Workers and consumers are paying for the cost of living crisis, through product price rises and stagnant wages – shareholders, it seems, are notNestlé is on course to report its best profit figures since 2008 when full-year figures appear next month. The Swiss maker of consumer favourites from KitKat to Nespresso coffee is expected to shrug off the cost of living crisis affecting consumers in most of its big markets to keep shareholders smiling in 2023.US rival Procter & Gamble, which competes on several fronts with Nestlé, has performed a similar magic trick. Back in October, the maker of Pampers nappies said average prices across its product lines rose 9% in the first quarter to the end of September, more than offsetting a 3% fall in sales. Continue reading...

Common currency was already used for valuations and bank deposits in former Yugoslav country, which joined the EU in 2013Croatia has adopted the euro and joined the European Union’s borderless Schengen zone, two steps that its prime minister said represented a historic moment.“Nothing is the same after this,” said Andrej Plenković, promising that joining the euro would better protect Croatians from financial crises, and joining the Schengen zone would make travelling easier and boost tourism. Continue reading...

Centre for Retail Research says 17,145 stores shut in total, up almost 50% on 2021, during pandemicLast year was a “brutal” one for Britain’s retail sector, with more shops shutting down than at any other point in the last five years, and 2023 will be similarly challenging, according to industry groups.About 47 shops on average pulled down their shutters for the final time every day last year, according to analysis from the Centre for Retail Research (CRR). It found a total of 17,145 shops on high streets and in other locations closed for good over 2022. This is up almost 50% on the 11,449 shops closed in 2021, during the Covid pandemic. Continue reading...

China’s lagging growth a key threat this year, IMF managing director Kristalina Georgieva said, while the US is ‘most resilient.’For much of the global economy, 2023 is going to be a tough year as the main engines of global growth – the US, Europe and China – all experience weakening activity, the head of the International Monetary Fund has warned.The new year is going to be “tougher than the year we leave behind,” IMF managing director Kristalina Georgieva said on the CBS Sunday morning news program Face the Nation on Sunday. Continue reading...

Britain’s recession, however, will be relatively mild, although such forecasting is a mug’s gameWar in Europe. Political turmoil. A stagnant economy. Soaring energy bills. The highest inflation rate in more than four decades. Higher interest rates. That was the story of 2022. Truly, the year just gone was – in the words of the late queen – an annus horribilis.So 2023 will have to go some to match its predecessor for drama. The bookies would, for example, give you relatively long odds on it being another year of three prime ministers and four chancellors of the exchequer. Continue reading...

• Rachel Reeves says Tory approach is ‘increasingly reckless’• Business leaders claim that small firms are being ‘hammered’The UK economy faces a “massive hit” in 2023 because Rishi Sunak’s government is refusing point blank to negotiate with unions over ending public sector strikes, shadow chancellor Rachel Reeves has told the Observer in a marked escalation of rhetoric from Labour.This week will see five consecutive days of shutdowns on the rail system but Reeves says ministers appear to have “given up” on governing altogether and are instead seeking confrontation with the unions for political reasons. Continue reading...

The region’s politicians need a different model to deal with social unrest and political instabilityFootball and national identity in Argentina fused after the Albiceleste won the World Cup in 1986 with Diego Maradona. The country’s democracy, recently restored after decades of coups and murderous army rule, celebrated Maradona’s rise from a shantytown to almost single-handedly defeating the rest of the world. The burst of countrywide pride, however, belied Argentina’s fall: it began the 20th century as the seventh richest nation in the world, but had dropped to the 70th place by 1990.Decades later, it’s much the same story. In the year that Maradona led his nation to the title, inflation averaged 116%. Annual inflation today is approaching 100%. Between Maradona and the World Cup-winning team led by Lionel Messi this year, the country has defaulted on its foreign debt three times, has had two national currencies, and received, in 2018, the biggest-ever International Monetary Fund bailout. Continue reading...

