A collapse in credibility under the former Tory PM is being followed by a return to ‘sado-monetarism’ under the new oneOne of the unfortunate consequences of the 44-day Truss/Kwarteng economic experiment is that there is now almost certainly going to be an overreaction. It was fit and just that the free-marketeers were brought down by the markets they believed in. The irony of it! But the danger now, with all this talk about the black hole in the nation’s finances, is that in its efforts to restore “credibility” the Sunak/Hunt economic experiment could well be taking risks with the country’s social fabric, while not necessarily retaining credibility in the markets.To put it bluntly: when the central banks of the Group of Seven are on the warpath, deliberately fomenting recessionary forces to fight inflation, there is a danger of a recurrence of what, in the early 1980s, I termed “sado-monetarism” – as if the sado-Brexiters were not enough. Continue reading...

Tackling inflation and restoring credibility are top of the chancellor’s to-do list in the autumn statement. Business pleas may go unheededLooming recession, soaring inflation, worker shortages and evaporating business confidence provide a fairly sobering backdrop for Jeremy Hunt’s autumn statement this week.As the government goes back to the drawing board after Liz Truss’s botched mini-budget, most of the problems that Britain’s economy faced under her leadership are either still a big worry for company bosses or have been amplified. Continue reading...

Labour says preventing companies stashing profits overseas would raise as much as £7bn a yearRishi Sunak is being urged to act “immediately” to crack down on UK-based firms stashing their profits in overseas tax havens, in a move Labour claims would raise as much as £7bn a year.Sir Keir Starmer’s party wants the prime minister to implement a “multinational top-up tax” in line with reforms agreed by the G20 in 2021. Continue reading...

The republic’s welcoming corporate tax policy has been a success, but it depends heavily on just a few big namesIn 1958, a young Irish civil servant named Kenneth Whitaker surprised his political masters in Dublin with a 250-page document on which he and some of his colleagues in the department of finance had been covertly working for months. Its title, Economic Development, may have been deceptively bland, but its message was blindingly clear. The country was an economic mess and unless radical action was taken its very existence as a viable state was in doubt.As the writer Fintan O’Toole put it in his memoir, 1950s Ireland was basically “a vast cattle ranch with a few cities and a lot of small provincial towns attached”. This ranch had two main exports: live cattle and beef products, most of them destined for the British market, and young people, emigrating in their thousands every year because there were no livelihoods, or any prospect of fulfilling lives, at home. Continue reading...

Next week’s autumn statement will show if Jeremy Hunt has learned anything from George Osborne’s and Kwasi Kwarteng’s failuresA fool repeats his folly, the Old Testament suggests, in the same way that a dog returns to its own vomit. Kwasi Kwarteng seems determined to prove that this is true. On Friday he made two false claims about his short tenure at the Treasury. The first is that his 23 September mini-budget was not a cause of the government’s current financial woes. The second is that Liz Truss forced the pace on economic policy too hard during her brief period as prime minister, while Mr Kwarteng, even more briefly her chancellor, argued for a slower approach.Neither claim stands up. No one pretends that the mini-budget is uniquely responsible for the high levels of UK public debt that are now being invoked as the justification for next week’s looming autumn statement. There are many other large causes, some of them global, like Covid and energy costs, and others closer to home, including Brexit. The mini-budget, though, made things even worse. It triggered a run on the pound, a lurch in gilts, a Bank of England buy-up emergency and a tightening of the mortgage market. It says a lot about Mr Kwarteng and Ms Truss’s doctrinaire wing of the Conservative party that, even now, they remain in denial about something the voters understand more clearly from their own experience than these discredited ministers ever did. Continue reading...

Pioneering ecological economist who foresaw the catastrophic effects of unlimited economic growthIn the 1960s, when economic growth became the single most important objective of government economic policy, the economist Herman Daly, who has died aged 84, saw a different future. He called for a change in thinking to make our economies more consistent with the finite energy and resource limits of the Earth.Sixty years ago it was considered heresy to question economic growth, and Herman faced much opposition, but his ideas have become a foundation for many new approaches, such as doughnut economics and wellbeing economics, by placing the economy within the Earth’s systems and in society. Continue reading...

One backer of ex-PM says ‘that wasn’t what was going on’, as Jeremy Hunt also appears to dispute version of eventsKwasi Kwarteng’s claims that he tried to get Liz Truss to slow down her financial plans have been challenged by her allies.In his first interview since he was sacked as chancellor by Truss, Kwarteng said he had told the then prime minister to be more cautious with their £45bn programme of tax cuts. Continue reading...

