Influential economist Andy Haldane says dearth of coherent strategy means Britain isn’t in the new ‘arms race’ to reindustrialiseBritain risks falling behind in a multibillion-pound global “arms race” of re-industrialisation without an urgent launch of a coherent plan for manufacturing, Andy Haldane has warned.The influential economist, who is on Jeremy Hunt’s council of economic advisers, said the UK was “not really in the race at any kind of scale” as other countries steal a march in developing the green, hi-tech industries of the future. Continue reading...
Move by UK’s second-largest supermarket raises hopes that food inflation will start to come downSainsbury’s has cut the price of its own brand bread and butter, in what some are seeing as a sign that soaring food price inflation will start to come down in the coming months.The UK’s second-largest supermarket chain said it had lowered the price of its soft white medium, wholemeal medium, wholemeal thick, and toastie white loaves of bread to 75p, which is a reduction of 11%. Continue reading...
Sluggish retail sales and credit card spending figures add to fears for British economyConsumers are cutting back on purchases amid growing pressure on the Bank of England to tame inflation.Retail sales increased 5.2% on a like-for-like basis in April compared with the same period a year earlier, according to data from the British Retail Consortium and the consultancy KPMG. Continue reading...
Its weaponization threatens US economic standing, so some are considering doing away with the ‘anachronistic’ ruleIn just a few weeks, the US may be unable to pay its bills.A divided Congress has still not reached an agreement on raising the debt ceiling, and time is running out to avoid a default. The treasury secretary, Janet Yellen, has warned that the government may be unable to cover its financial obligations as early as 1 June. And economists predict that a federal default would cause unemployment and interest rates to rise as the country’s GDP shrinks, wreaking havoc on Americans’ finances. Continue reading...
by Ruth Michaelson and Menna Farouk in Cairo on (#6BHV1)
Two-thirds of the population are struggling with falling living standards as even the once-thriving middle classes hunt for second jobs and eat lessIncreasing numbers of Egyptians are desperately hunting for second jobs, cutting back on eating meat and scrambling to find new ways to cope with soaring prices, amid a worsening cost-of-living crisis.Ahmed Fawzi is searching for a second job even though his current role as a graphic designer in Cairo leaves him with few spare hours in the day. He said: “It feels like the economic crisis is literally squeezing me. Prices are going up every day and there’s no solution to it.” Continue reading...
by Richard Partington Economics correspondent on (#6BHSW)
US investment bank believes inflationary pressures could force monetary policy committee’s handThe Bank of England could be forced to raise interest rates to 5% this summer, Goldman Sachs has warned, as Britain struggles to bring down the highest rates of inflation among the G7 group of advanced economies.Threadneedle Street is widely expected to increase the cost of borrowing for households and businesses on Thursday for a 12th time in succession, with financial markets anticipating a quarter-point rise to 4.5%. Continue reading...
Being alone can be bliss or hell, and different kinds of solitude matterSolitude is up. More people live alone and 6% of us (equivalent to 3 million people in England) report feeling lonely often or always. The pandemic left millions of us alone for months on end.But what kinds of solitude matter and how? After all, psychologists tell us being alone doesn’t necessarily mean being lonely. Solitude ranges from bliss to hell. Continue reading...
Conservative narratives have lost their power. Britain should follow the lead of the world’s winnersThe art of success in politics, economics and even war is to tell compelling stories. Data, formal speeches, slide decks, clever debating points and tools of close analysis all have their place – but the trump card in persuasion and winning hearts and minds is a good story. To win is to have owned the best narrative. Get the message wrong and it turns into an unbelievable, losing fairytale.Thus, one of the reasons the Russians will ultimately fail in Ukraine is as much their weak story as any military frailties, while the Ukrainian account in response is so strong. Few, even inside Russia, believe Vladimir Putin’s story that Ukraine was always and immutably Russian, justifying such death and destruction to reassimilate it into its “natural” motherland.Do you have an opinion on the issues raised in this article? If you would like to submit a letter of up to 250 words to be considered for publication, email it to us at observer.letters@observer.co.uk Continue reading...
King Charles and the Prince’s Trust arguably did a better job of improving the skills of the under-30s in the last decade than the governmentKing Charles is well known for his support of Britain’s youth. Arguably, he has done more to train the under-30s in practical skills over the last decade than the government – and financed it without lumbering them with huge debts.The Prince’s Trust passed its one millionth trainee milestone in 2020 and has carried on without much fanfare while the government’s skills programme has floundered – undermined by Theresa May’s complicated and misused apprenticeship levy. Continue reading...
