Economics | The Guardian

Rolling coverage of the latest economic and financial news, as BoE recommends banks can issue more high loan-to-income level loans

Move hopes to push lenders to offer more high loan-to-income mortgages and help 36,000 buyers on to housing ladder

Latest escalation in trade war is expected to push up costs across key parts of US economyCopper prices hit a record high in the US after Donald Trump announced he would impose a 50% tariff on the industrial metal, in the latest escalation of his trade war.Trump said before a cabinet meeting on Tuesday: Today we're doing copper," proposing a 50% tariff rate for imports. He also threatened to impose a 200% border tax on pharmaceuticals but in a year or a year and a half's time. Continue reading...

Andrew Hauser says it is puzzling' investors not more concerned by tectonic economic shifts emanating from Washington

A marketing campaign is all very well but if the LSE's fortunes are to turn, the real oomph needs to come from the chancellor

Readers respond to Randeep Ramesh's article on the flaws in Labour's approach to the economyRandeep Ramesh certainly tackles a worthwhile and complex modern economic policy conundrum (Labour could find the money it wants without raising taxes. This is austerity by amnesia, 29 June). But his opinion that the Bank of England should simply hand over the cash proceeds from quantitative tightening (QT) and that central bank independence is somehow partly responsible for Britain's economic woes, are misguided.Central bank independence was hard-won and has largely proven a resounding success in the developed world for more than 30 years. Allowing a central bank to hand over substantial moneys from QT revenues to the Treasury would be a recipe for disaster, against the spirit if not the letter of the law, as well as a dangerous precedent. Continue reading...

OBR report warns that UK public finances are in a relatively vulnerable position, as Archie Norman updates MPs about cyber-attack

Future of 100bn UK-France trade relationship in focus amid attempt to show unity in face of Trump tariffsAs Keir Starmer welcomes Emmanuel Macron to Britain for a landmark state visit aimed at building closer ties between London and Paris, the future of the nations' 100bn trading relationship will be drawn sharply into focus.In the three days of talks, concluding with the 37th Franco-British summit on Thursday, much of the attention will be on cross-Channel issues, including migration, amid expectations for a new deal on tackling small boat crossings. However, cooperation on business, trade, defence and security in the shifting global landscape will also feature prominently. Continue reading...

Office for Budget Responsibility warns national debt on course to hit 270% of GDP by 2070 amid volatility

The shifting timeline of Trump's tariffs, the most significant US tariff increase in nearly a century, has roiled global markets and caused widespread confusion

Reports say wealthy elite are leaving over tax changes - prompting a possible rethink by Rachel Reeves - but hard data is tricky to findIn Chester Square, the exclusive London address that was once home to Margaret Thatcher, multimillion-pound stuccoed townhouses are proving a hard sell.More than 20 luxury properties in the Belgravia postcode are on the market, says a buying agent. In nearby Montpelier Square in Knightsbridge, less than a 10-minute walk from Harrods department store, nine houses are on the open market. Continue reading...

There are just two days of talks left before the US president's potentially swingeing tariffs are restoredThe EU is entering a crunch week with only two days of talks left to secure a trade deal with Washinton to avert Donald Trump's threatened 50% tariff on its imports into the US.According to the US treasury secretary, Scott Bessent, on Friday, the negotiations - which continued over the weekend - are focussed on 15 to 18 agreements with important partners, while Trump warned of import tax rates of up to 70% on others. Continue reading...

A jittery No 10 now seeks the market's approval for everything. The result? Cruel cuts and a chronic fear of desperately needed public spendingOn 6 September 2022, Liz Truss entered No 10 with a clear vision for the country; the country asked her to leave less than 50 days later. But nearly three years on, even though all that remains of her premiership at Downing Street is a portrait she didn't stick around long enough to see hung, it is she who really runs Britain.Not through her influence - which has since been reduced to poorly attended speeches at far-right conferences in the US - but through the fear she left behind. Truss may be gone, but what remains is the shadow her failure cast, and the rigid fiscal caution that grew out of it.Max Mosley is a senior economist at the New Economics Foundation Continue reading...

