Painting a veneer of morality over welfare cuts risks people fighting a tougher battle for support they needThe assessment process itself is awful." Carol Vickers receives the personal independence payment (Pip), the disability support benefit whose spiralling cost the government is determined to cut back.She has a debilitating condition called Ehlers-Danlos syndrome that affects her connective tissues, and means she needs an assistance dog. I spoke to her this week, to get a sense of how those at the sharp end of the looming changes may be feeling. Continue reading...

A trade war could push up inflation when both the UK and US economies really need cheaper borrowing. So what's a central bank to do?Monetary policymakers on both sides of the Atlantic will be considering how seriously to take Donald Trump's threats of an all-out trade war as they give their verdict on the path of interest rates this week.The Federal Reserve, the US central bank, will examine the prospect of a Trumpcession" brought on by tariffs that send import costs rocketing and convince consumers, already shellshocked from the cost of living crisis, to stop spending. Continue reading...

Russia has pushed Europe into a quasi-Keynesian approach to the defence budget. Only Britain insists on cutting help to the sick to pay for securityAs the president of the US provokes trade and economic chaos at home and abroad, an American tells a British friend of mine: At least your political system removed Truss; we are landed with Trump for fouryears."Unfortunately, when it comes to the worldwide damage being wreaked by Trump and his cronies, the we" applies to all of us. Continue reading...

Treating disabled and sick people callously flies in the face of all the party stands for - the government must rethink its plans

The president's chaotic policy on import duties makes planning impossible, says the CEO of a Kentucky distillery - and state Republicans are unhappy, tooBrough Brothers Distillery is in the midst of a big expansion. A fifteen minutes' drive from its small distillery in the West End neighborhood of Louisville, Kentucky, workers are toiling away on its new site, seven times the size of the old one, in the heart of Bourbon City.This has been a long time coming for Brough Brothers, which opened its first location in 2020 and had drawn up ambitious plans for international growth in 2025. Then Donald Trump returned to power. Continue reading...

Calls for chancellor to exclude defence from rules or raise taxes in response to spending pressure at spring statementLeading economists are urging Rachel Reeves to bend her fiscal rules or raise taxes instead of cutting welfare when she responds to growing spending pressures in her spring statement later this month.The independent Office for Budget Responsibility (OBR) is expected to downgrade its forecasts for the UK when they are published on 26 March, wiping out the headroom to meet the chancellor's rules. Continue reading...

UK economy unexpectedly contracts by 0.1% in January in blow to the chancellor ahead of spring statement; Friedrich Merz declares: Germany is back'Let's look at the GDP figures in more detail.The 0.9% drop in production output in January, which came after 0.5% growth in December, was mainly caused by a 1.1% slump in manufacturing while mining and quarrying also declined. Basic metals and metal products were down along with pharmaceutical products. Continue reading...

ONS data showing 0.1% fall in GDP in January comes less than two weeks before chancellor's spring statement

GDP goes in wrong direction as chancellor puts final touches to fiscal plans

Lib Dem leader says PM should make public show of support for ally against shocking attacks' on its sovereigntyThe leader of the UK's Liberal Democrats has called on the prime minister to publicly support Canada and oppose the shocking attacks" on Canadian sovereignty, as the Trump administration further escalates its global trade war against longstanding allies.Ed Davey, who leads the third largest political party in the UK, has called on Keir Starmer to travel to Canada in a show of support to the nation's new prime minister, Mark Carney, as the commonwealth nation faces a generational crisis under Trump's tariff war and suggestions that the country might become the 51st US state. Continue reading...

Labour targeting sickness and disability benefits that have ballooned amid increasingly ageing and unwell populationKeir Starmer's government is aiming to cut billions of pounds from welfare spending before the spring statement.The prime minister has warned that Britain's benefits system is the worst of all worlds", before the government publishes a green paper on sickness and disability benefit changes next week. Starmer is facing the biggest rebellion of his premiership over the plans. Continue reading...

