Economics | The Guardian

Rolling coverage of the latest economic and financial news

Government bond markets also under increasing pressure, says Global Financial Stability Report

UK and global GDP growth forecasts upgraded for this year but immigration controls could have negative impact

A cost of living crisis is not inevitable if there is the will to stop companies extracting profits from Britain's essential servicesThe profound squeeze on living standards has become the defining, explosive feature of British politics. Each week seems to bring more pain in the form of higher bills. Water bills are forecast to rise again next year, on top of the energy price cap that recently increased to 1,755 a year. For rightwing populists, the cost of living crisis is the gift that keeps on giving, allowing them to blame the experience of declining living standards on migrants and perceived outsiders". Unless Britain's crisis of livability is addressed, Labour will probably be the handmaiden of a Reform victory.We often hear that the cost of living crisis is caused by rising energy prices linked to Vladimir Putin's war on Ukraine, or by disruption caused by the climate crisis. These factors, while hugely important, are not the whole story. The structure of Britain's economy amplifies the effects of inflation and makes life more expensive. When external shocks hit our economy, they translate into people paying even higher prices here than they do elsewhere. This is because essential services, such as energy, housing and transport, have been designed as opportunities for profit extraction.Mathew Lawrence is director of the Common Wealth thinktank Continue reading...

Firms too scared to take a chance on youngsters when taxes and minimum wages are higher, expert says

Unemployment rate rises slightly to 4.8% but ONS says falls in payroll numbers and vacancies are levelling off

Inflation also hitting sales, says industry body, as Barclays says credit card spending fell in SeptemberUK retail sales growth cooled last month as concerns over inflation and looming tax increases in Rachel Reeves's autumn budget weighed on British consumers.In a snapshot before the chancellor's tax and spending event next month, the British Retail Consortium (BRC) said total sales rose more slowly in September than in recent months. Continue reading...

Author of influential report on the gig economy says new watchdog can make progress on workers' rightsLabour has appointed Tony Blair's former policy chief to lead Britain's new jobs market watchdog being created by the government to enforce its strengthening of workers' rights.Matthew Taylor, who led the influential Taylor report on the gig economy and modern working practices for Theresa May's government, will become the chair of the Fair Work Agency when the body launches next April. Continue reading...

Trump has threatened 100% tariffs after Beijing's fresh curbs on rare earths, a month before deadline to agree a dealWith nearly a month to go before the deadline for the US and China to reach a deal in their trade war, goodwill between the two countries appears to have been swept off the table in recent days. China announced that it was once again restricting the export of critical minerals, prompting the US president, Donald Trump, to announce tariffs of 100% on US-bound Chinese exports, scuppering - at least for now - hopes that global economic turmoil could be averted. Continue reading...

Wall Street rallies at the open as fears over US-China trade war easeThe National Lottery operator Allwyn is to merge with Greece's leading gambling company OPAP to create a global listed gaming giant worth about 16bn (13.9bn).Allwyn, which owns a near-52% controlling stake in Athens-headquartered OPAP, has agreed an all-share tie-up with OPAP that will see the combined group renamed Allwyn. Continue reading...

US S&P 500 and Nasdaq Composite indexes rise and cryptocurrencies rebound after Trump post on Truth Social

Thinktank says UK could raise significant funds by tackling some of the longstanding inefficiency and unfairness' in tax systemRachel Reeves must avoid a half-baked dash for revenue" or risk damaging economic growth as the chancellor seeks to close a large gap in next month's budget, the Institute for Fiscal Studies has said.The tax and spending thinktank has warned there was a danger the chancellor would create unnecessary economic damage" if she chooses to stitch together unrelated tax-raising measures to cut the shortfall in government revenues and keep within her fiscal rules. Continue reading...

Beijing says it will act if US president doesn't stand down, while investors brace for trade war turmoilBeijing has told the US it will retaliate if Donald Trump fails to back down on his threat to impose 100% tariffs on Chinese imports as investors brace for another bout of trade war turmoil.China's commerce ministry blamed Washington for raising trade tensions between the two countries after Trump announced on Friday that he would impose the additional tariffs on China's exports to the US, along with new controls on critical software, by 1 November. Continue reading...

Influential economists want replenishment of funds and new ways to define countries in need before this week's IMF and World Bank meetingsTop economists are demanding urgent action on debt relief in Washington this week, as analysis from the campaign group Debt Justice shows struggling governments are cutting back on health and education.As finance ministers and central bankers gather for the International Monetary Fund (IMF) and World Bank annual meetings, influential experts including the Nobel laureate Joseph Stiglitz, and leading economists Mariana Mazzucato and Jayati Ghosh, are urging them to turn debt into hope". Continue reading...

