Economics | The Guardian

Study shows people in London district made more in 2015-19 than combined populations of Liverpool, Manchester and NewcastlePeople living in Notting Hill, west London, received more in capital gains from 2015 to 2019 than the combined population of Liverpool, Manchester and Newcastle according to an analysis of capital gains tax.Analysis of anonymised personal tax returns found that 97% of the population never receive any capital gain, and those that do are very likely to be among the very richest who benefit from the tax rate being lower than that earned on income from a salary. In fact, half of gains for the entire country go to as many people as could fit in the Albert Hall", researchers said. Continue reading...

Steven Knight, who is building a film studio in Birmingham, says line is catalyst for activity as data shows 10bn boost to regionThe Peaky Blinders creator Steven Knight said HS2 has been a gamechanger for regeneration in the West Midlands, as data revealed the train line has created a 10bn economic boost to the region since it was given the green light.A report by HS2 has found that within three impact zones" close to the new line in the West Midlands, planning applications have increased by 66% since the project was given royal assent in 2017, four times higher than the rate outside the zones. Continue reading...

The European Union to investigate if TikTok breached online content rules aimed at protecting children, as Andy Haldane urges central bank to consider interest-rate cuts

Owner of Nusr-Et steakhouse in London says profits rose 44% in 2022 as sales soared by nearly two-thirdsIt may charge nearly 700 for its most expensive steak but even the flamboyant condiment-sprinkling chef Salt Bae's London restaurant has been forced to turn off the heating amid soaring energy bills.Nusr-Et steakhouse, the outlet at the Park Tower hotel in Knightsbridge known for expensive dishes such as 680 wagyu striploin or 630 giant tomahawk steak, said it had made an effort to cut costs despite recording a jump in profits. Continue reading...

Former chief economist Andy Haldane says keeping rates high could crush the economy'

Two priorities are tackling entrenched inequalities and - the biggest challenge - addressing the climate crisisBritain's economy is in a deep rut. After news confirming the country fell into recession late last year, most experts agree the downturn is likely to be shortlived and shallow. Few, though, are betting on a strong recovery from the toughest period for living standards in almost 70 years.In most of the economic cycles of the past century, robust growth has typically followed each period of recession, as households and businesses get back on their feet after each setback. But as highlighted by Matt Whittaker of the Pro Bono Economics thinktank, the past two decades have been different. Gross domestic product per capita has either fallen or flatlined for the past seven quarters, and it is now 16 years since the last sustained uptick came to an end. Continue reading...

Pre-election giveaways funded by yet more austerity will push the welfare state the opposition created towards ruinAs a longstanding observer of the British economy, I sympathise with the general reader trying to make sense of recent reports on what is happening to it.One week he or she is told that inflation is falling; another week that it isn't. One week we are reliably informed that interest rates are going to be reduced; the next that they are not. One week there is no danger of falling into recession. The next week we are informed that we are already in one. Continue reading...

Years of austerity, followed by Covid, have left Britain with unhealthy workers and businesses struggling to recruit, but the road to recovery, of all kinds, will be longBritain has a sick economy and it is getting sicker. The clear message from last week's raft of economic data is that the UK is being held back by the growing number of people not able to work because of long-term illness.There are many theories about why the trend is worsening. Possible factors include long Covid, delays in NHS treatment as waiting lists grow longer, poor workplace practices, stress and the impact of austerity. Continue reading...

Rolling coverage of the latest economic and financial news, as retail sales in Great Britain rebound by 3.4% in January

Organized labor across the country is now setting its sights on housing costs as rents and mortgages continue to soarAs housing has become a top issue in strikes and protests in recent months, US unions are pushing for change and backing innovative solutions for the housing affordability crisis.With US house prices and rents rising in recent years, and high interest rates and inflation taking their toll, housing affordability has become a major issue at the bargaining table for US labor unions. Many workers are facing 60-, 90-, even 120-minute commutes to work because they cannott afford to live near their jobs. Continue reading...

