Policies such as the benefit cap have hurt the most vulnerable in society, particularly single mothers

This year has been a disaster for many investors in cryptocurrencies. Alex Hern draws the parallels of the spreading panic in the new digital economy with the 2008 financial crisisWhen the global financial system went into meltdown in 2008, banks collapsed and governments around the world were forced to step in to prevent the entire financial system from collapsing. It cost billions of dollars and, as well as that, it proved a pivotal moment: it profoundly shook the confidence that many had in their governments.As Alex Hern tells Nosheen Iqbal, this period also coincided with the rise of a new technology allowing a new type of currency: one that is not underwritten by governments but instead exists purely online: bitcoin was born. At first it was a novelty, useful for buying illicit goods on the dark web and not much more. But bitcoin grew and grew and despite some significant bumps along the way, it reached a peak of $69,000 per bitcoin. Anyone who’d invested in it, or a swathe of other competing cryptocurrencies, found themselves incredibly rich – in theory anyway. Continue reading...

Former shadow chancellor says a radical response needed to the worst cost of living crisis in a generationThe government should impose strict price controls on fuel and basic food items to help families struggling with soaring living costs, the former Labour shadow chancellor John McDonnell has said.Calling for a radical response to the worst cost of living crisis in a generation, McDonnell said the government needed to take urgent steps to limit the impact from soaring inflationary pressures on workers and their families. Continue reading...

EasyJet’s chief operating officer Peter Bellew resigns amid growing anger over flight disruption

May’s €1bn deficit came as rising prices, falling demand and supply chain disruption hit industrial baseGermany has recorded its first monthly trade deficit since 1991 amid soaring inflation and supply chain disruption weighing on the country’s industrial base.Figures from the country’s statistics agency showed a surge in the value of imports and modest decline in exports had pushed Europe’s largest economy into a trade deficit of €1bn (£860m) in May. Continue reading...

Growth in annual prices rose from 73.5% in May to 78.6% in June, but real rate could be double official figureTurkey’s official inflation rate increased to almost 80% last month – the highest in 24 years – as President Recep Tayyip Erdoğan’s unconventional economic policies continued to drive up the cost of living.The growth in annual prices rose from 73.5% in May to 78.6% in June, according to the Turkish statistics agency. Continue reading...

Borrowing from H&T Group exceeds pre-Covid high with no relaxation of lending criteriaA record number of people are pawning items to borrow money from Britain’s largest pawnbroker amid an escalating cost of living crisis.H&T Group said “pledge lending” – lending secured against a customer’s valuable items such as watches or jewellery – was at record levels, in a trading update published on Monday. Continue reading...

Energy prices had already surged in second half of 2021 but Russia’s invasion of Ukraine has exacerbated this

Lone parents reveal how they have turned to food banks and benefits amid soaring fuel and food prices

Exclusive: IFS study shows impact of Tory cuts to benefits and cost of living crisis on single mothers

Productivity is key but boosting it will take state as much as private investment after years of neglectBritain’s economy is at a turning point. Growth is slowing, with the rising chance of recession, inflation is at the highest level for 40 years, and expected to hit 11% this autumn as the country suffers an earlier and more painful economic firestorm than most other nations.That it was considered big news for the governor of the Bank of England to spell out these uncomfortable home truths this week was perhaps surprising given the regular drip-drip of economic pain that has sent confidence among consumers to its lowest depths since the 1970s. Continue reading...

Workers at big chains struggle to make ends meet as prices increase but their wages have notMinerva Rodriguez has worked at McDonald’s in Houston, Texas, for more than 23 years. She is paid $12 an hour and says she is doing the work of two to three people because the restaurant is chronically understaffed. Now she, like many Americans, is facing another crisis: runaway inflation. And while she has noticed the food prices at her store have increased, pay has not.“The wages are incredibly low and not sufficient for the work we do,” said Rodriguez, who joined the Fight for $15 and a union movement to push for higher wages and better working conditions. “They don’t want to lose that extra money. If they can have their present workers do double the job and not have to pay another worker it’s a benefit for them, but what happens with us? With food costs rising and gas prices rising, how are we supposed to live?” Continue reading...