Labour embraced the forecaster's powerful role, but now finds itself scrambling in the face of gloomy projections

Chancellor hopes to raise enough funds to stop damaging speculation about breaching fiscal rules

President suggests layoffs will be a lot' and in Democrat areas as unions for federal workers take the matter to court - key US politics stories from 10 October at a glanceMass firings of US federal workers have begun, as Republicans work to exert pressure on Democrat lawmakers to end a government shutdown. The White House budget office said the layoffs were substantial", with unions for federal workers taking the matter to court. President Donald Trump said of the job losses it'll be a lot" and suggested those losing their jobs would be in areas that were Democrat oriented".The government shutdown comes as the US president has revived the trade war with China, this time promising to increase tariffs on Chinese imports by 100%. His administration is also considering using visa restrictions and sanctions against countries that support the International Maritime Organization's net zero framework" proposal. Continue reading...

My father, Eric Potts, who has died aged 89, was an economist working in engineering and manufacturing businesses, in a period of considerable change for those industries.He began his career as a graduate apprentice at Rolls-Royce, in Derby, in the early 1960s. Joining the marketing department of the Weir Group, Glasgow, he rose to the top position, before being made marketing director at Weir Polypac, Hartlepool, in 1980. Continue reading...

Jeremy Cross says disjointed policies are trapping people in poverty and isolation, while Monica Hall considers the cost of potholes. Plus letters from Derrick Joad and Colin BurkeGeorge Monbiot is correct that cuts in public services cost far more than the money saved (It hurt when I crashed my bike into a pothole - and it taught me the true price of austerity, 4 October).I am a trustee of a small charity in Kent, The Social Justice Network, which runs a number of projects, including supporting refugees and their families to settle locally. Recently we welcomed a family of 10 (parents and eight children aged five to 16) from another county. The council had worked hard to house the family in its area but was unable to, despite having accepted its duty to do so. As a result of a forced move of nearly 100 miles at 24 hours' notice, the father lost his job and isnow benefit capped. Removing the two-child limit would make this family only marginally better off as they would still face the family benefit cap. Continue reading...

Business leaders are prioritising automation through AI to fill skills gaps, rather than training junior employees, survey findsBusiness leaders may be pulling up the ladder' behind them, by focusing on AI tools rather than taking on new staff, warns Kate Field, global head human and social sustainability at the BSI.Field explains:As roles are streamlined or eliminated before experience can be gained, we risk eroding the professional aspirations of people at the very start of their careers and before they've had the chance to flourish.Our findings suggest a troubling trend: senior leaders may be pulling up the ladder', prioritizing short-term productivity over long-term workforce resilience. If left unchecked, this could have lasting consequences, from weakening our skills pipeline, deepening generational inequality and our research suggests, dividing large companies and SMEs.Half (51%) of the respondents working in SMEs say AI is crucial to the growth of their organization, compared with nearly seven in ten respondents in large organizations (69%). This is reflected in its impact being felt; 70% of large businesses reported AI saves money compared to just half of SMEs (51%). Continue reading...

US president's threat to impose 92% tariffs targeting major manufacturers put family-run firms in the firing line as wellIt's a real pity," laments Antonio Rummo of Donald Trump's latest target in his ever-evolving tariff war: Italian pasta. Rummo is the sixth-generation grandson of the founder of Pasta Rummo, who opened a wheat mill in Benevento in southern Italy in 1846, using the family's three horses to lug grain from the surrounding Campania region and Puglia to produce fresh pasta.Demand for premium pasta in the US has been growing," says Rummo. Appreciated by consumers for a traditional processing method that guarantees it will cook to al dente perfection, sales of Pasta Rummo have been thriving. Continue reading...

Why UK steel sector is alarmed by prospect of punitive tariffs from its biggest customerThe EU shocked the UK steel industry on Tuesday with an announcement of 50% import tariffs - with no apparent carve-out for metal crossing the Channel.UK Steel, an industry lobby group, said the plan poses an existential threat" to British steelmakers. Here's what you need to know. Continue reading...

Kristalina Georgieva outlines mounting risks to economic stability before fund's annual meetings next week

Precious metal having biggest rally since 1970s amid political uncertainty in US, France and JapanThe price of gold has risen above $4,000 (2,980) per ounce for the first time as investors continue to seek a safe place to put their money at a time of global political and economic uncertainty.The spot price of gold - the real-time market value of gold and viewed as the global benchmark - had reached $4,031.54 by 8am in London on Wednesday morning, after climbing 1.2% during early trading. Continue reading...

