Euro slides to a 20-year low of $1.0001 on anxiety that Europe will fall into recession, as Heathrow introduces limit on summer holiday passengersThe euro is teetering ever closer to parity with the dollar.It’s now trading at just $1.0005, on concerns that the shutdown of the Nord Stream 1 gas pipeline for maintenance could become permanent.“While we believe that a cessation of Russian gas supply to Europe is a real possibility, one that would cause a Eurozone-wide recession with three consecutive quarters of economic contraction, there are also good reasons to assume that gas supplies will resume after the maintenance.” Continue reading...

When a country's economy is discussed in the news, you often hear a number called the GDP or 'gross domestic product' thrown around. But what does it actually mean, and is it gross? In this episode of News glossary, Matilda Boseley explains the meaning of GDP and how it reflects economies in Australia and abroad► Subscribe to Guardian Australia on YouTube

Boost in demand in June on back of jubilee celebrations fails to prevent third successive fallBritain’s retailers are suffering the sharpest drop in spending since the depths of the coronavirus pandemic as hard-pressed consumers tighten their belts as a result of soaring inflation.The monthly health check from the British Retail Consortium (BRC) reported a third successive drop in activity as the cost of living crisis continued to bite. Continue reading...

Latest updates: nominations open and close on Tuesday, with first round of voting on Wednesday

Shares hit as China try to quell resurgent Covid-19 outbreaks, while shares in Twitter drop after Musk tries to cancel takeover, and Uber is hit by leakElon Musk has responded to Twitter’s pledge to sue him, with a series of photos of himself having a good old chortle:But will Twitter actually have the last laugh, having turned to New York-based law firm Wachtell, Lipton, Rosen & Katz to force Musk to complete the deal?“They will likely be asking for a declaratory judgment that they are not in violation of the contract. Also, they will ask for an order from the court that Musk specifically perform his obligations under the agreement,” said Brian Quinn, an associate professor at Boston College law school.Under the terms of the agreement the company can ask a judge for “specific performance”, which would compel Musk to buy the company for the $54.20 a share he agreed to in April. Alternatively, the company can also seek a $1bn break fee from Musk for walking away from the deal in contravention of the agreement. Continue reading...

Head of train drivers’ union takes pride in calling very few strikes – but enough is enough, he saysMick Whelan, general secretary of the train drivers’ union Aslef, prides himself in rarely calling a strike since taking the helm in 2011. Now though, three years since most of his members last had a pay rise, industrial action looks increasingly likely.Ballots close on Monday at eight major train operators where drivers are voting to back strikes, and three more are due in a fortnight – potentially giving Whelan the power to bring most of the railway around England to a halt.I don’t understand how the government buys trains that end up in the hands of rolling stock companies at low cost and then rented back to the industry at high rates. Continue reading...

A weak pound often appears as a harbinger of economic doom for the UK – now it looks poised to weaken furtherBoris Johnson’s chaotic government, and its equally chaotic collapse, are not the only source of panic in the UK nowadays. There is growing anxiety about the exchange rate of the British pound as well.Since peaking in the spring of last year, the pound has depreciated by about 10% against the dollar. “Britain’s currency is getting slaughtered on international markets,” we are told. Of the five currencies underlying the International Monetary Fund’s reserve asset, special drawing rights, only the Japanese yen has done worse than the pound. Continue reading...

Imaginative public spending is unlikely to feature in the Conservative leadership race, where tax cuts will be a key dividing lineThe UK isn’t going broke. More public spending – such as cheaper public transport and writing off student loans – can help counter price shocks. However, imaginative government action is unlikely to feature in a Tory leadership race dominated by austerity and trickle-down messages. Rishi Sunak is the torch-bearer for fiscal conservatism, with a message not to believe in his rivals’ “fairy tales”. They in turn cast the former chancellor as the Scrooge of British politics, insisting on lean budgets with tax increases to balance them. Britain seems caught between obsessive frugalists and reckless opportunists.The Office for Budget Responsibility made headlines with claims last week that Britain faces an “unsustainable” debt burden. Yet this forecast is based on projections 50 years from now. It seems a little unrealistic to think future governments will not be able to head off such a scenario and restart economic growth. The OBR is in thrall to orthodox economics, which perhaps explains why it persists in an analysis that can cause needless alarm. The watchdog sets itself an arbitrary target of keeping national debt to 75% of GDP – the level it reached in March 2020 – by 2072. To achieve this, the OBR suggests spending cuts or tax rises worth £37bn every decade. Continue reading...

