One in 20 people unemployed and not seeking work have symptoms, says ONSOne in 20 people in the UK who are neither employed nor seeking paid work are suffering from long Covid, with the figure more than doubling in the past year, official data has revealed.The proportion is far higher than for the one in 29 people who are unemployed but seeking work who have long Covid symptoms, or the one in 30 employed people who are sufferers, data released by the Office for National Statistics (ONS) shows. Continue reading...
The Bank of England governor has warned the UK will enter a recession later this year. The Bank has cut its growth forecast and predicts the economy could fall into recession from the October to December quarter. Andrew Bailey highlighted the recent hike in gas prices as one of the biggest contributors to rising inflation
From first-time home buyers to credit card users, we look at how your finances may be affectedThe Bank of England has voted to raise interest rates by 0.5 percentage points to 1.75% as the UK battles to prevent inflation running out of control. We look at what that means for your finances. Continue reading...
Westminster is perpetrating the same scam as the rate-setters – bluffing that they can get the old economic machinery working like beforePerhaps you have been hoping that the age of lies is over. After all, Boris Johnson will soon be swept out of No 10 and whoever replaces him cannot be half as mendacious – can they? Liz Truss may love her pork markets but she can’t be as keen on telling pork pies. Well, I bring bad news. If lying is making a statement one knows to be false, then Britain is wading waist-deep into an era of systemic deceit.I don’t just mean the permanently malfunctioning Truss, who this week complained she was “wilfully misrepresented” by, um, her very own press release. No, the fabrications come from across the political establishment and they concern the future of our economy. And the ultimate fruit of these lies may well be another Johnson or Nigel Farage.Aditya Chakrabortty is a Guardian columnist Continue reading...
Markets expect 0.5 percentage-point rise for first time since independence as inflation risesThe US Federal Reserve has done it. The European Central Bank has done it. Now the Bank of England must decide whether to follow suit and opt for a bigger than usual rise in official borrowing costs when it meets on Thursday.After edging rates up by a quarter-point at a time, the financial markets are betting that Threadneedle Street’s monetary policy committee (MPC) will announce a 0.5 percentage-point jump this time, something that has never happened since the Bank was granted independence in 1997. Continue reading...
South of England experiencing faster recovery than north, Scotland and Northern IrelandVisits to high streets and shopping centres dipped to below pre-pandemic levels last month, with the north of England – plus Scotland and Northern Ireland – trailing behind the south in terms of the overall recovery from Covid-fuelled gloom.Footfall decreased by 14% in July compared with 2019, reversing gains made in April, as retailers struggled to entice shoppers amid a heatwave in the third week of the month and surging inflation. Continue reading...
A hike in interest rates does nothing to stifle inflationary pressures and adds to the pain for firms and householdsHere is a conundrum. At noon on Thursday, the Bank of England will most likely increase interest rates for the sixth time in a row. Analysts are generally expecting a rise of a half of a percentage point– the biggest single hike since before the Bank was made independent, when monetary policy was ultimately the responsibility of a chancellor called Ken Clarke.Yet this week’s rate rise is not intended to cool an overheating economy – far from it. Both the IMF and the OECD forecast that the UK will endure the weakest growth of any rich country next year, while the well-respected National Institute of Economic and Social Research (Niesr) believes that the country will enter a recession this summer and stay there until well into next year. So why, then, is the Bank pushing up interest rates? Continue reading...
Oil producers will lift oil production by 100,000 barrels per day in September, a much smaller rise than in recent monthsDespite economic headwinds, German exports beat forecasts with 4.5% growth in June.Exports from Europe’s largest economy hit a record level thanks to demand from the European Union, the United States and China, data this morning shows. Continue reading...