It’s a time of national emergency, the Tories tell us. But restraint is not a matter for everyoneWe are back in the thieving world of Fred “the Shred” Goodwin and Northern Rock. The sole difference from 2008 is that instead of the state expecting ordinary people to bail out failed banks, it is expecting them to take pay cuts to protect bosses’ bonuses. The war against inflation in the 2020s, like the war against financial collapse in the noughties, must be fought by those least able to fight it.Nowhere in the speeches of the prime minister, chancellor or governor of the Bank of England is there a hint that a national emergency demands equality of sacrifice. They do not repeat David Cameron’s line that “we’re all in this together”. As millions sink down, all they say is that it is their patriotic duty to protect the privileged by sinking deeper. Or, as a writer plucked from the Victorian age explained to Daily Telegraph readers last week, the rewards of the rich are “natural and inevitable” but the “clamour” of workers for pay rises is “nothing but shameful opportunism”. Continue reading...

When Marc Bolan was urging us to Get It On, life in the UK was very different but now, as then, pitiful levels of business investment make us all poorerBritain is suffering a catastrophic economic shock that resembles the one that knocked the economy sideways in the 1970s, but strike action by workers offered below-inflation pay rises ranks low on the list of similarities.The UK is being affected by inflationary pressures and steadily rising wage demands, but both remain modest by comparison with the 1970s. Much more important are the circumstances of 21st-century life, which are very different from those that prevailed almost five decades ago. Continue reading...

The UK looks set for a recession and a longer battle with inflation than many of its neighbours. This is whyThe UK is sliding towards a recession. Only six months ago, a strong recovery was expected, but the impact of the pandemic, the slow return to pre-Covid work patterns and soaring inflation driven by the Ukraine invasion have depressed the economy.Last week the governor of the Bank of England, Andrew Bailey, warned that Britons are likely to suffer a deeper and longer downturn than other major industrialised nations. He also said inflation would be more severe and persistent. Continue reading...

Orders at UK factories fall for first time in 17 months and prices accelerate at a record pace across the eurozone

ECB plans first interest rate rise in 11 years as food prices increase and Putin’s invasion drives up energy costsInflation across the eurozone has soared to a fresh record of 8.6% in June as Russia’s war in Ukraine adds to the cost of living crisis.Figures from the EU statistics agency Eurostat showed consumer price inflation increased from 8.1% in May, reaching the highest level since relevant records began in 1997, two years before the euro was launched. Continue reading...

Coalition government consults health experts, economists and growers in race to clear legal hurdles within two yearsGermany is mulling over the consequences of soon becoming the world’s largest potential market for legally sold cannabis, as the country’s left-liberal government presses ahead with plans to allow the controlled distribution of the drug among adults.Olaf Scholz’s coalition government has in recent weeks reiterated its 2021 coalition-deal vow to legalise for recreational use what its Green and liberal party minister have taken to referring to as Bubatz, a slang word for weed popular among German rappers. Continue reading...

The strikes are gaining momentum, and public opinion is behind them – could they transform our economic landscape?In Britain, more than in most democratic countries, going on strike is a risk. Your employer, the government, most of the media, much of the public and often the opposition parties are likely to be against you – or, at best, unsupportive. Your loss of income is unlikely to be made up by strike pay. Your behaviour on the picket line will be subject to what Tony Blair described approvingly in 1997 as “the most restrictive” trade union laws “in the western world”.In very public ways, you will be breaking the rules of the modern economy: refusing to work, inconveniencing consumers, acting collectively rather than individually, and making demands for more money openly – rather than in private, as more powerful people do. If you are on the left, you are likely to be told again and again that your strike is politically counterproductive. Continue reading...

US stocks have recorded their worst first half in more than 50 years as central bank attempts to slow inflation sparks selloff

It would be naive to rule out the possibility, but the evidence points to house prices dampening rather than tumblingNationwide says UK property price rises have slowed for the third consecutive month and most recently from 11.2% in May to 10.7% in June. The slowdown in growth can be traced to the beginning of the Russian invasion of Ukraine and an escalation of Britain’s cost of living crisis.Unsurprisingly, property owners ask whether a crash is on the horizon, especially now that the economy is heading into a downturn and possibly a full-blown recession. Adding to the gloomy atmosphere, Bank of England officials, seemingly immune to the prospect of a slump, have begun to raise interest rates. Continue reading...

