Battle focuses on what EU sees as bloc’s over-reliance on London’s clearing houses handling euro-denominated derivativesThe City of London faces another post-Brexit blow to its dominance after the EU moved to require firms to settle more financial-risk reducing trades within the bloc.The plan centres on trades in securities known as derivatives, and on financial market clearing houses, the intermediaries that enable the transfer of funds to sellers and financial products to buyers. Handling trillions of transactions each year, they are deemed an essential part of financial market plumbing that reduces risk. Continue reading...

Report’s author, the World Bank, states concern over poor countries’ increasing spending on debtThe world’s poorest countries are expected to pay 35% more in debt interest bills this year to cover the extra cost of the Covid-19 pandemic and a dramatic rise in the price of food imports, according to a World Bank report.More than £63bn will be spent by the 75 countries, many of them in sub-Saharan Africa, that make up the poorest nations, to cover loans taken out mostly over the past decade and higher interest rates. Continue reading...

Exclusive: Chancellor to meet heads of UK’s major lenders and consumer champion Martin Lewis on Wednesday

Total sales rose by 4% but figures were helped by inflation masking lower volumes, says BRCBritain’s retailers benefited from a November sales boost fuelled by Black Friday discounts and colder weather as consumers bought winter coats, hot water bottles and hooded blankets, according to industry data.In its latest snapshot of high street and online spending, the British Retail Consortium (BRC) said sales growth picked up last month compared with October, despite mounting concern over the cost of living crisis. Continue reading...

Rolling coverage of the latest economic and financial news, as CBI warns UK faces recession and a lost decade without a government growth plan

TUC data shows 18% increase on staples over year, while category including cranberry sauce is up 33%The cost of the items that make up a traditional Christmas dinner has risen three times faster than wages this year, according to research from the Trades Union Congress (TUC).In a series of calculations to back its calls for more government action on the cost of living crisis, the trade union body said Christmas staples such as a turkey, pigs in blankets, carrots and roast potatoes had risen in price by an average of 18% in the space of a year, while wages had gone up by only 5.7%. Continue reading...

Business bosses ‘confused and disappointed’ by PM’s lack of growth plan in face of recessionRishi Sunak’s government is “going backwards” on building a greener economy and lacks a growth plan to soften the blow from recession, the head of the UK’s leading business lobby group has said.Tony Danker, the director general of the Confederation of British Industry (CBI), said the prime minister’s lack of ambition for the low-carbon economy was leaving business bosses “confused and disappointed” after the progress made under Boris Johnson. Continue reading...

Exclusive: economic inactivity due to sickness at highest level since records began, with north, Wales and Northern Ireland disproportionately affectedPeople in the UK are getting “sicker and poorer”, with a gaping health and wealth divide between regions that is only getting worse, research has found.Economic inactivity because of sickness is at its highest level since records began, with 2.5 million working-age adults inactive due to their health, states the Institute for Public Policy Research report, which is due out later this week. Continue reading...

Rampant inflation and government policy has brought matters to a head: so where is disruption going to hit and what are the unions asking for?Strikes are not something most managers think about. The oft-mentioned “winter of discontent” and year-long miners’ strike were features of the late 1970s and mid-1980s. Since then, industrial action in the private and public sectors has fallen to a level so low that academics have given up studying it.When pay talks began a year ago for the current financial year, inflation was rising, but the Bank of England was reasonably certain it would be temporary. Union leaders prepared for a post-pandemic battle over pay, but not one that would probably end in strike action. Continue reading...

Business leaders fear Rishi Sunak is failing to grasp severity of situation and impact on economySomething odd is going on in Britain’s jobs market. Even as unemployment hovers close to its lowest level since the mid-1970s and businesses across the country struggle to recruit enough staff to fill roles, growing numbers are quitting the workforce altogether.The rise of economic inactivity – when working-age adults are neither in a job nor looking for one – is one of the biggest challenges facing the economy as the country grapples with the twin threats of rampant inflation and weaker economic growth. Both are influenced by the loss of more than 600,000 “missing workers” since the Covid pandemic. Continue reading...

