Life as we know it is under threat, as short-term-thinking politicians ignore the signs that point to a dystopian futureIn the coming decades, the world faces megathreats that would imperil not just our global economy and financial assets, but also put at risk peace and prosperity.In our partisan political world, where we kick the can down the road – we are biased towards short-term planning and leave thinking about the future to others – these threats are something different. Left to grow, they will make life worse for people across the world. It is essential for the public good that these threats are not ignored by our leaders, but are acknowledged, taken seriously and countered – fast. Continue reading...

Thousands have lost their jobs, including the human rights team, according to reports from the media and former employeesThe Bank of England is trying to get inflation under control without doing too much damage to the UK economy, its chief economist says.Huw Pill told CNBC that the Bank’s monetary policy committee is aiming to balance getting inflation down to 2%, without slowing growth too severely.“What we are seeking to do, we’re always seeking to do, is to find that balance that gets us back to our 2% inflation target without generating unnecessary and costly problems in the real side of the economy.“Creating that balance, signalling that balance, that was really our key message yesterday.” Continue reading...

Anthony Albanese says the government can’t afford to provide energy payments or other relief because to do so would put even more pressure on the RBA to raise interest rates – is he right? Three economists have their sayThis week, the prime minister, Anthony Albanese, said he would not be pushing for payments for households to deal with the rising costs of energy, groceries and other financial pressures, because to do so would risk further inflation.The easy option would have been for us to funnel these savings straight into a cash-splash, a one-off giveaway to buy a headline. Cheap politics and hugely expensive economics.

Andrew Climo on the narrative Labour needs to establish to ensure victory over the Conservatives at the next general electionJonathan Freedland’s excellent piece was timely (Rishi Sunak is the best choice the Tories could have made – but Labour can still beat him, 28 October). It is now that the narrative needs to be developed for why the Tories’ approach is doomed to failure. A week of listening to Rishi Sunak’s coronation speeches showed they have a caring side after all – a deep concern for the health of that abstract entity “the economy”.But the economy does not feel frozen to the bone, feel gnawing hunger, or fear being thrown on the mercy of relatives or neighbours. It doesn’t have its life chances ruined by poor education or curtailed by lack of access to a GP or hospital waiting lists. There can be no economic revival without a broad-based revival of fortunes of its population. It is this that needs to be stressed at every point.

Analysis from Joseph Rowntree Foundation also finds rents for new lets could rise sharplyHigher monthly home loan costs will pull another 400,000 people into poverty in the coming year as the fallout from dearer mortgage rates ricochets through the housing market.The Joseph Rowntree Foundation (JRF) said an extra 120,000 households in the UK, the equivalent of 400,000 people, will be plunged into poverty when their current mortgage deal ends. Continue reading...

Final jobs report before midterms shows jobless rate at 3.7%, a day after Federal Reserve announced further interest rate hikeThe US economy added 261,000 jobs in October, the labor department announced on Friday in its last snapshot of the health of the employment market before next week’s midterm elections.The latest report confirmed the remarkable strength of the US jobs market. The unemployment rate rose to 3.7%, still close to a 50-year low. The news comes after the Federal Reserve once again raised interest rates in an effort to slow investment and bring down inflation, a move that economists and the Fed predict will eventually cost jobs. Continue reading...

UK economy faces ‘very challenging outlook’ with recession now expected to last until middle of 2024

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Cutting in a downturn has been long discredited. And yet that’s what the government is doingLearning no lessons, repeating the same failure over and over yet expecting a miraculously better result, the Bank of England might just as well be advocating a return to the gold standard. Raising interest rates as the UK is facing its longest recession since records began is no way to repair the damage done by Trussonomics and the longer effect of George Osborne’s crippling austerity, and it is no way to breathe life into a stagflated economy.The increase of 0.75 percentage points – from 2.25% to 3% – is the steepest rise since 1989. Millions of mortgage- and rent-payers alike will be hit hard, on top of falling real wages and rising costs of everything. An Ipsos poll for Sky News finds that more than a quarter of adults have started using credit cards to buy food – and a fifth have borrowed money to adjust to rising prices this year. Inflation has hit a 40-year high.Polly Toynbee is a Guardian columnist Continue reading...

Interest rate rise to 3% is biggest since 1989 and fears UK economy may go into longer, deeper recession

From loans to mortgages, house prices to credit cards – all you need to know about the biggest rate rise since 1989The Bank of England has hiked interest rates by 0.75 percentage points to 3% – the eighth rise since last December and the biggest since 1989. So what does this mean for your finances? Continue reading...

