From May, loyalty card holders will collect 3p of points for every £1 spent at health and beauty chain, down from 4pBoots is cutting the points per pound shoppers can earn on their loyalty card by a quarter, while offering discounts on its own-brand products.The health and beauty chain told customers via email that from May, holders of the Boots Advantage card would collect 3p worth of points for every £1 spent, instead of 4p. They will keep the number of points they have already collected, which will still be worth the same amount. Continue reading...

GDP is likely to edge sideways in 2023 (if that) but the true impact of rising interest rates has yet to be felt

Rolling coverage of the latest economic and financial news, as crypto turmoil leads to an "‘orderly wind down’ and ‘voluntary liquidation’ of Silvergate bank

Labour knows the UK needs a green recovery plan like Joe Biden’s, but the Tories have neither the courage nor will to follow suitThere was a time when the Institute of Directors was a hotbed of Thatcherism. Its members were gung-ho for the free market, tax cuts, privatisation and economic liberalism in its purest form. But that was in the 1980s and early 1990s and it is a different story now. Earlier this week, the IoD called on the chancellor, Jeremy Hunt, to be more than simply a bean counter in next week’s budget and urged the government to come up with its own version of Joe Biden’s Inflation Reduction Act.This is some change of heart. The IRA is a $370bn (£312bn) package of protectionism, state aid and subsidies designed to galvanise American business in the fight against climate change. Where once the IRA would once have been everything it loathed, here was the IoD warning that “short-term budgetary concerns” should not be allowed to trump the “strategic imperative of establishing market leadership positions in green business”. Continue reading...

A new operating model for the global economy is upon us – its success will depend on how policymakers adaptFor three decades, businesses and governments around the world operated under the assumption that economic and financial globalisation will continue apace. As the international order has come under strain in recent years, however, the concept of deglobalisation – the delinking of trade and investment – has increasingly gained traction with households, companies, and governments. But the available data suggest that globalisation is not ending so much as it is changing.Not too long ago, it seemed that there were no limits to global economic and financial integration. For decades, globalisation’s benefits appeared to be obvious and unassailable. The interconnectedness of production, consumption, and investment flows provided consumers with a wider range of choices at attractive prices, enabled companies to expand their markets, and improved the efficiency of their supply chains. Global capital markets expanded access to credit and lowered its cost for private and public borrowers alike. The world’s governments engaged in what seemed to be a series of win-win partnerships. And technology – including, most recently, the accelerating shift toward remote work – made national borders seem largely irrelevant. Continue reading...

MPC member Swati Dhingra warns against that overtightening monetary policy could harm weak economy

With inflation cooling rate-setter Swati Dhingra says higher borrowing costs pose ‘material risk’ to already-weak economyA senior Bank of England policymaker has said interest rates should be held at 4% amid signs of cooling inflation, rather than adding to pressure on households and businesses with a further rise in borrowing costs.Swati Dhingra, an external member of the Bank’s rate-setting monetary policy committee (MPC), said higher borrowing costs would pose a “material risk” to the UK economy. Continue reading...

The shadow chancellor has read the room on the need for a stable tax regime, but the ‘to-be-decided’ list is longIt was easy to spot the gaps that Labour needs to fill in the review of business taxation announced by the shadow chancellor, Rachel Reeves. On the rate of corporation tax, Labour wants to be “in lockstep with the G7”, which is a terribly vague formulation. On long-term tax breaks to boost investment, Reeves is enthusiastic but has committed to nothing specific. Any role for windfall taxes, where Labour is still calling for a “proper” additional levy on North Sea producers, was not mentioned in her speech to the trade body Make UK.The “to-be-decided” list, then, is long. In the meantime, Reeves said Labour would support “a genuine boost to investment … if it is affordable”, if that’s what the government produces in next week’s budget. There was nothing here to frighten business – but, equally, nothing much to excite. Continue reading...

