Chancellor’s upbeat note in budget delivery was echoed by safe-seat Tory MPs but ‘red wall’ members are less happyAt a drinks party in Downing Street a few weeks after he took over as chancellor last year, Jeremy Hunt told his guests: “Sometimes doing the popular thing isn’t the right thing.”Ever since he was handed the keys to the Treasury, first by Liz Truss and then Rishi Sunak, Hunt’s overwhelming priority has been to restore the Conservatives’ reputation for economic competence. Continue reading...
The statement will be remembered for the childcare pledge, but there was nothing to meet the scale of Britain’s economic malaiseI have spent more than 25 years covering budgets, because someone had to, and have learned one golden rule: for all the huff and puff, the ready reckoners and those blessed fan charts, most of what’s said evaporates from the public consciousness by the weekend. Out of all Jeremy Hunt’s promises today, only one will linger in the electorate’s memory: providing working parents with 30 hours of free childcare during term time for their babies and toddlers.Not that you’d know. The chancellor gave it only brief airtime and got far more excited at the idea of building “12 potential Canary Wharfs”. But that’s the only policy guaranteed to light up WhatsApp groups this evening and perhaps to be remembered by many voters at the ballot box. It is also, according to the Office for Budget Responsibility, the measure that will do most to boost the economy – more than the much costlier giveaways to business. The pledge is shot through with more holes than Clint Eastwood’s cowboy hat, as we shall see, but it also contains important clues for how politics will play out between now and the next election.Aditya Chakrabortty is a Guardian columnist and senior economics commentator. He was last week named columnist of the year (broadsheet) at the Press Awards Continue reading...
by Polly Toynbee, Miatta Fahnbulleh, Katy Balls, Fran on (#69V13)
Jeremy Hunt has announced reforms to childcare, pensions and disability benefits. What do they mean for the economy?“Are you and your family better off than you were 13 years ago?” Ask yourself this, Labour says, echoing Ronald Reagan. Of course not. Living standards will fall and every public service will continue to decay. The government can expect few thanks for preventing another monster rise in energy bills, when people are still paying twice as much as a year ago. Headlines on falling inflation will impress few when voters find prices don’t fall, but keep climbing. “You could have been even worse off” is not much of a slogan.Polly Toynbee is a Guardian columnist Continue reading...
Biggest change to welfare system in a decade and extension of energy price guarantee among expected measuresJeremy Hunt is due to set out the government’s plans for tax and spending in his first budget on Wednesday. Meanwhile, the Office for Budget Responsibility (OBR) will publish updated economic forecasts and an assessment of the government’s finances for the next five years – running up to and beyond the next election. Here is what to expect. Continue reading...
Average monthly cost of owning 3-bed home is £500 a year less than renting, but the gap is narrowingHomeowners in the UK are almost £500 better off a year than renters, according to new research from Halifax.The average monthly cost of owning a three-bed home for first-time buyers is now £971, which is £42 lower than the average cost of renting an equivalent property, the mortgage lender said. Renters pay on average £1,013 each month – 4% more. Continue reading...
by Joanna Partridge and Graeme Wearden on (#69T09)
Probes announced in the UK and US over failure of California lender as financial markets recovered from Monday’s turmoilInquiries into the collapse of Silicon Valley Bank (SVB) and its UK arm have been announced in Britain and America, as financial markets settled and banking shares recovered from Monday’s turmoil.In the US, prosecutors at the Department of Justice (DoJ) as well as the stock market regulator, the Securities and Exchange Commission (SEC), are conducting separate investigations into the collapse of California lender SVB, which was taken over by the government after a run on its deposits. Continue reading...
Failure of America’s 16th biggest bank amid high inflation poses an awkward decision on interest rates for the Federal ReserveThe collapse of Silicon Valley Bank (SVB) has inevitably conjured up memories of September 2008 when the bankruptcy of Lehman Brothers prompted a market meltdown, a global recession and a dramatic easing of policy from the world’s central banks.Fears that SVB is not the only poorly regulated bank to be feeling the effects of steadily rising US interest rates have led to a rethink of what will now happen to official borrowing costs. Ultimately, that depends on whether this really is a “Lehman’s moment”, or a re-run of the stock market crash of 1987 or the failure of the hedge fund Long Term Capital Management in 1998, when the market turmoil was temporary. Continue reading...
The Fed’s target of bringing inflation to 2% could see dramatic change in tumultuous aftermath of Silicon Valley Bank collapsePrice rises slowed again in February as the annual rate of inflation eased but the report has been overshadowed by a banking crisis ahead of next week’s meeting of the Federal Reserve.Prices in February were 6% higher than a year ago, down from an annual rate of 6.4% in January and significantly lower than the 9.1% peak of inflation seen in June. Between January and February, prices rose 0.4% as prices increased in sectors including housing and food. Continue reading...
Parents describe plight as pressure builds on Jeremy Hunt to provide help in the budgetJoanna Jayarajan, 41, a self-employed mother of two from London, is one of many thousands of working parents in Britain for whom the current childcare offer simply does not work.She used to work five days a week providing extracurricular activities in schools and nurseries, until she lost her last au pair a year ago, and subsequently a chunk of her income (her wages more than offset the cost of the childcare). Continue reading...
We’re keen to hear from people in the UK whether a bigger allowance for tax-free pension contributions might entice them to put off retirement or work more hoursChancellor Jeremy Hunt is likely to announce a significant increase of the annual tax-free allowance for pension contributions from £40,000 to £60,000, as well as the so-called lifetime allowance (LTA) – the maximum amount workers can pay into their pension pot tax-free – by more than half a million pounds.We’re interested to hear from people in the UK how these new allowances might affect their career and retirement plans. Would you consider working longer hours or retiring later than you had envisaged to make use of the new pension thresholds? Or could you be persuaded to return to work from early retirement? Continue reading...