The Conservatives have presided over a shrunken British economy, and Rishi Sunak does not have a clue how to make it grow againWe're on the up!" claimed the Daily Express about the British economy on Thursday . Sorry, loyal Conservative cheerleaders, but exactly the reverse is true. Instead of being on the up, we're on the slide. On Thursday, the Office for National Statistics announced that the UK is in fact in recession, with a 0.3% drop in gross domestic product for the last quarter of 2023 to follow a 0.1% drop in the third quarter. The economyis therefore getting smaller. This is a recession. It is a huge national blow, both economically and politically.It is true that the slide into recession has been a gentle one. Few economists believe that the announcement portends a downward lurch to compare with the recession of 1980 or the one after the financial crisis in 2009, when GDP fell by more than 4%. Do not, though, be misled by talk of a technical" recession. An economy is either growing or it is not. Ours is not growing. It is shrinking. Continue reading...

From unfreezing tax thresholds to boosting social housing, solutions to the UK's problems don't have to trigger the return of inflationThe UK economy needs a lift after it sank into recession in the second half of 2023.It's not an easy task when so many of the problems are longstanding and the measures needed for a cure could take years to have an effect. Continue reading...

UK economy shrank by 0.3% in October-December, worse than expected, putting country into a technical recession in a blow to the PM

GDP fell 0.3% in three months to December after collapse in retail sales in run-up to Christmas

Shadow chancellor's No 10-style press conference given extra credence by decision to drop 28bn green pledge, Labour sources say UK politics live - latest updatesAs she stood beside two union flags in a wood-panelled room, it looked as if Rachel Reeves had stepped into Rishi Sunak's own press conference room in Downing Street - a deliberate move.The shadow chancellor had been preparing for this moment for months, warning of the heightened risk of recession ever since the last quarter's GDP figures showed negative growth. Continue reading...

Call comes as report puts reconstruction cost at nearly $500bn since start of conflict

It is one thing to U-turn on a modest green transition programme. It is another to do so using mendacious Tory economic paradigmsRarely has a lacklustre policy been abandoned for a reason so bad that it threatens to inflict long-term damage on a society. Independently of whether the 28bn green investment programme was the right policy for the next Labour government to commit to, Rachel Reeves's reasons for ditching it were an undeserved gift to the Tories and a partial vindication of their disgraceful flirtations with an austerian, anti-green political narrative.Speaking on BBC Radio 4's Today shortly after her U-turn on Labour's headline 28bn green transition programme, the shadow chancellor explained her decision by claiming that, under Jeremy Hunt, the Treasury is planning on maxing out the credit card", adding for good effect that the Tories are maxing out the headroom ahead of the next general election" thus limiting what an incoming Labour government will be able to achieve". By comparing the state's coffers to an overladen credit card, Reeves endorsed an insidious fallacy. Continue reading...

Governments try to generate a feelgood factor before an election. The UK has the opposite: a feel-bad factor

Fall in rank below Germany has been attributed to a weak yen and country's ageing, shrinking populationJapan has been eclipsed by Germany as the world's third-biggest economy and has slipped into recession, according to data released Thursday, as the country battles a weak yen and an ageing, shrinking population.Japan's economy, now the world's fourth-biggest, grew 1.9% in 2023 in nominal terms - meaning it is not adjusted for inflation - but in dollar terms its gross domestic product (GDP) stood at $4.2tn compared with $4.5tn for Germany. Continue reading...