Districts in Birmingham now ranked below poorest areas of France, Malta and Slovenia as institute urges rethink on planned welfare cutsThe UK has tumbled down the league of affluent nations after almost a decade of welfare cuts and stagnant incomes, according to a report that found the poorest districts in Britain now rank below the lowest-income areas of Malta and Slovenia.In a warning for ministers to protect welfare spending before Rachel Reeves's spring statement later this month, the National Institute of Economic and Social Research (NIESR) said the UK's reputation for high living standards was under threat. Continue reading...

Inditex shares plunge as some analysts say data suggests falling demand across Americas amid tariff uncertainty

Once again, the American economy is under the gun and under a microscopeIn 2016, voters in the UK opted to leave the European Union hoping that the day after would deliver something better. Nearly nine years later, Britain's growth remains anemic, its economy continues to underperform. A parade of prime ministers came and went. Along the way, a head of lettuce outlasted a hapless and clueless Liz Truss.Blood and soil economics exacts high a price. Fittingly, Nigel Farage, the godfather of Brexit, was on hand for Donald Trump's inauguration in January. On account of the cold, he was not seated. Still, Farage left his mark. America now endures a Brexit moment of its own. Continue reading...

FCA move follows longstanding pressure against new public interest test for announcing investigations

While inflation has declined sharply from its peak in 2022, price increases have remained above Fed's target rate of 2%Consumer prices remained relatively stable in February even as some economists have warned that prices could rise again amid Donald Trump's trade war and stock markets have fallen on fears of a recession.According to the Bureau of Labor Statistics latest Consumer Price Index (CPI), which tracks the prices of a range of goods and services, the annualized inflation in February was 2.8%, a 0.2% decrease from January's year-over-year rate of 3%. The month-by-month price increase for all goods minus the volatile food and energy industries was 0.2%, compared with January's 0.4%. Continue reading...

Large tax cuts for the rich, import tariffs, and the competing interests of Republican nationalists and the techno-right is a dangerous combinationWhat connects Donald Trump's approach to trade, tax and government spending? Is there a Trumpian theory of economics - Maganomics? Trump, like most politicians, would doubtless reject any claim that he was following a particular ideological blueprint, but then, as John Maynard Keynes said: Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist."It's certainly difficult to attribute Trump's policies to the intellectual influence of any one strand in economic thinking. The most obvious frame is the dual one identified by Harvard economist Dani Rodrik, who describes it as a combination of economic nationalism and the techno-right. The former, represented by long-term Trump confidantes Peter Navarro and Steve Bannon, wants to rebuild America's traditional industrial strength behind tariff walls while deporting as many immigrants as possible; the latter, represented of course by Elon Musk, to engineer a great leap forward into an AI-enabled libertarian future.Jonathan Portes is professor of economics and public policy at King's College London and a former senior civil servant Continue reading...

The release of economic data was moved to 7am in 2020, and research has suggested that if the time was reverted, the ONS website could crashThe UK's embattled statistics agency cannot reverse a pandemic-era decision to release official data on the state of the economy before financial markets open because its creaking website could crash, it has emerged.The Office for National Statistics (ONS) had sought views on whether to revert to releasing statistics - such as GDP and inflation data - at 9.30am. The releases were moved forward to 7am in March 2020 to allow investors time to digest consequential data - such as the subsequent record contraction in the economy - before the start of London stock market trading at 8am. Continue reading...

US president announces new 50% tariff on Canadian metal imports from tomorrow

Philip Wood, Daniel Scharf and Sheila Triggs respond to an article by Rowan Williams calling for a refocusing of Labour's goals on wellbeing, not wealthBravo! I never thought I would find myself in full agreement with that woolly liberal Rowan Williams, but I do now (When politicians tell us to focus on growth we need to ask: Why, and for whom?', 8 March). As a green social democrat, I am appalled by the intellectual vacuity of our neoliberal growth orthodoxy, so enthusiastically pursued by Labour. We seem to be oblivious to how the neoliberal revolution since the 1970s has immiserated most of our population. It has led to inequality and soaring rates of poverty and illness; a largely non-unionised, exploited workforce; impoverished public services; knackered infrastructure and an environmentin crisis.Instead of the trickle down of wealth created by rentier capitalism, to be taxed and invested in better infrastructure, public services and general wellbeing, we have had this wealth from growth sucked up into the top 1%. Dhananjayan Sriskandarajah (Opinion, 7 March) outlines how 38% of all turnover of non-financial businesses in Britain went through foreign companies, especially US businesses. He quotes Angus Hanton as rightly saying that we have become a vassal" state, with our assets being destructively exploited by US economic predators. We need Labour to begin a counter-revolution, not further servility to this economic madness, by taking back into full public ownership our precious infrastructure, public services and strategic industries such as steel-making and green power generation and distribution. Continue reading...