Resolution Foundation says Bank of England likely to forecast higher and later peak, on eve of interest rates decisionThe UK’s annual inflation could go as high as 15% by the start of 2023, experts have forecast, as further sharp increases in energy prices push up the cost of living.On the eve of the latest decision on interest rates by the Bank of England, the Resolution Foundation thinktank said price pressures were likely to be stronger and last longer than the Bank had previously forecast. Continue reading...
Rising tensions between US and China threaten to accelerate decoupling of world’s two biggest economiesRelations between the US and China were poor even before the visit of the House of Representatives speaker to Taiwan. Now they have the potential to turn very nasty indeed – with significant consequences for the global economy.At the moment, things look containable. Financial markets have responded relatively calmly to Nancy Pelosi’s visit and the military exercises that Beijing has ordered in response. The assumption is that China will put on a show of strength and leave it at that. Continue reading...
The rise will force the Bank of England to hike interest rates higher and for longer than previously expected, says NIESRInflation will soar to “astronomical” levels over the next year forcing the Bank of England to raise interest rates higher and for longer than previously expected, according to a leading thinktank.The National Institute of Economic and Social Research also forecast a long recession that would last into next year and hit millions of the most vulnerable households, especially in the worst-off parts of the country. Continue reading...
As small businesses crumble, shelves get emptier and the care-worker shortage intensifies, life outside the EU is having a dire effect on many of us. Why aren’t politicians talking about it?When British politicians talk about Brexit and its consequences, they tend to adopt rictus grins and assure us that, by some miracle as yet unexplained, everything is going to be OK. The Labour leader Keir Starmer, who only a few years ago was a passionate advocate of a second referendum on our exit from the EU, now has a five-point plan to “make Brexit work”. Meanwhile, as the Tory leadership contest grinds on, both the candidates are at pains to claim that life outside the EU is going wonderfully well, or soon will do.No matter that leaving the EU has tangled up businesses in form-filling, fees and a new world of unbelievable complexity: Rishi Sunak says he wants to “go further and faster in using the freedoms Brexit has given us to cut the mass of EU regulations and bureaucracy holding back our growth”. Liz Truss sounds even more zealous: she now wants to scrap all the regulations in UK law that are there as the legacy of our time in the EU by the end of next year, to “make the most of our newfound freedoms outside the EU”. Continue reading...
Energy companies have done themselves few favours by helping investors as they benefit from soaring pricesBP has done well out of the war in Ukraine. Soaring oil and gas prices that followed Russia’s invasion in February meant quarterly profits have tripled to just under £7bn. Only once, when oil prices hit a record level of almost $150 a barrel 15 years ago, has the energy giant posted higher profits.It was only two years ago that oil prices briefly went negative in the early stages of the pandemic, but the big energy companies can expect little public sympathy. Continue reading...
by Kalyeena Makortoff Banking correspondent on (#622YN)
Analysis: High street lenders have shrugged off their concerns, announcing payouts for investorsUK banking bosses gave off an unexpected air of calm when they released second quarter earnings over the past week, defying wider anxiety over the cost of living crisis and its impact on businesses and consumers.Major high street lenders, including NatWest, Barclays, Lloyds and HSBC, largely shrugged off concerns over potential defaults linked to weaker economic forecasts, with most announcing fresh payouts for investors and instead releasing money they previously put aside for bad loans. Continue reading...
Unions criticise oil giant who recorded second-highest profits in its history after Ukraine war drove up energy pricesBP has reported ‘eye-watering profits’ at a time when the public are very worried about their energy bills jumping in the autumn, says Rachel Reeves MP, Labour’s Shadow Chancellor.“People are worried sick about energy prices rising again in the autumn, but yet again we see eye-watering profits for oil and gas producers.“Labour argued for months for a windfall tax on these companies to help bring bills down, but when the Tories finally u-turned they decided to hand billions of pounds back to producers in tax breaks. That is totally wrong.Our people have continued to work hard throughout the quarter helping to solve the energy trilemma - secure, affordable and lower carbon energy.We do this by providing the oil and gas the world needs today - while at the same time, investing to accelerate the energy transition. Continue reading...
