Prime minister says he knows people will be anxious about rate rise but it is going to be OK'. This live blog is closed

Rolling coverage as the Bank of England lifts UK interest rates to a 15-year high, as it contnues to fight inflation

Research allays fears that rapid scaling back of production would hit people's savings and pensions hardA rapid reduction in fossil fuels, essential to avoid devastating climate breakdown, would have minimal financial impact on the vast majority of people, new research has shown.Urgently cutting back on fossil fuel production is essential to avoid the worst impacts of climate breakdown and the economic and social turmoil that would ensue. However, some opponents of climate action claim it is too expensive. They argue that rapidly scaling back fossil fuel production would leave billions of pounds of stranded assets", leading to an economic slump that would impoverish the public through a fall in the value of savings and pension funds. Continue reading...

Britain is facing a new economic era that will hurt those already struggling, and could radicalise even the previously comfortableThe sleepless nights are here again, then. It's back to the bad old days of poring over a calculator, trying and failing to make the sums add up; back to scrimping and saving, hiding from the bank, wondering dizzily what just hit us.Even before the Bank of England pushed up interest rates to 5% on Thursday, the Resolution Foundation thinktank was warning that anyone coming off a fixed-rate mortgage next year could expect their repayments to rise on average by 2,900 a year. But that's just an average: recently I bumped into a friend whose payments trebled when she remortgaged. She and her partner count themselves lucky as they're earning well enough to absorb the shock, but only by sticking to the absolute bare essentials. No more going out. No more fun stuff.Gaby Hinsliff is a Guardian columnist Continue reading...

Experts say increase from 8.5% may be insufficient to tackle surging inflation some estimate to be 110%Turkey's central bank has raised interest rates for the first time in more than two years, from 8.5% to 15%, but there is widespread concern that the move is insufficient to combat rising inflation and a continuing economic crisis.The decision marks a partial shift in the unorthodox economic policy of the president, Recep Tayyip Erdoan, under which interest rates have been frozen since March 2021 despite a sharp devaluation in the Turkish lira. Continue reading...

Critics say Bank should pay less attention to economic models and more to what is happening on the ground

Move brings borrowing costs to highest level since April 2008 as Bank intensifies efforts to control inflation

Borrowers with expiring fixed-rate or tracker mortgages face difficulties, with some saying they will be forced to sell their homes

The Bank of England is expected to raise interest rates again today, leaving millions of homeowners facing higher costs. Richard Partington reportsBritain's inflation rate remained at 8.7% in figures released yesterday. It means that when the Bank of England announces its interest rate decision at noon today, it will almost certainly raise the base rate from the current level of 4.5%.As our economics correspondent Richard Partington tells Nosheen Iqbal, this rise will pile further pain on to mortgage holders, who are already smarting from successive interest rate rises. Many took on large debts to buy homes during an era of record-low borrowing costs and are now facing monthly bills hundreds of pounds higher than they budgeted for. It comes at a time when utility bills are pinching hard and food prices are at record highs. Continue reading...

Starmer and his party seem to have concluded direct support for homeowners cannot be justified - but it's smart politics to be seen to take on the banksLabour's five-point plan" to ease the pain in the mortgage market can be boiled down to a single idea: get heavy with the lenders - the banks and building societies - to make them play nicely with over-stretched borrowers.One cannot call it a radical idea, however. First, it's in the interests of lenders themselves, up to a point, to be flexible by, say, lengthening the term of the loan, granting a payment holiday or allowing a borrower to switch to interest-only arrangements for a while. Second, many banks say they already have such policies in place, even if critics say they're not advertising them with enthusiasm. Continue reading...

Shadow chancellor Rachel Reeves says party would force banks to take a range of steps to protect borrowersLabour has piled further pressure on Rishi Sunak to take action to help struggling mortgage holders as the Bank of England prepares to raise interest rates again to levels not seen since before the 2008 financial crash.Rachel Reeves, the shadow chancellor, said on Wednesday that if Labour were currently in power, it would force banks to offer a range of support to borrowers, including letting them move on to interest-only mortgages and extending their repayment period. Continue reading...

Former health secretary says understanding important of early quarantining could have helped prevent disease spreading. This live blog is closed

The speaker had to step in after the PM's claims about the economy stretched the credulity of at least one MP at PMQIt was just after Rishi Sunak had answered Stephen Flynn's first question that the speaker intervened. The SNP leader in Westminster had merely wondered if some of the prime minister's promises to fix the economy showed that he had been taking honesty lessons from Boris Johnson. This was too much for Lindsay Hoyle. He urged MPs to be more cautious in their use of language. There was a danger that people might think Flynn was accusing the prime minister of deliberately misleading parliament.So there we had it. A new precedent. No one can now compare another MP to Boris Johnson, because to do so is to accuse them of lying. Spare a thought for Jacob Rees-Mogg. Or Jake Berry. Now officially banned from being mentioned in the same breath as their hero. From now on, to do a Johnson" is officially translated in Hansard as to habitually tell lies". Continue reading...