British PM has discussed issue with president, as US trade war with Canada escalatesKeir Starmer has said he will not hit back with immediate counter-tariffs if Donald Trump imposes 25% levies on all steel and aluminium imports to the US on Wednesday.The prime minister discussed the issue with Trump in a phone call on Monday and is prepared for the tariffs to be imposed at 4am UK time on 12 March. Continue reading...

US currency has lost all the gains it enjoyed since Trump won election and hits lowest level since mid-OctoberThe euro and the pound have risen against the dollar to their highest level since the week of the US election, as the greenback sank against other leading currencies amid mounting Trumpcession" fears.The European single currency rose by a cent to $1.093, breaching the $1.09 barrier for the first time since Donald Trump won the presidential race. Sterling hit $1.2956, its highest since 8 November, with both currencies strengthening after the US president escalated his trade war with Canada by lifting planned tariffs on metal imports. Continue reading...

Industries across the country are bracing for the impact of the Trump administration's worldwide tariff regime

Jewellery purchases linked to 14 February give lift to otherwise lacklustre month, British Retail Consortium saysAn increase in Valentine's Day gift-buying brought relief for retailers last month amid February's grey days", as consumers held back from spending on big-ticket items, according to industry figures.Jewellery purchases linked to Valentine's Day were one of the highlights of an otherwise lacklustre month when sales inched ahead, the British Retail Consortium (BRC) said. Continue reading...

New York stock market posts heavy losses, as investors have a wake-up call' about risks of recession under Donald Trump

Premier Doug Ford says province won't back down' until US president retracts duties on CanadaThe Canadian province of Ontario is imposing a 25% surcharge on electricity exports to the states of New York, Michigan and Minnesota in protest against Donald Trump's tariffs, the premier, Doug Ford, said on Monday.President Trump's tariffs are a disaster for the US economy. They're making life more expensive for American families and businesses," Ford said in a statement. Continue reading...

Donald Trump's brinkmanship and stop-start approach to tariffs rattle investors

Commission for Healthier Working Lives warns against cutting benefits and calls for proactive route for 8m affectedProviding more support for people in ill health to stay in work could save the UK government more than 1bn, according to a report warning ministers against cutting benefits.As the chancellor, Rachel Reeves, looks for savings before the 26 March spring statement, the cross-sector Commission for Healthier Working Lives has called for a new approach to supporting the 8 million people in Britain with a work-limiting health condition. Continue reading...

Yolanda Diaz Perez's leftwing government has championed employment reform similar to Labour's proposals - and she tells British business there is nothing to fearSpain's leftwing deputy prime minister, Yolanda Diaz Perez, has a message for Labour politicians as the UK government's employment rights bill takes its next step to becoming law this week: take heart from our success.With business groups in the UK issuing dire warnings about the impact of the workers' rights package, Diaz, the minister of labour and social economy, remembers her own government's battle when it thrashed out radical labour laws that came into force in 2022. We went through nine months of hell, literally. We had the press against it, academia, research centres - everybody was saying this was going to contribute to unemployment and not eradicate it," sherecalls. Continue reading...

US policy changes won't have a large direct effect on the Australian economy but a global trade war can only be a drag on growth

KPMG/REC report shows decline in people being placed in roles continues, while unemployment is rising, says BDOCompanies are putting the brakes on hiring new staff amid a subdued" economic outlook and rising wage bills, according to the latest business surveys.In signs of a weakening UK labour market, the consultancy KPMG and the trade body the Recruitment and Employment Confederation (REC) said a marked decline in the number of people being placed in permanent and temporary roles continued in February, although hiring declined at a slower pace than in January. Continue reading...

