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...

UK business confidence falls to levels that signal a recession, as new orders growth weakens

Spirit of consensus has gone as ministers seek a scapegoat for the stagflation affecting the economyA little more than two years ago Rishi Sunak stood outside 11 Downing Street flanked by the head of the TUC, Frances O’Grady, and Carolyn Fairbairn, the boss of Britain’s leading employers’ group, the CBI. The photo op was meant to demonstrate a new spirit of tripartite solidarity that would help see Britain through the pandemic.The TUC had played a big part in plans for the furlough wage subsidy scheme and the chancellor was eager to show his gratitude. Announcing the government’s emergency economic package to parliament, Sunak thanked the TUC for its “constructive conversations” with the Treasury. Continue reading...

Business confidence slumps to level that typically signals imminent recession, warns economistBritain’s economy is starting to “run on empty” as post-pandemic order books dry up and the highest inflation in 40 years affects confidence, the latest snapshot of the private sector has shown.Flash estimates of the economy’s performance in June showed business optimism at its lowest since the early months of the Covid pandemic in the spring of 2020 and the sharpest drop in new order volumes for a year. Continue reading...

Interest on debt payment leaps 70% on a year ago to £7.6bn, a monthly recordGovernment borrowing was higher than expected in May at £14bn as soaring inflation sent interest payments on the UK’s debt to a monthly record.The Office for National Statistics (ONS) said debt interest payments leapt 70% on a year ago to £7.6bn, the third highest debt interest payment made by central government in any single month and the highest payment in May on record. Continue reading...

Supplies are running ‘two to three weeks’ behind, a situation the store says has been exacerbated by post-Brexit staff shortagesHarrods has delayed its summer discount sale by two to three weeks because of global supply chain hold-ups, it has announced.“Our supply chain is running two to three weeks behind where it should be,” Michael Ward, the managing director of the upmarket Knightsbridge department store, told Bloomberg TV at the Qatar Economic Forum. “A good example of that is, we’ve just delayed the summer sale for two weeks because I need another 10% of new-season stock to allow me to function into the new year.” Continue reading...

Jim O’Neill scathing about decision to help pensioners while forcing real-terms pay cuts on public sector workersGovernment plans to raise the state pension by 10% while forcing real-terms pay cuts on public sector workers have been attacked as “ludicrous” by a former Conservative Treasury minister.Jim O’Neill, the former Goldman Sachs chief economist who served as a minister under George Osborne, said it was “crazy” to protect pensioner incomes while younger people’s wages were being eroded by the highest inflation rates for 40 years. Continue reading...

Senator Elizabeth Warren criticizes the Fed’s rate moves, expressing fear that rate hikes will ‘drive this economy off a cliff’The Federal Reserve will keep raising rates until it sees “compelling evidence” that inflation is coming down, the Fed chair, Jerome Powell, told Congress on Wednesday.The US is wrestling with rates of inflation unseen in 40 years and Powell warned that “further surprises could be in store”. Continue reading...

Rising prices and recession mean the last thing the government should do is muddle through and leave everything to the marketInflation is back with a vengeance. The cost of living has not been rising this fast since the Falklands war. Prices are climbing faster than wages. In every respect bar one, this is clearly bad news. The best that Britain can hope for in the months ahead is a period of stagflation: weak growth and rapidly rising prices. If things get really bad, we could be on course for an “incession” – high inflation combined with a recession. Either way, the outlook is grim, especially for those on the lowest incomes, who spend most on energy and food, for which price increases are heftiest.The one consolation is that high inflation acts as a national wake-up call. Or at least it should do. For far too long, the UK has drifted along convinced that all is well because cheap imports from China are keeping inflation low and rock-bottom interest rates are fuelling a house-price boom. It would be nice to think we have finally woken up to reality. But that in itself is an illusion. Just as in the 1970s, the economy’s structural weaknesses have been exposed by a period when prices are hurtling upwards. Continue reading...

The pressures faced by one Yorkshire rice importer illustrate how costs feed through to consumersThe 20kg bags of rice stacked on ceiling-high shelving units look like any other but are the first to arrive in the West Yorkshire depot from Vietnam as the food price shocks fuelling inflation force companies to find cheaper ingredients.Jason Bull, one of the directors of Eurostar Commodities, which imports rice and flour destined for restaurant chains, supermarket suppliers and caterers, says the Brighouse-based company is facing its biggest challenge in nearly 30 years. Continue reading...