With faith in Labour economic policies on the rise, and staunch voters losing faith, the next election will not be another 1992Economic menus have rarely sounded so bland. A mild recession in 2023, followed by a fall in inflation and, for dessert, a return to modest growth.The current consensus view among City economists of next year’s overarching economic outlook would appear to be fairly benign, compared with the Armageddon promised by the Truss/Kwarteng fiasco of a few months ago. They forecast an absence of job losses, except at the margins of the retail industry, hospitality and maybe construction, though worker shortages would mean that even in these sectors, most people looking for a job would find one. Continue reading...

In her first interview since joining the monetary policy committee, Britain’s newest interest-rate setter warns that inflation is not the biggest threat to the economy – because ‘the slowdown is here’As the newest policymaker at the Bank of England responsible for setting interest rates, Swati Dhingra can see a problem. Britain’s economy is heading for a lengthy and painful recession, while Brexit is making matters worse.After a year of the central bank driving up borrowing costs – the equivalent of stamping hard on the economic brakes – to tackle rampant inflation, the London School of Economics academic worries that much tougher action could intensify the crash. Continue reading...

Britons need to be kept aware of the cost of leaving the EU, says Swati Dhingra• ‘The slowdown is here’ – read the Observer business profileBrexit is contributing to a surge in food prices as the country heads into recession, a senior Bank of England policymaker has warned.Swati Dhingra – the newest member of the Bank’s monetary policy committee (MPC), which sets interest rates – also used an interview with the Observer to suggest that the coming run of central bank rate rises should peak below 4.5%, which is the level that some City investors are expecting. “The market is probably underestimating what damage that [level of interest rates] might cause to the UK economy,” she said. Continue reading...

Union members working on England’s roads have announced 12 days of strike action over Christmas and the new year, while US added 263,000 jobs in NovemberThe UK’s financial regulator has warned insurers not to undervalue cars and other property when making payouts to customers.The Financial Conduct Authority says it has seen evidence that some consumers who have had their cars written off after an accident are being offered a price lower than the vehicle’s fair market value, and only improving the offer when customers complain.‘When making an insurance claim, people shouldn’t need to question whether they are being offered the right amount for their written off car or other goods that they need to replace.‘Insurance firms should offer settlements at the fair market value. This is especially important now as people struggling with the cost of living will be hit in the pocket at precisely the time they can ill afford it. Continue reading...

Script was set when interest rates started rising 11 months ago and slump has some way to go“The fallout from the mini-budget continued to impact the market,” says Nationwide’s chief economist, explaining the 1.4% decline in house prices in November.There’s never a wrong moment to kick Liz Truss and Kwasi Kwarteng’s excursion into fantasy economics – and, yes, the shambles, and the spike in bond yields, will have been a factor. But let’s not pretend that the mini-budget is the sole cause of falling house values, or that declines will be halted by the subsequent policy U-turn in the Treasury. Continue reading...

Average UK house prices fell 1.4% in November, as “the fallout from the mini-budget continued to impact the market,” says Nationwide

Nationwide warns inflation and rising interest rates will weigh down housing marketUK house prices fell last month at their fastest rate for two and a half years as the fallout from Liz Truss’s disastrous mini-budget put buyers off, according to Nationwide which warned inflation and rising interest rates would weigh on the market in the coming months.The price of an average home dropped 1.4% to £263,788 in November, according to the building society’s house price index, accelerating a slowdown that saw prices fall 0.9% in October. It was the third monthly decline in a row, and the biggest drop since June 2020. Continue reading...

Sydney sneaks into Top 10 as rising energy prices send inflation soaring globally, Economist Intelligence Unit survey findsNew York was the world’s most expensive metropolis in 2022, sharing the unwanted title with Singapore, as soaring energy prices doubled the inflation rate across the major global cities, according to the Economist Intelligence Unit’s annual survey.Last year’s leader Tel Aviv dropped to third, while Sydney snuck into the Top 10 and Moscow and St Petersberg in Russia scaled the rankings by as much as 88 places as sanctions and buoyant oil prices propelled prices higher, the EIU’s Worldwide Cost of Living report found. Continue reading...

Three years into the pandemic, China is still relying on snap lockdowns and mass testing – and that could spell trouble for the global economyProtests against pandemic restrictions in China could unleash a new wave of volatility into a global economy already racked by inflation, energy shocks and the war in Ukraine.The government’s continued reliance on lockdowns, quarantine orders and mass testing to limit the spread of the virus has provoked the biggest protest movement in decades. But there’s little evidence that authorities are willing to diverge from the path they have taken. Continue reading...