The 2008 crash, Trump, aid budget cuts and a more fragmented world has made debt relief seem a lost cause but there are murmurs of a renaissanceTwenty years ago this weekend, the leaders of the world's most powerful countries, chaired by Tony Blair, gathered at the Scottish golf resort of Gleneagles and made a series of historic promises on debt relief and overseas aid.It was the culmination of a long-running campaign involving charities, churches and celebrities and benefited from the passionate commitment of Gordon Brown, for whom international development is a lifelong cause. Continue reading...

US is on the brink of launching a trade assault on dozens of countries as 90-day pause on tariffs is set to end on 9 JulyWhen Donald Trump unveiled his liberation day" tariffs in the spring, only to pull the plug days later as panic tore through global markets, his officials scrambled to present the climbdown as temporary.Three months of frenetic talks would enable the Trump administration to strike dozens of trade agreements with countries across the world, they claimed. We're going to run," the White House trade adviser Peter Navarro told Fox Business Network. Ninety deals in 90 days is possible." Continue reading...

From spending cuts to tax rises, we rank possible routes to plugging the gap caused by Labour's welfare climbdownRachel Reeves is under pressure to tackle a multibillion-pound shortfall in the government finances.Labour's high-stakes welfare U-turn and a spike in bond markets prompted by speculation over the chancellor's position has dragged the government's tax and spending plans into the spotlight. Continue reading...

Charlie Bean says slim margin of 10bn means chancellor has to neurotically fine-tune taxes to control OBR forecast'

In the third in a series, the Guardian hears how Reform UK is targeting voters over green policies - which business says are bringing new jobs to the area

Economists anticipated drop, but 8,000 new positions were added in June compared with May, with unemployment rate down to 4.1%The US economy added 147,000 jobs in June, a sign of continuing strength in the labor market amid Donald Trump's trade war.The number of jobs added surpassed expectations, as economists largely anticipated a drop in openings. Instead, 3,000 more jobs were added in June compared with May, according to new job figures from the Bureau of Labor Statistics (BLS). The unemployment rate actually decreased to 4.1%, down from 4.2% in May. Continue reading...

Rolling coverage of the latest economic and financial news, as economists predict that Wednesday's sell-off has strengthened Reeves's position

Bond yields fall, reversing a sharp rise on Wednesday sparked by speculation over the future of the chancellor Business live - latest updatesUK government bonds have rallied after Keir Starmer backed Rachel Reeves to remain as chancellor for a very long time" despite lingering investor concerns over a multibillion-pound hole in Britain's public finances.The yield - in effect the interest rate - on 10-year British government bonds, also known as gilts, fell on Thursday morning to trade close to 4.5%, reversing much of the rise on Wednesday sparked by feverish speculation over Reeves's future. Continue reading...

President embraces Robin-Hood-in-reverse policies to benefit wealthiest and hurt those earning under $50,000Last November, Donald Trump made a solemn vow to all Americans: Every citizen, I will fight for you, your family and your future every single day." Eight months later, Trump is vigorously backing many policies that will mean pain for millions.Trump has pushed to enact the Republican budget bill, which would make significant cuts to Medicaid, Obamacare, and food assistance, and would do the greatest damage to those Americans struggling hardest to make ends meet - the 30% of the US population that lives in households earning under $50,000 a year. Continue reading...

All 17 businesses in six-month pilot to continue with either four-day week or nine-day fortnightNearly 1,000 British workers will keep a shorter working week after the latest trial of a four-day week and similar changes to traditional working patterns.All 17 British businesses in a six-month trial of the four-day week said they would continue with an arrangement consisting of either four days a week or nine days a fortnight. All the employees remained on their full salary. Continue reading...

Cost of government borrowing leaps as investors take fright from PMQs, before falling back as No 10 says chancellor staying in post

With 6.25bn in planned savings now shelved, the government faces awkward choices on how to plug gap

Stefan Scherer, boss of AMG Lithium, says Europe must become more self-sufficient in critical raw materials and new technologiesThe EU may as well apply to be a province of China" such is its inability to wean itself off that country's supply of critical raw materials used in everything from electric vehicles to smartphones and wind turbines, a leading German industrialist has said.As chief executive of AMG Lithium, the EU's first factory to make the lithium hydroxide used in many car batteries, Stefan Scherer sits at the centre of what has been dubbed a new gold rush. Continue reading...