Average price of a home was £271,209 last month after the 12th monthly rise in a row, says NationwideThe UK housing market remained buoyant in July with price growth accelerating to an annual rate of 11%, according to the country’s biggest building society.The average price of a home was £271,209 last month, up 0.1% from June when taking account of seasonal effects, and the 12th monthly rise in a row, said Nationwide building society. This took the annual change to 11% from 10.7%. Continue reading...
Lebanon is worst-hit by food inflation after food grain store explosion in Beirut in 2020Food inflation has soared across much of the developing world since Russia’s invasion of Ukraine and has trapped several richer countries in a cycle of rising prices, a report by the World Bank has found.The Washington-based development organisation said the war in eastern Europe would hit many countries with an increase in food bills worth more than 1% of their annual national income (GDP), while others would fail to contain the impact and be plunged into a full-blown debt crisis. Continue reading...
Analysis: Bank ruling that borrowers don’t have to show they can afford steep repayment hikes raises questions over how to curb excessive borrowingFrom today, there is one less barrier to obtaining a mortgage. The path to high value property loans has opened to a much wider audience after the Bank of England killed off a regulation demanding borrowers show they can cope with a three-percentage-point rise in interest rates.In a move planned last year and implemented on 1 August, the financial policy committee of the central bank said it was scrapping the rule because forcing borrowers to stay within a limit of 4.5 times earnings when they apply for a loan was enough. Continue reading...
British manufacturers suffer first drop in output in over two years in July, while retail sales in Germany slumped over 8% as inflation hit consumersGerman retail sales have fallen at the largest annual pace since records began in 1994, as households cut back in the cost of living crisis.Retail sales fell 8.8% in real terms in June compared with the same month last year.The difference between the nominal and real results reflects the high price increases in retail, which are having a noticeable impact on consumer confidence. Continue reading...
Former chancellor takes leaf out of rival Liz Truss’s book but his plans may be too good to be trueHarold Wilson’s quip that a week is a long time in politics has rarely been more true than in the case of Rishi Sunak.Seven days ago the former chancellor was marketing himself as the candidate of financial rectitude as he pitched to be Britain’s next prime minister. Tax cuts, Sunak said, would have to wait until they could be afforded and inflation had been tamed. Continue reading...
As energy bills soar, survey shows almost half of homes are worried about paying rent or mortgageMore than one in eight UK households fear they have no further way to make cuts to afford a sharp increase in annual energy bills this autumn.More than a quarter of households earning less than £20,000 worry they will be unable to cope with higher bills, with families in Yorkshire, the south-west and Northern Ireland the least confident about covering their costs, according to the latest rebuilding Britain index of 20,000 people by Legal & General. Continue reading...
Sharpest contraction is in energy-intensive industries, such as petrol, coking coal and ferrous metalsChina’s factory activity unexpectedly shrank in July as sporadic Covid outbreaks disrupted the sector and the slowing global economy weighed on demand.The official manufacturing purchasing managers’ index (PMI) fell to 49.0 in July from 50.2 in June, China’s National Bureau of Statistics said on Sunday. That was weaker than forecast, below the 50-point mark separating expansion from contraction. Continue reading...
Policies are tightening when major economies are either falling into recession or heading that wayIt’s over. An era of ever-rising house prices stimulated by cheap money is coming to an end. Central banks created a colossal real estate boom and soon they will have to cope with the consequences of the bubble being pricked.In China it is already happening. Banks in the world’s second biggest economy are under orders to bail out property developers so they can complete unfinished projects. Mortgage boycotts are on the rise because people are, unsurprisingly, unhappy about paying home loans for properties they are unable to occupy. Continue reading...