Stuart Rose flags ‘massive change’ in consumer behaviour and says No 10’s priority is to get inflation downShoppers at Asda are setting themselves £30 limits at checkouts and petrol pumps, the supermarket’s boss says, as consumers tighten their belts because of the cost of living crisis.Customers are employing several tactics to not overspend, said Stuart Rose, including putting fewer items in their baskets and opting for budget ranges. Continue reading...

Analysis: PPI, the indicator of rises before they reach the consumer, shows higher price rises to come• UK inflation rises to 9.1%, its highest rate in 40 yearsAre we there yet? Each month the same question is asked about the UK’s inflation rate. Is there any sign of the cost of living crisis abating? And each month the answer is in the negative. The current upward trend has further to go.May’s increase in the consumer prices index – the government’s preferred measure of inflation – was modest by recent standards but even so the rise from 9% to 9.1% was a new 40-year-high. Continue reading...

Headline CPI rate will add to cost of living crisis, fuelled by rises in food and transport costs• If UK inflation feels bad now, the grim news is worse is on the wayUK inflation has increased to 9.1%, its highest rate in 40 years amid record prices for petrol and the soaring cost of food.The figures from the Office for National Statistics showed an increase in May from 9% in April, as measured by the consumer price index, in a reading that matched the forecasts of City economists. In a fresh high, the headline inflation rate has hit a level not seen since February 1982, piling pressure on households in the cost of living crisis. Continue reading...

EU withdrawal fuelling higher import costs and costing British workers nearly £500 a year, says Resolution FoundationBritain’s cost of living crisis is being made worse by Brexit dragging down the country’s growth potential and costing workers hundreds of pounds a year in lost pay, new research claims.The Resolution Foundation thinktank and academics from the London School of Economics said the average worker in Britain was now on course to suffer more than £470 in lost pay each year by 2030 after rising living costs are taken into account, compared with a remain vote in 2016. Continue reading...

But sales have fallen to slowest pace since June 2020, near start of pandemic, and demand for homes still outstrip supplyThe average US house price hit an all-time high of over $400,000 in May even as interest rate rises and high prices led to a fourth consecutive month of declining sales.Existing home sales fell 3.4% last month from April to a seasonally adjusted annual rate of 5.41m, the National Association of Realtors said on Tuesday. Sales fell 8.6% from May last year, hitting a two-year low. Continue reading...

Musk’s comments, echoing other CEOs, are accompanied by plan to lay off 10% of Tesla’s salaried staffElon Musk has warned that a US recession is “more likely than not” to come soon as the Tesla chief executive confirmed plans to cut 10% of salaried staff at the electric carmaker over the next three months.The world’s richest man said a recession in the US was inevitable but would most probably come in the short term. Continue reading...

Living costs face squeeze even though pay deals in three months to May are highest since 1992Annual pay growth stalled at 4% in May, leaving most workers with a rise in earnings worth less than half the 9% increase in prices.Figures from XpertHR, a pay and personnel data publisher, said employer pay deals for the three months to May failed to increase on April’s median 4%, undermining concerns that workers would push for inflation-busting rises in earnings that could start a wage-price spiral. Continue reading...

Rolling coverage of the latest economic and financial news

Highest inflation rates since the 1980s and wage stagnation have squeezed household budgetsBritain is facing the highest rates of inflation since the early 1980s, with households suffering the biggest hit to their incomes since modern records began. Energy bills are soaring, as is the cost of petrol. Food inflation is at a 13-year high, running at 8.3%, the market research firm Kantar said on Tuesday. The government has announced billions of pounds in emergency financial support, but has faced heavy criticism over its handling of the cost of living crisis as millions struggle to afford the basics.

Engineering firm says it is the first time it has made payment linked to economic climate not performanceRolls-Royce is to give more than 14,000 staff a £2,000 payment to help them cope with the soaring cost of living, the first time the engineering firm has made such a move.The one-off payment will go to shopfloor staff and junior management, who are mainly based at the company’s two biggest sites in Derby and Bristol. They represent 70% of Rolls-Royce’s UK workforce of about 20,000. Continue reading...