After taking the US by storm with her Eras tour, Taylor Swift is set to perform in Australia once again in February - and fans are frantically trying to secure a ticket.Guardian Australia opinion editor Bridie Jabour tells Gabrielle Jackson how Taylor Swift became a pop culture phenomenon and how Swiftonomics' may impact Australia's economyRead more: Continue reading...

Member of Jeremy Hunt's economic advisory council says BoE must create uncertainty and frailty", after UK headline inflation was unchanged at 8.7% in MayFalling prices for motor fuel led to the largest downward contribution to monthly inflation in May.Today's inflation report shows that motor fuel prices fell by 13.1% in the year to May 2023, compared with a fall of 8.9% in April. Continue reading...

Expected surge in costs by 2025 likely to hit people in 30s hardest, says Institute for Fiscal Studies reportMore than 1 million households across Britain are expected to lose at least 20% of their disposable incomes thanks to the surge in mortgage costs expected before the next election, the UK's leading economics thinktank has warned.Sounding the alarm as mortgage costs reach the highest levels since the 2008 financial crisis, the Institute for Fiscal Studies (IFS) said that almost 1.4m mortgage holders would see at least a fifth of their disposable income erased. Continue reading...

ONS figures show stabilising energy prices were offset by rises in cost of air fares, holidays and secondhand cars

In blow to Rishi Sunak's plans to cut taxes before general election, net debt reached 2.6tn at of end of MayThe UK's total government debt pile in May reached more than 100% of annual national income for the first time since 1961 as state borrowing more than doubled, according to official figures.In a blow to Rishi Sunak's plans to cut taxes before the general election, which is expected next year, the Office for National Statistics (ONS) said net debt reached 2.6tn as of the end of May, estimated at 100.1% of gross domestic product (GDP). Continue reading...

From gig tickets to video games to air fares, costs soared in May as food and drink prices also rose sharply

As Bank raises interest rates again and big business greedflation pushes prices higher, the PM's vow is a gamble

While the rate has fallen from its October peak of 11.1%, the figure for May remains stubbornly highUK inflation remained stubbornly high in May at 8.7% - the same as the previous month - despite a string of forecasts earlier this year predicting a sharp fall in response to tumbling energy prices.Official figures had been expected to show that the UK's consumer prices index (CPI) eased slightly last month, to 8.4%. But unlike almost everywhere else in the world, that didn't happen. Continue reading...

Borrowers who made a short-term choice after the 2008 banking crisis were lucky - current borrowers have been equally unluckyAs mortgage lending rates surge to levels not seen since the banking crisis, some borrowers are wondering whether there is something to be said for the certainty of fixing the borrowing rate for the full term of the loan.In 2007 two of the UK's biggest lenders launched 25-year fixed-rate mortgages. They were responding to a call from the then chancellor, Alistair Darling, who suggested consumers would be better off if they did not have to find a new deal every two years, typically paying charges each time. Continue reading...

Largest amount of money Kyiv previously worked with was $6bn a year in 2014, Mustafa Nayyem says

Kantar survey is released day before official figures expected to show a slight easing in UK inflation rate

Figures released on Wednesday expected to confirm UK stuck with highest inflation rate in G7Conservative MPs are increasingly split over whether ministers should intervene to defuse Britain's mortgage timebomb, as the Bank of England prepares to raise interest rates for a 13th consecutive time.In a crunch week for the economy, official figures on Wednesday morning are expected to confirm the UK remains stuck with the highest level of inflation in the G7, as the cost of living crisis continues to squeeze household budgets. Continue reading...

Jeremy Hunt faces calls to introduce mortgage interest tax relielf from Conservative MPs at Treasury Questions, and rules out price caps on food

Exclusive: Kristalina Georgieva calls for debt for climate swaps' ahead of world summit on new global financial pactPoor countries hit by climate disaster should not be forced to struggle with crippling debt payments, the head of the International Monetary Fund has urged before a global summit on climate finance.Kristalina Georgieva, managing director of the IMF, said providing debt relief to countries suffering from extreme weather was a matter of urgency. Extreme weather is hitting harder around the world, and countries already facing debt mountains cannot afford to service their debts, particularly at a time of high interest rates. Continue reading...