Cryptocurrency exchange FTX starts bankruptcy proceedings in US and Sam Bankman-Fried is resigning as chief executive officer

This live blog has now closed, you can find our latest political coverage hereMichael Gove, the levelling up secretary, is holding a press conference in Blackpool with Micheál Martin, the taoiseach (Irish PM), following the conclusion of the British-Irish Council summit.Asked whether the UK government would pause the progression of the Northern Ireland protocol bill, which is currently in the House of Lords (see 12.39pm), Gove said that was not a decision for him. This is from UTV’s Tracey Magee.It is really disgraceful that Kwasi Kwarteng has the cheek to do this interview. He crashed the economy with his mini-budget just a few weeks ago. It’s caused untold damage to people. Anyone coming off a mortgage deal will be blaming the Conservatives, including Kwasi Kwarteng, for those huge increases, up to £500 a month more in interest payments because of the decisions by Conservative chancellors over the last few months, including Kwasi Kwarteng. Continue reading...

Founder Sam Bankman-Fried resigns as CEO and tells of shock ‘to see things unravel the way they did’

GDP fall of 0.2% for three months to September gives bleak picture in run-up to autumn statement

Amid higher costs and worker shortages, British Chambers of Commerce says Brexit is another factor

The decay has set in across social classes, and more deeply than when the country last turned itself around in the 90sDecline is a spectre that has haunted this country for at least a hundred years. Through the retreat from empire, postwar recessions and growth panics, and our inward turn since Brexit, the worry that Britain is falling behind other countries – or deteriorating in absolute terms – has repeatedly gripped journalists, politicians and the public.We are in one of those periods now. Seven out of 10 people in a recent Ipsos Mori poll agreed that the country was in decline. Commentators in other countries look on with a mixture of pity and schadenfreude.Andy Beckett is a Guardian columnist Continue reading...

Pound surges and stock markets rebound as US consumer price index drops from 8.2% to 7.7% in OctoberStock markets rebounded and the pound surged on Thursday after the US reported a lower than expected inflation rate for October, fuelling hopes that the cost of living crisis may have peaked.Shares on the London exchange jumped after US inflation dropped from 8.2% in September to 7.7% in October, with the FTSE 100 rising 1% and the FTSE 250 gaining 3.9%. Continue reading...

Readers respond to an article by Larry Elliott in which he said that Brexit remains an opportunity to transform an underperforming British economyI am glad that Larry Elliott has given us his latest take on Brexit, but his contention that there is an absence of evidence that Brexit has done much harm has holes in it (Brexit isn’t to blame for our current problems; it is still an opportunity, 6 November). Most fundamentally, the pound was trading at $1.49 on the day of the referendum. Two days later, it was $1.36. Now it is $1.15. Prior to the referendum result, £1 equalled €1.31. Now it is €1.15. Imports are more expensive and exports are not helped because manufacturing is such a small proportion of our economy, and uses a lot of imported materials anyway.He claims that Britain attracts more foreign direct investment than any other European country. Perhaps a chunk of this is buying up British assets at bargain basement prices? He does not mention the businesses relocating to mainland Europe to survive, undoubtedly reducing the British economy.

RSA chief executive says century of progress now going into reverse after years of underinvestmentThe worsening health of the British people is holding back economic growth for the first time since the Industrial Revolution after years of underinvestment in services, Andy Haldane has warned.The chief executive of the Royal Society of Arts (RSA) said more than a century of progress on health and wellbeing was going into reverse, with a direct impact on the economy and the cost of living emergency. Continue reading...

Brexit didn’t change the party: austerity was as heartless under Cameron and Osborne as it is under SunakWhat kind of government is this? You can almost see the puzzlement on pundits’ faces as they try to work it out. Is it the technocratic dictatorship of Jeremy Hunt, or the banal nastiness of pound-shop mafioso Gavin Williamson? Is it Rishi Sunak bro-hugging Emmanuel Macron, or Suella Braverman banging up “invaders”? Is this the administration of smooth-cheeked, spreadsheet-speaking sensibles they long for at the Times, or the gleeful barbarians the Daily Mail ordered?It depends on how you look at the shape British politics has taken since 2010. Of the party that has run the country since then, a simple story is usually told. It goes thus: from 2010 to 2016, the Conservatives were a well-spoken and professionally run centrists’ club. True, there was some unpleasantness over spending cuts – but don’t forget gay marriage, the huskies and hoodies and London’s Olympics!Aditya Chakrabortty is a Guardian columnist Continue reading...