A few short years after the financial crash, oil, food and flights were affordable again. But this downturn looks much darkerWatching the Conservative party candidates spray money around as they vie to win the keys to No 10, it seems churlish to ask where the cash will come from. Running a 21st-century economy is not cheap and, unfortunately for those in power, gets more expensive every year.More immediately, to prevent a cost of living crisis translating into a calamity this winter for low- and middle-income households, a bigger bailout is on the cards. Continue reading...
This week’s decision on interest rates will be fraught, but many think Britain is heading the same way as the USWhen Bank of England officials meet this week to consider how much to raise the central bank’s base rate by, they could be forgiven for having spent the previous day scratching their heads.There are figures that show the UK economy is – like an 18th-century depiction of John Bull after a feast of pies – straining at full capacity. In normal times, low unemployment and a record number of vacancies would indicate a boom in full swing. Continue reading...
Analysis: In spite of high employment and robust hiring, many Americans are pessimistic about the economyThe Republican chair of the Federal Reserve doesn’t think it’s happening. Neither does the Democratic president, Joe Biden, nor do a good number of economists.And yet, many Americans appear to believe the world’s largest economy is in a recession, creating yet another liability for Biden in the run-up to November’s midterm elections, where voters are already inclined to hand Republicans control of at least one chamber of Congress. Continue reading...
The opposition should be clearer about its own solutions to disputes that the government is shamefully trying to prolongIt is perverse, but seemingly true, that Britain’s current industrial disputes over pay and jobs are causing more problems for the Labour opposition than they are for the Conservative government. There was a telling example on Wednesday, when Keir Starmer sacked an obscure junior shadow minister, Sam Tarry, for making media appearances on a rail workers’ picket line. The action generated more heat and headlines than anything triggered by Liz Truss’s belligerent pledge this week to impose new legal restrictions on public sector strike action, or Grant Shapps’ instant plan of 16 different measures that would emasculate unions’ rights to strike at all.There are several lessons here, but the main one is that the Conservatives are not being held to proper account for the spiralling effects of the squeeze on living standards over which they are presiding. They, not Labour, are the government. They, not Labour, set public sector pay policy. They have the formal power to change public finance rules. They also have the informal authority to bring pressure on the two sides to negotiate a settlement. As guardians of the public interest, if nothing else, the government should also avoid unnecessarily provoking the dispute or becoming a protagonist. Continue reading...
US oil companies post huge earnings, as sky-high fuel costs hit consumers and drive up inflationCities in Germany are switching off spotlights on public monuments, turning off fountains, and imposing cold showers on municipal swimming pools and sports halls, as the country races to reduce its energy consumption in the face of a looming Russian gas crisis.Hanover in north-west Germany on Wednesday became the first large city to announce energy-saving measures, including turning off hot water in the showers and bathrooms of city-run buildings and leisure centres. Continue reading...
Cost of living crisis comes as 19-member currency bloc beats growth forecasts in second quarterInflation in the eurozone reached a record high of 8.9% this month, closing the gap with the UK’s 9.4% rate.Dearer energy was blamed for the lion’s share of the increase from 8.6% in June, as the fallout from the Russian invasion of Ukraine continues to hammer European economies. Continue reading...
People borrowed an extra £1.8bn in June, up from £900m in May, Bank of England figures showUK consumer credit growth in June accelerated at the fastest rate in three years, as households struggle to cope with the rising cost of living.People borrowed an additional £1.8bn in consumer credit last month, up from a £900m increase in May, according to the latest Bank of England data. Continue reading...
Republicans are quick to call a recession as the administration points to brighter employment numbersPrices are rising in the US at the fastest rate in four decades. The Fed raised interest rates again. And new data showed the American economy shrank for a second consecutive quarter, intensifying fears of a recession and handing Republicans a potent line of attack just months before the midterm elections.For embattled Joe Biden, Thursday’s gross domestic product figures were the latest in a string of worrying economic developments clouding his presidency this week. The news came as Democrats celebrated a breakthrough on the president’s long-stalled economic agenda after Senator Joe Manchin announced his support for a version of the plan in a shock reversal for the West Virginia holdout. Continue reading...