Central bank felt the need to massage down interest rate expectations amid fears over impact on UK economy

Telecom giant blames 18% fall in profits on need for extra savings after £200m energy bill increase and soaring inflationBT has warned of more job cuts to come after it was forced to find more than £500m in additional savings due to soaring inflation and energy bills.The company, which reported an 18% slump in pretax profits from just over £1bn to £831m year-on-year in the six months to the end of September, said its energy bill will be £200m higher this year. Continue reading...

Analysts believe a 0.75 percentage point rise is likely, potentially the biggest hike in the base rate since 1989

Fed officials have now imposed the sharpest increases in interest rates since the 1980s, as the cost of living crisis batters consumersThe Federal Reserve has stepped up its fight against a 40-year high in US inflation, announcing its fourth consecutive three-quarter-percentage-point hike in interest rates but signaling the pace of increases may soon slow.With the cost of living crisis battering consumers and Joe Biden’s political fortunes, Fed officials have now imposed six rate rises in a row, the sharpest increases in interest rates since the 1980s, when inflation touched 14% and rates rose to nearly 20%. Continue reading...

It fits the definition of madness to propose more austerity. But that, along with higher interest rates, is what’s comingEconomic policy in the UK is peppered with the language of S&M. The Treasury demands budgetary discipline. The Bank of England sees the need for monetary tightening. Policymakers talk of the need to avoid “fiscal dominance”. Only in Britain could there ever have been an instrument of monetary control known as the corset.Judging by the way in which the Treasury and the Bank are behaving, it’s easy to see why the novelist Anthony Burgess once described the English as “profoundly masochistic”. A great deal of self-inflicted pain is about to be administered, but for its victims there will be no pleasure involved.Larry Elliott is the Guardian’s economics editor Continue reading...

AP Møller-Maersk says Ukraine war, Europe’s energy crisis and high inflation are hitting demand, as it forecasts lower demand for containers

Oligarchs Alexander Abramov and Alexander Frolov among four steel and petrochemical tycoons put on listTwo Russian oligarchs and business partners of Roman Abramovich, whose sprawling wealth was revealed by a Guardian investigation, have been added to the UK government’s sanctions list in response to the invasion of Ukraine.Alexander Abramov and Alexander Frolov, whom the UK government said were “known to be business associates” of the former Chelsea FC owner, were on Wednesday among four new Russian steel and petrochemical tycoons added to the sanctions list.West Caicos, a Caribbean island intended to be developed as a luxury resort island.Proposed but rejected redevelopment of St Paul’s church, Robert Adam Street, London, to include office space.Shepherd’s Bush market in London, via investment in the company aiming to acquire a majority stake.Office space in London, Leicester and Glasgow.A Prague golf course community with homes and a hotel and spa.Land and a part-built hotel in Mykonos, alongside an operating partner.An office on Clifford Street, one of London’s most prestigious Mayfair addresses. Continue reading...

Annual rise of 11.6% comes as milk, teabags and sugar become more expensive

The number of economically inactive 50- to 64-year-olds has shot up. Some can simply afford to retire – but many have long Covid or other health issues“I’m still working at home, but only just.” Before the pandemic, Melanie Green loved her job in a bustling police control room. But the drugs she takes for arthritis suppress her immune system and Green won’t risk going back into the workplace while Covid continues to circulate.“It’s a busy environment with people coming in and out at all times of day. There’s no way that I could be working in that office safely,” she says. “The doctor says I am still at extremely high clinical risk.” Continue reading...

Figure represents 220,000 children, with union adding many families of nurses and public transport workers also in crisisMore than one in four children with care worker parents are growing up in poverty, according to a report by Trades Union Congress, with the union warning of “rampant” hardship in households with key workers.The TUC said that 220,000 children – 28.4% – with at least one social care worker as a parent were in poverty, and said the number was on course to rise to nearly 300,000 by the end of this parliament unless action was taken to improve pay and conditions in the sector. Continue reading...

Central bank in bid to reduce its emergency stimulus to the economy and fend off claims it has lost its independenceThe Bank of England has begun to shrink its £838bn stockpile of government bonds in a bid to reduce the central bank’s emergency stimulus to the economy and fend off claims that it has lost its independence by directly financing government borrowing.Ahead of a meeting on Thursday when the Bank is expected to raise its base rate by as much as one percentage point to 3.25%, officials offloaded £750m of government bonds, known as gilts, to commercial banks and insurers as part of a plan to sell £80bn by the end of next year. Continue reading...