Share index is one of few to post rise but pound has worst year against US dollar since 2016

Blue-chip share index finishes turbulent year slightly higher, beating global markets

Barclaycard data shows number of transactions was up but high inflation led to smaller basket sizesRetailers have failed to benefit from a post-lockdown boost in UK high street activity this year after soaring energy bills and the cost of living crisis forced households to rein in their spending.Despite an increase in face-to-face shopping after the lifting of Covid 19 restrictions, Barclaycard data released for the whole of 2022 showed retail spending fell 0.8% on the previous year. Continue reading...

Whether there are more crises or we’re just more aware of them, a sense of our shared fate is key to surviving them

Almost every facet of life in the UK – courts to cost of living, transport to healthcare, environment to asylum system – is at breaking pointIn mid-November Rishi Sunak was asked in a Channel 4 interview to name one public service that “was working, adequately, working properly”.The prime minister didn’t give a direct answer. But the exchange feeds into an ever-more-common discourse: that the UK is facing “polycrisis” in almost every facet of life in Britain. From courts to the cost of living, transport to healthcare, environment to the asylum system – everywhere appears to be affected. Continue reading...

Campaign for Better Transport calls on government to make wealthy pay for ‘hugely damaging’ private flightsThe super-rich should be forced to pay an extra tax each time they fly on “hugely damaging” private jets to help fund better and cleaner public transport, a charity has said.The Campaign for Better Transport (CfBT) called on the government to introduce a “super tax” on private jet travel, saying it is “about time that these individuals started paying for the damage their flights cause and the proceeds used to help improve public transport for communities up and down the country”. Continue reading...

The Resolution Foundation thinktank forecasts a drop in living standards for a second year as the cost of living crisis deepensHouseholds are facing a “groundhog year” in 2023, as soaring gas bills and planned tax rises squeeze disposable incomes and send living standards tumbling for the second year running.Higher mortgage costs as fixed-rate loans come to an end and new deals are negotiated will add to the financial burden already felt by millions of households reeling from the worst fall in living standards in a century. Continue reading...

Oil prices fall amid fears over a Covid wave from China, while European wholesale gas prices hit 10-month low on WednesdayLondon-listed iron pellet producer Ferrexpo told the City this morning that its controlling shareholder, billionaire oligarch Kostyantyn Zhevago, has been detained in France.Ferrexpo, which operates iron-ore mines and an iron ore pellet production facility in Ukraine, said it believes the detention is not related to the company.The Company is aware that Mr Zhevago has been detained in France by the French authorities, and the Company understand that this is in relation to matters unrelated to Ferrexpo.The Board of Directors of Ferrexpo is seeking to clarify the situation and will update the market as appropriate.“Ferrexpo’s owner Kostyantyn Zhevago has reportedly been arrested in Courchevel in the French Alps at the request of Ukraine. He will stand in front of the appeals court of Chambery in France on 5 January. The billionaire is wanted on suspicion of financial crimes including money laundering linked to the bankrupt Finance & Credit Bank.Ferrexpo has had a difficult year with shares down around 45% year-to-date as the war in Ukraine caused major interruptions and instability which have impacted its operations and production. In October a Russian missile hike nearby infrastructure leaving Ferrexpo with minimal power supply.” Continue reading...

Inflation, faltering GDP and rising unemployment are all on the cards for the country this yearThe UK is beginning 2023 on the brink of recession as households and businesses come under intense pressure from the cost of living crisis, with inflation at the highest rates since the early 1980s.The Bank of England has said the country is on track for a prolonged recession, as households struggle to keep up with the soaring costs of food, energy and other basic essentials. Here are five charts for the UK’s economic prospects in 2023. Continue reading...

CEO David Solomon said he will make cuts in January with reports claiming investment bank will axe about 4,000 postsThe boss of Goldman Sachs has told staff that he will make job cuts early next month, as the US investment bank seeks to improve its profits amid concerns over the global economy.The bank is reportedly considering cutting about 8% of its 49,000 employees, which could equate to as many as 4,000 job losses. It is also thought to be considering cuts to its bonus pool of up to 40%. Continue reading...

