Analysis: Figure is being generated by factors outside Britain, and households and firms can do without burden of higher interest rates

The government must face the reality that the economic model of an oversized City is fundamentally brokenWhile millions of households struggle with soaring costs and the government rejects any demands for pay rises, the bankers’ bonuses are back, alongside plans to unleash City bosses’ pay as part of a post-Brexit deregulation agenda, much like the one that paved the way to the 2008 financial crash. Under the guise of “international competitiveness”, the City and the government are seeking to double down on a finance-led economy that serves global financial markets rather than supporting communities and the green transition.In June, the then Treasury minister John Glen outlined his vision for an “advanced financial services sector that is globally competitive”, starting with plans to introduce a new competitiveness objective for regulators. The new chancellor, Nadhim Zahawi, is expected to showcase this vision for financial regulation in his speech to bankers at a lavish dinner at Mansion House tonight, before introducing legislation to parliament tomorrow. Despite the Tory leadership turbulence, it seems that whichever combination of prime minister and chancellor takes over, they will firmly support the City. The reason the finance industry has spent a decade lobbying for this is so it can argue that all the activities it does in the name of profit are to increase international competitiveness – think mortgage mis-selling, money laundering and excessive risk-taking. We only have to turn the clock back to 2008 to see what chasing the “competitiveness” of the finance sector does to our economy.Fran Boait is executive director of campaign group Positive Money Continue reading...

Jobs data from the Office for National Statistics shows real terms pay, which accounts for inflation, fell 2.8% between March and MayEconomics editor Phillip Inman has the full story on today’s labour data:British workers’ living standards dropped in May at a record rate after pay rises failed to keep pace with inflation. Continue reading...

Money Saving Expert founder calls for warm public spaces in winter as cost of living becomes ‘unaffordable’ for someThe consumer champion Martin Lewis has warned the next prime minister that they stand to inherit a country on the brink of a “national financial cataclysm” as soaring energy bills threaten to tip households into crisis this winter.The founder of the Money Saving Expert website has become increasingly vocal in recent months on behalf of financially stretched households, amid surging inflation and a cost of living crisis. Continue reading...

Number of people in employment rises but cost of living crisis worsens as pay fails to keep pace with prices• Analysis: UK living standards squeeze will intensify as real pay plungesBritish workers’ living standards dropped in May at a record rate after pay rises failed to keep pace with inflation.Earnings growth increased across the private and public sector by 4.3% in the three months to May excluding bonuses, the Office for National Statistics said, but that left pay down by 2.8% year on year – a record fall. Continue reading...

Analysis: Rising inflation likely to lead to more strikes and falling spending unless government actsForget talk of a return to the inflationary spirals of the 1970s. The real story of Britain’s labour market is of an intensifying squeeze on living standards as the gap between pay and the cost of living widens.Real regular pay – wages adjusted for prices once bonus payments have been stripped out – were 2.8% lower in the three months to May than in the same period of 2021. Not only was that the sixth monthly decline in a row, it was the biggest drop since modern records began in 2001. Continue reading...

Don’t take my word for it that the Conservatives are the party of low growth? Just ask Liz Truss and Tom TugendhatAfter years of division, the unexpected sudden arrival of unity should be cause for celebration. It has long been accepted by the government’s opponents that 12 years of Tory rule have been a disastrous combination of stagnation and decline, so it is to be welcomed that pretenders to the Conservative crown have now embraced these facts.That Liz Truss has savaged the economic policies of the government she has served in since 2019 is notable enough, damning Rishi Sunak for plunging the country into a coming recession. But Truss’s critique is far more sweeping than that, damning “business-as-usual economic management, which has delivered low growth for decades”. Whether Truss is aware of this or not – she did, after all, get lost leaving the room during her campaign launch – this is a timeframe that includes the last three Conservative prime ministers. And she is on point: the average economic growth of the 2010s was only marginally better than the 2000s, itself the worst decade for growth since the war.Owen Jones is a Guardian columnist

My father, David Evans, who has died aged 81, was a pioneering international development economist and family man. He dedicated his career to improving the world, one economic policy at a time.Born in Perth, Western Australia – the third of four sons of Flower (nee Southwood) and Bill Evans – David grew up near the banks of the Swan River, where he developed a lifelong love of boats, water and adventure, enjoying youthful success in competitive rowing and sailing. Continue reading...