Supermarket chain plans to close loss-making McColl’s stores, as it tries to regenerate business

The chancellor’s autumn statement is expected to include both tax increases and public spending cutsGet ready for Austerity 2.0. The message coming out of 10 and 11 Downing Street is that a belt-tightening autumn statement will include both tax increases and public spending cuts. Ahead of Jeremy Hunt’s announcement on 17 November , the pitch is being carefully rolled.The Treasury plans have a strong sense of deja vu about them, since the first economic act of David Cameron’s coalition government in 2010 was a £40bn package of measures designed to balance the books. Back then, the global financial crisis had punched a hole in the state’s finances; in 2022 the damage has been caused by the pandemic and Russia’s invasion of Ukraine. Continue reading...

Factory output likely to fall further as consumers’ real incomes are hit by inflation, economists sayThe UK’s manufacturing sector stood on the brink of a deep recession in October after firms suffered their worst slump in output and new orders since the beginning of the pandemic.Factory output was hit especially hard by a drop in new orders amid a global fall in the demand for industrial goods. Continue reading...

Total savings rose by almost £5bn in September, official data shows, amid fall in mortgage approvalsHouseholds are saving more, limiting their credit card purchases and taking out fewer mortgages as they take a safety-first approach to Britain’s worsening economy.Adding to fears of recession and a period of falling house prices, figures from the Bank of England showed weaker demand for all forms of borrowing and consumers more than doubling the amount put into bank accounts in September. Continue reading...

Large convoy of vessels sets sail from Odesa as Moscow warns doing so without its approval is ‘risky’

Pubs, restaurants and hotels threatened by energy bills and food price inflation, survey findsMore than a third of UK hospitality businesses, including pubs, restaurants and hotels, could go bust by early next year as energy bills surge and bookings fall, according to a new survey.With nearly all businesses saying they face higher energy costs and food price inflation, 35% of respondents to a quarterly hospitality industry survey said they expected to be operating at a loss or to be unable to continue trading by the end of the year. Continue reading...

UN body says economic and political crises threaten rise in jobs and hours worked after Covid pandemicThe economic impact of the Ukraine war and growing risk of a global recession have sent the post-pandemic worldwide jobs boom into reverse, according to recent research.The International Labour Organization, which is affiliated to the United Nations, said the decline in the demand for workers over the past three months came after a rise in jobs and hours worked in the developed and developing world in the wake of the Covid-19 pandemic. Continue reading...

Liz Truss’s investment zones also suggested as likely savings target, amid reports energy windfall tax will be extended“Everything will be reviewed” as the government considers ways to cut spending and plug a budget black hole, the levelling up minister has said, naming the HS2 high-speed rail project and Liz Truss’s investment zones as possible candidates for savings.Michael Gove’s comments followed reports that ministers are considering extending the windfall tax on energy companies by three years and increasing it to 30% of profits, but have taken a similar levy on banks off the table. Continue reading...

China’s property meltdown, the unwinding of QE and the tech stock plunge all show a fragile global financial ecosystem under stressThere’s always one deal that symbolises the end of an era. In the early 2000s AOL’s merger with Time Warner served notice that the dot-com boom was over. Royal Bank of Scotland’s over-priced takeover of ABN Amro was followed by the global financial crisis of 2008-09. The question now is whether Elon Musk’s purchase of Twitter will be seen as the moment the global economy tipped into recession.The signs are not promising. Even before Musk sealed the deal, tech stocks had seen a sharp sell-off. The stock market value of Meta, the parent of Facebook, fell by $80bn on Thursday after Mark Zuckerberg’s company announced a 50% drop in third-quarter profits. The reason was simple: advertisers are reining in spending in response to slowing global growth. Continue reading...

In a mouth-watering new book, the South Korean academic fuses his twin passions of food and economics to interrogate capitalism. We should treat economic theory as a buffet rather than a set menu, he urges – and that’s just for starters…

In an extract from his new book Edible Economics, the economist Ha-Joon Chang explains how his nation’s manufacturing boom busts myths about the global economy

Authoritarian regimes can be seen to be manipulating their economic growth rates to a greater extent than democraciesA tweet from the author Nassim Nicholas Taleb caught my eye last week. Amid the merry-go-round of prime ministers, he told us all to “stop complaining about the turnover in Britain”. It caught my eye partly because I’d done some complaining myself in last week’s column. His argument was that it’s good that such fast turnover can happen and definitely preferable to “other nations that have NO turnover”, ie Russia and Saudi Arabia.The tweet prompted two reactions. The first and strongest was that, just maybe, we don’t face a binary choice between dictatorship and the recent chaos. But, second, that it’s always good to be reminded of the benefits of our democracy. Being able to dispense swiftly with leaders making big mistakes is important, as a US stuck with Trump for four years demonstrated. And there are some specific advantages for us economic researchers. Continue reading...

