Proposals said to include forcing large exporters to convert up to 80% of their foreign currency into roublesVladimir Putin is reportedly planning to hold a meeting with Russian policymakers on Wednesday in order to discuss reintroducing some capital controls to help prop up the struggling rouble.Citing a Russian finance ministry proposal, the Financial Times said large exporters could be forced to convert up to 80% of their foreign currency into roubles in order to raise demand for the currency. Continue reading...
UK regular pay growth highest since 2001 while unemployment rate rises unexpectedly; rouble recovers afters Bank of Russia raises rates at extraordinary meetingThe statement doesn't mention the rouble, which dropped to its lowest level in nearly 17 months yesterday. The Russian currency has been boosted by the central bank's move.It now takes 95 roubles to buy a dollar, whereas yesterday the exchange rate was at 102 roubles per dollar at one stage.The decision is aimed at limiting price stability risks.Inflationary pressure is building up. As of 7 August, the annual rate of inflation rose to 4.4% while current price growth rates continue to increase. Over the last three months current price growth amounted to 7.6% on average in annualised terms on a seasonally adjusted basis. The same core inflation measure went up to 7.1%. Continue reading...
Bank will discuss interest rate after high spending on war in Ukraine and drop in export revenues put further pressure on Russia's economyRussia's central bank has announced it will hold an extraordinary meeting on Tuesday to discuss the level of its key interest rate after the rouble fell to its weakest point in almost 17 months.The currency has been steadily losing value since the beginning of the year and slid past the psychologically important level of 100 to the dollar on Monday morning. Continue reading...
Only serious, long-term business investment will help structural problems and inequalitiesBritain's economy has barely grown for 18 months. The level of activity today is pretty much the same as it was when Russia invaded Ukraine in February 2022 and gave an added boost to already strong inflationary pressure.The sideways drift is noteworthy in itself. Economies don't very often have prolonged periods when they operate at stall speed; they either bounce back or slip into recession. Not since the late 1950s has the UK experienced anything like its recent torpor. Continue reading...
Britain depends on the kindness of strangers to get by in the world. It doesn't have to be like thisBritain has its back against the wall to an extent unparalleled in its peacetime history. In all the other financial struggles we have faced - the currency crises of 1931, 1949, 1976 and 1992 - we could fight our way out by belt-tightening and devaluing the pound within a structure of secure trading relationships, anchored first by empire and later the EU.Our international assets exceeded our liabilities by a huge degree. Our national debt was well structured, built on long-term bonds whose servicing requirements were always manageable. We retained great industrial strengths. We were fundamentally creditworthy. Even when the financial crisis broke in 2007/8, the low national debt meant the country could put its balance sheet behind its banks and bail them out. Continue reading...
Paul Johnson, of the Institute for Fiscal Studies, issues plea for honesty from Labour and the Conservatives about tax and spending choices ahead of electionUnveiling significant tax cuts before next year's general election would put Britain's scary" public finances in further peril and risk the nightmare scenario of even higher interest rates, one of the country's most influential economists has said.Paul Johnson, director of the Institute for Fiscal Studies, also made a plea for honesty from both main parties over the profound tax and spending choices they would face should they win power. Continue reading...
The MPC will look closely at this week's earnings and inflation figures, but energy volatility could also come into playThere is a firm view in the City that Bank of England policymakers have at least one more interest rate rise in them, but much depends on the latest official prices data - out this week - and how quickly inflation is falling.Financial markets are betting that there is a 80% chance of a 0.25 percentage-point rise, to 5.5%, when the Bank's monetary policy committee (MPC) next meets on 21 September. Continue reading...
Data suggests prices are rising even though production costs are flat. Yet wages remain policymakers' chief concernThere is a chart in the Bank of England's latest report on the economy which illustrates that price gouging may still be a factor in pushing up inflation.What unions and academics have complained about for more than two years - and policymakers at the central bank have downplayed - is that corporate profits could be pumping up inflation as much as rising wages. Continue reading...
Joe Biden taps C Kirabo Jackson, a labor economist known for research on economics and education, for CEA roleJoe Biden is tapping C Kirabo Jackson, a labor economist whose research advocates robust public spending on schools, to fill out the president's three-member Council of Economic Advisers (CEA), according to a White House official.The selection suggests public education will be a key area of focus for Biden's brain trust ahead of a 2024 re-election bid expected to turn on the strength of the economy. The position does not require Senate confirmation. Continue reading...
UK in bottom half of income table across 38 rich nations as US and Italy see growth but Canada, France and Germany declineA sharp rise in tax payments and cuts to energy subsidies in the UK were to blame for a steep fall in household incomes during the first three months of the year, according to the Organisation for Economic Cooperation and Development (OECD).In a review of its 38 member states, the OECD said the UK was in the bottom half of the income table after households faced a steeper rise in tax payments than their counterparts in the US, France and Germany. Continue reading...