Candidates’ focus on reducing tax would throw petrol on the inflationary fire and turbocharge inequalityBy the time the Conservative party gets around to electing a new leader, Britain will either be in recession or perilously close. The cost of living crisis will be entering a new, more painful phase with a fresh surge in energy bills. A tough autumn will be approaching, with inflation – already at a 40-year high – heading for 11%.These are far from ideal conditions for an incoming prime minister. Yet so far, none of the Tory candidates is offering real solutions to the cost of living challenge. Instead, the leadership contest is taking place in some parallel universe where the biggest tax cutter is king. Continue reading...

Policymakers can only wait and see how the next prime minister’s tax and spend policies will affect the economyOfficials at the Bank of England will be watching the progress of the race to replace Boris Johnson as Tory leader and prime minister with rapt attention.In normal times, central banks are supposed to pay little regard to the political gyrations that keep politicians occupied in Westminster’s tea rooms and bars. These are not normal times. Inflation has hit 9.1% and Bank staff are under pressure to push up interest rates to squeeze the economy and with it the inflationary pressures driving prices higher. Continue reading...

Analysis: If Johnsonomics stands for anything, it is a lack of plan or vision to address Britain’s economic woes

Cornwall Insight predicts UK energy cap will rise to £3,363 a year in January, as US economy shakes off recession worries by adding more jobs last monthThe CMA’s initial report into the fuel market, just released, highlights how prices have soared:The price of a litre of both petrol and diesel has gone up by over 60p in the last year. Households now pay on average more than £500 per year extra to run a medium-sized petrol car, and for those living in rural areas, the impact will generally be greater.More than half of motorists have changed their behaviour in response to this increased cost.Even with his resignation, he remains emboldened to continue as a caretaker PM until the autumn while a new leader is selected, eager to push through his economic agenda and make one final stand.Needless to say, at a time when the UK economy is already on its knees, these developments may continue to add to the negative sentiment and weigh on the outlook for UK financial assets. Continue reading...

US unemployment rate held steady at 3.6%, labor department said, as jobs report indicated resilienceThe US economy added 372,000 jobs in June, an indicator of resilience despite signs of slowing economic growth.The jobs reports is seen as a key indicator on whether high inflation – and central bank efforts to tame it with interest rates rises – is beginning to bite down on the wider American economy. Continue reading...

Japanese politician who as prime minister had sought to stimulate the economy through the radical monetary policy of AbenomicsFew other Japanese leaders in living memory have left as deep an imprint on their country as Shinzo Abe. One of the most transformative politicians of the postwar era, he was shot dead at the age of 67 while giving a campaign speech in the western city of Nara ahead of elections to the upper house.When he stepped down as prime minister in 2007 after only a year, most people assumed he would fade into an undistinguished career on the backbenches. Yet just over a decade later, he had become Japan’s longest-serving premier, with a host of major political reforms to his name and even his own globally recognised brand of economic stimulus, Abenomics. Continue reading...

From inflation to tax, labour shortages to R&D, ministers will need to confront these key issues and fastBritain has emerged from the pandemic with most economic indicators flashing red. The prospects for the UK economy have weakened this year and next in response to the Russian invasion of Ukraine, a messy divorce process from the EU that remains unresolved and global supply chain blockages hitting many business sectors.Following Boris Johnson’s departure, a new government will need to release itself from former chancellor Rishi Sunak’s spending constraints to ease the inflationary pressures on households while preventing a possible slide into recession with extra support for businesses. Continue reading...