Move to lower threshold from £150,000 would be in line with Hunt’s vow that tax rises should hit ‘broadest shoulders’Jeremy Hunt is expected to increase the number of people paying the highest rate of tax by lowering the threshold from £150,000, according to Treasury sources.The move to increase the number of taxpayers paying the 45p rate of tax is a handbrake turn from Liz Truss’s government, which proposed to abolish the rate altogether. Continue reading...

Young people no longer able to rely on hard work to improve their living standards as they age, says IFSWorking for a living has become a harder way to grow rich in modern Britain amid rising wealth inequality over the past decade, according to research published today that warns of a breakdown in social mobility as inheritances grow in importance.The Institute for Fiscal Studies said wealth had grown rapidly compared with earnings from work since the 2008 financial crisis, driven by a surge in house prices and financial assets – such as stocks and shares – at a time of flatlining progress for average wages. Continue reading...

As Cop27 discusses climate finance, report says continent’s GDP growth could fall by two-thirds this century

If climate catastrophe is to be avoided, the governments and institutions of the rich west will have to alter their prioritiesMaking a transition away from fossil fuels and towards low-carbon energy is the only way to keep our planet safe and habitable for future generations. That transition has thankfully begun, but it has a vast distance to go. And the kinds of changes that are needed cost money. Development of new technology has always required investment. This applies to the generation of renewable energy, and to the myriad lifestyle changes that follow from the shift away from coal, oil and gas. Electric cars and other transport are one example. Packaging to replace plastic (which is derived from oil) is another. Resources are also required to protect societies from the harms caused by the global heating that has already happened, and to help them adjust to altered conditions.A new report presented at the Cop27 UN climate summit says that about $2tn (£1.75tn) a year will be needed by 2030 if developing countries are to make the necessary changes. One of the authors, Nicholas Stern, pointed to a crucial role for the World Bank as well as western governments in redirecting finance and reducing the cost of capital for investors (banks typically charge higher interest on investments in poor countries, due to perceived risks). Continue reading...

UK households face £682 rise in annual grocery bill as prices soar, and there’s ‘no peak in sight’

Huw Pill says there is ‘still more to do’ on tackling inflation despite risks of prolonged recessionThe Bank of England is preparing to further raise interest rates over concerns that inflation could become embedded in the British economy, despite the growing risks of a prolonged recession, its chief economist has warned.Huw Pill said there was “still more to do” to tackle soaring inflation after the central bank raised interest rates to 3% last week with the biggest single rise in borrowing costs since 1989. Continue reading...

Such a move may force Bank of England to rethink interest rates approach, says its chief economistBritain risks a deeper than expected economic slowdown if Jeremy Hunt sets out large tax rises and spending cuts at next week’s autumn statement, the Bank of England’s chief economist has warned.Huw Pill said a tough fiscal settlement from the chancellor could weigh on the British economy by more than the central bank currently anticipates, in a development that would force it to rethink its approach to setting interest rates. Continue reading...

The strictures of neoliberalism must be thrust aside and public money used for the public good, says Mary Mellor. Plus letters from Colin Hines, Kevin Donovan and Patricia BorlenghiLarry Elliott rightly sees the current panic about a “black hole” in public funding as demonstrating a fundamental misunderstanding of public economics (The UK economy is about to be thrown into a black hole – by its own government, 2 November).As he points out, the widespread use of state money creation (quantitative easing) after the financial crisis of 2007-08 and the Covid pandemic fundamentally challenges the fairytale that the public sector is totally dependent on private funding. QE also challenges the assumption that public “money printing” automatically leads to inflation. The current inflationary spike comes from non-monetary factors: the war in Ukraine and the Covid slowdown. Continue reading...

House prices dropped at fastest monthly rate since February 2021, as newer buyers risk falling into negative equity

Kristalina Georgieva cautions that supply chain disruption could cause persistent pressure in living costsGlobal inflation could be peaking, the head of the International Monetary Fund has said, but she warned that consumers were at risk of facing persistent pressure from rising living costs due to a breakdown in world supply chains.Kristalina Georgieva, the IMF’s managing director, said there were signs the global surge in consumer prices since the Covid pandemic and exacerbated by Russia’s war in Ukraine was close to its apex. Continue reading...