E-bikes, home security cameras and frozen berries added to ONS list in sign of changing shopping habitsTwo ubiquitous consumer items of the 1990s – alcopops and CDs – will no longer count towards the monthly update of Britain’s cost of living after the latest shake-up of the shopping basket used to measure price changes.In a sign it is no longer fashionable to order a fruit drink laced with booze in a pub and that the age of the compact disc is over, the Office for National Statistics said both products had fallen foul of its annual audit of the UK’s spending habits. Continue reading...
Financial deregulation led to the crash in 2008 and it could again in 2023. It’s time to make banking boring againOn Friday, bank regulators closed Silicon Valley Bank, based in Santa Clara, California. Its failure was the second largest in US history and the largest since the financial crisis of 2008.Will other banks fail? On Sunday, regulators closed New York-based Signature Bank. Continue reading...
Soaring profits are a bonanza for executives and shareholders, but all that’s on offer for workers are real-terms pay cutsThese days there is a lot of talk about a “cost of living crisis”, but as Unite’s most recent research confirms, we should actually be talking about a cost of profiteering crisis. From rising supermarket prices, to energy bills, to transport costs, we are all paying the price.Take UK Power Networks, the National Grid power distributor. Last financial year, according to Companies House, it made a staggering £1.3bn pre-tax profit. Billions in profit, bonanzas for the executives and shareholders, while there are only real pay cuts on offer for workers. Continue reading...
Higher growth should mean stable employment and wages, with low- and middle-income countries seeing biggest improvementsThe end of extreme poverty may finally be achieved by 2050, spurred by economic growth in low-income countries, according to a new economic forecast.Though the Covid pandemic began to reverse progress in eradicating extreme poverty, and additional challenges will emerge, the damage may have a very limited impact on the overall trajectory of economic growth, according to a Center for Global Development (CGD) report. Continue reading...
Analysis by UK union shows large corporations have improved profits with price rises in cost of living crisisLarge corporations have fuelled inflation with price increases that go beyond rising costs of raw materials and wages, pushing shopping bills to record highs, according to an analysis of hundreds of company accounts.Highlighting a trend dubbed “greedflation”, the research indicates that supermarkets, food manufacturers and shipping companies are among hundreds of major firms who have improved their profits and protected shareholder dividends, giving an extra lift to prices, while the cost of living crisis has meant workers face the biggest fall in living standards in a century. Continue reading...
Wednesday’s announcement will not change big picture for UK economyThe only way was up for Jeremy Hunt when he took over at the Treasury last October. Appointed by Liz Truss in an attempt to save her job, he was the fourth chancellor of 2022 and the Conservatives were at rock bottom.The economic legacy handed to Hunt was dire. Inflation was above 10%, living standards were falling, and house prices were going down while interest rates were going up. In the aftermath of Truss’s departure from Downing Street, the Bank of England said the economy was already in recession and would remain that way for the whole of 2023. Opinion polls were pointing to a landslide victory for Labour at the next election. Continue reading...
Tories can take heart that the over 65s won’t punish poor GDP, research finds. Just don’t hit them in the pocketBritain is a stagnation nation, with next to no productivity growth and zero real wage growth post-financial crisis. And that’s before inflation hit 40-year highs. Can British politics chart a course out of this low-growth mess?The demographics won’t help. That is the takeaway from an interesting recent paper by Oxford’s Tim Vlandas. Britain is getting older (we’ll have around 2.5 million more people aged over 65 in 2030 v 2020). Some of the growth effects are obvious (fewer workers means lower GDP), but the indirect impacts on growth via politics are Vlandas’s focus. He raises two concerns. Continue reading...
The chancellor has room for giveaways in this week’s budget, but business and consumer groups fear he will hold them back for the electionJeremy Hunt is under pressure to be generous when he delivers his first budget speech since he became chancellor last October.The public finances have improved dramatically from the chaotic days that followed Liz Truss’s mini-budget in September, which rocked international money markets and sent interest rates on government debt soaring. The cost of financing Britain’s debt has fallen in recent months and the cost of gas on wholesale markets has tumbled. Continue reading...
by Kalyeena Makortoff Banking correspondent on (#69PSZ)
Industry leaders expected to call for state intervention to avoid failure of hundreds of UK firmsThe UK government is coordinating an emergency meeting with tech firms, who are expected to call for state intervention to avoid the failure of hundreds of firms following the collapse of Silicon Valley Bank UK (SVB UK).The chancellor, Jeremy Hunt, also spoke with the Bank of England governor, Andrew Bailey, on Saturday morning, just hours after the collapse of SVB UK’s parent company, which marked the largest failure by a bank since the 2008 financial crisis. Continue reading...
Vacancies are high, but pay is not rising. Nor will the Bank of England allow it to. That means something else has to giveSome of Britain’s biggest industries need to shrink and they need to start thinking about how to do it now.Hospitality is one. Manufacturing could be another. These sectors are among many to say they cannot find the workers they need at the price they have traditionally paid. Continue reading...
Chancellor likely to announce increase to £40,000 pension annual limit and lifetime allowanceJeremy Hunt is considering a boost for the pensions of middle-class professionals and more help with childcare for parents in next week’s budget, as he tries to get more people into the workforce.The chancellor is likely to announce significant increases to pensions allowances in a bid to tackle the “pension trap”, which has led many workers to take early retirement. Continue reading...
by Presented by Katharine Murphy. Produced by Mellany on (#69NHB)
Political editor Katharine Murphy speaks to economics writers Shane Wright and Greg Jericho about inflation and whether the reserve bank is doing its best to curb it, any prospects of a recession and the upcoming budgetRead more: Continue reading...