Economic crises of the past offered a clear warning about the foolhardiness of the Truss-Kwarteng debacleIf I had been a member of the Conservative and Brexit party eligible to vote in its leadership election – which thank the Lord I was not, sir – I should have marked my ballot paper “none of the above”.In a variation on Mark Antony’s observation that the evil that men do lives after them, Boris Johnson and his Brexit have wreaked so much damage on the Conservative party that only Brexiters stood a chance of being elected. Continue reading...

There’s limited scope for further spending cuts so the PM and chancellor must surely look to higher taxation to repair damage done by the mini-budgetDevon county council leader John Hart dreads the return of austerity. A Conservative who has long complained about Whitehall’s tenuous grasp on regional issues, Hart must find savings of £27m next year before Jeremy Hunt has even begun looking for further cuts in local authority funding.England’s counties, most of them Tory run, face a £500m shortfall next year, according to the Local Government Chronicle. The big cities and unitary authorities are also on course for huge deficits and worse when the chancellor slashes their budget allocations for the 2023-24 financial year and beyond. Continue reading...

For companies in need of finance to expand – or just survive – rising interest rates and inflation make a scary combination, especially as recession loomsIt was a photo that marked the end of an era. Morrisons boss David Potts, in a black open-necked shirt, standing in a garden at the supermarket group’s Bradford headquarters, beside a statue of founder Ken Morrison. Standing chatting to him is the former Tesco supremo Sir Terry Leahy. They were celebrating a landmark deal that last year saw the grocery chain taken off the stock market and into private hands.Leahy, now an adviser to the buyout giant Clayton Dubilier & Rice (CD&R), had helped it outbid rival US private equity firm Fortress for Morrisons. The deal, which involved loading the business with debt in a sector known for slim margins and cutthroat competition, was a big bet on growth. Continue reading...

This week, Labor released its first budget in nine years, with the Albanese government touting it as a ‘bread-and-butter affair’. Political editor Katharine Murphy speaks to Jim Chalmers about releasing a budget during a cost-of-living crisis and why this budget has everyone talking about energy Continue reading...

Keir Starmer may have preferred to face Mordaunt or Johnson, but the new prime minister has plenty of vulnerabilitiesPublicly, they said they feared no one. When Labour MPs were asked a week ago which of the three would-be successors to Liz Truss looked hardest to defeat, they shrugged off the question, insisting that Boris Johnson, Penny Mordaunt and Rishi Sunak were all as weak and beatable as each other. But whatever the outward show, the truth is Labour got the Conservative leader that, at first glance, they had good reason to dread.The evidence has been swift. On Thursday a poll showed that Sunak is more trusted on the economy, as well as on taxes and business, than Keir Starmer. When asked who they’d prefer as prime minister, it was close, but more voters went for Sunak. Never mind that the survey had Labour comfortably ahead of the Conservatives overall: the economy and leadership are reliably the two key determinants of general elections – and on both measures Sunak has the edge. Continue reading...

A cost of childcare crisis is forcing parents – mostly mothers – out of the workplace. Now we’re taking the fight to the streetsAs the new prime minister burnishes his family man credentials, mothers this weekend are highlighting that when it comes to this government, their needs are getting the same worrying lack of attention that Bing’s friend Pando gets when he keeps taking his trousers off. With childcare costs reaching up to two-thirds of their income, women of childbearing age are leaving the workforce in their droves – meaning their taxes and their talent both go untapped. In response, campaigners are taking to the streets as part of Pregnant then Screwed’s March of the Mummies to highlight the fact that, while mothers may be surviving on a diet of Pom-Bears and strong coffee, we also have a voice and a vote, and we’re not afraid to use either.The UK has the second most expensive childcare system in the world, and parental leave that may as well be called “parental lump it” because so few can actually afford to take it. We have failed to make flexible working a reality for all but the most wealthy. And the pandemic exacerbated what was already a raw deal.Stella Creasy is the Labour and Cooperative MP for Walthamstow Continue reading...