Acceding to US demands to exempt its companies from an agreed global tax deal is morally and financially indefensibleThe US Treasury just made a deal with the other G7 countries that global minimum taxes that were already agreed upon will not apply to American companies. The G7 governments caved under intense pressure from President Donald Trump and lobbying from multinationals in Washington, London, Brussels, and beyond - just as India, and now, sadly, Canada have caved on digital taxation.Years ago, the international community recognised that too many global companies were not paying their fair share of taxes, and some weren't paying taxes to the country where the economic activity actually occurs. The complex agreement that emerged in 2021 at the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting comprised two pillars; only Pillar Two, a global minimum corporate tax, has been adopted. (The other pillar allocated taxation rights among countries and spurred opposition from developing countries and the US.) Continue reading...

Rolling coverage of the latest economic and financial news

Rising fruit and vegetable prices contribute to jump in annual food price inflation in June to 3.7%Britain's largest retailers are warning that food prices are being driven up by hot weather hitting harvest yields, as the latest UK heatwave pushes temperatures close to record levels.The British Retail Consortium (BRC) said rising fruit and vegetable prices had contributed to a jump in food price inflation in June, while retailers also passed on tax rises and employment costs to consumers. Continue reading...

Report says concerts attracted record 23.5m fans, leading to unprecedented spend across British economyA wave of big-name acts including Taylor Swift, Charli xcx and Bruce Springsteen helped to attract a record of more than 23 million live music fans in the UK last year, leading to an unprecedented 10bn of spending across the UK economy.A report from the industry body UK Music estimates that 23.5 million music tourists" attended concerts and festivals last year, up almost a quarter on the 19.2 million in 2023. Continue reading...

Trump officials hail U-turn as Mark Carney says decision to rescind digital services tax means revival of trade talksThe United States has said that Canada's prime minister, Mark Carney, caved" to demands from the White House after his government abruptly scrapped their digital services tax on US technology companies, which was set to go into effect on Monday.It's very simple. Prime Minister Carney and Canada caved to President [Donald] Trump and the United States of America," the press secretary, Karoline Leavitt, said in a daily briefing. Continue reading...

UK-US trade deal kicks in today, lowering tariffs for British carmakers and aerospace sectorUK households hit by squeeze on living standards despite fastest growth in G7Karim Haji, global and UK head of financial services at KPMG, said:May's uptick in mortgage approvals bucks the downward trend we've seen throughout the year so far. The gradual easing of interest rates could be helping to boost confidence and demand amongst mortgage borrowers.The cost of living remains high, but a drop in consumer borrowing in May signals that rising incomes are starting to feed through to the cost of day-to-day expenses.It is incredibly positive news to see an increased number of mortgage applications approved. It is one of the loudest signals of them all regarding consumer affordability, and it is also a massive vote of confidence from lenders in the longer-term prospects of the economy too.As we head into the summer months, we have witnessed on average the number of viewings per property available see an uplift of around 30% compared to the month previous. On top of this, we have also seen the UK Government make a pledge to create a National Housing Bank which could bring significant investment to help build 500,000 new homes, enabling a potential greater degree of flexibility for those who aspire to buy. Continue reading...

Concerns over conduct of bosses at Lincolnshire site, with ministers saying workers had been badly let down'

ONS confirms GDP growth at 0.7% between January and March but households saving less of disposable income

Vacancies for graduate jobs, apprenticeships, internships and junior jobs with no degree requirement have dropped 32%, Adzuna finds

Binary rules and twice-yearly OBR forecasts have turned chancellor's moves into grim spectator sportThere are many lessons for Labour's bruised leadership from last week's embarrassing U-turn on welfare cuts, but one is surely that how - and when - fiscal policy is set is not working.Binary fiscal rules, a slim margin for error (less than 10bn), and the Office for Budget Responsibility's twice-yearly forecasts have combined to turn tax and spending decisions into a grim spectator sport. Continue reading...

In the second in a series, the Guardian looks at how Grangemouth struggles as Reform UK hopes to win votes

Next week, a UN summit in Seville will discuss the future of financing the world's poorer nations. It should first concede that the old methods have failedIt is 2025, and the architecture of economic power remains grossly tilted against the nations of the global south. Nowhere is this imbalance more acute - and more enduring - than in the debilitating impact of sovereign debt.From the vast countries of Africa to the scattered but strategically vital small island developing states (Sids) of the Caribbean and the Pacific, debt has become a modern form of bondage - the chains that restrict growth, sovereignty and the basic human dignity of nations struggling to define their own path to development. Continue reading...