Consumer price inflation data shows prices fell by 0.3% year on year in JulyChina's economy has fallen into deflation after consumer prices fell year on year last month for the first time in more than two years, official data shows, as slowing domestic spending weighs on the country's post-Covid economic recovery.The consumer price index, the main gauge of inflation, fell 0.3% in July, the National Bureau of Statistics of China (NBS) said, having flatlined in June. A survey of analysts had anticipated a 0.4% year-on-year decline. Continue reading...
Trade with rest of world is shrinking and youth unemployment is at 20% but state interventions are expectedChina's economy is struggling. The recovery after the lifting of Covid-19 restrictions is faltering. Its trade with the rest of the world is shrinking. A decade-long boom in house prices has come to an end.The most obvious manifestation of the troubles besetting the world's second biggest economy is that China is now officially in deflation. In the US, the UK and the eurozone, prices are rising - albeit not quite as fast as they were a few months ago - but in China they are actually falling. Continue reading...
Report says wealth gap would be wider if not for over-priced or ineffective services such as healthcare in USThe average US household is almost a third richer than its UK counterpart and most of this difference is down to housing being cheaper in the US, according to a study by a leading thinktank.If it were not for the fact that homes are 40% less expensive a square metre on average in the US - allowing them to live in much larger properties for the same outlay - US households would have the same standard of living as their counterparts across the Atlantic. Continue reading...
Economic experts say it will take until third quarter of 2024 for output to return to pre-pandemic peakRishi Sunak will fight the next election against a backdrop of an economy suffering from five years of lost growth and a widening of the gap between the prosperous and less well off parts of Britain, a leading thinktank said on Wednesday.The National Institute of Economic and Social Research (NIESR) said it would take until the third quarter of 2024 for UK output to return to its pre-pandemic peak and that there was a 60% risk of the government going to the polls during a recession. Continue reading...
Insolvencies rocket as army of small firms - seen as backbone of the sector - struggle with falling demand, rising interest rates and higher costsIt's tough out there," says Steve Midgley, the managing director of Fairgrove Homes. His east Midlands firm, which builds about 50 homes a year, is one of Britain's army of small housebuilders that are struggling with falling demand, rising interest rates, labour shortages, and high material and wage costs.It's taking longer for people to sell their own house," says Midgley. So it's taking vastly longer to exchange contracts. After the reservation, we're talking three or four months, whereas at one time we'd have had that down to four to six weeks. And that all puts stress on the working capital, the work in progress and everything." Continue reading...
Decline in July is fourth monthly fall in a row with prices dropping by 2.4% on an annual basis, says lenderThe average UK house price has fallen for the fourth month in a row, according to Halifax, which says higher borrowing costs are increasingly pushing first-time buyers to switch to smaller homes.The average price fell by 0.3% in July, the bank's monthly index showed, with a typical UK home costing 285,044, compared with a peak of 293,992 last August. Continue reading...
Firms have cut back on hiring staff and manufacturing output is at its lowest since May 2020 as supply issues continue, a survey findsBusiness confidence fell last month amid jitters over the slowing UK economy dampening company plans to hire more staff, according to a survey of more than 4,000 firms.Optimism has declined, with higher interest rates and weak global demand contributing to gloom across the services and manufacturing sectors. Continue reading...
The former governor of India's central bank now steers a tricky course between supporting free markets and campaigning against unfettered risk-takingHe was once talked about as a possible successor to Christine Lagarde as boss of the International Monetary Fund. Then there were hints he might become governor of the Bank of England.But Raghuram Rajan says neither job was ever on his radar, despite his position in the front rank of central bankers after a stint running the Reserve Bank of India until 2016. Continue reading...
by Kalyeena Makortoff Banking correspondent on (#6DKHS)
Participants also including banks and pension funds will have to reveal how activities could harm financial systemMany of the world's largest hedge funds will reveal whether their investment activities risk amplifying economic shocks and harming the UK's financial system, after being recruited into the first-ever stress tests involving the shadow banking sector.The Bank of England has released the names of more than 50 City institutions taking part in the exercise, which will measure the ways that banks and non-bank financial institutions - often referred to as the shadow banking sector - affect financial stability. Continue reading...
Western economies must adopt industrial strategies, boost R&D and exploit new tech to prosper - Americans realise this better than EuropeansThe US economy is growing more quickly than expected. The eurozone avoided a winter recession after all. In the UK, the Bank of England says the economy is showing surprising resilience.Everywhere in the developed west the story seems to be the same. Countries are coping with the tough anti-inflationary measures imposed by central banks over the past 18 months or so. Inflation has peaked and there has been no sharp increase in unemployment. Recession fears are old news. The talk now is of soft landings across the board. Panic over. Continue reading...