Dhaka is understood to be seeking $4.5bn rescue package after being hit by high import costs and falling exportsBangladesh is to hold talks with the International Monetary Fund after applying for a bailout to prevent the country running out of cash.The government in Dhaka – the third in south Asia to seek a financial rescue package from the IMF after Pakistan and Sri Lanka – is understood to want $4.5bn (£3.7bn) after it was hit hard by high import prices, especially for gas, and a fall in exports as the global economy slowed down. Continue reading...
Blow to businesses as 300,000 workers took time off due to Covid last month, with BA.4 and BA.5 the majority of new infectionsStaff shortages were already a fact of life for restaurant-owner Des Gunewardena when the recent wave of Covid-19 hit.“I visited the Butler’s Wharf Chop House earlier this week and when I asked about our general manager he was off with Covid,” said the D&D boss, who oversees 2,000 staff in outlets across the UK, France and US. Continue reading...
Question weighs on consumers, politicians and investors around the world as the Federal Reserve raises interest ratesIs the US in a recession? It’s a question weighing on consumers, politicians and investors around the world. Today we got one step closer to answering it. And the answer is: maybe? Continue reading...
The bad news will be a major blow for the Biden administration as it prepares for a tough midterm election seasonThe US economy shrank again in the last three months, unofficially signaling the start of a recession.The commerce department announced Thursday that gross domestic product (GDP) – a broad measure of the price of goods and services – decreased at an annualized rate of 0.9% in the second quarter after falling at an annualized rate of 1.6% in the first three months. Continue reading...
Swiss food and beverage group says sales rose 9.2% driven by price increases, beating expectationsThe maker of KitKat, Nespresso, Häagen-Dazs ice-cream and Maggi stock cubes has blamed “significant and unprecedented cost inflation” for a 6.5% rise in prices in the first half of this year.Nestlé’s sales rose ahead of expectations driven by the price increases, analysts said, increasing 9.2% to 45.6bn Swiss francs (£39bn) in the half year, although net profit decreased by 11.7% to 5.2bn francs. Continue reading...
Neither has the first idea of what they’re doing. Truss’s proposal does little for those who need it, and Sunak’s is a desperate U-turnRishi Sunak is losing the battle to be Britain’s next prime minister and he knows it. The former chancellor’s announcement that he would scrap VAT on energy bills for a year is exactly what it looks like: a U-turn born of desperation.Having set himself up as the candidate of sober rectitude, Sunak has bowed to the inevitable as opinion polls show Liz Truss’s plan for immediate tax cuts are proving more attractive to Conservative party members than his wait-and-see approach.Larry Elliott is the Guardian’s economics editor Continue reading...
Tweaks suggested by Sunak and Truss will create longer-term problems. The need for a third support package is inescapableIn the contest to mouth the words “tax cuts” as often as possible to attract the gaze of Tory party members, Rishi Sunak now says he would remove VAT on energy bills for a year. However much his camp protests otherwise, this is a U-turn of the screeching sort. As chancellor, Sunak had two goes at constructing an energy support package for households and he kept the 5% VAT rate in place both times.More importantly, it’s a U-turn that does not come close to recognising the size of the hit coming to the pockets of poorer households. The sums here are not difficult. At £3,400 – a reasonable estimate for October’s price cap for an average household – axing VAT would produce an annual saving for consumers of £170. At £3,850 – the more speculative estimate of where the cap could be set in January if Russia continues to reduce gas flows through Nord Stream 1 to a trickle – we’re talking £192.50. Continue reading...