Interest rates ‘likely higher than anticipated’, Jerome Powell says in Fed’s monetary policy report to Senate panelFederal Reserve chair Jerome Powell told Congress on Tuesday that the central bank will likely continue to increase interest rates in coming months as bringing down inflation “has a long way to go and is likely to be bumpy”.“The ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said, delivering the Fed’s semiannual monetary policy report to the Senate’s banking committee. “My colleagues and I are acutely aware that high inflation is causing significant hardship, and we’re strongly committed to returning inflation to our 2% goal.” Continue reading...

Catherine Mann concerned firms could take advantage of people’s willingness to tolerate higher pricesA senior Bank of England policymaker has expressed concern that UK companies could be exploiting the cost of living crisis to push through inflation-busting price increases – a phenomenon widely known as “greedflation”.Catherine Mann, one of the nine members of Threadneedle Street’s monetary policy committee, said she was concerned about the ability of firms to take advantage of consumer willingness to tolerate higher prices. Continue reading...

Pressure builds for childcare help in budget as Britain slips down global league table for women in workWomen in Britain are being priced out of work and suffering from a growing gender pay gap as the result of a lack of affordable child care, a new report has found.With the chancellor thought to be looking at ways of boosting employment in next week’s package, a survey by the consultancy group PwC found the UK slipping down the international league table for women in work. Continue reading...

February figures from BRC highlight impact of cost of living crisis on British economy before budgetUK consumers sharply cut back their spending in February as soaring living costs damaged household finances, retailers have warned, despite strong sales of jewellery and fragrances for Valentine’s Day.Highlighting the impact of the cost of living crisis on the economy before Jeremy Hunt’s budget next week, the British Retail Consortium (BRC) said sky-high energy bills and the rising cost of a weekly shop were forcing shoppers to cut back. Continue reading...

Encouraging economic signs as construction activity rises at fastest rate for nine months in February, and UK car market grows for seventh month running

The chancellor is unlikely to make giveaways next week, but he could offer more help with energy billsIf it’s headlines he’s after, Jeremy Hunt has a tough act to follow when he delivers his budget on 15 March. It would be quite something for the chancellor to make as big a splash as his predecessor Kwasi Kwarteng did with his package of measures last September.Hunt will not mind having a lower profile. If the budget makes a few ripples rather than sending a tsunami through the financial markets – as Kwarteng’s tax cuts did – then so much the better. Anybody expecting a giveaway package next week is certain to be disappointed. Continue reading...

Boosting spending power, increasing public funding for science and tech skills, R&D and infrastructure could workBritain has been struggling to find a solution to its north-south divide since the staple industries of the Industrial Revolution – textiles and coal – started to decline in the early 20th century.It is not a unique problem. Every sizeable country has richer and poorer regions, and from the US rust belt to what was once East Germany, geographical inequality is easy to spot.It would make more sense – if the aim is to get the big regional cities to punch their weight – to invest in better links between them, rather than on improving links to London. An HS3 would be better value for money than HS2. Continue reading...

No 10 says UK is giving firms in Northern Ireland time to prepare with phased introductionThe new Brexit trading arrangements in Rishi Sunak’s revised Northern Ireland protocol could take more than two years to be fully implemented, government sources have confirmed.Businesses in Northern Ireland say they expect a mass educational campaign to be launched across the country by HMRC and other government departments to help them put the deal announced in Windsor last Monday into operation if it is approved by parliament. Continue reading...

The PM’s commendation of the EU’s benefits to Northern Ireland is surely a sign for the party to embrace rejoiningThere is a marvellous moment in one of the great Fast Show sketches when, within seconds, the George Smiley-esque interrogator raises his hand in triumph because the prisoner has given himself away – blown it, as they say. Such a moment came last week, when, in his commendable efforts to settle the Northern Irish question, Rishi Sunak told the province how lucky it was to be in the European single market as well as the UK.I should not wish to push the comparison too far, but it is certainly the case that before the euphoria accompanying the Windsor framework, the prime minister appeared to be a prisoner of the rightwing European Research Group (ERG), who are in cahoots with the Democratic Unionist party (DUP). Continue reading...