Like characters in Dario Fo's farce, we complain about, but tolerate, the most damaging political scandal of our timeAt the beginning of the first Thatcher government (1979-83), the economist John Kenneth Galbraith wrote that Britain was the perfect place to conduct the dubious monetarist experiment recommended by his fellow economist Milton Friedman. This was because although Galbraith (rightly) thought the policy was crazy, British phlegm" would see us through, and the tolerant nation would not take to the streets".This memory came to mind recently when I was at the revival of that great 1970s classic Accidental Death of an Anarchist. Dario Fo and Franca Rame's farce has been updated by Tom Basden, and is a five-star triumph. The memory was evoked by the central character, the maniac", declaring: Scandal is to society what confession is to the sinner. It's a catharsis [that] fixes nothing: the hostile environments, the sewage in the seas, the peerages for political donors. And what's the result? Do we arrest anyone? Can we change anything? Of course not ... In glorious democracies such as ours, we get to moan about it instead." Continue reading...
Key data this week will offer a hint as to whether the eurozone's powerhouse can shake off recent stagnationEngine of the eurozone, industrial powerhouse, export world champion - just some of the ways Germany's economy has been described over the years.However, recent figures have indicated that the good times have come to an end, with Europe's largest economy stuck in recession. Continue reading...
Figure is less than expected in first jobs report since Fed raised interest rate to 22-year highUS employers added 187,000 jobs in July, less than expected and a sign that the labor market is cooling after a series of interest rate hikes by the Federal Reserve have driven rates to their highest level in 22 years.The jobs market has continued to add at least 200,000 new jobs each month this year, according to the US Bureau of Labor Statistics (BLS). But that compares to an average monthly gain of 400,000 in 2022. Continue reading...
That seaside staple is up by more than 50%, while car hire is up 75% ... add an item to our visual tool to see how costs have risen in the past five yearsIt's enough to make you drop your chips - official figures show that over the past five years the price of a takeaway fish supper has risen by more than 50%.A portion of fish and chips isn't the only British summer break staple that has become far more expensive since then: hotel, restaurant and bar bills have also all shot up. Continue reading...
Britain's 14th successive rise signals a grim 2024 for the economy and for Rishi Sunak's governmentThe surprise would have been if it had not happened. As a result, the markets - political markets as well as financial ones - were able to greet this week's 0.25% increase in the cost of borrowing with something resembling a collective shrug of the shoulders. This 14th successive rise, taking UK base interest rates to 5.25%, had been largely priced in. A 15th is widely expected, so the price of money for businesses and mortgage holders is likely to go on rising to levels that have not been seen since before the financial crisis of 2008.Ordinary borrowers are unlikely to be so phlegmatic. More than 1.4 million people hold variable rate mortgages. For them, the latest rise twists the screw even more tightly, piling on fresh costs to the hundreds of pounds that have been added to their monthly bills since rates began their steep climb from that distant 0.1% rate that still applied at the start of last year. Do not forget the additional deterrent effect of all this, not just in discouraging new customers from taking out new mortgages but also in the inevitable knock-on consequences for an increasingly sluggish construction sector. Continue reading...
The Bank of England has announced a quarter-point interest rate rise, taking its base rate to a new 15-year high. The Bank's governor, Andrew Bailey, said the increase, the 14th hike in a row, would support the government's efforts to bring inflation rates down. 'Low and stable inflation is the foundation of a healthy economy. High inflation hurts the least well-off the most,' he said
The reliance on Bank of England rate rises alone can't go on. In other countries, rent caps and excess profit taxes are workingThe government seems to be claiming that it's winning the fight against inflation. But we are not out of the woods yet. Inflation currently is still far too high and the Bank of England has today increased rates again to 5.25% and lowered its growth forecast. But it doesn't have to be like this. The case of Spain is a great counter-example. Its inflation has just fallen to the 2% target. How is it that it has already achieved this important milestone?The reason is more forceful management of the economy - the Spanish government took quicker, more concerted action than ours did. Spain capped energy prices by more than the UK, lowered the cost of public transport, taxed excess profits and put in place limits on how much landlords can raise rents. While also coming with costs, this kept inflation from spreading more widely and more persistently than elsewhere.Carsten Jung is a senior economist at the Institute for Public Policy Research's Centre for Economic Justice Continue reading...
We're interested to hear from people aged 50 and over in the UK about what it's like to work as couriers for delivery companies such as DeliverooOver-50s looking for work in the UK should consider delivering takeaways and other flexible jobs typically occupied by younger people, the work and pensions secretary, Mel Stride, has said.Stride made the comments during a visit to the London headquarters of the food delivery firm Deliveroo, which has recorded a 62% increase in riders aged over 50 since 2021. Continue reading...