Experts say up to 20,000 parties will be thrown, 62m pints quaffed and untold special quiches scoffedThe big day has finally arrived, which means millions of flags will be waved, pints drunk and quiches eaten. Here is the coronation weekend in numbers. Continue reading...
April broke downward trend in growth of labor market, which has been slowing over the last few monthsUS employers added 253,000 jobs in April, a sign that the resilient jobs market remains robust even after a year of Federal Reserve interest rate rises.Labor market growth has been slowing over the last few months, from 472,000 jobs in January to a revised 165,000 in March. April broke that downward trend in growth, the Bureau of Labor Statistics (BLS) reported on Friday. Continue reading...
IAG expects to fly almost the same passenger numbers this year as before Covid pandemicThe owner of British Airways has upgraded its full-year profit expectations thanks to strong demand for holiday travel, as the airline group said it expected to fly almost the same number of passengers this year as it did before the coronavirus pandemic.International Airlines Group (IAG) reported a first-quarter profit for the first time since 2019, before the travel industry was plunged into chaos by Covid lockdowns. It made an operating profit of €9m (£7.9m) in the first three months of the year. Continue reading...
by Richard Partington and Graeme Wearden on (#6BEEV)
Comments by Christine Lagarde come after central bank raises interest rates for seventh time in successionThe president of the European Central Bank has suggested companies are taking advantage of high inflation when increasing prices, after the bank raised interest rates by a quarter of a percentage point to tackle the cost of living surge.Christine Lagarde said wage pressures in the eurozone had strengthened, as workers try to recoup some of the purchasing power they have lost due to inflation, but she hinted some firms were engaging in so-called greedflation. Continue reading...
From rationing to taxes, house prices to health – the differences and similarities between the Britains of 1953 and 2023Double-digit inflation prompted by a regional war. Essential goods in short supply in the shops. Shortages of workers. In some respects the economy when Charles III is crowned king this week has distinct echoes of his mother’s coronation 70 years ago.In other respects, Britain is an entirely different place. In 1953, the retreat from empire was under way, the welfare state was in its infancy and membership of the European Economic Community was two decades away. Continue reading...
Chain’s CEO Simon Wolfson warns of ‘very challenging’ 2023 after signalling price rises of 7%The UK clothing and homeware retailer Next has reported a smaller than expected drop in sales in recent weeks but expects a bigger decline in the spring quarter because of the cost of living crisis and colder weather than last year.Next, which has about 500 stores and is seen as a good barometer of consumer spending, said sales were down by 0.7% from a year earlier in the 13 weeks to 29 April, better than the firm’s guidance of a 2% fall. Continue reading...
Despite Washington’s efforts to de-escalate tensions with Beijing attempts to restore bilateral trust seem futileI recently attended the China Development Forum (CDF) in Beijing, an annual gathering of senior foreign business leaders, academics, former policymakers, and top Chinese officials. This year’s conference was the first to be held in person since 2019, and it offered western observers the opportunity to meet China’s new senior leadership, including new premier Li Qiang.The event also offered Li his first opportunity to engage with foreign representatives since taking office. While much has been said about the Chinese president, Xi Jinping, appointing close loyalists to crucial positions within the Communist party of China (CPC) and the government, our discussions with Li and other high-ranking Chinese officials offered a more nuanced view of their policies and leadership style. Continue reading...
Keir Starmer’s U-turn on pledge to abolish university tuition fees is poorly timed just before local electionsA month before the 1992 general election, which the Tories won even though many expected to see Labour in Downing Street, shadow chancellor John Smith set out his tax and spending plans in a high-stakes moment of political theatre.His shadow budget was published in a “red book” that deliberately mimicked the Treasury’s own budget document, while Smith and his frontbench team even posed for pictures on the steps of the Treasury. Continue reading...
Rise in benchmark interest rate is 10th hike since March 2022, when the Fed started its rapid inflation-fighting campaignThe US Federal Reserve voted to increase interest rates to a 16-year high on Wednesday, even as a banking crisis has left the economy wobbling.The quarter-point rise in the Fed’s benchmark interest rate was the 10th hike since March 2022, when interest rates were zero and the Fed started its rapid inflation-fighting campaign. The interest rate now stands at 5% to 5.25%. Continue reading...
by Pamela Duncan, Anna Leach, Carmen Aguilar García on (#6BDJ2)
New more-detailed ONS data on UK basket of goods shows how much staples have shot up since 2018The cost of making spaghetti bolognese for a family of four has risen to £10, up 15.6% in the last year alone, according to the most detailed government data yet published on rising pricesThe cost of ingredients for the nation’s most popular pasta dish rose by just 24p between 2018 and 2022 but has now soared to £9.98, a 20% increase since 2018. Continue reading...
