the biggest squeeze since the second Covid-19 lockdown, according to a closely watched survey. A slump in manufacturing output dating back to last August continued in December. Continue reading...
Big budget giveaways look unlikely as Hunt forced to borrow more
Chancellor likely to tread cautiously after record December budget deficitBudget day on 15 March is less than two months away and if ever there was a government in need of a feelgood event then this is it. Unfortunately for Rishi Sunak, the state of the public finances means the chances of a voter-friendly giveaway to counter a cost of living crisis and sleaze allegations look vanishingly small.Jeremy Hunt certainly provided no hint in his response to the latest Office for National Statistics figures that he was preparing anything other than a steady-as-she-goes package. It was vital, the chancellor said, to stick to his deficit reduction plan. Continue reading...
Energy support sends UK government borrowing to December record
Spending exceeds receipts by £27.4bn, as higher interest payments also contribute to deficitGovernment payments to soften the impact of rocketing energy bills helped send UK public borrowing soaring to more than £27bn last month – the highest figure for December since modern records began 30 years ago.The latest bulletin on the health of the UK’s finances from the Office for National Statistics showed government spending last month exceeded receipts by £27.4bn. Continue reading...
The CBI is right. The UK needs a growth plan | Nils Pratley
Business lobby head deserves response after government sloth on green investment and tax incentivesThe CBI billed it as a “major speech”, which is a judgment best left to others, but, yes, Tony Danker, the director general of the CBI, made a couple of excellent points on Monday as he addressed the current obsession in UK boardrooms: where is the national plan for growth?First, it’s time for the UK to stop congratulating itself of having built so many offshore windfarms, and understand that “a subsidy arms race”, as Danker put it, is under way in green investment. The dramatic phrase may sound like a plea for corporate handouts (and, up to a point, it is) but it is also a widely held assessment of President Joe Biden’s misleadingly named Inflation Reduction Act. A $369bn (£298bn) package to direct subsidies towards green technologies is enormous and has the potential to change the investment landscape and increase the gravitational pull of the US. It is a hard piece of legislation to ignore. Continue reading...
Levelling-up grants don’t make up for cuts to regional funding | Letters
Jim Bamford says mainstream funding needs to be rebalanced; plus letters from John Marriott, Joanna Christina and Les BrightGovernment spending overall is planned to be £1,182bn in 2022-23. The levelling up expenditure announced last week was just £2.1bn – less than 0.2% of that (Editorial, 18 January). It is the way that the other 99.8% is spent that has created the gross regional imbalance that so disfigures Britain’s economy. Mainstream funding has depressed the north – and other areas outside London, such as the West Country – and it is that mainstream funding that needs to be rebalanced if levelling up is ever to become real.A good place to start would be with bus services, on which the government is overseeing terminal decline outside London just when the cost of living and climate crises demand a “London solution” (ie public control and ownership) for the whole country. And judicious spending could solve the perpetual chaos on the north’s railways, so frequently reported but rarely with solutions offered.
CBI boss urges Sunak to show more ambition on economy
Tony Danker’s ‘major’ speech on Monday likely to be viewed as rebuke of No 10 and Treasury policyThe head of the UK’s leading business organisation is to call for Rishi Sunak to show more ambition on the economy, warning that the country risks being left behind on green growth and that a cull of EU laws could scupper a recovery.While stressing that he did not want to be seen as a “doomster or gloomster”, Tony Danker, director general of the Confederation of British Industry (CBI), is to use what the organisation is billing as a “major” speech to call for action on several fronts. Continue reading...
Impending UK recession could be twice as bad as anticipated, say analysts
Contrary to other recent economic analysis the business consultancy EY forecasts 0.7% drop in GDP this yearThe UK’s impending recession could be twice as bad as previously thought, according to leading economic forecasters at the business consultancy EY.Reduced government support, higher taxes and an overall worsening outlook have all led the firm’s analysts to conclude that the next three years could be worse than they anticipated three months ago. Continue reading...
UK will be 15 years late in hitting £1tn annual export target, figures show
Exclusive: Forecasts predict exports will fall to £707bn next year and target will not be reached until 2035Ministers have been accused of leaving a “record of failure and broken promises” as internal forecasts show Britain will be 15 years late in achieving its £1tn annual export target after being hit by Brexit.Projections from the Department for International Trade (DIT) show the value of UK exports will not reach £1tn until 2035, based on current trends, with the total due to fall to £707bn next year. Continue reading...
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