Brent crude prices pushed past $100 per barrel after US president Joe Biden failed to secure output hike agreements with the world’s top oil exporterGrant Thornton has been fined £1.3m for “serious” failures in two audits of Sports Direct accounts.The fine applied by the accounting watchdog, the Financial Reporting Council (FRC), relates to two audits in 2016 and 2018.The audit failings in this case were serious and relate to fundamental auditing standards.It is particularly important that auditors follow up with due rigour where they have identified potential related party transactions as a significant audit risk.

Monetary policy committee member says Bank must act to prevent high inflation becoming embeddedInterest rates could rise above 2% in the coming year as the Bank of England acts to prevent high inflation becoming embedded in the economy, one of its policy setters has said.Michael Saunders, who leaves Threadneedle Street’s monetary policy committee (MPC) next month, said he supported tighter policy because the risks of doing “too little, too late” outweighed the risks of doing “too much, too soon”. Continue reading...

Tom Tugendhat most likely to be eliminated after bruising ITV debate marked by Sunak and Truss clashesConservative MPs will cull the five-strong field hoping to succeed Boris Johnson by one more on Monday, as the International Monetary Fund cautioned the candidates over their race to announce sweeping tax cuts.Following an often bruising debate on ITV on Sunday night, a third round of voting by MPs will take place on Monday afternoon, with the result announced at 8pm by Sir Graham Brady, the chair of the 1922 Committee of backbench Tories. Continue reading...

This year has been a disaster for many investors in cryptocurrencies. Alex Hern, Guardian UK technology editor, draws the parallels of the spreading panic in the new digital economy with the 2008 financial crisisThis episode was originally published on the Guardian’s global news podcast, Today in Focus.When the global financial system went into meltdown in 2008, banks collapsed and governments around the world were forced to step in to protect the financial system. It cost billions of dollars and also proved a pivotal moment: it profoundly shook the confidence that many had in their governments. Continue reading...

Whoever is the next prime minister will likely resurrect a form of capitalism that almost broke the economy in 2008It is no coincidence that the modern-day Conservative party was born just when Britain was its most equal, in the late 70s. Thatcherism was a counter-revolution in economic thinking. Its aim was to roll back what had until then been a successful model of state intervention in favour of business interests. During the 1970s, energy price shocks produced inflation. Yet this was attributed by rightwing thinkers to slack government fiscal and monetary policy. When policy was tightened, the lengthening dole queues that resulted were blamed on the power that trade unions had gained after decades of full employment.Thatcherism pinned the sense of the country being adrift on egalitarianism. Its supporters argued that economic progress needed more, not less, inequality. Tories first identified their enemies and then opportunistically scapegoated them for the country’s plight. That ploy worked when they were insurgents, but today’s Conservative party has been in power for 12 years. It is struggling to repeat the trick. Voters do not recognise trade union leaders as “barons” because they do not think of their status as being more privileged than that of their members or the general public. Continue reading...

The 1920s also began dismally. But for a fourth industrial revolution to happen, much more has to be doneOptimism abounded as 2019 drew to a close. If the 2010s had been a lost decade of weak growth and stagnating living standards then the years to come were going to be much better.The talk was of a new Roaring Twenties, a repeat of the decade that followed the first world war. There were even Great Gatsby-themed fancy dress parties to celebrate the good times to come. Continue reading...

Some US firms have announced hiring slowdowns and layoffs in recent weeks amid fears of recessionAs top tech companies prepare to release their quarterly earnings reports starting next week, investors are bracing for bad news.Several US tech companies have announced hiring slowdowns and layoffs in recent weeks, and the difficulties are expected to continue. “It’s not a great time for tech in general,” said Paul Verna, an analyst at Insider Intelligence, a market analysis firm. “There is no question that companies are going to be spending less, cutting back budgets, and maybe implementing hiring freezes. None of that is good news for the next quarter.” Continue reading...

As the Fed raises interest rates, dollar-denominated loans become an unsustainable burden to states around the globeLater in July US interest rates are expected to jump for a second time this year, and that’s going to wreck any chance of a global recovery.The Federal Reserve could push its base rate up by as much as a full percentage point, ending 15 years of ultra-cheap money, intended to promote growth. Continue reading...