Despite many forecasts, a worldwide downturn in 2023 is not inevitable – and it can be avoidedThe world’s leading economists spent most of 2022 convincing themselves that, if the global economy was not already in a recession, it was about to fall into one. But with the year’s end, the global slump has been postponed to 2023.Clearly, the reports that the US was in recession during the first half of the year were premature, especially given how tight the country’s labour market is. And, despite the confidence with which many again proclaim the inevitability of a downturn, the chances of one in the coming year are well below 100%. But, owing to the rapid interest rate rises by the US Federal Reserve and other big central banks, there is something like a 50% chance of a recession in 2023 and a 75% chance of it happening at some point during the next two years. Continue reading...

Cost of living crisis forcing families to cut back on eating out, holidays and other discretionary items, survey findsTwo-thirds of UK consumers are planning to cut their discretionary spending in 2023 amid concerns about the cost of living crisis, according to a survey.Highlighting the pressure on families and the wider economy from inflation, the accountancy firm KPMG said 61% of consumers in a poll of 3,000 were preparing to reduce their spending on eating out, holidays and other non-essentials. Continue reading...

US oil firm contests legal authority for ‘solidarity contribution’ to raise funds to offset soaring energy pricesExxonMobil has launched a legal challenge against the EU in an attempt to derail the bloc’s windfall tax on the profits of energy producers.In a high-stakes political battle as countries across Europe and the wider western world struggle with soaring energy costs and sky-high inflation, the US oil firm said it believed the EU had overreached its powers with the windfall tax. Continue reading...

PCS says it is planning to escalate industrial action after Christmas as Downing Street calls for talks between unions and employers. This live blog has closed

About 40% greater footfall recorded at retailers on Tuesday than on traditional day for festive salesMore shoppers flocked to British retail parks, high streets and shopping centres on 27 December than on Boxing Day, exploiting the extra bank holiday to hunt for bargains in the post-Christmas sales.The number of people hitting the shops was nearly 40% higher than on Monday, according to research by retail data analysts Springboard, and higher than a year ago. Continue reading...

Terry Peach responds to an article by Robert Reich on Donald Trump, Sam Bankman-Fried and Elon MuskRobert Reich’s conjecture (Trump, Bankman-Fried and Musk are the monsters of American capitalism, 24 December) that Adam Smith “would have bemoaned the … corruption, and cynicism spawned by modern capitalism and three of its prime exemplars” is certainly consistent with Smith’s known beliefs. But he would not regard these dismal phenomena as anything new. From his 18th-century perspective, the avarice and ambition of the rich was not only the driving force behind economic development, it was also the harbinger of “rapine”, “injustice” and the “corruption of our moral sentiments”.As for self-preening plutocrats, obsessed with “the gratification of their own vain and insatiable desires” and with “no love of mankind”, they may well come to bask in the applause of the foolish masses. But that may not be the end of their story. Even if they escape legal censure, the “furies of shame and remorse” may finally exact their vengeance. Reich’s “monsters” should take note.

Analysts says lifting of many rules may soften impact of higher interest rates and unblock supply chains in 2023

Rishi Sunak soon rowed back from his predecessor’s chaotic experiment, reasserting the seven pillars of UK Treasury wisdomIt was all over for Liz Truss’s war on economic orthodoxy the moment she decided to summon Kwasi Kwarteng back from the annual meeting of the International Monetary Fund in Washington.If the sacking of the Treasury’s top mandarin, Sir Tom Scholar, marked the beginning of the campaign against Whitehall beancounters, then the end came when Jeremy Hunt became the fourth chancellor of the exchequer of 2022. Continue reading...

Climate crisis, Ukraine invasion and China-US tensions are challenging assumption free markets are bestThis was supposed to be the year when things returned to normal. After the collapse of activity during the months of lockdown in 2020 and the supply bottlenecks of 2021, the hope was that 2022 would call time on an era of seemingly permanent crisis. It hasn’t quite turned out like that.Indeed, 2022 is shaping up to be a pivotal year for the global economy, taking its place alongside the end of the Bretton Woods fixed exchange rate system in 1971, the reunification of Germany in 1990 and the near collapse of the banks in the financial crisis of 2008. Continue reading...