The UK’s sale of collapsed Bulb Energy to Octopus Energy will go ahead after it was approved by a London judge this afternoon

Rise in cost of essentials will hit poorer households, already struggling with higher energy bills, hardestUK food price inflation hit a new high of 12.4% in November as the price of basics such as eggs, dairy products and coffee shot up.Fresh foods led the increase in prices – with inflation rising to 14.3% from 13.3% in October – with rises expected to continue into next year according to the latest data from the British Retail Consortium trade body, which represents most big retailers, and the market research firm NielsenIQ. Continue reading...

Tory-led Essex authority is on brink of bankruptcy and has appealed to government for emergency bailoutA Tory-led council has admitted a series of disastrous investments in risky commercial projects caused it to run up an unprecedented deficit of nearly £500m and brought it to the brink of bankruptcy.The staggering scale of the catastrophe at Thurrock council in Essex – one of the biggest ever financial disasters in local government – is contained in a report made to the council’s cabinet, which reveals it has lost £275m on investments it made in solar energy and other businesses, and has set aside a further £130m this year to pay back investment debts. Continue reading...

Huge subsidies for US-based low-carbon manufacturers are posing big problems for EU leadersIn a slick General Motors advert aired during last year’s Super Bowl, the actor and comedian Will Ferrell took patriotic umbrage at Norway’s ability to sell more electric vehicles per capita than the US. “Norway’s beating us at EVs!”, Ferrell lamented, before promoting GM’s latest battery technology to the watching millions.Almost two years on, the angst is being felt on the other side of the Atlantic. Following on from President Joe Biden’s “Buy America” rules for infrastructure, his Inflation Reduction Act (IRA) will deliver, from January, almost $370bn worth of subsidies and tax breaks to US-based companies involved in the transition to a low-carbon economy. Around $50bn will come in the form of tax credits to persuade Americans to buy electric vehicles made in North America (Canada and Mexico were included in the deal after initially being left out). Continue reading...

Bank of England governor Andrew Bailey is facing the House of Lords economic affairs committee

Homebuyers face higher interest costs, as lending figures slump to lowest monthly total since June 2020The chaos in the mortgage market that followed Kwasi Kwarteng’s now infamous mini-budget led to a 10% fall in the number of mortgage approvals during October.According to the latest figures from the Bank of England, the number of mortgages approved by lenders slumped from 66,000 in September to 59,000 last month – the lowest monthly total for mortgage approvals since June 2020. Continue reading...

Payment for ‘policy advice’ came from company of hedge fund manager who organised September champagne reception

The economic outlook for China is not good however its leaders respond to anti-lockdown protestsFor much of the world there has been hope for some time that the worst economic shocks from the Covid pandemic are in the rearview mirror. In China, however, there are important reminders that risks to the world economy still remain.Three years since the virus first spread, protests in several Chinese cities against the Beijing government’s strict zero-Covid policies have reignited concerns in financial markets over the economic costs of the pandemic. Global oil prices have fallen back, while the Chinese yuan and stock markets across Asia have taken a hammering. Continue reading...

Good connectivity is the lifeblood of a modern, thriving economy – so how much is the ongoing disruption costing UK plc?Crunched up, sat on a suitcase by the door of an overflowing toilet. Two hours standing up. Or seated, but stuck in purgatory (somewhere near Hatfield), as the conductor tells passengers: “I’m sorry, we’re trapped”. And that’s if the train is running at all.Britain’s railways shouldn’t be like this. In their 2019 manifesto the Conservatives promised a “transport revolution”, though it’s doubtful they planned this to involve a near rebellion on the 18:33 to Leeds. Continue reading...

The EU did wonders for the economy: that was why we joined. Our departure from it is now all too obviously costing us that prosperityWhen recently asked on the Today programme to cite chapter and verse on the subject of Brexit “opportunities” Michael Gove, the secretary of state for all seasons, was hopelessly out of his depth.However, Gove missed a trick. What he should have said, but as a signed-up Brexiter obviously could not, was that the only “opportunity” arising from Brexit was to conduct a scientific experiment to demonstrate that the whole idea was a mistake. Moreover, it was a confidence trick on the British public, the majority of whom now realise that they have been had. Continue reading...