Rebel MPs will try to lay new amendment on Monday giving colleagues a chance to delay bill despite No 10 concessionsKeir Starmer is battling to stem the revolt over his cuts to disability benefits, with about 50 Labour MPs concerned the new concessions will create a two-tier" system where existing and new claimants are treated differently.Senior government sources insisted things were moving in the right direction" for No 10, with the whips phoning backbenchers to persuade them to support the bill on Tuesday. Continue reading...

Government's concessions over welfare cuts leave chancellor with a growing hole in her budgetRachel Reeves is expected to extend a freeze on income tax thresholds to raise fresh funds after the government's U-turn on welfare cuts left her with a growing budget hole.The chancellor was already facing pressure to backtrack on pledges not to increase taxes further as she attempted to fix public services and grow the economy while meeting her fiscal rules. Continue reading...

Rolling coverage of the latest economic and financial news

In first assessment since pandemic in 2020, World Bank urges other countries to step up supportExtreme poverty is accelerating in 39 countries affected by war and conflict, leaving more than a billion people to go hungry, according to the World Bank.Civil wars and confrontations between nations, mostly in Africa, have set back economic growth and reduced the incomes of more than a billion people, driving up extreme poverty faster than anywhere else", the Washington-based body said. Continue reading...

European Commission president says EU will defend the European interest as needed' as Trump threatens 50% steel tariffsThe European Commission president, Ursula von der Leyen, has said the EU is ready for a trade deal with Donald Trump, but all options remain on the table".Von der Leyen said she was analysing the latest US negotiating document received on Thursday. Our message today is clear, we are ready for a deal," she told reporters, after briefing EU leaders at a summit in Brussels. At the same time, we are preparing for the possibility that no satisfactory agreement is reached ... and we will defend the European interest as needed. In short, all options remain on the table." Continue reading...

Cancer Research UK says this is more than any other health condition and 350,000 years of productivity are lostPeople dying early of cancer costs the UK economy 10.3bn a year, more than any other health condition, a study has revealed.That is the total cost of the 350,000 years of lost productivity recorded across Britain every year because adults have died prematurely of the disease, according to Cancer Research UK (CRUK). Continue reading...

Devereux Review on the UK's main statistics body also says a revision of past figures may be requiredThe UK's main statistics body needs a 10m overhaul and its top role split in two after a series of management failings and errors that have plagued the organisation for several years, a scathing report has found.The Devereux Review on performance and culture of the Office for National Statistics (ONS) found deep-seated" issues that called for radical measures and warned of the likelihood that past statistics would need to be revised. Continue reading...

Andrew Bailey says slack appearing in labour market, after Keir Starmer tells businesses they have made a huge difference'

Andrew Bailey warns of significant decline in wage growth in year ahead' as Bank prepares for interest rates decision

Data shows 16.1% jump as Bank of England suggests influx of cheaper goods could bear down on inflationChinese exports to the UK jumped in May, according to data from Beijing, raising the prospect of a flood of cut-price goods as firms look for alternative markets to avoid Donald Trump's tariffs.Data published by the Chinese government showed a 16.1% increase in exports to the UK in May compared with the same month last year, hitting the highest level since February 2022. Continue reading...

New strategy to focus on more agile' modest agreements, as opposed to wide-ranging dealsBritain has focused too much on trying to sign major trade deals with other countries, ministers have said, as they lay out the case for a big shift in post-Brexit trade policy.The change forms the heart of the government's new trade strategy, which ministers will publish on Thursday. Continue reading...

Louis Taylor, CEO of state-owned lender, targets investment in eight key UK sectors as he prepares defence at Covid inquiryLouis Taylor is caught between two eras. The chief executive of the British Business Bank (BBB) has spent much of his tenure attempting to revive the state-owned lender's image after a battering from the fraud-hit pandemic loan scheme under the last government, and will soon have to defend its actions at the Covid inquiry.But until then, he can focus on the BBB's gleefully landed fresh 10bn mandate linked to the centrepiece industrial strategy Labour hopes will boost a flagging economy as it nears the end of its first year in power. Continue reading...