Inflation soared in 2022 amid Covid-19, the war in Ukraine and a broken supply chain – but here’s what we can expect nextJust a few years ago, inflation seemed like an issue the US and many other major western economies had outgrown. “Is inflation dead?” Businessweek asked in 2019, beneath an image of an ailing dinosaur. And then came Covid-19.Supply chain issues, sickness, death and the war in Ukraine upended global trade. Propped up by government handouts and savings, consumers bounced back from the pandemic shutdowns only to find a short supply of everything from used cars to housing was triggering a cost of living crisis unseen in a generation. US inflation this year reached a 40-year high. Continue reading...

The Labour leader must be clear about how he’ll succeed where Tories have failed – rehashing Blair’s strategies isn’t enoughThe future direction of UK plc now looks more likely to come from the Starmer and Reeves emporium than the woeful management of the present Are You Being (Under) Served? government. In the mayhem of 2022, the Tories forfeited their claim to be the natural managers of the UK economy. Opportunity knocks for the opposition to fill that gap.Attacking the government’s record here is straightforward: the economy has had skimpy growth for most of its 12 years in power (on a per-person basis, the economy has grown just 7% in real terms since the financial crash of 2007-08). Perhaps more concerning for any potential replacement, productivity has lagged behind competitors. Voters feel the result in their real-terms household incomes, and lower earners now find basics, let alone treats, less affordable. So “the Tories tanked the economy” is a line with a lot of truth to it. Planning to get the economy upright again is a more daunting task. That will need to change in 2023 as voters will want to know more about Labour’s intended direction of travel.Anne McElvoy is senior editor at the Economist Continue reading...

Passport control staff striking at Heathrow, Gatwick, Manchester, Birmingham, Cardiff and Glasgow airports, and Newhaven portHere’s our news story on PCS union head Mark Serwotka’s warning that the strike disruption by Border Force staff could last six months, and a “huge escalation” in January unless the government comes to the negotiating table.Britain’s biggest airport said that so far there has been no disruption from the Border Force strike.“The morning arrivals peak has started well. Immigration halls are free flowing at Heathrow with Border Force and the military contingency providing a good service.” Continue reading...

Exclusive: Better known for its work in developing countries, charity has supported thousands of UK households this year

UK GDP contracted by 0.3% in July-September, lagging behind other G7 countries, as UK households’ living standards fall again….. while rail fares in England to rise by nearly 6% in March

ONS says economy shrank by 0.3% in third quarter, with UK only G7 country whose GDP is still lower than before pandemicBritain’s recovery from the Covid-19 pandemic has been even weaker than originally believed and is the only member of the G7 group of leading industrial countries where output is still below its pre-crisis level.The Office for National Statistics said the UK economy contracted by 0.3% in the three months to September – compared with an original estimate of a 0.2% decline. The ONS also revised down growth in every quarter stretching back to the third quarter of 2021. Continue reading...

As staple food inflation runs above 16%, many say they have skipped or reduced the size of a mealMore than half of all adults in Great Britain are buying less food and drink, with surging costs leaving the most vulnerable worst off.People in the most deprived areas of England are the most likely to have cut back, with 61% saying they were buying less food when shopping last month, compared with 44% in the least deprived areas and 51% across Great Britain. Continue reading...

Experts say cuts to public services and NHS waiting times could be contributing to UK worker shortageRishi Sunak is under growing pressure to offer more help to older workers who have fallen out of the workforce due to ill health, as official figures show a sharp increase in the rates of long-term sickness in every region of the UK except London.Highlighting deep regional divisions, figures from the Office for National Statistics show economic inactivity due to long-term sickness has increased most among 50 to 64-year-olds outside the capital since the Covid pandemic. Continue reading...