The Bank of England’s former chief economist has a clear idea of what caused the current inflation mess, but fears the UK lacks any clear plan for solving itAndy Haldane has a simple but stark message for those seeking to replace Boris Johnson as prime minister: Britain has serious economic problems and they won’t be solved by massive tax cuts.Nor, according to the man who until last year was chief economist at the Bank of England, does the solution to Britain’s cost of living crisis lie with the decisions Threadneedle Street makes about interest rates. Continue reading...

Rampant inflation, war in Ukraine, fuel poverty, Brexit… we ask 10 experts to explain – for absolute beginners – what the economic crisis means for Britain and how we should respondVicky Pryce

Pandemic and economic uncertainty caused by Brexit have added to pressures on businesses, insolvency expert saysThings have turned sour in the swanky tonic market.Fevertree, the premium carbonated mixer maker, has cut its profit forecasts and warned that logistic problems and rising costs have “significantly worsened in recent months”, including shortages of workers and glass bottles. Continue reading...

Fall comes amid concerns that soaring inflation will curb spending by large manufacturersCopper has suffered its worst weekly plunge in price since the early months of the coronavirus pandemic, in a stark indicator of the worsening state of the global economy.The metal dropped below $7,000 (£5,913) a tonne for the first time since November 2020, as fears over a worldwide recession grew. Continue reading...

Shutdown of cities takes its toll, while property market remains in crisis and global outlook darkensChina’s economic growth has slowed sharply in the second quarter of the year, official data showed on Friday, highlighting the colossal toll from widespread Covid lockdowns and casting doubt over whether its pre-ordained growth target can be met.Output contracted by 2.6% between April and June compared with the previous quarter, the statistics bureau said, prompting many economists to revise their predictions for the world’s second biggest economy. Continue reading...

Shortage of workers in US forces firm to ship more drinks from UK amid rising freight costs and port holdupsThe soft drinks company Fever-Tree has warned that the soaring cost of glass for its bottles amid shortages, plus higher transport fees, mean its profits will be almost a third lower than hoped.The London-based tonic and mixer maker said it was experiencing an “exceptionally challenging environment” with glass prices rising by more than 10%. Continue reading...

It’s been almost 50 years since Australia had an unemployment rate lower than this. How did we get here and what about wages?

Largest US bank saw net income fall 28% from April to June and is concerned about economy and geopolitical tensionsJP Morgan Chase, the largest US bank, saw its net income fall 28% over the months of April to June as it boosted reserves to cover possible customer loan defaults amid concern over the economy and geopolitical tensions.The investment bank’s profits for the second quarter came in at $8.65bn (£7.3bn), or $2.76 per share, far less than $11.95bn, or $3.78 per share, over the same period a year ago. Shares in the bank dropped 4.3% on Thursday, hitting a fresh 52-week low. Continue reading...

Anxiety over global slowdown knocks sterling to a two-year low, as oil falls to its levels when the Ukraine war beganThe owner of the Upper Crust sandwich chain and Ritazza coffee shops doesn’t see any early respite from inflation.SSP reported this morning that:In common with the entire hospitality sector, we continue to face widespread and increasing inflationary pressures impacting our supply chain, labour and energy costs, and these are anticipated to persist well into next year.While there are clearly macro-economic uncertainties ahead, the housing market remains robust, our forward order book is strong and we have the resilience and flexibility to react to changes in the operating environment. Continue reading...

Body revises economic forecast and says outlook for EU and eurozone heavily dependent on course of warEurope’s economy faces the twin blows of slower growth and higher inflation as it struggles to deal with the fallout from Russia’s invasion of Ukraine, the European Commission has warned.In its summer forecast, the governing body in Brussels said the “protracted war” was sending shockwaves through the eurozone and the wider EU, leading to a marked slowdown in activity next year. Continue reading...

Ben van Beurden says Ukraine war fallout means big rise in bills and possible need to ration suppliesEuropean consumers could face energy rationing this winter as costs continue to soar amid the risk of Russia cutting off gas supplies, Shell’s chief executive has warned.“It will be a really tough winter in Europe,” Ben van Beurden told the Aurora spring conference in Oxford on Thursday. “We will all face very significant escalation in energy prices. In the worst case, Europe will need to ration its energy consumption.” Continue reading...