Andrew Bailey says inflation staying at 4% in January was encouraging but more evidence of cooling in wage rises is needed

Live coverage of business, economics and financial markets as the UK consumer price index sticks at 4%, below economists' 4.2% forecast

From vegetables to cocoa and holiday centres to restaurants, how the cost of everyday things varies

Workers on average incomes are missing out on wage rises as energy bills increase

Thorsten Wulff looks for laughter amid the bleakness, while Carola Gartner is concerned about poverty and drug usePeter Kuras's analysis of the rather dire situation Germany faces right now is spot-on (Tractor chaos, neo-Nazis and a flatlining economy: why has Germany lost the plot?, 6 February). Back are the dreaded times of the sick man of Europe, only stopped 20 years ago by the Agenda 2010 reform package of the social democratic chancellor Gerhard Schroder. Who is an outcast not only in his party these days, being Vladimir Putin's friend. Endless rows of tractors from the Brandenburg Gate to the Siegessaule, where Barack Obama spoke to the masses in a much brighter 2008, are the solidified image of the muck the country is stuck in.And then there is the stiff seriousness of German politics. In August 1919, the Berliner Illustrirte Zeitung, successful precursor of magazines like Life, published a funny image of President Friedrich Ebert and his defence secretary, Gustav Noske, in trunks on the beach. The scoop made the front page; the young republic was outraged. Lloyd George must have felt the hypocritical quake in Downing Street. Continue reading...

The Body Shop has collapsed into administration in the UK, less than three months after it was taken over by a private equity company

While inflation has fallen sharply since peaking above 9% in June 2022, many are still feeling the pinch of high pricesInflation was hotter than expected across the US last month as it continues to fall back from its highest levels in a generation.Price growth dropped to an annual rate of 3.1% in January, according to official data; above economists' expectations of 2.9%. In December, the consumer price index stood at 3.4%. Continue reading...

December figures prompt predictions Bank of England may cut interest rates later than previously expected

The absence of so many potential workers is taking a toll. In a literal sense, this is a sick economy

Overhaul rigid planning rules, invest in infrastructure - there is no magic bullet, but this would set us on a far better path

Rachel Reeves has ruled out a wealth tax, but she'll need to raise revenue somehow - and there are still good options availableThe prime minister's tax return crept out with the house in recess. But the front page of the Financial Times splashed a blunt warning: Sunak makes 1.8m capital gains as he struggles to engage with hard-up voters." Does it matter when the Tory frontbench has always been packed with the enormously rich? After all, politicians are paid beyond most people's wildest expectations, with the average UK worker earning less than half their MP's annual salary.Forelock-tugging Britain, which has elected five rich Etonian PMs since the second world war, may be undergoing a sea change in attitudes. A multimillionaire chancellor and a PM richer than the king are proving a political problem on the doorstep. In Wellingborough, participants in a More in Common focus group with 2019 Tory voters said the prime minister was financially on another planet" and abandoning hard-working people". Continue reading...

Goldman Sachs Doppelganger' analysis suggests UK real GDP has unperformed by 5% since 2016 vote, while Body Shop's owners have filed the intention to appoint administrators.

US president tells big brands the public is tired of being played for suckers' in video to mark Super Bowl

The long-running series in which readers answer other readers' questions on subjects ranging from trivial flights of fancy to profound scientific and philosophical conceptsAre there any countries that are ultimately neither capitalist nor communist? Becky Jackson, DorsetSend new questions to nq@theguardian.com. Continue reading...

Figures on GDP, wages and inflation this week are set to offer Labour plenty of scope for criticising Tories' economic competenceAll eyes at the Treasury this week will be on estimates of economic growth in the final three months of 2023. A contraction in gross domestic product (GDP) in the fourth quarter would spell embarrassment for the government and disaster for Rishi Sunak.The second of the prime minister's five pledges was to have the economy growing by the end of the year. Instead, it is widely expected that the Office for National Statistics (ONS) assessment of fourth-quarter activity will show that the economy contracted by 0.1%, after also shrinking by 0.1% in the third quarter (revised from an estimate of no growth). That would mean the UK was in a recession during the second half of 2023, albeit a shallow one. An economy is considered to be in recession after two consecutive quarters of contraction. Continue reading...