UK appears to be out of US eyeline for now but it would not be immune to slowdown triggered by rising tariffsForget the Trump put", as financial analysts called the bet that the US president's policies would unleash a winning era for the nation's stock markets. By Friday, the chat was of the Merz spurt".The decision by Friedrich Merz, the German chancellor-in-waiting, to cut a deal on ditching Germany's debt brake - still to be confirmed by the outgoing parliament - marked a seismic shift. Continue reading...

More government borrowing, more abandoned pets, more sourdough baking. Our panel looks at the ramifications of the pandemic, for better and for worse, on education, health, arts and life in the UKThere is an omerta, or code of silence, around 2020 - a blind spot. Most people don't want to dwell on the pandemic, the trauma, the boredom, the anxiety and the uncertainty about when it would end, or if it would end, whether the rules would change or why the rules hadn't already changed, and work out who was a covidiot or a superspreader or a doom monger.But like a forgotten mask in an old coat pocket, the effects of the Covid pandemic are still with us. The lockdowns and the fear of being near other people, the restrictions on freedom and the despair of isolation - and the virus that killed more than 200,000 people - have all had profound impacts on Britain, on life at work and at home, and in the NHS, in schools and theatres, and on the rest of the economy. Continue reading...

Even Berlin and Brussels are bending fiscal rules in the face of Russia's threat. Will the chancellor still stick to hers?As the Nobel laureate Robert Lucas quipped during the 2008 financial crisis: I guess everyone is a Keynesian in a foxhole." Donald Trump's upending of the postwar security consensus has underlined the enduring wisdom of Lucas's observation. But now, instead of bank bailouts and emergency bond buying, European firepower is being directed at bombs, tanks and drones in the desperate fight to secure the continent's border with Russia.Berlin and Brussels - typically capitals of financial orthodoxy - have been convinced that this approach is required once again. Under the plan put forward by Germany's chancellor-in-waiting, Friedrich Merz, Berlin is on the brink of relaxing its debt brake" rule to pave the way for spending on defence and infrastructure worth an additional 1tn (840bn) over the coming decade. Continue reading...

Life expectancy, homelessness and young people's mental health were among the areas where Britain performed poorly despite spending more than other countriesBritain performed worse than most other developed nations in its response to the Covid pandemic, according to an Observer analysis of international data, five years on from the first lockdown.The UK spent more money than most other countries on economic help yet still ended up with larger drops in life expectancy, more people too sick to work, huge levels of homelessness and soaring mental health problems among young people. Continue reading...

UK manufacturing is unloved and underinvested - but the defence industry is more essential than ever in a changing political ageInvest in Britain. You might make a fortune. Take a punt on a fintech company or an artificial intelligence startup. Better still, join the rest of the world by targeting property, which is the go-to asset class for 80% of global investments seeking a stellar payout.Whatever you do, avoid retail. And steer clear of manufacturing, which needs lots of startup capital and precision engineering, and offers only slim margins and modest returns as a reward for all that effort. Continue reading...

As the US president warns of a a little short-term interruption', businesses are struggling to make decisions amid heightened uncertaintyDonald Trump declared there to be no room left" for a deal with Canada and Mexico this week, launching a trade war against his nation's closest allies that he presented as an effort to protect America's soul.Then he pulled back. It wasn't his first feint and retreat. It probably won't be the last. Continue reading...

Officials said to be looking at whether producers have conspired to increase prices or have held back supplyThe justice department has reportedly opened an investigation into what is driving the sharp rise in egg prices, including whether top producers have conspired to increase them.Officials are also said to be looking at whether companies have held back supply. Their investigation is in its early stages, and may not lead to any formal action, according to the Wall Street Journal, which cited sources familiar with the matter. Continue reading...