Buying expensive presents once helped push me into debt. Take it from me: no present is worth your peace of mindWhether we are driven to move, impress or simply not disappoint, many of us feel undue pressure to choose the perfect gifts for our loved ones at Christmas, no matter the cost. And each year, our expectations of our gift-giving abilities only increase – presents must be bigger and better and we must outdo ourselves again and again, otherwise we will have failed.The practice is known as “giftflation” and it sets a ruinous precedent. In the UK, we spend more than any other European country at Christmas, with projected sales this year estimated at £82.2bn. And each year, our rampant consumerism reaches dizzying new heights. In 2020, at the height of the Covid-19 pandemic when celebrations were curbed to reduce transmissions, Britons still spent £26 more on presents than the previous year, with those struggling with debt spending £51 more than in 2019.Clare Seal is an author, financial coach and founder of the @myfrugalyear Instagram account Continue reading...

Which? says most common bill not paid was energy as data suggests wave of defaults in cost of living crisisAs the cost of living crisis continues to ravage people’s incomes, it has emerged that almost 2m households have defaulted on at least one significant bill in the run-up to Christmas.According to the latest findings from Which?’s consumer insight tracker, an estimated 1.9m households failed to make at least one mortgage, rent, loan, credit card or other bill payment over the last month. Continue reading...

Half a million workers have vanished. Policymakers don’t seem to understand whyAs the UK sidles gingerly past the pandemic, a big mystery looms. Where have all the employees gone? Unemployment is around its lowest level since 1974 and well over a million positions are vacant. There are plenty of jobs to help offset those eye-watering fuel and grocery bills yet, since Covid hit these shores, 565,000 Britons have dropped out of the workforce. They have become what statisticians define as “economically inactive”, which is to say of working age yet neither in a job nor wanting one.Even as trains sit in sidings, Christmas post goes undelivered and nurses form picket lines, here is a different story about workers – one that gets barely a mention. The country’s workforce has shrunk, with serious implications for employers, inflation, tax revenues and economic growth. Yet the policymakers paid to analyse such phenomena have no idea why it has happened. The governor of the Bank of England, Andrew Bailey, accepts that the situation is “very unusual”, while one of his deputies, Dave Ramsden, says: “It’s not clear what is driving this participation puzzle.” A giant shrug from Threadneedle Street then, while ministers waited until last month to launch an investigation. Continue reading...

If Beijing is expecting an immediate boost from abandoning its tough controls it is mistakenFrom zero tolerance to “let it rip”. China has not just changed its mind on how to cope with Covid, it has executed the mother of all U-turns in response to slower growth and mounting civil unrest at the draconian lockdowns.If Beijing is expecting an immediate economic boost from abandoning its tough controls it is mistaken. There will be a growth dividend from the policy shift but the state of the world’s second biggest economy will get worse before it gets better, and it will be next spring at least before the easing of restrictions starts to pay off. Continue reading...

Nationwide says a ‘relatively soft landing’ in housing market is possible, while TSB is penalised for operational failings over botched move to new IT platform in 2018In a worrying sign for the global economy, Taiwan has suffered its biggest drop in export orders in over a decade.Taiwan’s manufacturers were hit by a plunge in demand from China, where Covid-19 outbreaks and lockdowns hit its economy, and weakening consumer demand worldwide as interest rate hikes bite.Taiwan’s orders for all major product categories fell, with optical products, plastics and basic metals registering the biggest contractions. Electronic products, which includes orders for semiconductors, fell by 15.2% versus November 2021.The government attributed the bigger-than-expected decline to waning end-user demand, inventory adjustment by clients and to disruption to manufacturing in China due to Covid controls, according to the ministry’s statement. Continue reading...

With shoppers prioritising cheaper gifts over sustainable ones, independent businesses are struggling to stay afloatWith just one week left until Christmas, shoppers are hurrying to choose their final presents – and retailers are vying for much-needed year-end custom.For many of the UK’s small businesses, the cost of living crisis has hit profits. For those whose mission is sustainability, the knock-on effect has been dramatic. Continue reading...

Loss of employees since Covid raises fears of weaker growth and higher inflation, says Lords reportAn exodus of more than half a million people from the British workforce since the Covid pandemic is putting the economy at risk of weaker growth and persistently higher inflation, a Lords report has warned.The House of Lords economic affairs committee said the sharp rise in economic inactivity – when working-age adults are neither in employment nor looking for a job – since the onset of the health emergency was posing “serious challenges” to the economy. Continue reading...