Covid has shrunk the nation’s workforce, but new programmes aim to tackle the ill-health that may be holding willing employees and entrepreneurs backChelsea Tierney beams as she talks about her new part-time job as a cleaner at Morrisons supermarket. “It’s really nice, I like it. People are friendly – they’re lovely.”Struggling after the pandemic, 36-year-old Tierney had been out of work for more than five years when she was referred to a programme called Working Well, at its office in Bolton. “Covid hit and it knocked everyone’s confidence,” Tierney says. “It was awful.” Continue reading...

Britain’s energy suppliers have been told by officials to prepare two sets of bills for next month, with Treasury expected to maintain support for longer

Thinktank says 2010-2019 spending would have been £540bn higher had previous plans been stuck toA decade of austerity by the Conservative-led governments after 2010 resulted in more than half a trillion pounds of lost public spending and a weaker economy, a left-of-centre thinktank has calculated.The Progressive Economy Forum said that had state spending continued at the pace before David Cameron became prime minister, it would have been £91bn higher by 2019 – enough to cover the entire education budget in that year. Continue reading...

Concerns that a big driver of price rises may be firms using inflation as excuse to increase profit marginsFears that Europe’s companies are exploiting high inflation to increase their profit margins have prompted a warning from the European Central Bank that it is closely monitoring potential price gouging of consumers.Policymakers have repeatedly called for wage restraint but concerns are mounting that a bigger driver of the wave of price rises may be companies using inflation as an excuse to increase profit margins, a trend unions have described as “greedflation”. Continue reading...

Books-to-stationery retailer says a cyber security incident has resulted in illegal access to current and former employee data, though website and customer accounts are unaffected

But Governor Andrew Bailey says rates could rise again if inflationary pressures become embedded

An end to ultra-low rates mean borrowers can only afford smaller mortgages

Money saving expert predicts government could decide not to lift average energy bills to £3,000 per year in April, after pressure

Supermarket latest to ration vegetable sales; Ofgem cuts maximum cost of electricity and gas units from April, but average bills set to rise anyway

The UK chain’s thrifty founding family would never have run it this way. Now, with high debts and falling profits, signs look grim‘We all say he would be turning in his grave. It is not what it was,” says one former member of staff outside the Girlington branch of Morrisons in Bradford.On the streets of the West Yorkshire city that Sir Ken Morrison helped put on the map, the mood surrounding Britain’s fifth-biggest supermarket chain is decidedly glum. Continue reading...

Thinktank warns austerity drive at next month’s budget will further damage economyRishi Sunak’s government is hiding £28bn of “stealth cuts” to public services over the next five years, according to a report warning that a renewed austerity drive at next month’s budget would further damage the economy.Calling on the chancellor, Jeremy Hunt, to change course at next month’s tax and spending set-piece speech to the House of Commons, the Trades Union Congress said a boost for public spending could help keep Britain out of a recession this year. Continue reading...

Cancelling loans put the Wunder into Wirtschaftswunder. Treat poor nations the same todaySeventy years ago this Monday, the London Debt Agreement saw half of Germany’s (then West Germany’s) borrowings, accumulated after two world wars, written off. The debt cancellation, worth more than a fifth of national GDP, was driven by the United States, the UK and France. Eventually, South American, Asian and African nations signed up – including, in a bitter twist of history, colonial precursors of today’s bankrupts.Germany’s economic miracle was built on debt relief. Unlike today, Germany was allowed to repay a large part of its debts in its national currency. Meanwhile, the cost of servicing the country’s external debt was capped at 5% of export revenues. In 2021, the comparable figure was 16% for poor, indebted nations – money that should be used for schools and hospitals. Creditors in the 1950s were expected to take a haircut if the German economy faltered. The country was allowed to industrialise by replacing imports with home-manufactured goods, while creditor nations agreed to reduce their own exports. Unlike the current International Monetary Fund bailouts, West Germany’s state was allowed to get bigger. Social welfare spending zoomed upwards. Continue reading...