Care workers and cleaners turn out in North Carolina, Nevada and Georgia to urge voters to elect officials who’ll listen to their needsAs America heads to the polls, representatives of the more than 2 million workers in domestic jobs – from caring for the sick, elderly and disabled to cleaning homes – are making a last-minute midterms push to make sure their voices are heard.Diondre Clarke, a certified nursing assistant in Charlotte, North Carolina, has been canvassing in nearby Winston-Salem to boost voter turnout in the critical swing state. Continue reading...

Whether that opportunity is seized or squandered is yet to be seen but the dire predictions didn’t happenThe UK economy is clearly struggling. Growth has stalled, interest rates are going up and the Treasury is softening up the public for a new dose of austerity measures.For some, the explanation for these horrors is simple: Britain is paying the price for its decision to leave the European Union. Forget the impact of the most severe pandemic in a century. Forget what Vladimir Putin’s invasion of Ukraine has done to energy prices. Brexit is the “gorilla in the room”. Continue reading...

The “invasion” of immigrants does not mask our real woes: climate change and a tanking economy• You can order your own copy of this cartoon Continue reading...

The real reason for last week’s rate rise was to boost unemployment and keep a lid on wage demands. But the government could instead increase the supply of labourA recession is already with us and could last all next year and beyond, says the Bank of England. It’s a gloomy outlook, tempered only by the Bank’s monetary policy committee signalling that the downturn is unlikely to be as bad as expected, despite its jolt to mortgage payers last week with a 0.75 percentage-point increase in the base rate.Interest rates will peak at a lower level than the 5.25% financial markets previously expected – somewhere between 3% and 4% – which means the recession, rather than being the longest in 100 years, will be short and shallow. Continue reading...

Life as we know it is under threat, as short-term-thinking politicians ignore the signs that point to a dystopian futureIn the coming decades, the world faces megathreats that would imperil not just our global economy and financial assets, but also put at risk peace and prosperity.In our partisan political world, where we kick the can down the road – we are biased towards short-term planning and leave thinking about the future to others – these threats are something different. Left to grow, they will make life worse for people across the world. It is essential for the public good that these threats are not ignored by our leaders, but are acknowledged, taken seriously and countered – fast. Continue reading...

Thousands have lost their jobs, including the human rights team, according to reports from the media and former employeesThe Bank of England is trying to get inflation under control without doing too much damage to the UK economy, its chief economist says.Huw Pill told CNBC that the Bank’s monetary policy committee is aiming to balance getting inflation down to 2%, without slowing growth too severely.“What we are seeking to do, we’re always seeking to do, is to find that balance that gets us back to our 2% inflation target without generating unnecessary and costly problems in the real side of the economy.“Creating that balance, signalling that balance, that was really our key message yesterday.” Continue reading...

Anthony Albanese says the government can’t afford to provide energy payments or other relief because to do so would put even more pressure on the RBA to raise interest rates – is he right? Three economists have their sayThis week, the prime minister, Anthony Albanese, said he would not be pushing for payments for households to deal with the rising costs of energy, groceries and other financial pressures, because to do so would risk further inflation.The easy option would have been for us to funnel these savings straight into a cash-splash, a one-off giveaway to buy a headline. Cheap politics and hugely expensive economics.

Andrew Climo on the narrative Labour needs to establish to ensure victory over the Conservatives at the next general electionJonathan Freedland’s excellent piece was timely (Rishi Sunak is the best choice the Tories could have made – but Labour can still beat him, 28 October). It is now that the narrative needs to be developed for why the Tories’ approach is doomed to failure. A week of listening to Rishi Sunak’s coronation speeches showed they have a caring side after all – a deep concern for the health of that abstract entity “the economy”.But the economy does not feel frozen to the bone, feel gnawing hunger, or fear being thrown on the mercy of relatives or neighbours. It doesn’t have its life chances ruined by poor education or curtailed by lack of access to a GP or hospital waiting lists. There can be no economic revival without a broad-based revival of fortunes of its population. It is this that needs to be stressed at every point.

Analysis from Joseph Rowntree Foundation also finds rents for new lets could rise sharplyHigher monthly home loan costs will pull another 400,000 people into poverty in the coming year as the fallout from dearer mortgage rates ricochets through the housing market.The Joseph Rowntree Foundation (JRF) said an extra 120,000 households in the UK, the equivalent of 400,000 people, will be plunged into poverty when their current mortgage deal ends. Continue reading...

Final jobs report before midterms shows jobless rate at 3.7%, a day after Federal Reserve announced further interest rate hikeThe US economy added 261,000 jobs in October, the labor department announced on Friday in its last snapshot of the health of the employment market before next week’s midterm elections.The latest report confirmed the remarkable strength of the US jobs market. The unemployment rate rose to 3.7%, still close to a 50-year low. The news comes after the Federal Reserve once again raised interest rates in an effort to slow investment and bring down inflation, a move that economists and the Fed predict will eventually cost jobs. Continue reading...