Department is worst for publishing spending data, records show, with ministers apparently in breach of guidelinesTreasury ministers appear to have broken government guidelines by failing to publish details of their department’s spending for several months, and in some cases more than two years.Public records show the Treasury is the worst department in Whitehall for publishing key data on what its officials are spending public funds on, despite its role overseeing spending across government. Continue reading...
Expected hike in benchmark rate to a range of 5% to 5.25% could push US into recessionThe US is braced for an interest rate rise on Wednesday that could push the world’s largest economy into recession.The Federal Reserve is expected to announce another quarter of a percentage point rise in its benchmark interest rate, to a range of 5% to 5.25%. It would be the central bank’s 10th consecutive rate rise as it prioritises the fight against rising prices. A year ago interest rates were close to zero. Continue reading...
How could it come up with that decision given what it said in April and the new data we have seen since then?The Reserve Bank’s decision to raise the cash rate on Tuesday to 3.85% suggests a board completely lost to logic and we should be thankful that soon the decision to change rates will be taken out of its hands.Last month, when the RBA decided after 10 straight meetings to keep the cash rate steady, it presented a number of reasons. The chief was that “a range of information, including the monthly CPI indicator, suggests that inflation has peaked in Australia. Goods price inflation is expected to moderate over the months ahead due to global developments and softer demand in Australia.” Continue reading...
Lib Dem leader calls for watchdog to probe reports of big retailers and food multinationals inflating markupsBritain’s biggest supermarkets are facing calls for the UK’s competition watchdog to investigate claims of profiteering amid the cost of living crisis, as industry figures show food price inflation soared to a record high in April.With the rising cost of a weekly shop adding to pressure on households across the country, the Liberal Democrat leader, Ed Davey, called on the Competition and Markets Authority (CMA) to investigate whether any profiteering was taking place among supermarkets and food multinationals. Continue reading...
by Richard Partington Economics correspondent on (#6BBKP)
FSB says business confidence is rising but soaring costs and weakening demand is still slowing growthSmall businesses across Britain are warning that the cost of living squeeze is holding back economic growth, after two in five company bosses reported a drop in sales at the start of the year.The Federation of Small Businesses said that although business confidence was rising among bosses before the summer, soaring costs and weakness in consumer demand were still weighing on activity. Continue reading...
Bird flu, higher costs and the rise of meat-free options are pushing poultry producers to reduce flocks or give up entirelyJames Mottershead’s family has been in the chicken farming business for two decades, but nothing compares with the current situation. “Absolutely dire,” is his summary.Based in Shropshire and operating from six vast sheds that churn out 1.3m chickens a year, the business has been hit by a cocktail of pressures. Continue reading...
Institute of Directors index returns to levels last seen just before Russia’s invasion of Ukraine in 2022Business confidence has increased for the fifth month in a row, according to a regular health-check by bosses’ lobby group the Institute of Directors.The IoD’s “economic confidence index”, which surveys company directors on issues such as the wider economy and their own plans for hiring and investment, rose to -5 in April, up from -13 the previous month. Continue reading...
UK policy is to ensure its industry doesn’t suffer collateral damage in the contest for tech supremacyRishi Sunak is readying a billion pounds to subsidise the UK’s fledgling microchip industry. It sounds big. But the British government is merely reacting to US economic warfare against China. Behind the talk of “friendshoring” and resurgent industrial policy is a struggle to avoid collateral damage in the battle between China and the US for tech supremacy.The EU plans almost to match the US promise of $52bn (£42bn) in chip subsidies. India is spending $30bn (£25bn) on its semiconductor mission. Mr Sunak looks to be bringing a peashooter to a gunfight. But Britain does not have a complete end-to-end chip supply chain nor does it aspire to have one. Instead, it is following the slipstream of US power. Washington’s strength is that almost all chip factories contain critical tools from US suppliers. The US has isolated Beijing with export control powers that ban transactions between foreign countries and China. Washington’s legislative arsenal was first deployed against China’s Huawei, whose products Britain has also decided to ban.Do 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...