Under layers of misinformation, UK inequality is rising after decade of flatlining progress for most peopleThe sea of yellow placards, held aloft in the protest against Oxford’s low -traffic neighbourhoods (LTNs) scheme earlier this month, told a story. In the crowd of about 2,000 people who took part, it was clear the demonstration was about much more than traffic reduction.“The 15-minute WEF ghettoes are not about climate, it’s tyrannical control,” read a placard. “Say NO to the new world order. Say no to 15 mins prison cities. Wake up, people, wake up.” Continue reading...

A year of conflict has brought soaring prices and faltering trade, but also a step change in the switch to renewablesRussia’s invasion of Ukraine sent shockwaves through the global economy and now, a year on from the start of the attack, the world is fundamentally changed.Trends that were already in motion have accelerated, as the need to move away from fossil fuels to greener, renewable energy supplies became more urgent. Food prices have soared, increasing hunger in the developing world, and forcing governments, businesses and people to adapt to lasting shifts. Here we take a look at five ways the global economy has changed: Continue reading...

Productivity is much lower than in comparable countries, yet bosses just award themselves millions – and hire consultantsBanker bonuses are on the rise again. NatWest, HSBC, Lloyds and Barclays have in the past fortnight reported shelling out millions of pounds to bosses and assorted directors as a reward for their exceptional efforts. Almost £20m was doled out between the four chief executives.A glance at the FTSE 100 shows that all chief executives seem to believe they are exceptional: the data shows their pay and bonus packages averaging a whopping £3.4m each, or 103 times the £33,000 average salary for full-time UK workers. Continue reading...

The cheapest way from Ireland to Europe used to be via Dover. But now Cherbourg and Rosslare are thrivingRain or shine, Colm Lambert likes to sit on a bench overlooking Rosslare port on the south-eastern tip of Ireland and watch the new freight ships and passenger ferries sailing in from the Irish Sea.“They’re coming in from France, Spain, Belgium, Holland – it’s great to see,” he said. “Brexit has made an awful difference to here. Boris Johnson did Rosslare a favour.” Continue reading...

Proportion of people experiencing shortages of food items has risen over the last year, ONS says

Consumer prices rose 0.6% from December to January, up sharply from a 0.2% increase from November to DecemberThe Federal Reserve’s preferred inflation gauge ticked higher in January, a sign that price pressures remain entrenched in the US economy and could lead the Fed to keep raising interest rates well into this year.Friday’s report from the commerce department showed that consumer prices rose 0.6% from December to January, up sharply from a 0.2% increase from November to December. On a year-over-year basis, prices rose 5.4%, up from a 5.3% annual increase in December. Continue reading...

UK rent and rate rises plus tougher rules are fuelling a crisis for both tenants and owners

Thérèse Coffey, Defra secretary of state, has predicted that the UK’s fruit and vegetable shortages could last up to four weeks

Catherine Mann, a hawkish member of the MPC, says high rates necessary to stop inflation becoming embedded in wages and pricesInterest rates will need to rise again to prevent inflation becoming a persistent problem in the UK, a Bank of England policymaker has warned.A shortage of workers and high wage demands were likely to continue pushing up inflation, acting as a counterweight to falling energy prices, said Catherine Mann, a member of the Bank’s monetary policy committee (MPC), which sets the base rate. Continue reading...

Loan is on top of £25bn that cash-strapped Islamabad already owes Beijing and Chinese commercial banksChina has agreed to loan Pakistan $700m (£580m) to help it weather its worst economic crisis in a generation, in a development that will intensify concern among western countries about cash-strapped Islamabad’s debt burden to Beijing.The loan comes on top of $30bn (£25bn) that Pakistan already owes China and Chinese commercial banks. Securing the financing will help to unlock bailout cash from the International Monetary Fund (IMF). Continue reading...

Chief executive Charlie Nunn could receive £9.1m payout, while top performing bankers to share £446m bonus pot for work in 2022Lloyds Banking Group has been accused of “stuffing the pockets of already overpaid bankers” after proposing increases for top bosses that could result in a £9.1m payout for its chief executive, Charlie Nunn.The bank revealed on Wednesday that staff would share a £446m bonus pot – the highest in four years – for their work in 2022, despite reporting flat annual profits, after an increase in the money put aside for a potential jump in defaults. Continue reading...