Elon Musk says he will honour the results of a Twitter poll asking whether the should resign as head of the social media platformCall it Chekhov’s Jet: a Twitter account placed on the mantelpiece in act one must surely go off in act five.Seven days after buying the social network he tweeted that his commitment to free speech extended even “to not banning the account following my plane”. Six weeks later, his reversal of that policy set in motion a series of events that seems increasingly likely to end in his dramatic departure as chief executive of Twitter. Continue reading...

CBI calls for support on energy costs as country will be in recession throughout much of 2023Britain’s factory output is falling at its fastest rate in more than two years amid growing signs that rising inflation has pushed the economy into recession.At a time of severe cost pressures and weaker demand for their goods at home and abroad, companies responding to the monthly survey by the Confederation of British Industry (CBI) said they expected no letup in the tough trading environment in early 2023. Continue reading...

Ted Heath and Jim Callaghan paid a big price for taking on the trade unions, and once again voters are blaming the politiciansFor those of us who were there, the rows over pay, the strikes, the picket lines and an ineffectual government bring it all back. Britain is facing its 2022 equivalent of the late 1970s’ winter of discontent. It was bitterly cold back then, too.Rishi Sunak’s approach to the widespread industrial action is clear. The government will warn that excessively high wage deals risk entrenching inflation. It will argue that the recommendations of the public sector pay review bodies (PRBs) are reasonable and must be adhered to. And it will wait for support for action to crumble as striking workers contemplate the harsh reality of lost pay at a time of a cost of living crisis, and gradually give up the fight. Continue reading...

Job cuts have risen this year, even as the US economy shows no signs of a downturn for nowWhile many American workers are preparing for the holiday season, some are grappling with the mental and financial anguish of being suddenly laid off.After corporations complained of labor shortages through 2021 and 2022, several companies have shed workers in mass layoffs as 2022 comes to a close. Continue reading...

’Tis the season to be confronted with PPE contracts, strikes and austerity• You can order your own copy of this cartoon Continue reading...

Whatever the chancellor and the Bank may suggest, wage settlements are still running behind the rate of inflationIs inflation the fault of the workers? Striking nurses and rail staff could be forgiven for starting to believe that rising prices can be blamed on their demands for pay. Jeremy Hunt said as much last week, as did the governor of the Bank of England, Andrew Bailey.By the same token, warehouse workers distributing goods for Aldi, who received a 10% annual pay rise, and East Midlands airport security staff, who secured a whopping overall 17% increase this year, must also be to blame. If wages account for about 70% of a business’s expenses on average, then it must be true that bumper wage increases are the enemy of those who seek to bring down inflation. Continue reading...

Mick Lynch speaks after talks with minister on Thursday as one in five trains expected to run today and some National Highways workers strike

Higher salaries would boost the UK economy and bring us in line with many other rich countriesFor almost half a century, in other words within the limits of political memory, Britain has been a country where the priority of most governments has been to keep a few key economic numbers low. Income tax, interest rates, inflation and most people’s wages: all were deliberately suppressed by Downing Street and its collaborators in business and the Bank of England. By doing so a space was created – in theory at least – for certain interest groups to flourish: employers, entrepreneurs, shareholders, top earners, homeowners and consumers. Together, they were supposed to boost our previously sluggish rate of economic growth.It hasn’t quite worked out like that. Britain is on the brink of recession yet again. Interest rates, taxes and inflation are all high. Only average wages are still low. And even that dubious achievement of British government and capitalism since the 1980s now feels fragile, with strikes solidifying and spreading across both private and state sectors, determinedly driven by workers who have finally had enough of years of falling pay. As Mick Lynch of the RMT union put it with characteristic pithiness on the Today programme last week: “The price of labour isn’t at the right price in this country.”Andy Beckett is a Guardian columnist Continue reading...

Majority of MPC rate-setters back hike of 0.5 percentage points despite fears UK is entering a long recession