Deadline of Sunday set for companies such as JPMorgan Chase to table offer for California bank whose shares have plummetedUS regulators are racing to secure the sale of California bank First Republic, which is on course to become the third American lender to fail this year, a sequence of collapses that has drawn uncomfortable parallels with the 2008 global financial crisis.Half a dozen US banks are in the running to take over stricken First Republic, according to reports over the weekend, with leading bidders including JPMorgan Chase, Citizens Financial and PNC Financial Services. Continue reading...
Central banks are keen to blame the surge in inflation on anyone but central banksImagine you are a trade union official deep in negotiations with an employer over pay. Inflation is running at 10% and you know the company has lots of unfilled vacancies. You are seeking a wage settlement that at the very least maintains the spending power of your members.The backdrop to the pay talks is a war that has led to a sharp rise in the cost of energy. Gas and electricity bills have gone up, leaving members of your union with less disposable income. Continue reading...
Congress appears to be facing its biggest debt standoff in years – and the consequences of default could be disastrousAngry at the size of the government debt, House Republicans have passed a bill that ties spending cuts to any lifting of the US’s debt limit. A tense fight is escalating, with Democrats refusing to budge and hardline Republicans digging in. Without a solution, economists and others warn, the US could be plunged into an “economic catastrophe”.You can be forgiven a sense of deja vu. This has all happened before. Only this time, it could be worse. Continue reading...
Polling reveals most voters can now see through the referendum’s lies much more clearly than their leaders‘Half a league, half a league, / Half a league onward. / All in the valley of Death, / Rode the six hundred.” Why does Tennyson’s great poem come to mind as the local garage waits for a spare part to be delivered from Turin to fix a problem with my Fiat?In pre-Brexit days, thanks to Margaret Thatcher’s great achievement in integrating the British economy into the European single market, spare parts for cars, dishwashers – you name it – could be delivered almost overnight thanks to the sophistication of the EU supply chain. Continue reading...
Joe Biden’s American Rescue Plan and other economic policies have had predictable resultsWatch any sport nowadays, and you will be treated to instant replays that give you a detailed – often slow-motion – view of important moments. Watch the news, and you may find yourself feeling like you are similarly watching the past on playback. But these replays – of high inflation, soaring public debt, a brutal ground war in Europe, a new cold war and the rise of potentially destructive technologies – are far from instant, and the stakes are much higher.Readers might recall that I predicted rising inflation and slower growth as early as spring 2021. The former US Treasury secretary Larry Summers did so even earlier. Yet the US inflation figures – the worst since the early 1980s – caught most people by surprise. Continue reading...
Live coverage of business, economics and financial news as eurozone economy grows by 0.1% in first quarter after Amazon earnings beat expectationsCompared with the same quarter of the previous year, GDP increased by 1.3% in both the eurozone and the EU in the first quarter of 2023, after +1.8% in the eurozone and +1.7% in the EU in the previous quarter.In the fourth quarter of 2022, GDP had remained stable/stagnated (depending on your worldview) in the eurozone and had decreased by 0.1% in the EU. Continue reading...
by Kalyeena Makortoff Banking correspondent on (#6B87X)
Banking group says some customers have had to dip into savings because of rising pricesNatWest has reported bumper first-quarter profits on the back of a rise in UK interest rates but said persistently high prices were causing some customers to dip into their savings.The banking group said it was largely unaffected by the banking turmoil that resulted in the collapse of Silicon Valley Bank and Credit Suisse last month, and despite uncertainty, managed to report a 50% jump in profits to £1.9bn in the first three months of the year. That was better than the £1.6bn forecast by analysts. Continue reading...
Public sector workers and food bank users don’t need the Bank’s chief economist to tell them who is worse off and who not, says Janet Dubé. Plus letters from David Redshaw, Mike Alcock, Austen Lynch and Andy StelmanHuw Pill says “in the UK, someone needs to accept that they’re worse off” (Britons ‘need to accept’ they’re poorer, says Bank of England economist, 25 April). If he wants to tell “someone” his private opinion of our economic situation, being chief economist at the Bank of England surely puts him in a good position to find a candidate.It’s simply not true that “we’re all worse off”, as Mr Pill claims. Neither the prime minister nor King Charles appear to be in that category. Public sector workers and food bank clients don’t need a senior economist to tell them who is worse off and who isn’t. Continue reading...