UK economy faces ‘very challenging outlook’ with recession now expected to last until middle of 2024

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Cutting in a downturn has been long discredited. And yet that’s what the government is doingLearning no lessons, repeating the same failure over and over yet expecting a miraculously better result, the Bank of England might just as well be advocating a return to the gold standard. Raising interest rates as the UK is facing its longest recession since records began is no way to repair the damage done by Trussonomics and the longer effect of George Osborne’s crippling austerity, and it is no way to breathe life into a stagflated economy.The increase of 0.75 percentage points – from 2.25% to 3% – is the steepest rise since 1989. Millions of mortgage- and rent-payers alike will be hit hard, on top of falling real wages and rising costs of everything. An Ipsos poll for Sky News finds that more than a quarter of adults have started using credit cards to buy food – and a fifth have borrowed money to adjust to rising prices this year. Inflation has hit a 40-year high.Polly Toynbee is a Guardian columnist Continue reading...

Interest rate rise to 3% is biggest since 1989 and fears UK economy may go into longer, deeper recession

From loans to mortgages, house prices to credit cards – all you need to know about the biggest rate rise since 1989The Bank of England has hiked interest rates by 0.75 percentage points to 3% – the eighth rise since last December and the biggest since 1989. So what does this mean for your finances? Continue reading...

Central bank felt the need to massage down interest rate expectations amid fears over impact on UK economy

Telecom giant blames 18% fall in profits on need for extra savings after £200m energy bill increase and soaring inflationBT has warned of more job cuts to come after it was forced to find more than £500m in additional savings due to soaring inflation and energy bills.The company, which reported an 18% slump in pretax profits from just over £1bn to £831m year-on-year in the six months to the end of September, said its energy bill will be £200m higher this year. Continue reading...

Analysts believe a 0.75 percentage point rise is likely, potentially the biggest hike in the base rate since 1989

Fed officials have now imposed the sharpest increases in interest rates since the 1980s, as the cost of living crisis batters consumersThe Federal Reserve has stepped up its fight against a 40-year high in US inflation, announcing its fourth consecutive three-quarter-percentage-point hike in interest rates but signaling the pace of increases may soon slow.With the cost of living crisis battering consumers and Joe Biden’s political fortunes, Fed officials have now imposed six rate rises in a row, the sharpest increases in interest rates since the 1980s, when inflation touched 14% and rates rose to nearly 20%. Continue reading...

It fits the definition of madness to propose more austerity. But that, along with higher interest rates, is what’s comingEconomic policy in the UK is peppered with the language of S&M. The Treasury demands budgetary discipline. The Bank of England sees the need for monetary tightening. Policymakers talk of the need to avoid “fiscal dominance”. Only in Britain could there ever have been an instrument of monetary control known as the corset.Judging by the way in which the Treasury and the Bank are behaving, it’s easy to see why the novelist Anthony Burgess once described the English as “profoundly masochistic”. A great deal of self-inflicted pain is about to be administered, but for its victims there will be no pleasure involved.Larry Elliott is the Guardian’s economics editor Continue reading...

AP Møller-Maersk says Ukraine war, Europe’s energy crisis and high inflation are hitting demand, as it forecasts lower demand for containers

Oligarchs Alexander Abramov and Alexander Frolov among four steel and petrochemical tycoons put on listTwo Russian oligarchs and business partners of Roman Abramovich, whose sprawling wealth was revealed by a Guardian investigation, have been added to the UK government’s sanctions list in response to the invasion of Ukraine.Alexander Abramov and Alexander Frolov, whom the UK government said were “known to be business associates” of the former Chelsea FC owner, were on Wednesday among four new Russian steel and petrochemical tycoons added to the sanctions list.West Caicos, a Caribbean island intended to be developed as a luxury resort island.Proposed but rejected redevelopment of St Paul’s church, Robert Adam Street, London, to include office space.Shepherd’s Bush market in London, via investment in the company aiming to acquire a majority stake.Office space in London, Leicester and Glasgow.A Prague golf course community with homes and a hotel and spa.Land and a part-built hotel in Mykonos, alongside an operating partner.An office on Clifford Street, one of London’s most prestigious Mayfair addresses. Continue reading...

Annual rise of 11.6% comes as milk, teabags and sugar become more expensive