ONS says public borrowing estimates have been out by 200m-500m a month since JanuaryMistakes in recent public finances data mean government borrowing has been overstated by a cumulative 3bn, the Office for National Statistics has said.In a fillip that gives Rachel Reeves a little bit more wriggle room in her November budget, the ONS said its estimates of public borrowing had been out by 200m-500m a month since January. Continue reading...

Research finds it would take average worker saving all their earnings for 52 years to match wealth of richest 10th of societyIt would take the average earner in the UK 52 years' worth of earnings to become as wealthy as the richest 10%, according to new research by the Resolution Foundation.In a new report, the influential thinktank analyses the Office for National Statistics' latest wealth and assets survey, which covers the Covid pandemic period of 2020-22. Continue reading...

Starmer says UK in discussions with EU over Brussels plan to double import tariff to 50%, which unions warn could kill UK steel industryThe EU has announced it will match Donald Trump's steel tariffs, doubling levies on imports to 50% in a decision condemned as an existential threat" to the industry in the UK.With 80% of British exports going to the EU, the change poses the UK steel industry's biggest ever crisis, according to the lobby group representing the sector, while unions said they could kill off the industry. Continue reading...

Company says more roles will be at risk unless UK government supports tariffs to protect industry

Investors rattled by resignation of French PM but country is not alone in trying to grapple with political maths

Mel Stride outlines plans to slash 47bn a year from public spending, including 23bn welfare cut

Rolling coverage of the latest economic and financial news, as France's prime minister resigns unexpectedly

From Ohio to Florida, the US government's clampdown on students from abroad threatens rural universities and local businessesFor a town of 20,000 residents a few miles from the Indiana state line in rural Ohio, the city of Oxford boasts an outsized number of international eateries.On High Street, the Phan Shin Chinese restaurant sits a few doors down from the Happy Kitchen, another Chinese food joint, which is next door to the Krishna Indian restaurant. There's a French bakery and even a Uyghur restaurant selling central Asian fare. Continue reading...

In Johnstown, thousands live in poverty - and voters went for Trump. How are people feeling as his devastating cuts take hold?Ernest Hairston has a plan. He's going to buy a car and find a job, then he'll be able to start saving for a down payment on a house.A car this year, house next. That's his plan. But first, he has to fix his health. Continue reading...

Labour colleagues advise chancellor against string of small money-raising measures, as OBR presents forecastSome of Rachel Reeves's Labour colleagues have urged her to ditch the party's manifesto promises rather than risk a pasty tax" budget that raises money through a string of small measures.As the independent Office for Budget Responsibility (OBR) presented its first fiscal forecast to the Treasury on Friday, several sources said there was tension within the government over the manifesto pledges. Continue reading...

Data was collected for closely-watched jobs report before shutdown, but Trump officials so far defy calls to publish itCompanies, consumers, policymakers and investors across the US are flying blind" at a crucial time for the world's largest economy, a former top official has warned, after Friday's closely-watched jobs report was not published as a result of the federal government shutdown.The data for the release have already been collected, according to two former heads of the Bureau of Labor Statistics (BLS). But the Trump administration has so far defied calls to publish the report. Continue reading...

Rolling coverage of the latest economic and financial news

History suggests that bullying the Fed for political gain can have serious consequences for the rest of usOne of the more critical lessons economists gleaned from the Nixon administration is about the exorbitant cost of allowing politicians to mess with the Federal Reserve. Donald Trump also learned an important lesson from Richard Nixon - a very different one.Nixon had blamed the Fed for his loss in his first bid for the presidency in 1960. By keeping rates high, he believed, it caused a recession that led voters to punish the then vice-president. In 1972, he would not let that happen again. Continue reading...

My generation is struggling for stability in a system that no longer feels fit for purpose. It's time to take that seriouslyFor gen Z Americans, it's hard to remember a version of the economy not defined by crisis. We finished our education online as Covid devastated the world, only to graduate into high costs of living, stagnant wages and now AI's threat to entry-level jobs. We've come of age in a system that no longer feels fit for purpose.The result is a generation that's lost faith in the traditional markers of stability. What once defined a secure life - home, family and comfortable retirement - feels out of reach. A pension is out of the question," one friend told me. So staying in the same job no longer makes sense." She's not alone: jobseekers' confidence in keeping or finding work dropped sharply this spring, with a survey in June suggesting nearly 60% of graduates were still looking for their first jobs.Alice Lassman is a policy expert with a focus on the global economy and gender. Her forthcoming book explores how AI's influence on gender and emotions are reshaping economic life Continue reading...

Chancellor has ways to cover UK deficit without breaching spirit of Labour manifesto, Morgan Stanley claimsRachel Reeves could raise as much as 45bn in taxes without breaking Labour's manifesto promises, according to a City report.Economists at the US investment bank Morgan Stanley said they expected the chancellor to use next month's budget to announce billions of pounds in tax increases to cover a potential 30bn shortfall in the public finances. Continue reading...