Annual pace decelerates to just 1.1% as fears of recession this year grow despite strong consumer spendingUS economic growth slowed sharply in the first quarter of the year, despite strong consumer spending resilient to interest-rate rises designed to tame historic inflation.The latest GDP figures released by the US commerce department show that the world’s largest economy slowed sharply from January through March, to just a 1.1% annual pace as businesses reduced inventories amid a decline in housing investment. Continue reading...
Supermarket chain and consumer goods company insist they are protecting shoppers from inflation surgeSainsbury’s and the Marmite maker Unilever have both insisted they are protecting shoppers from inflation, amid accusations that some companies are profiteering from the cost of living crisis.“We are not profiteering in any form,” the chief executive of Unilever, Alan Jope, said as the consumer goods company insisted it was only passing on three-quarters of its increased costs to customers. Continue reading...
by Kalyeena Makortoff Banking correspondent on (#6B73J)
Venkatakrishnan says bank remains cautious about months ahead despite first-quarter profit of £2.6bnThe British economy is still not “out of the woods”, according to Barclays’ chief executive, who said the bank would remain cautious in the months ahead despite making its strongest quarterly profit since 2011.CS Venkatakrishnan said: “The macro-economic outlook around the world – not only the UK or in the US – is a little better today than it was six months ago. That doesn’t mean they’re out of the woods.” Continue reading...
Thinktank urges ministers to make reducing long-term sickness health equivalent of drive for net zeroBritain’s poor record on health is costing the economy £43bn a year and cutting the annual incomes of individuals affected by long-term sickness by up to £2,200 a year on average, a report says.With official figures showing more days lost to sickness than at any time since 2004, the Institute for Public Policy Research said improving the country’s health was vital both for the economy and to boost the incomes of disadvantaged groups. Continue reading...
‘We’re all worse off,’ says the Bank of England. At a time of soaring pay to company bosses, this is ugly politicsStruggling households, sinking businesses: the Bank of England wants you to swallow some bitter news for your own good. You “need to accept” that you are poorer. Stop asking for wage rises. Do not sneak up prices. Surrender your “reluctance to accept that, yes, we’re all worse off”. Such thoughts only produce higher inflation – and that simply won’t do, according to the Bank’s chief economist, Huw Pill. In an interview this week, he accused families and business of indulging in a game of “pass the parcel” – pushing higher costs between themselves when what they really need to do is admit that “we all have to take our share”.If Mr Pill himself displays such Zen-like acceptance, it may owe something to the fact that he received £88,000 for his first five-and-a-bit months at Threadneedle Street, equivalent to an annual salary of £180,000. Another advocate of serenity is the Bank’s governor, Andrew Bailey, who last year told workers not to make big pay demands, while raking in half a million pounds. Ordinary Britons may detect a touch of Versailles here, of being advised to chow down on brioche because no bread is to be found. Such statements do not enhance one’s authority, as Marie Antoinette could attest. Continue reading...
Why should we all just ‘accept we’re worse off’, when corporate greed and global shortages are really to blame?The Bank of England’s chief economist, Huw Pill, provoked derision this week when he claimed that inflation means those in Britain need to accept that “we’re all worse off, and we all have to take our share”. Echoing comments made last year by the Bank’s governor, Andrew Bailey, on the need for pay “restraint”, Pill claimed the “pass-the-parcel game” of wage and price rises was “generating inflation”.I disagree: they are both almost entirely wrong, and the clumsy messaging reflects the failure of conventional thinking and policy in tackling the cost of living crisis.James Meadway is director of the Progressive Economy ForumDo 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...
UK foreign secretary warns a war across Taiwan strait and likely destruction of semiconductor industry would have global effectsA Chinese invasion of Taiwan would destroy world trade, and distance would offer no protection to the inevitable catastrophic blow to the global economy, the UK’s foreign secretary, James Cleverly, warned in a set piece speech on Britain’s relations with Beijing.In remarks that differ from French president Emmanuel Macron’s attempts to distance Europe from any potential US involvement in a future conflict over Taiwan, and which firmly support continued if guarded engagement with Beijing, Cleverly said “no country could shield itself from the repercussions of a war in Taiwan”. Continue reading...
Retailer will extend online click & collect service to London and expand into Texas after strong resultsPrimark is to extend its online click & collect service to London and expand in the southern US after reporting strong first-half sales.The cut-price retailer said it had benefited from a return of tourists and office workers across UK cities, who had bought more items than a year before despite a 7% rise in prices. Continue reading...