Households and businesses hit by higher prices caused by the conflict should be helped by companies that have benefitedEither we are fighting a war in Europe and should put the economy on a war footing, or we should accept that western government support will falter, dragged back by waning public tolerance.This message comes from several economists worried that a laissez-faire approach to energy and food prices plays into Putin’s hands. Continue reading...

ECB chief Christine Lagarde notes concerns but warns of further hikes to tackle soaring eurozone inflationThe European Central Bank has increased the cost of borrowing to tackle inflation, which soared across the eurozone last month to 9.9%.Matching financial market expectations, the ECB’s 25-member governing council raised the deposit rate by three-quarters of a point to 1.5% – the joint fastest rise in the eurozone’s history. Continue reading...

Commerce department estimates show 2.6% annual growth rate for third quarter, snapping two straight quarters of contractionThe US economy grew at a 2.6% annual rate from July through September, snapping two straight quarters of economic contraction and overcoming punishingly high inflation and interest rates.Thursday’s estimate from the commerce department showed that the nation’s gross domestic product – the broadest gauge of economic output – grew in the third quarter after having shrunk in the first half of 2022. Stronger exports and steady consumer spending, backed by a healthy job market, helped restore growth to the world’s biggest economy. Continue reading...

Group reports 10% growth in sales revenue driven by highest price rises in its historyThe owner of Marmite, Hellmann’s, Magnum and Ben & Jerry’s ice-cream has warned of further price rises after commodity, labour and energy costs resulted in the biggest quarterly increases in its history.Unilever said sales revenue rose 10.6% in the three months to September, driven by a 12.5% jump in prices, while the volume of goods sold decreased by 1.6%. Continue reading...

Larger-than-expected drop in profits to £1.5bn in third quarter comes despite rising interest ratesProfits at Lloyds Banking Group tumbled 26% in the three months to September as the UK’s largest mortgage lender steeled itself for a potential surge in defaults as it predicted house prices would fall 8% next year.The drop in profits was much larger than the 9.5% analysts had expected, and was the result of having to put aside an extra £668m amid fears that some loan and mortgage customers could default on their debts. Continue reading...

Never mind Tufton Street, our first investment banker prime minister shows that the Square Mile truly rules WestminsterIt has been a week of firsts in British politics. The country has rightly celebrated the fact that it has its first Asian-heritage and Hindu prime minister. A rather less noted milestone, however, is that Britain also has its first investment banker PM.Rishi Sunak’s first job was at the US investment bank Goldman Sachs. He went on to spend 14 years in the sector before becoming an MP. In many ways, his unelected appointment marks the highpoint of big finance’s takeover of Britain’s political and economic system – a quiet infiltration of Westminster and Whitehall has been taking place over several decades and gone largely unremarked. Continue reading...

Putin himself may be out of reach, but weakening the oligarchs and the economy is still an important weaponShortly after Russia invaded Ukraine, in February, nearly 40 countries responded with coordinated sanctions against the aggressor. They had three aims: to cripple the Russian economy by limiting the ability of banks to access dollars and the US financial system; to curtail exports of hi-tech goods and services to reduce Russia’s ability to fight the war; and to target allies of the Kremlin and businesses. This unprecedented economic coercion has not been able to obliterate the Kremlin’s resolve for war or its economic capability. Nor have the sanctions crushed Russia’s standard of living. But look closely, and you will see that they are succeeding in systematically crippling the country, and remain necessary in order to bring the war to an end.Russia’s isolation now that its supply chains are decimated, along with the mass exodus of an estimated 1,000 foreign firms, threatens its future growth and power projection. By limiting Russian imports, export controls have created a trade surplus. High energy prices have also raised demand for rubles. As a result, the ruble has appreciated 29% against the dollar.Carla Norrlöf is a professor of political science at the University of Toronto and senior fellow at the Atlantic Council Continue reading...

With fiscal statement deferred and mixed government messaging on tax and spending the BoE has little to go on

Results will further fuel calls for the government to tax banks’ excess earningsBarclays has become the second big bank to breeze past profit forecasts this week after an increase in borrowing costs and bond trading during the UK’s market meltdown pushed earnings to £2bn this quarter.The results, which follow a higher-than-expected windfall at HSBC on Tuesday, will further add to calls for the government to tax banks’ excess earnings, as lenders reap the benefits of higher interest rates and volatility across UK markets. Continue reading...

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