House prices may be falling as interest rates climb, but there’s no respite for tenants as property shortages biteIt’s a tale of two markets: while private rents have soared to record highs in the UK, making life precarious for tenants, the for-sale sector has slowed sharply and property values have started to fall, with sharper declines predicted for next year.The latest house price index from Nationwide, Britain’s biggest building society, along with Bank of England mortgage lending data due this week, should shed further light on the severity of the UK’s housing slowdown. Continue reading...

First such accord after leaving EU was predicted to bring £15bn boost but UK now lags rivalsThe first major free trade agreement signed by Britain after Brexit has been branded a failure after new figures showed exports had fallen since it came into force.Liz Truss signed a “historic” deal with Japan as trade secretary in October 2020, describing it as a “landmark moment for Britain”. It was claimed it would boost trade by billions of pounds and help the UK recover from the pandemic. Continue reading...

In new book The Price of Time, economist Edward Chancellor explores the role central banks have played in the snowballing challenges of the past quarter centuryTwenty years ago, a youngish economist destined to become a household name in Australia issued a warning to central banks everywhere.“[L]owering rates or providing ample liquidity when problems materialise but not raising rates as imbalances build up, can be rather insidious in the longer run,” he said. Continue reading...

Three women tell how low pay and the high cost of childcare make it difficult or impossible to have a jobIn his autumn statement, chancellor Jeremy Hunt promised to address the labour shortage by conducting a “thorough” assessment of the barriers and incentives to work. Since the pandemic, an extra 630,000 working age adults in the UK have become economically inactive, while job vacancies are close to a record high.To put the brakes on an exodus from the British job market, Hunt announced measures including a crackdown on benefit claimants. However, he made no mention of childcare provision. Continue reading...

For too long pledges have gone unmet, so at Cop28 new solutions need to be explored• Gordon Brown is the WHO ambassador for global health financingOn Sunday, loud cheers from Sharm el-Sheikh greeted the announcement of a new initiative – the global loss and damage fund – to right historical wrongs by compensating climate-hit developing countries. This breakthrough brought back memories of another, the £100bn a year agreed at the 2009 Copenhagen climate summit to help poor countries mitigate the effects of the climate crisis.That money has never fully materialised. If our 13 years’ experience of the £100bn fund that never was is anything to go by, eulogies of praise will soon turn into allegations of betrayal. The president of next year’s Cop28 will have to answer for yet another fund without funders. Far from the loss and damage fund narrowing the credibility gap on climate action, it is likely to bridge nothing if money fails to flow from rich to poor. Continue reading...

Housebuilders also see share price falls as interest rate rises and cost of living crisis deter potential buyersShares in one of the UK’s biggest estate agent chains and some of the largest British housebuilders fell on Friday, amid the latest warnings about the outlook for the housing market, as potential homebuyers are squeezed by rising interest rates and the cost of living crisis.The share price of LSL Property Services, one of the UK’s largest estate agent chains, tumbled by as much as 11% after it warned on profits for the second half of the year and said conditions in the housing market had become more challenging than anticipated. Continue reading...

Retail experts predict a more muted Black Friday this year, as consumers cut back and Royal Mail strike disrupts deliveries

Despite ambitious green goals, the country’s over-reliance on Russian gas has forced it back to coal and expensive importsSay what you will about Vladimir Putin, but his war on Ukraine did open European eyes to some long-underrated truths. One is that even after more than 70 years of relative peace on the continent, neglecting military security poses grave dangers. Another is that the “green dream” of modern economies powered exclusively by renewable energies remains out of reach – and reliable access to cheap energy supplies remains essential.While the first truth became starkly apparent as soon as Russian troops crossed into Ukraine on 24 February, the second has only gradually penetrated public awareness. In fact, many have called for an embargo on European imports of Russian gas, arguing that this would not only undermine Moscow’s ability to wage its war, but also accelerate progress toward green Nirvana – all at minimal cost to Europe in terms of lost GDP. Continue reading...