Keir Starmer will now be appealing to voters on the basis it can run the status quo better than the ToriesUntil last week's U-turn on its pledge to spend 28bn on greening the economy, Labour had a coherent story to tell on the economy. It was not an especially exciting story but it made sense.The narrative went like this. Since coming to power in 2010, the Tories have made a right mess of things. Misguided austerity has resulted in weak growth and flatlining living standards. Public services have been starved of money and too little has been done to safeguard the future of the planet. Failure on such a comprehensive scale requires a different approach. Continue reading...

Starmer desperately wants to win back the trust of a crucial, and famously cautious, demographic. But support for public investment is growingLabour has a demographic mountain to climb when it puts forward plans to spendonly a few billions of pounds, letalone 28bn. The parliamentary constituencies the party must win from the Conservatives to secure an overall majority are overweight with older people who are resistant to change and want their government to watch the pennies.Touting a pledge worth 18bn for green investments on top of 10bn already earmarked was always going to be vulnerable, especially when there was scant debate about how people might be affected, allowing speculation to escalate about its potentially deleterious effects. Continue reading...

EVs heavily subsidised by Beijing are flooding Europe and the globe. If we don't watch out, it could start a major trade warWhenever people learn that I have an electric vehicle (EV) the conversation invariably turns to whether I suffer from range anxiety" - the fear of running out of charge. The answer is that generally I don't, though I might if I were contemplating a drive across the Highlands of Scotland to Aviemore, say. But otherwise, no. Why? Because I am able to charge the car overnight at home, and most of my trips are much much shorter than the vehicle's 300-mile range.In that sense I am statistically normal. Government estimates are that 99% of car journeys in England are of less than 100 miles. So if you can charge at home, then most of your problems are over, which probably explains when the last time the Department for Transport did a survey, 93% of the country's EV owners had home charging. Continue reading...

Billions in tax relief is showered on UK small businesses in the belief that they are transforming the economy. They aren'tEntrepreneurs are a false god. We offer them billions of pounds' worth of tax breaks and subsidies, and a lot of goodwill, when research suggests that most, after pocketing the cash, will do little to help UK plc prosper.Academic studies have found that small business owners, while being a significant slice of the economy and a source of employment, are very rarely the spur for innovation or increases in productivity, let alone the wellbeing of the workers under their employ (health and safety is worse in small businesses). Continue reading...

Authority weighs up legal action against government over new checks on imported meat taking place 22 miles inlandThe Port of Dover could become a target for criminals smuggling illegal and diseased meat into the country under new post-Brexit plans that will involve lorries from the continent being checked 22 miles inland, the port's health authority has warned.The Dover Port Health Authority (DPHA) is now considering legal action against the government over its decision to end physical checks of imported meat at a post within the port. Instead, lorries will be directed to a new checking facility half an hour's drive up the M20 at Sevington, Ashford. Continue reading...

Rolling coverage of the latest economic and financial news, as hawkish BoE policymaker looks for signs that rates needn't rise furtherProfessor Costas Milas, of University of Liverpool's management school, has analysed how geopolitical risks and oil prices have influenced UK monetary policy over the decades, through higher inflation and lower output.He tells us:MPC member Haskel is (arguably) partly' correct to wait until further evidence shows that inflation risks are waning.My colleague, Mike Ellington and I assess just that. We look at the impact of geopolitical risks on the UK economy. We find that geopolitical risks and higher oil prices depress UK output and that oil prices lift UK inflation. So, there is a subtle' tradeoff between higher inflation and lower output in making interest rate decisions. Continue reading...