US dollar hits four-month low after February's US jobs report shows rise in jobless rate and hiring

FTSE 100 drops and is on track for its worst week in a year, as Germany's Dax index slides

Quarter-point cut to deposit rate, to 2.5%, comes as Trump prepares to impose tariffs on EU exports to US

Selling off assets to foreign owners, deregulating markets, and liberalising financial services only leads to inequality and instabilityIn 1994, I joined a march protesting against how the World Bank and the International Monetary Fund - backed by the US - were forcing governments in the global south to follow what was called the Washington consensus".We argued that privatising state assets, deregulating markets, and liberalising financial services to attract external investment was leaving countries more unstable, more unequal and more dependent on foreign actors. Decades on, I am horrified that an approach that wreaked havoc in the global south is still being pursued in the UK.Dhananjayan Sriskandarajah is the chief executive of the New Economics Foundation and author of Power to the People. He is a former chief executive of Oxfam GB and secretary general of Civicus, a global alliance of civil society organisations Continue reading...

The GOP budget seeks vast cuts to Medicaid, food assistance and more. Instead, let's build an economy for everyoneFamilies in the US are exhausted. They deserve a government that chooses them over billionaire donors. The Republican budget plan that passed the House last week calls for $4.5tn in tax giveaways for the ultra-rich and corporations. It will be paid for with enormous cuts to Medicaid, food assistance and other federal programs that serve our families and the working class. These are the folks Elon Musk refers to as the parasite class".The agenda of the billionaire president and the richest man in the world is crystal clear: making the rich richer while working families struggle. Continue reading...

After a call with top executives at GM, Ford and Stellantis, president approves one-month exemption from tariffsDonald Trump has temporarily spared carmakers from sweeping US tariffs on goods from Canada and Mexico, one day after an economic strike on the US's two biggest trading partners sparked warnings of widespread price increases and disruption.The US president extended his aggressive trade strategy at midnight on Tuesday by targeting the country's two closest neighbors with duties of 25%. Continue reading...

Berlin's big bazooka' proposal sends industrial stocks surging but fiscal sea change also hikes borrowing costs

The chancellor-elect's proposals for gamechanging spending on defence and infrastructure are the right response to a new eraThree days after Russia's invasion of Ukraine in February 2022, the German chancellor, Olaf Scholz, created a 100bn special fund to modernise Germany's armed forces. Vladimir Putin's aggression, he told a stunned Bundestag in explanation, meant that Europe was living through a Zeitenwende, or turning point.Mr Scholz was right. But it has taken the return of Donald Trump to the White House to lay bare the full scale of the emerging threat to European values, security and economic interests. For leaders across the continent, the dawning realisation of what Trump 2.0 means for the transatlantic alliance constitutes a second historic moment of jeopardy and decision.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...

Although UK may avoid tariffs, overall productivity could be impacted by tit-for-tat tariffs between economiesA full-blown trade war would pose a substantial" threat to the British economy, Bank of England governor Andrew Bailey has warned.Donald Trump struck Canadian and Mexican imports with new duties of 25% at midnight on Tuesday, and also levied extra 20% tariffs against Chinese goods, triggering retaliatory moves. He also threatened to place sweeping 25% tariffs on EU imports last week. Continue reading...

Many plan to boycott US goods and say they will not cross the border while Trump is in officeSince Donald Trump began his tariff threats against Canada and his jokes' about making Canada the 51st US state, I have not bought a single product originating in the US," said Lynne Allardice, 78, a retired business owner from New Brunswick, Canada.Not a single lettuce leaf or piece of fruit. I have become an avid reader of labels and have adopted an anywhere but the US' policy when shopping. I will not visit the States while Trump remains in office, and most of the people I know have adopted the same policy." Continue reading...

Tariffs are dampening consumer confidence and fears of a downturn seem to be weighing on the dollar

Prices highly likely' to rise almost immediately, retailers say, after 25% duty hits exports from Mexico and CanadaAmericans have been warned to brace for higher prices within days of Donald Trump pulling the trigger on Monday, imposing US tariffs on goods from Canada and Mexico and hiking tariffs on China.Global stock markets came under pressure again on Tuesday, with leading indices falling sharply - and the benchmark S&P 500 losing all its post-election gains - as Canada, Mexico and China vowed to retaliate, and investors balked at the prospect of an acrimonious trade war. Continue reading...