Landline and broadband customers told to expect disruption as engineers, call centre and shop staff back actionBT staff have voted for their first national strike in 35 years, which is expected to affect customers across the country having broadband services installed or getting faults fixed.The strike by BT engineers and call centre staff represents the vast majority of its 58,000-strong frontline workforce, and the trade union organising the ballot has said that BT customers can expect disruption to services including repairs, having new phone and internet lines fitted or getting hold of support staff. Continue reading...

Weakening economy, cost-of-living squeeze and rising interest rates are cooling market, index showsAnnual house price gains across the UK have slowed for a third month as the weakening economy, cost of living squeeze and rising interest rates started to have an impact on the property market.The average UK house price hit a new record high of £271,613, but there are “tentative signs of a slowdown”, Nationwide building society said. Continue reading...

Chancellor told he urgently needs to support companies facing rising energy prices, chronic staff shortages and supply chain issuesRishi Sunak has been warned the government is running out of time to save the economy amid a rapidly worsening growth outlook and soaring inflation hitting businesses.The director general of the British Chambers of Commerce (BCC), Shevaun Haviland, said the chancellor urgently needed to announce a package of financial support for firms struggling with a “perfect storm” of rising energy prices, chronic staff shortages and supply chain problems. Continue reading...

There is ample reason to fear big economies such as the US face recession and financial turmoilThe global financial and economic outlook for the year ahead has soured rapidly in recent months, with policymakers, investors and households now asking how much they should revise their expectations, and for how long. That depends on the answers to six questions.First, will the rise in inflation in most advanced economies be temporary or more persistent? This debate has raged for the past year but now it is largely settled: “Team Persistent” won, and “Team Transitory” – which previously included most central banks and fiscal authorities – must admit to having been mistaken. Continue reading...

Andrew Bailey said inflation would persist for longer than previously expected as petrol prices soarBritons should expect to suffer a more severe bout of inflation than other major economies during the current energy crisis, the governor of the Bank of England has warned.Speaking at a conference of central bankers in Portugal, Andrew Bailey said inflation was higher in the UK and would persist for longer than previously expected as soaring petrol and gas prices sent household bills rocketing to new highs. Continue reading...

Rolling coverage of the latest economic and financial news, as Camelot loses legal bid to prevent the handover of the National Lottery licence to rival Allwyn

Prices up 3.1% on a year ago, with fresh food prices in particular rising sharply, figures showShop prices have hit their highest rate of inflation in almost 14 years as businesses grapple with soaring supply chain costs and a cut in household spending, figures from the British Retail Consortium (BRC) show.They were up 3.1% on a year ago in June, up from 2.8% in May – the highest rate of inflation since September 2008, according to the BRC-NielsenIQ shop price index. Continue reading...

UK’s biggest chemist to stay with Walgreens Boots Alliance as market turmoil makes debt-funded takeovers difficultBoots will remain under the ownership of Walgreens Boots Alliance after the US pharmacy company abandoned a sale of Britain’s biggest chemist.Walgreens has been looking to sell Boots and its related No7 Beauty brand since the end of last year, with a formal review of its options beginning in January. However, on Tuesday it pulled the sale, blaming global financial market conditions which meant potential buyers were struggling to borrow enough money. Continue reading...

Rolling coverage of the latest economic and financial news

As inflation soars, the Fed, ECB, Bank of England and others are more regularly challenged than in the pastWho would want to be responsible for monetary policy in 2022? To judge from the fierce economic and political debates under way around the world, it is as though open season has been declared on central bank governors: they are being criticised from all sides.The US Federal Reserve chair, Jerome Powell, and his colleagues are accused of failing to spot the early signs of an inflationary threat last year. As late as last autumn, they were arguing that price rises were “transitory”. With annual US inflation today approaching double figures, that looks to have been a poor judgment. But now that the Fed has acknowledged its mistake and is raising interest rates, many accuse it of choking off the post-pandemic recovery, collapsing equity and bond markets, and precipitating a recession. Continue reading...