Information campaign to advise on cutting usage as cost of shielding households from soaring bills is set to double in new year

Deputy governor Dave Ramsden makes comments as CBI snapshot predicts tough winter for UK factoriesInterest rates may need to start falling again if cost of living pressures abate more quickly than the Bank of England expects, a senior policymaker at Threadneedle Street has said.Dave Ramsden, one of the Bank’s deputy governors, said he was currently supporting fresh increases in the cost of borrowing but raised the possibility that a weakening economy may require a cut. Continue reading...

IoD and unions among groups writing to government, saying move would cause business chaos, harm rights and threaten environment

Consumer body says one in three lone parents forced to miss meals or visit food banks to make ends meetClose to a third of single parents have resorted to skipping meals to make ends meet because of rising food costs, according to research revealing the household types worst hit by the cost of living crisis.Three in 10 single parent households surveyed said they had missed meals as a consequence of runaway food prices. That compared with one in seven parents in couples and an overall figure of 14% in the poll by the consumer group Which? Continue reading...

The Guardian’s John Harris is in the West Midlands to talk to teachers, librarians and the local council about how more than a decade’s worth of real terms cuts is taking its toll on services Continue reading...

New Zealand’s reserve bank delivered its largest rate hike in history on Wednesday, piling pressure on the country’s homeownersRosie Smyth and Richard Larsen, along with their toddler daughter, had spent years looking for an affordable home in Lyttelton, a small port town at the edge of Christchurch where Smyth grew up.They were hunting in the midst of New Zealand’s housing affordability crisis, when prices rose to nearly nine times the average income. The market had a frenetic quality – every month seemed to bring a new rise, and with it the feeling, Smyth says, that if you didn’t get in now, prices could permanently dance out of reach. Continue reading...

Departure of more than 500,000 workers since Covid risks stoking inflation, says Huw PillThe surge in people quitting the British workforce because of ill health or early retirement could force the Bank of England to further increase interest rates, its chief economist has warned.Huw Pill said the departure of more than half a million workers from the jobs market since the Covid pandemic risked stoking inflationary pressures, long after the shock from sky-high energy prices is likely to fade. Continue reading...

UN gains mandate for talks next year that could bring reforms to existing tax policy and new conventionDeveloping nations could have a greater say over global tax rules after winning a diplomatic tussle at the United Nations in New York on Wednesday.A new resolution, agreed by UN members, gives the body a mandate to kickstart intergovernmental talks on tax. Continue reading...

We speak to four working people who are struggling to keep pace with their billsWith households braced for the biggest fall in living standards since records began, as food prices continue to soar and many struggle to pay their energy direct debits this winter, four people share why they are taking on a second job. Continue reading...

New Zealand’s reserve bank says spending levels still need to be reduced with rate rises, in order to tame inflationNew Zealand’s reserve bank has forecast that the country will tip into recession in 2023, and has lifted the official cash rate by an unprecedented 75 basis points, to 4.25%.The cash rate hike, announced on Wednesday, is the largest in the central bank’s history, and comes as it attempts to rein in New Zealand’s 7.2% inflation rate. Continue reading...

Former Tory cabinet minister and arch Eurosceptic claims his rights to privacy infringed by inquiry into lobbying. This live blog is now closedOwen Paterson taking UK to human rights court after lobbying scandalStarmer says Britain is trapped in a “vicious cycle of stagnation”.The UK has had the worst record for growth in centuries, he says. He says a new model is needed. And this should be a turning point.They put our public finances in a perilous position, wasted the chance to transform our potential in an era of low interest rates, and created an economy with weak foundations.But the war didn’t ban onshore wind. The war didn’t scrap home insulation. And the war didn’t stall British nuclear energy. Continue reading...

Average five-year fixed mortgage rate has dropped below 6% for the first time in seven weeks, as OECD cuts growth forecasts

Fixed interest rate deals starting to drop and could ‘fall further still’, says MoneyfactsThe average rate on a five-year mortgage deal has dropped below 6% for the first time since the disastrous mini-budget two months ago that ended up costing Kwasi Kwarteng his job as chancellor.Moneyfacts, a financial data provider, said that the average five-year fixed mortgage rate had dropped below 6% for the first time in seven weeks. The reduction is good news for would-be borrowers but rates could “fall further still”, it suggested. Continue reading...