Markets look at the wider picture and post-Brexit, post-pandemic economic policy is still a vacuumThe relief rally in sterling on the resignation of an incompetent prime minister wasn’t much to shout about. The pound rose very modestly in the morning and gave back some of the gain in the afternoon. At $1.20-ish against the dollar, the currency still sits at roughly its lowest level since the 2016 referendum, barring a few wild trading days at the start of the pandemic. In an ugly contest with the euro, which is spooked by the threat of rising bond yields among its weaker members, the two currencies are at level pegging.Markets look at the wider picture: post-Brexit and post-pandemic economic policymaking in the UK is still a vacuum. The economy almost certainly contracted in the second quarter of this year, even before consumers are hit with the next clunking hike in their energy bills in October, an event that will tip inflation over 10% in all likelihood and emphasise how the UK’s price squeeze is a notch or two more severe than that of other major economies. Continue reading...

Office for Budget Responsibility warns the world is becoming a riskier place, as UK faces cost of aging population and loss of fuel dutyElectricals goods retailer Curry’s has warned that the cost of living squeeze is likely to hit sales, as it passes on rising costs onto customers.Curry’s reported this morning that the cost of goods is rising:On most products we pay in local currency when the goods arrive in our markets, the price increases we are seeing at the moment will be felt by all of our competitors as well.These costs are passed on to consumers, but we seek to proactively mitigate through providing similar, different specification products at alternative price points.Currys is defying the gloomy headlines, jumping almost double digits despite lowering its profit forecast for this year and next year amid uncertainty around the outlook for UK consumer spending.Investors were encouraged by Currys’ full-year 2022 top and bottom line beats. Adjusted EBIT came in at £274 million versus expectations for £245 million while profit before tax hit £186 million, also ahead of consensus. Full-year group sales rose 24%, higher than expected thanks to the return to bricks and mortar shopping post pandemic. Continue reading...

Veteran retailer among business leaders and Tory donors calling for a new prime minister to boost UK’s ailing economyStuart Rose, the veteran retailer and Conservative peer, has urged Boris Johnson to leave No 10 now, describing him as a “lame duck prime minister”.His comments came as a series of business leaders and Tory donors, from the hotelier and Brexit backer Rocco Forte to the telecoms entrepreneur David Ross, gave their reaction to Johnson’s resignation and called for his successor to boost the UK long-term economic prospects amid fears of an impending recession. Continue reading...

Taxes ‘must be raised to offset mounting cost of ageing population and falling fuel income’Britain’s public finances are on an “unsustainable” long-term path with a debt burden that could more than treble without further tax rises to cover the mounting cost of an ageing population and falling fuel duties, the Treasury’s independent forecaster has warned.The Office for Budget Responsibility said that if economic shocks continue to hit the public finances, debt is on course to reach almost 320% of annual national income (GDP) in 50 years’ time – up from 96% now – unless successive governments raise revenues to offset rising costs. Continue reading...

The UK suffers from poor productivity and lacks investment, something Rishi Sunak’s planned tax rise aimed to addressNadhim Zahawi’s musings on business taxes may become irrelevant at any moment, but this week’s chancellor of the exchequer arrived with an idea to kick around: delay, reform or simply cancel his predecessor’s hike in corporation tax from 19% to 25%, due to take effect from next April.That, at least, seemed to be the meaning of Zahawi’s many references to the tax in his day-one interviews. “I know that boards around the world, when they make investment decisions, they’re long term, and the one tax they can compare globally is corporation tax,” he told Sky News. Continue reading...

Kyiv asks largest independent oil trader to state when it will ship last barrel and how much it will ship until that date

Analysis: Rishi Sunak’s successor treading tightrope between spending to keep PM in power and dealing with economic crisis

Planned hike from 19p to 25p maybe looked at again amid drive to ‘keep UK business competitive’Nadhim Zahawi, the new chancellor of the exchequer, has called for a review of the UK’s corporate tax policy in a clear hint that a rise from 19p to 25p due next year could be reduced or scrapped.Zahawi, who took up the post on Tuesday evening after Rishi Sunak’s resignation, said he wanted to examine the planned increases in corporation tax to make sure British companies remain competitive. Continue reading...