Keir Starmer has abandoned his totemic pledge on green investment amid fears it opens the party to attacks on its economic credibility. Is he being too timid? Kiran Stacey and Fiona Harvey reportIn late 2021, Labour party members were still licking their wounds after a byelection defeat in Hartlepool, and Keir Starmer was at something of a crossroads in his leadership. He needed something big and bold that would excite his party and get the attention of voters. He was under pressure to match the ambition of President Biden's Green New Deal. So Labour made a significant pledge: to spend 28bn a year as part of a major strategic investment package to shift the economy towards its commitment to net zero emissions by 2050.As the Guardian political correspondent Kiran Stacey tells Michael Safi, the plan was always a bit vague. The 28bn figure was not assigned to specific spending pledges, but its symbolic value was welcomed by environmentalists as the first serious step towards matching Britain's green commitments. It did not take long, though, for the attacks to begin. And when Liz Truss as Tory leader sent the cost of borrowing skywards, the debate within Labour about the feasibility of its 28bn plan intensified. Yesterday, Labour formally dropped it. Continue reading...

Lobby group joins calls for chancellor to resist pre-election giveaways next month and spend on projects to boost economy

Rolling coverage of the latest economic and financial news, as China slipped deeper into deflationary territory in JanuaryChina's deflation problem highlights the country's economic malaise, explains Susannah Streeter, head of money and markets at Hargreaves Lansdown:While inflation is still an unruly force central banks are attempting to tame in many nations, China is grappling with its evil twin. Deflation.Prices have fallen at their steepest rate since 2009, with the consumer price index falling 0.8% compared to a year earlier. Although falling food prices, particularly pork, is partly behind the trend. This was exacerbated by sharply lower demand during the month compared to last year due to the lunar new year celebrations landing in February, but underlying weakness remains with non-food inflation falling back.The current market remains one of robust volumes, but while the Red Sea crisis has caused immediate capacity constraints and a temporary increase in rates, eventually the oversupply in shipping capacity will lead to price pressure and impact our results.The ongoing disruptions and market volatility emphasize the need for supply chain resilience, further confirming that Maersk's path toward integrated logistics is the right choice for our customers to effectively manage these challenges. Continue reading...

Plunge in consumer prices has fuelled calls for a stimulus package - yet Beijing may stick to the new normal of lower growth China consumer prices plunge at fastest rate for 15 yearsChina's economy has gone from bad to worse - and it is only February.Figures released on Thursday showed consumer prices fell by 0.8% in January compared with a year earlier, outstripping economists' expectations and marking the biggest contraction in 15 years. Continue reading...

Plummeting food prices feed steep annual drop amid renewed calls to stimulate economy and offset weakening demand

Deputy governor Sarah Breeden also says firms must rein in profits as there is some way to go' to meet 2% inflation targetVictory in the war on inflation will require British workers to accept lower pay deals and companies to rein in their profits, a senior Bank of England policymaker has said.Sarah Breeden, one of the central bank's four deputy governors, said there was still some way to go" before inflation would fall back to the 2% target set by the government for the Bank to achieve on a sustainable basis. Continue reading...

2023 was an inflection point for Uber", says CEO Dara Khosrowshahi

Instead of claiming demand factors are the main reason for inflation, the spotlight should be on companies' pricing decisionsDespite a new year and a new way of doing things, the thinking at the Reserve Bank remains the same - inflation is all about people having too much money to spend rather than the actions of companies which are actually the ones raising prices.With the first Reserve Bank board meeting of the year behind us - and the first under the new arrangements where the board only meets every six weeks rather than monthly - the prospect of more rate rises looks unlikely. Continue reading...

The scope for a near-term surge is limited by the market only having just avoided a crash, say analysts

Deep-scarring effects': Living standards for hardest hit won't return to pre-pandemic levels until 2027, report predictsBritain's poorest households have suffered a 4,500 hit to their finances since the start of the Covid pandemic, according to a report indicating that those on the lowest incomes have borne the brunt of the cost of living crisis.Highlighting a dramatic fall in living standards since Boris Johnson's election landslide four years ago, the National Institute of Economic and Social Research (NIESR) thinktank said soaring costs for energy, food and other basic essentials had hit those most badly off the hardest. Continue reading...