Falling gas prices and CPI decline could boost public finances before 2024 general electionBritain’s inflation rate could fall to below 2% by the end of the year, according to new financial industry forecasts, handing the chancellor a boost to the public finances before a general election in 2024.Predictions that falling gas prices will accelerate the decline this year in the consumer prices index (CPI) from last month’s level of 10.1% could also support a recovery in household living standards and persuade the Bank of England to cut interest rates earlier than expected. Continue reading...

British Steel plans to close its coke ovens, a move that could result in 260 job losses at its Scunthorpe site in northern England

Can Putin weather the west’s economic attack? Plus: Global disinformation.

Now Modi’s government has modernised it must make growth sustainable, inclusive and fairIndia is poised to become the world’s most important country in the medium term. It has the largest population (which is still growing), and with a per-capita GDP that is just one-quarter that of China’s, its economy has enormous scope for productivity gains. Moreover, India’s military and geopolitical importance will only grow, and it is a vibrant democracy whose cultural diversity will generate soft power to rival the US and the UK.One must credit the Indian prime minister, Narendra Modi, for implementing policies that have modernised India and supported its growth. Specifically, Modi has made massive investments in the single market (including through de-monetisation and tax reform) and infrastructure (not just roads, electricity, education and sanitation, but also digital capacity). These investments – with industrial policies to accelerate manufacturing, a comparative advantage in tech and IT, and a customised digital-based welfare system – have led to robust economic performance after the Covid-19 slump. Continue reading...

The RBA tells us the pain is only temporary, but it could be here for a while. Here’s whyAustralia’s politicians and Reserve Bank officials have obfuscated the extent of the economic challenges ahead.The spin is that interest rate rises are temporary and for the best. The truth is that the cost of living and interest rates may stay high for some time to come. Continue reading...

Jeremy Hunt says he will not improve pay offer despite surprise budget surplusJeremy Hunt has insisted the government is unable to afford a bigger pay increase for nurses and other public sector workers at next month’s budget, despite official figures showing an unexpected boost for the exchequer in January.Batting away calls for an improved pay offer to break months of strike deadlock, the chancellor said the government finances still remained under pressure after recording a surprise £5.4bn surplus last month. Continue reading...

Woking says it is at risk of issuing section 114 notice, which would force central government to interveneA local council in Surrey has signalled it is close to effective bankruptcy after amassing debts worth almost £2bn to fund a property investment spree, raising fresh questions over the fragile health of local authorities after years of austerity.Woking borough council said it was “in the territory” of being unable to meet its financial obligations, amid a surge in debt interest costs on its investments, which include a shopping centre, residential skyscrapers and 23-storey Hilton hotel. Continue reading...

Asda introduces a limit on tomatoes, peppers, cucumbers, lettuce, salad bags, broccoli, cauliflower and raspberries, after bad harvest hits supplies

Pound edges up as stronger economic growth increases chances of further interest rate risesA rebound across the UK’s services sector in February has raised hopes that the country might avoid recession in the first half of this year.Analysts said the bigger than expected surge in business activity appeared to show that the UK would narrowly avoid a recession, though the squeeze on consumer spending from the energy crisis and a struggling manufacturing sector would continue to put the brakes on the economic recovery. Continue reading...

I was in a six-month trial for the four-day week – it transformed people’s spare time and their working lifeI’m interested in any idea that makes staff happier and more productive, because I work in HR. But until last year I hadn’t given a lot of thought to asking people to work less. When I first heard about the idea of a four-day week, I have to admit I thought it sounded a bit too good to be true. When we gave it a try, though, my teams and I thought it was a huge success.Last year, from July to December, Citizens Advice Gateshead – where I work – was one of 61 companies, comprising about 2,900 workers, who took part in a six-month trial run by the 4 Day Week campaign. So far we’ve been continuing with the trial as our staff have found it so rewarding. We want conversations to continue so that staff are thinking about how they can improve their work-life balance and what we can do to support them.Claire Hall is head of HR and agile working at Citizens Advice Gateshead Continue reading...