Reluctant to raise prices, refusing to sacrifice profits, travel companies, retailers and restaurateurs are cutting corners wherever they can, usually without telling their customers. Is poor quality the new normal?Did your flight get cancelled in the school holidays? Has the delivery of your new sofa been delayed? Was your last meal out disappointing? Are your new socks see-through? Are you reading this while you are on hold to customer services? Does everything feel just a little bit worse?The cost of living crisis has given British households a crash course in the misery caused by inflation, which is scaling heights not seen since the 1980s. But what if there is also another force at work in the economy, lurking in the background and making a bad situation that little bit grimmer? Continue reading...

Scott Wilson, Kathleen Roberts, Dr Rhys Jenkins and Richard Hyman on the hardship of having to live on a low state pensionI was disappointed to see Nils Pratley (The chancellor’s position on lifting the state pension makes no sense, 23 June) support the contention that the UK can’t afford a cost of living increase in pensions . A 10% rise in the state pension of £9,500 is £950 – compare that with the likely £1,800 rise in energy costs. How would the extra cash received by poorer pensioners who wholly or mainly depend on the state pension contribute to inflation? Most would go into the pockets of the energy companies. Surely it would be fairer to have a more progressive tax system for richer pensioners or a progressive rise in energy costs, where the unit price could increase with the amount consumed?

Rolling coverage of the latest economic and financial news

Rising fuel costs, higher wages and the surging price of imported goods and raw materials are forcing a ‘change of behaviour’Britain’s army of more than a million small and medium-sized businesses are stockpiling raw materials and ordering components six months ahead to overcome supply shortages that prevent them from meeting customer demands.With construction costs reaching fresh record highs and import prices surging following a fall in the pound, businesses reported that much of their cash was tied up in securing the basic raw materials and components needed to supply customers. Continue reading...

UCL’s research, knowledge and support for business startups provides boost ‘equal to holding Olympics every year’University College London has boasted its financial contribution to the British economy is the equivalent of hosting the Olympics every year – in part because of how it encourages graduates to create jobs and investment around the country.An independent report commissioned by UCL estimates that the university generates close to £10bn a year in economic activity from its spending of £1.67bn. According to the consultancy London Economics, that figure “is comparable to the boost in international trade and inward investment delivered by the 2012 London Olympics”. Continue reading...

Western leaders hope to tighten vice around Vladimir Putin without causing backlash at home or in global southA proposed cap on the price of Russian oil and pipeline gas to slash the Kremlin’s revenues and reduce inflationary pressures in the west gathered support on Sunday as G7 leaders met in Bavaria.The three-day event will be dominated by discussion of how to tighten the economic and military vice around Vladimir Putin without leading to disastrous spillovers, including a backlash among western consumers and starvation in a rain and grain-starved global south. Continue reading...

Global Investment and Infrastructure Partnership, aimed at rivalling China, comes a year after Build Back Better World planThe G7 has been forced to relaunch its vehicle to provide infrastructure funds to poor and developing countries only a year after a largely similar scheme was unveiled at the G7 conference in Cornwall last July under the label Build Back Better World.The fund was relaunched at the start of the G7 in Germany on Sunday as the Global Investment and Infrastructure Partnership and with the same goal of providing an alternative to the Chinese belt and road initiative that Beijing has used for more than a decade to build economic ties with developing countries. Continue reading...

Volume of Russian crude bought and then exported by India suggests some of it may end up in European petrol stationsThe huge blue and red hull of the SCF Primorye came into port at Vadinar, western Gujarat, India, earlier this month. The 84,000-tonne oil tanker, built in 2009 and sailing under the Liberian flag, had arrived from the port at Ust-Luga, a settlement in Russia near the border with Estonia.Until 2017, the Vadinar oil refinery was controlled by Essar – the Indian owner of the Stanlow refinery in Ellesmere Port. Since then a consortium including the sanctioned Russian state-owned oil firm Rosneft and the commodities trader Trafigura, which holds a 24.5% stake, have owned Nayara Energy, which runs the refinery. Continue reading...

The Chips Act would provide an enormous subsidy to chipmakers for making their chips in the US. This is extortionCongress will soon put final touches on the Chips Act, which will provide more than $52bn to companies that design and make semiconductor chips.The subsidy is demanded by the biggest chipmakers as a condition for making more chips in America.Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com Continue reading...