Author of landmark UK review into the economic value of nature joins UN environment chief in calls for action, not just words' on biodiversity goalsHumans are exploiting nature beyond its limits, the University of Cambridge economist Prof Sir Partha Dasgupta has warned, as the UN's environment chief calls on governments to make good on a global deal for biodiversity, six months after it was agreed.Dasgupta, the author of a landmark review into the economic importance of nature commissioned by the UK Treasury in 2021, said it was a mistake to continue basing economic policies on the postwar boom that did not account for damage to the planet. Continue reading...

Institute for Public Policy Research points to 500bn-plus underspend compared with other advanced economiesMore than half a trillion pounds' worth of underinvestment by government and business over recent decades has left Britain's economy trapped in a growth doom loop", according to a thinktank.Sounding the alarm as the economy struggles to gain momentum, the Institute for Public Policy Research said the UK risked falling further behind comparable wealthy nations without a sharp turnaround in approach. Continue reading...

Report finds that raising minimum energy efficiency standards by 2030 could have huge impact beyond billsFixing Britain's draughty homes could add almost 40bn to the economy by the end of the decade by cutting energy use and improving health, according to research by Citizens Advice.The consumer group said raising the minimum energy efficiency standards of Britain's homes could have a profound impact beyond reducing bills and should be the government's top priority. Continue reading...

There are some doubts as to whether Starmer's publicly-owned energy company will have its emphasis in the right placeA Labour government would establish a new publicly-owned energy generation company in Scotland, Keir Starmer announced on Monday. Fine, if expertise and jobs from the North Sea industry are to be transferred over time, Scotland is a logical place to put it. But the location is only a minor piece of the decision-making. Two more important questions about Great British Energy" are these: how much money will it have to invest? And which investments would it prioritise?There is - as yet - no hint of an answer to the first question, perhaps understandably if a general election is still more than a year away. But note that many outsiders think GBE would need an annual investment budget of 5bn-10bn to make a meaningful difference to the pace of energy transition. Clarity can't wait for ever. Continue reading...

Former prime minister criticises Daily Star stunt but says UK media's irreverence is a good thing overallLiz Truss has described as puerile" the newspaper stunt in which her tenure as prime minister was measured against the shelf life of a lettuce.Speaking at a broadcasting conference in Dublin, Truss also complained that the media did not properly understand her economic ideas. She said too much political coverage was froth", while at the same time praising the overall irreverence of the UK. Continue reading...

Average mortgage rates hit highest level since December, as asking prices for British homes fall in June for the first time in six years

Prime minister says no new support available for households struggling to pay loans

World needs to offer trillions, not billions in overseas support, says leading climate economist Avinash PersaudThe world must rethink its approach to the climate crisis, by investing trillions of dollars instead of billions in the developing world, and moving beyond conventional ideas of overseas aid, one of the world's most influential climate economists has urged.We need a complete rethink of the whole nexus of climate, debt and development," Avinash Persaud told the Observer, before a key summit. What we are seeing today is new - countries affected by climate disaster, this is happening now. Countries are drowning." Continue reading...

Members in marginal seats fear Conservative party leaders have not understood the impact of rate risesTory MPs in marginal seats are already sounding the alarm over an interest rate catastrophe", amid claims that the party has not understood the impact of spiralling mortgages.With the Bank of England likely to increase interest rates again this week and major mortgage lenders raising their own rates in the last few days, there is a growing nervousness among Tories about the impact this will have later in the year as the main parties begin to shape their campaigns for the next election. Continue reading...

The midweek inflation bulletin could be the most significant piece of government data published this yearThis Wednesday will mark the longest day of the year and not long after the sun comes up the Office for National Statistics (ONS) will publish its latest cost of living bulletin. To say the data is eagerly awaited is an understatement. There is unlikely to be a more significant piece of official data released in the current parliament.The reason is simple. Despite raising interest rates 12 times since December 2021 in an attempt to quell upward price pressures, inflation is proving harder to shift than the Bank of England imagined. Continue reading...

Jeremy Hunt’s fascination with the investment potential of retirement savings is understandable. But the obstacles are prohibitiveIn these desperate times, everyone wants to find some money down the back of the sofa. Politicians are no exception. Taxpayer cash is difficult to generate – witness the growing disquiet on Conservative backbenches at the billions of pounds raised by chancellor Jeremy Hunt’s long-lasting freeze on income tax thresholds.Until fairly recently, borrowing from international investors carried an ultra-low price tag, but since the Liz Truss and Kwasi Kwarteng mini-budget debacle last September Treasury ministers have been unable to consider adding to the public debt as a low-cost exercise. Short-dated gilt yields are back up to the level of the Truss era, raising the cost of government borrowing. Continue reading...

