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...

Start of superstar’s world tour ‘seems to have coloured inflation’, says economist, after tens of thousands of fans flocked to the capital for concertsSwedish inflation fell below 10% in May, official statistics showed, but was still higher than expected with some analysts suggesting superstar Beyoncé had tipped the scales.Consumer prices rose by 9.7% in May year-on-year, down from 10.5% in April, the first time inflation has come in under 10% in over six months. Continue reading...

Even with the pause, Fed officials suggest further increases may come depending on how close economy gets to 2% inflation targetUS Federal Reserve officials have announced a pause in interest-rate hikes, leaving rates at 5% to 5.25% after more than a year of consecutive rate increases.The decision, made by the Fed’s Federal Open Market Committee (FOMC), marks a shift in how Fed officials view the state of inflation, which reached a 40-year high of 9.1% in June last year as food and energy costs soared. Inflation in May was down to 4%, the lowest since April 2021. Continue reading...

Growing the economy by shrinking it first is a high-risk political strategyUnder Liz Truss’s mercifully short-lived premiership, the yield on British government bonds surged last September – a penalty described as a “moron risk premium” that markets imposed on her reckless plan for a tax giveaway to the rich. Now it appears that the morons are back: yields on gilts have exceeded the levels they reached last year, and are higher than at any point since the 2008 global financial crisis.The reason is that, although workers are having a tough time in the current cost of living crisis, it’s not tough enough for the City’s liking. In this topsy-turvy world, it’s bad news that unemployment fell and pay growth accelerated to a record high. Never mind that prices are rising at a faster rate than wages, investors are taking their cue from the governor of the Bank of England, Andrew Bailey. Continue reading...

Experts fear rising interest rates will cause UK recession, as two UK mobile networks are to merge

Chancellor gives unstinting support to Bank of England as households brace for borrowing costs to rise againJeremy Hunt has said the UK has “no alternative” but to raise interest rates to bring down inflation, as households brace for the Bank of England to increase borrowing costs further next week.The chancellor said the government would be “unstinting in its support” for the central bank to “do what it takes” to squeeze high inflation out of the system amid the cost of living crisis. Continue reading...

GDP rose by 0.2% in April, with rising car sales and reduced impact of strikes also playing a part

Stronger than expected job and pay data makes interest rate rise more likely, driving up two-year bond yields

The Reserve Bank has raised interest rates for the 12th time in 13 months, with governor Philip Lowe warning that rates will keep rising if necessary, despite ‘significant financial pressure’. This plan has come under fire, with treasurer Jim Chalmers saying the bank’s decision was ‘difficult to understand and difficult to cop’, and Commonwealth Bank economists predicting that Australia could slide into a recession this year.Economics correspondent Peter Hannam explains why interest rates continue to rise and columnist Greg Jericho looks at whether the central bank is killing the economy

Bank of England had been looking for signs of labour market softening so it could take foot off brake

UN figures show value of British goods and services exports rose by 6% between 2012 and 2021, compared with 29.1% for EUBritain has endured the worst exports record of any member of the G7 besides Japan over the last decade, according to a new analysis that will raise pressure on the government to reconsider its post-Brexit trade deal with the EU.As most of the world’s other major seven economies have rebounded from the pandemic, export growth has remained sluggish in the UK at a time when businesses trading with the EU faced extra red tape and costs as a result of the country leaving the bloc. Continue reading...

Breaking Bank of England in 1992 arguably set off wave of Euroscepticism that would engulf British politicsPhilanthropist. Intellectual. Trenchant opponent of totalitarianism. George Soros is all of these things. At 92, he has not lost his power to make headlines, as shown by his decision to hand control of his multibillion-dollar Open Society Foundations to his son Alex, going back on a vow that it would not go to one of his children.It has been a long time since Soros was an active investor, and he has been focused on how to spend the fortune he amassed on his main areas of interest – building democracies and supporting human rights. Continue reading...

Bank of England policymaker Jonathan Haskel says interest rates may need to rise higher, as mortgage providers raise rates or withdraw deals

Jonathan Haskel suggests surging borrowing costs for households is a price worth paying to tackle inflationThe Bank of England may need to increase interest rates further to tackle inflation, despite mounting pressure on households from the rising cost of borrowing, senior Threadneedle Street policymakers have said.Jonathan Haskel, an external member of the rate-setting monetary policy committee (MPC), said the central bank could not rule out more hikes given concerns about stubbornly high rates of inflation. Continue reading...

Move follows decision by HSBC and applies to brokers and online applications as lenders hike fixed ratesSantander has become the latest major bank to temporarily pull its mortgage deals for new borrowers from sale, amid a fresh warning that further interest rate hikes may be needed to tackle inflation.Days after HSBC temporarily pulled down the shutters, Santander said it would stop accepting new applications for its “new business” residential and buy-to-let fixed and tracker rates at 7.30pm on Monday, with deals not becoming available again until Wednesday 14 June. Continue reading...

Households and firms can expect more financial pain despite Britain dodging technical recession, says KPMGBritain will be left with deep scars from the pandemic despite narrowly escaping a second recession within three years and growing signs of an economic pick up, according to new forecasts.A new report by the accountancy firm KPMG has found that the economy has enjoyed a better start to the year than it had thought, and is now expected to grow by 0.3% this year, compared with its previous prediction of an uplift of just 0.1%. Continue reading...

Australia’s big supermarkets have increased profit margins throughout the pandemic, and some critics have accused them of ‘excessive pricing’. In response, Woolworths and Coles argue their promotional items show they are protecting customers from some of the price hikes – but are they actually a good deal?

Scaling back of green prosperity plan reflects a possibly costly desire to project fiscal stabilityDread of the financial markets is part of the Labour party’s DNA. This primal fear has been passed down the generations. Ramsay MacDonald, Clement Attlee, Harold Wilson and James Callaghan were all battle-scarred from their vain attempts to defend the pound.Even though the signs point to a big Labour victory at the next election, the mood at the top of the party remains cautious. For months, Rachel Reeves has been on a charm offensive in the City, sending out a message to the bond dealers and currency traders that she will take no risks with the public finances. Continue reading...

Research reveals the extent to which our earnings and values are determined by where we are bornWhere you are born matters a lot. There’s the accent, of course, but I mean in rather less superficial ways. It’s the breadth of those impacts that stands out in a new study from London School of Economics researchers, which shows how the economic circumstances of where and when we were born shape far more than our economic outcomes – moulding everything from our cultural outlooks to voting patterns.The authors join up data tracking British individuals’ attitudes and earnings from 1991 to 2008 with details of the unemployment level in their place of birth – a key measure of economic insecurity. Continue reading...