End of the 99p cheeseburger as fast food chain warns ‘we’re living through incredibly challenging times’Fast food chain McDonald’s is hiking its prices, including the first rise in the cost of a cheeseburger in 14 years.The company told customers this morning that its popular cheeseburger will now rise from 99p to £1.19, as the company passes on rising costs.We know things are tough right now. We’re living through incredibly challenging times and we’re all seeing the cost of everyday items, such as food and energy, increase in a way many of us have never experienced.This summer, our restaurants will be adding between 10p and 20p to a number of the menu items impacted most by inflation. From today, we’ll be increasing the price of our cheeseburger for the first time in over 14 years, taking it from 99p to £1.19.Some prices remain unaffected, and some will continue to vary across our restaurants. We understand that any price increases are not good news, but we have delayed and minimised these changes for as long as we could. Continue reading...
Fresh food inflation at 8% after increases in fertiliser, animal feed and transportShop prices soared by the greatest amount since at least 2005 in July as the cost of fresh food was driven up by rising charges for fertiliser, animal feed and transport.Prices rose by 4.4% compared to July last year, a step up from a year-on-year rise of 3.1% in June, according to the British Retail Consortium’s latest shop price index collated with market research firm Nielsen IQ. Continue reading...
International Monetary Fund cuts global growth forecasts as outlook darkens and inflation climbs, with UK seen as slowest-growing G7 member in 2023Power supply problems are causing disruption to rail services on the UK’s east coast main line this morning - a day before a national strike is expected to cause widespread problems.Damage to the overhead electric wires between Peterborough and Stevenage means trains on the route may be cancelled, delayed by up to 60 minutes or revised. Continue reading...
The UK is witnessing extreme temperatures, prompting public outcry. Yet new proposals to counter this are coming up shortLast week, temperatures crested at 40C (104F) in England, bringing the climate crisis to the fore and spurring a fresh wave of dismay. How is it, despite a steady drumbeat of extreme weather events, a rising tide of public outcry, and growing consensus across the political spectrum, that the world remains so profoundly far from the outer limits of the climate targets considered “safe”?The answer is increasingly located not in climate denial, but in a proliferation of non-solutions advocated by policymakers and business interests with varying degrees of earnestness and good intention, under the umbrella of “green capitalism”. These are proposals sold as urgent, pragmatic tools for cutting emissions or reversing ecosystem loss, but which in fact deliver neither. Continue reading...
Fund cuts forecasts as US, China and eurozone stall and inflation beats expectationsThe International Monetary Fund has said the global economy could soon be teetering on the brink of recession amid evidence that the world’s three biggest economies are all stalling and inflation is higher than previously forecast.In a downbeat update to its April world economic outlook (WEO), the IMF cut its growth forecasts in 2022 and 2023 – and raised the prospect of a more pronounced slowdown.A sudden stop of European gas flows from Russia as a result of the war in Ukraine.Stubbornly high inflation.A debt crisis triggered by tighter global financial conditions.Further Covid-19 outbreaks and lockdowns in China.Social unrest triggered by rising food and energy prices.Trade wars and geopolitical fragmentation. Continue reading...
Foreign capital flees poorer countries at the first sign of instability. The pandemic and Ukraine war ensure there is plenty of that aroundThis January, even before Sanjana Mudalige’s salary as a sales worker in a shopping mall in Colombo, Sri Lanka, was slashed in half, she had pawned her gold jewellery to try to make ends meet. Ultimately, she quit her job, because the travel costs alone exceeded the pay. Since then, she has shifted from using gas for cooking to chopping firewood, and eats just a quarter of what she did before. Her story, reported in the Washington Post, is one of many in Sri Lanka, where people are watching their children go hungry and their elderly relations suffer for lack of medicines.The human costs of the crisis only really captured international attention when the massive popular upsurge earlier this month, known as Aragalaya (Sinhalese for “struggle”), led to the peaceful overthrow of President Gotabaya Rajapaksa. His family had ruled Sri Lanka with an iron fist, albeit with electoral legitimacy, for more than 15 years, and is now being blamed by both national and international media for the desperate economic mess the country is in.Jayati Ghosh is professor of economics at University of Massachusetts Amherst Continue reading...