Mark Carney says Bank’s negative predictions about consequences of leaving EU ‘proven to be the case’Brexit is to blame for the soaring inflation driving the cost of living crisis in the UK, a former governor of the Bank of England has said.Mark Carney, who pro-Brexit figures said should have been fired for warning about the economic dangers of leaving the EU prior to the vote, said he took no pleasure in being proven right because the resultant hardship had been placed on the backs of millions of ordinary people. Continue reading...

World leaders will meet next week to discuss climate finance, green growth, debt and private investmentTalks on a global financial pact that will give poor countries access to funds to help them tackle the climate crisis and develop their economies in environmentally sustainable and socially equitable ways will begin next week in Paris.Emmanuel Macron, the French president, will be joined on Thursday by dozens of world leaders to discuss climate finance, green growth, the debt crisis and how to tap private sector sources of investment. EU leaders, including the European Commission president, Ursula von der Leyen, and the German chancellor, Olaf Scholz, will be there, but the British prime minister, Rishi Sunak, has not confirmed whether he will attend. Continue reading...

With interest rates predicted to rise again and cost of fixed-rate deals on the up, here’s what you need to know

Lib Dems call for emergency mortgage protection fund, as new data shows two-year fixed rate mortgage has jumped to 5.98% and confidence in Bank of England falls

Ken Murphy says higher costs of grocery imports because of Brexit are partly to blame for rising pricesThe chief executive of Tesco has said food inflation has probably peaked but that prices are likely to stay high.Ken Murphy, the head of the UK’s biggest supermarket chain, said the price of milk, bread, cooking oil and some vegetables such as broccoli had come down this month but inflation continued in other essentials, including rice and potatoes, as weather issues and locked-in increases in the price of labour and energy continued to bite. Continue reading...

The prime minister has set a target that was not in his power to deliver, and he ignored political convention to do soBack in January, Rishi Sunak presumably thought it was a smart way to try to project an air of confidence and stability from Downing Street after the Liz Truss wildness. Promise something that, according to the collective wisdom of financial markets, was about 95% likely to happen anyway. Thus the first of the prime minister’s five new year pledges to the British people was this: “We will halve inflation this year to ease the cost of living and give people financial security.”Never mind the fact that the Bank of England – not the government – sets interest rates to tackle inflation. Sunak’s calculation, one assumes, was that an easy win was on the cards and he could scoop the credit by being the person who had set the target. Continue reading...

President Tinubu’s policies please foreign investors, but a devalued currency and soaring petrol prices mean ‘national sacrifice mode’ is widely unpopularNigerians are feeling the strain as their new president pushes through a series of unpopular policies that have earned him praise from foreign investors.Bola Tinubu, who was sworn in on 29 May, has surprised many observers by taking a running start to his tenure of Africa’s most populous country. In little over two weeks he has banished a longstanding petrol subsidy, ejected the country’s central bank governor and ended restrictions on the rate of the naira, Nigeria’s currency. Continue reading...

From Beyoncé to BTS, the star power of popular music artists is helping to revive pandemic-hit countriesMoney has proved to be an enduring inspiration for some of the bestselling artists of all time: from Pink Floyd pondering the “root of all evil” to the Wu-Tang Clan rapping how “cash rules everything around me”.Some superstars are bigger, though, so big they are not content with merely singing about money, or even making lots of it, but prefer to move entire economies with their vocal cords. Continue reading...

Nationwide is latest lender to lift cost of deals as borrowers brace for 13th successive Bank of England interest rate riseThe average rate on a new two-year fixed mortgage has edged closer to the 6% threshold, as Nationwide became the latest big lender to push through a significant increase in the cost of its deals.Borrowers are braced for more pain, with the Bank of England expected to raise rates for the 13th meeting in a row next week. The Bank’s former governor Mark Carney has predicted interest rates would remain high “for the foreseeable future”. Continue reading...

UK mortgage holders face worst squeeze since 1990s crash, while Europe’s central bank hikes borrowing costs to battle inflation

Move marks eighth successive rise, highlighting struggle to cool price rises amid juddering growth

A summit in Paris this month offers a way to tackle this disastrous failure, but only if western leaders bother to turn upBroken promises, missed opportunities and a failure to see the bigger picture: that’s the story of the west’s approach to developing countries in recent years. Money to help with climate breakdown has been pledged but not delivered. Vaccines have been hoarded. Aid budgets have been cut.From any perspective – be it geopolitical, economic, humanitarian or ecological – the indifference to what is happening elsewhere is disastrous. If the west wants to counter Beijing’s influence in Africa, to secure the raw materials and metals it needs for its green industrial revolution, to prevent a debt crisis and to have any hope of tackling global heating, it needs to sharpen up its act fast.Larry Elliott is the Guardian’s economics editorDo you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...