Chief economist Huw Pill wants to make strategy plain to the public in hint of more interest rate risesThe Bank of England will “deliver inflation back to its 2% target”, its chief economist has pledged, despite the challenges it faces from rising food and energy costs and a fall in the value of the pound that has made both more expensive.Huw Pill said he wanted to make plain to the public that the central bank’s single purpose at the moment was to bring down the rate of price growth, in a clear hint that more interest rate rises are on the way. Continue reading...

Inside the cryptocurrency crash. Plus: pictures that changed the worldGet the Guardian Weekly delivered to your home addressThe world of cryptofinance can be difficult to penetrate – and not without good reason. In the decade since bitcoin first became a tradable asset, complex and largely unregulated digital currency markets have boomed – fuelled latterly by a surge of activity from amateur home traders during the pandemic. But now, against a backdrop of more conventional global economic strife including the Ukraine war, rising inflation and higher borrowing costs, the digital finance sector is crashing.Could a bursting crypto bubble trigger serious problems elsewhere in the financial markets or the world economy? Alex Hern and Dan Milmo go behind the crypto crash, and ask how concerned we should all be. Continue reading...

The children’s commissioner for England urged MPs to take urgent steps to tackle child povertyThe children’s commissioner for England has called on the government to develop urgent plans to tackle child poverty, amid the cost of living crisis that is hitting the most vulnerable in society hardest.Rachel de Souza said children were increasingly worried about the soaring price of basic essentials and the impact on their lives, telling MPs on the Commons education committee that urgent steps were required to tackle poverty ahead of a difficult autumn for families. Continue reading...

Financial Stability Report warns that UK and global economic outlook has ‘deteriorated materially’, as pressure builds on households and businessesThe pressure on households will “only intensify” through the rest of this year, the boss of Sainsbury’s has warned as he said the supermarket would invest £500m in attempting to keep prices low.The pledge came as the UK’s second biggest supermarket, which also owns the Argos and Habitat chains, revealed that sales at established stores fell 4% in the 16 weeks to 25 June compared with the same period a year before and excluding fuel.Set against ever tightening competitive screws, Sainsbury had its work cut out on any number of fronts going into the statement. And the ferocity of competition in the sector is plain to see.Against strong comparatives from a partial lockdown last year, each of the main categories have fallen, with Grocery sales down 2.4%, Argos 10.5%, General Merchandise 14.6% and Clothing 10.1%. The picture is marginally better against pre-pandemic sales, although still mixed, with Grocery up 8.7% and Clothing up 3.9%, but Argos down 4.5% and General Merchandise down 13.8%. Continue reading...

UK households likely to face more inflationary pressures arising from Ukraine war, says central bankThe outlook for the UK and global economy has “deteriorated materially” due to inflationary pressures largely stoked by Russia’s invasion of Ukraine, putting extra strain on British household and business finances, the Bank of England (BoE) has warned.The worsening economic outlook has caused volatility in global markets in recent months with more turbulence likely, the Bank said in its quarterly health check on the UK’s financial system. Continue reading...

West’s response to effects of Covid and Ukraine war condemned as shortsighted ‘collective failure’ to invest in future human capitalThe international community would be “playing with fire” if it failed to help Africa recover from Covid and the impact of the Ukraine war, the International Monetary Fund’s director for the continent has said.Failure to invest and support the continent was shortsighted and detrimental to the global economy, as half of the new entrants into the global workforce over the next decade would come from sub-Saharan Africa, Abebe Aemro Selassie, director of the IMF’s Africa department, told the Guardian. Continue reading...

Women in Leicestershire on how soaring bills have hit their finances – and why one-off payments aren’t enough

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