First meeting in 1975 grappled with the oil shock – now it is Russia’s war in Ukraine creating angst, especially for the eurozone

The philosopher Harry G Frankfurt’s book on dishonesty offers a valuable insight into the Johnsonian mindsetI would love to have been a fly on the wall when the subject of the EU came up during the meetings between Boris Johnson and Ukraine’s President Zelenskiy. How could Johnson, master of bullshit, have possibly handled the irony of the situation? He, the principal culprit in what is being increasingly recognised as the self-harm of Brexit; and Zelenskiy, desperate to join the EU that the UK, in its unforgivable folly, has left.Now, I use the word bullshit – not normally one that appears in this column – advisedly. I have read a short book by a renowned American moral philosopher, Harry G Frankfurt, entitled On Bullshit. Frankfurt examines the distinction between humbug – “deceptive misrepresentation, short of lying” – and outright lying; he sees his third category, bullshit, as “a lack of connection to a concern with truth”. It is “this indifference to how things really are” that he regards as “the essence of bullshit”. Continue reading...

Data due this week will be closely scrutinised to discern whether the market’s remarkable resilience is falteringEvery economic indicator in Britain has started flashing red, but the housing market has marched relentlessly on.Nationwide building society will release its latest house price index for June this week, along with regional data for the second quarter, while the Bank of England’s latest mortgage lending figures should also shed more light on the state of the UK property market. Prices are up 5% this year, although uncertainty about the wider economy has meant Nationwide has not issued an annual house price forecast. Continue reading...

Smaller grocery bills amid rising cost of living behind 0.5% drop in retail sales in May, statistics body says• Tough summer ahead for shops as consumer confidence hits rock bottomAlmost half the adults in Great Britain are cutting back on the amount of food they buy as the cost of living crisis forces them to trim their weekly supermarket shop, the latest official figures have shown.In stark evidence on the effect of rising inflation on spending patterns, the Office for National Statistics said 44% of adults surveyed last month said they were buying less food – up from 18% at the start of the year. Continue reading...

Retail sales across Britain dropped in May and consumer morale continues to slide

Acquisition comes at a time of intense competition in the mortgage marketBarclays is to buy the specialist mortgage lender Kensington Mortgages for £2.3bn, in a dash for mortgage books as interest rates rise.The acquisition comes at a time of intense competition in the mortgage market, and as rising interest rates provide a boost to lenders. Continue reading...

Analysis: Shoppers will be counting their pennies, with inflation predicted to hit 11%

Cancelling poor nations’ historic debts would allow their governments to channel money into climate adaptationIt has proved too easy to stop people uniting around the crucial issues of our time. Those who demand better pay and conditions for workers and justice for poor people have been pitched by demagogues and corporate lobbyists against those who demand a habitable planet.For years, we have struggled with the question of how to overcome this division and create a social and environmental justice platform that could unite vast numbers of the world’s people. Only one thing was clear: any such campaign had to be led by activists from poorer nations. Now, I believe, the breakthrough has arrived.George Monbiot is a Guardian columnist Continue reading...

David Lammy, the shadow foreign secretary, confirms party won’t seek to rejoin single market or EU blocLabour has broken its long silence on Brexit, laying out detailed plans to improve, not scrap, the deal Boris Johnson struck with the EU, in a move it concedes will enrage remain supporters.On the sixth anniversary of the Brexit referendum, the shadow foreign secretary, David Lammy, confirmed the party would seek only limited changes and would not seek to rejoin the single market which would bring the return of free trade and free movement of people. Continue reading...

Sunak’s attempt to make a distinction between increases in pensions and wages fuels a sense of political favouritismThe government has got itself into a fine muddle on the triple lock pension guarantee, David Cameron’s gift-cum-bribe to older voters in 2010 that has ricocheted down the years. On the one hand, Boris Johnson and Rishi Sunak argue that awarding inflation-matching pay rises to public sector workers would risk an “inflationary spiral” and so should be avoided. On the other, the chancellor maintains that lifting the state pension by 10% – the figure likely to be produced by the triple lock formula – wouldn’t create inflationary pressures.The position makes no sense. Income increases, whether delivered via pension payments or pay packets, all contribute to aggregate demand and spending capacity. Sunak’s attempt to make a distinction – “pensions are not an input cost into the cost of producing goods and services we all consume so they don’t add to inflation in the same way,” he said – only fuelled the sense of naked political favouritism. Teachers, to alight on the next bargaining battleground, aren’t manufacturing soap suds either. Continue reading...