Theresa May, Alok Sharma, business and church leaders say plan would harm UK and not even Margaret Thatcher would have countenanced itThe former prime minister Theresa May has condemned a promise made by Kemi Badenoch to repeal the Climate Change Act if the Tories win the next general election, calling the plans a catastrophic mistake".She joined other leading Tories, business groups, scientists and the Church of England in attacking the Conservative leader's announcement, which would remove the requirement for governments to set carbon budgets" laying out how far greenhouse gas emissions will be cut every five years, up to 2050. Continue reading...

Employees wonder if the shutdown will leave them out of work temporarily or set stage for permanent terminationAn estimated 750,000 federal employees are furloughed as a result of the first federal government shutdown since 2018.Many have been on edge for months", according to James Kirwan, who works as a labor attorney inside a government agency. Now the Trump administration is threatening to implement another sweeping wave of cuts to their ranks. Continue reading...

Donald Trump wanted EJ Antoni to head agency, but critics said he was too partisan and exceedingly unqualified'Economists are expressing relief that the White House withdrew its nomination for head of the Bureau of Labor Statistics (BLS), the government agency that reports key economic data.In August, Donald Trump nominated EJ Antoni, chief economist at the conservative Heritage Foundation and a co-author of Project 2025, to replace Erika McEntarfer, whom Trump fired after the bureau released revisions to its monthly jobs report that showed weak job growth over the summer. Continue reading...

Report says changes to occupational mix since release of ChatGPT in 2022 sluggish' compared with 1940s and 50sThe US jobs market has yet to experience serious disruption from breakthroughs in artificial intelligence, according to an academic study.Analysis by Yale University's Budget Lab found there had been no discernible disruption" since ChatGPT's release in November 2022. Continue reading...

Losses narrow to nearly 16m for 48 weeks to 4 January 2025 but group has not made pre-tax profit since 2019Selfridges has blamed a slump in the number of international tourists shopping for luxury goods in the UK and weaker consumer confidence for a fall in annual sales, as the retailer racked up losses for a fifth year in a row.The upmarket department store chain reported a 7% decline in sales in the 48 weeks to 4 January 2025 to 775m compared with 835m recorded over the 53 weeks of its previous year. Continue reading...

Survey of bosses shows energy prices also a concern, as Bank policymakers warn inflation may take longer to dropBusiness confidence fell to its lowest level on record in September, driven by concerns over soaring costs, according to a survey of bosses.Topping the unease were labour costs, with energy prices also weighing on the outlook. Continue reading...

Insolvency firm running Lindsey oil refinery announces job losses after collapse of parent company Prax GroupAbout 125 jobs are to go at the Lindsey oil refinery in north Lincolnshire, following the collapse of its parent company, the energy conglomerate Prax Group.However, there are at least two bids to buy and operate the site as a going concern with a full workforce, according to the Unite union.We can confirm that 125 Prax Lindsey Oil Refinery employees have been informed that their positions will be made redundant at the end of October. A further 255 employees will remain at the site.This decision was not taken lightly and follows a thorough review of all aspects of the business, following its insolvency.The government has been tin eared to the plight of workers at the second oil refinery facing closure in less than a year. This makes a mockery of government promises to protect workers and its plan for net zero.The government had promised to ensure that job focused bids would be the priority at Lindsey, yet prior to bids even being considered, they are already issuing redundancy notices. Continue reading...

Looming funding cuts to the US food assistance program come as food prices continue to rise under Trump's administrationAmericans are bracing for the impact of the largest cuts to the government's food assistance program for low-income people in US history that have begun to take effect as a result of Donald Trump's One Big Beautiful Bill Act.Effective 1 October, the beginning of fiscal year 2026, funding for Snap-Ed, part of the Supplemental Nutrition Assistance Program (Snap) that provided funding for food banks across the US, is being eliminated. The cuts are part of the sweeping spending bill Trump signed in July. Continue reading...

Core disinflation process will continue as wage growth slows, BoE deputy governor explains

Conference speech sets out likely Labour economic argument at next general election and pitch to party

While Javier Milei's shock therapy to tame inflation has won support from Washington and the IMF, ordinary Argentinians seem less impressedWe're backing him 100%. We think he's done a fantastic job. Like us, he inherited a mess." Donald Trump gave his enthusiastic endorsement to Javier Milei's radical economic experiment when the pair met in New York last week.The US has declared itself ready to offer more than rhetorical support to the chainsaw-wielding Argentinian president in the coming days, as Buenos Aires stands on the brink of a fresh financial crisis. Continue reading...