Cost-of-living crisis ‘only getting worse’ says IMF chief Kristalina Georgieva, predicting a tough 2022, and ‘even tougher 2023’The outlook for the global economy has “darkened significantly” in recent months, the head of the IMF has warned, and the world faces an increasing risk of recession in the next 12 months.The commodity price shock from the war in Ukraine had exacerbated the cost-of-living crisis for hundreds of millions of people, Kristalina Georgieva said on Wednesday, and it was “only getting worse”. Continue reading...

Inflation gap highlights need for Boris Johnson’s successor to stick to levelling up agenda – thinktankPoor home insulation and greater car dependency means inflation is up to 30% higher in northern English cities than it is in London, according to a new report.The Centre for Cities thinktank said a study of cities in England and Wales showed the north-south cost of living divide was intensifying regional inequality. Continue reading...

A fall in oil prices is small consolation – even ignoring fuel and food, US inflation is running at 6%Chapter one in the inflation story was central banks’ failure to recognise the threat as they spent most of 2021 warbling about supply-chain shocks and “transitory” factors. Chapter two was the belated realisation that action was needed, followed by several yanks on the interest rate lever. Chapter three – scheduled to arrive about now – was supposed to be firm signs that the inflationary peak is in sight.We’re not there yet. The shocker from the US on Wednesday was an inflation reading of 9.1% in June, a couple of notches higher than markets and economists had forecast. The US Federal Reserve’s promise-cum-threat to hike rates by 0.75% at the end of this month, after a similar move last month, now looks nailed on to be delivered in full. Cue another discomforting rise in the dollar, causing the euro to dip below parity for the first time since 2002. Continue reading...

Soaring prices a top concern for many Americans, and likely influencing many voters in a midterm election yearInflation in the US is at a 40-year high – an astounding 9.1% year-over-year, according to a government report released Wednesday.Prices have climbed every month, while consumer confidence has hit record lows. Inflation is now a top concern for many Americans, and is likely influencing many voters in a midterm election year. Continue reading...

News of 9.1% year-on-year increase for June virtually guarantees Fed will hike interest by three-quarters of a point this monthUS inflation accelerated in June by more than forecast, led by elevated prices for gasoline, food and housing costs and resulting in the largest annual increase in inflation in more than 40 years.The news virtually guarantees that the Federal Reserve will hike interest rates by another three-quarters of a point this month. Continue reading...

Analysis: May is only one month and there is likely to be a sharp contraction in June

Stocks fall after US inflation jumps to 9.1%, as UK economy grows faster than expected by 0.5% in MayMonthly GDP is now estimated to be 1.7% above its pre-pandemic levels (February 2020).Production grew by 0.9% in May, driven by 1.4% growth in manufacturing and a 0.3% rise in electricity, gas, steam and air conditioning supply. Continue reading...

Single currency tanked to low of $0.9998 as Ukraine war and high gas prices fuel concern of recessionThe euro dipped below parity against the dollar on Wednesday for the first time in almost two decades, as growing concern about rising recession risks in the eurozone continued to batter the currency.The European single currency started this year on a strong note, given a post-pandemic economic recovery. But Russia’s invasion of Ukraine, surging European gas prices and fears that Moscow could cut off supplies further has raised the spectre of recession and hurt the euro. Continue reading...

GDP rose by 0.5% in May after revised 0.2% decline for April, says ONS

Shipping delays and bottlenecks, along with rising popularity of hard liquor, cause shortage, accompanied by dip in chicken nugget stocksAs supply chain pressures and shipping delays are felt around the world, New Zealand is being hit by a nationwide dearth of bourbon, with shortages also hitting the craft beer and chicken nugget markets.“It’s a pain all right,” said Neil, a worker at the Bottle-O store in Mt Eden. “There’s a shortage of bourbon at the moment. We can’t get anything from out of America, apparently.” Continue reading...

Thinktank blames inequality and poor productivity as CBI calls for investment policies to fuel growthThe UK’s failure to get serious about inequality and weak growth over the past 15 years has left the average British household £8,800 poorer than its equivalent in five comparable countries, research has found.A “toxic combination” of poor productivity and a failure to narrow the divide between rich and poor had resulted in a widening prosperity gap with France, Germany, Australia, Canada and the Netherlands, the report from the Resolution Foundation said. Continue reading...

Analysis: Investors often turn to US currency in times of uncertainty and there are plenty of reasons for them to be jittery

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