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Veteran philanthropist tells World Economic Forum civilisation ‘may not survive’ what is coming

Rolling coverage of the second day of the World Economic Forum in Davos

Some doubt the OECD-brokered agreement, which would levy more tax on the world’s largest firms, will ever be implementedAn international deal that would force the world’s biggest multinational companies to pay a fair share of tax has been delayed until 2024 amid fresh wrangling over the painstakingly negotiated agreement.Mathias Cormann, the secretary-general of the Organisation for Economic Co-operation and Development (OECD), told the World Economic Forum in Davos, Switzerland, that there were “difficult discussions” taking place that meant the deal could not come into force in 2023, as previously hoped. Continue reading...

The Restaurant Group says it still expects to meet full-year profit forecasts despite surge in costsThe owner of Wagamama, Frankie & Benny’s and Chiquito expects food and drink inflation to reach as much as 10% this year, double the rate predicted just two months ago, as the war in Ukraine disrupts supply chains.The Restaurant Group, which operates about 400 outlets, said it was working with its supply chain to offset the cost rises but warned “this remains a volatile inflationary market”. Continue reading...

Jens Stoltenberg tells business leaders in Davos that values should matter more than profits

Tax receipts are weaker than expected, revealing impact of UK’s slowing economyThe chancellor is expected to come under renewed pressure to offer a larger financial package of support to low-income families suffering from the cost of living crisis after the public spending deficit in April came in lower than expected.With the cabinet understood to be concerned about the government’s falling poll ratings as the cost of living crisis escalates, the government borrowed £18.6bn last month – lower than forecast and down by £5.6bn from a year ago, according to Office for National Statistics figures. Continue reading...

Speaking at Davos, Kristalina Georgieva said anxiety about food prices was ‘hitting the roof’ globallyThe head of the International Monetary Fund (IMF) has said the war in Ukraine has darkened the outlook for the global economy and could result in recession for more vulnerable countries.Kristalina Georgieva predicted that 2022 would be a tough year and declined to rule out a global recession if conditions worsened markedly. Continue reading...

Andrew Bailey defends response to Covid pandemic and indicates Bank will not take aggressive approach to raising interest ratesThe governor of the Bank of England has hit back at critics who accused him of being asleep at the wheel while inflation soared and a cost of living crisis hit UK living standards.Andrew Bailey said the nature of the shock meant higher interest rates could damage the economy, which recovered slowly from the pandemic during 2021. Continue reading...

Rolling coverage of the first day of the World Economic Forum in Davos

We answer readers’ questions about how the rise in cost of living will affect themThere is no escaping inflation: whether it’s energy, food, transport or entertainment you are paying for, prices are going up – and at pace.Once again this week’s headlines have been dominated by the latest figures – on Wednesday we learned that inflation had reached a 40-year high of 9%. Plus, there have been warnings of worse to come. But what does it all mean? We asked readers what questions they had about inflation and its impact, and have tackled them below. Continue reading...

If economy goes into tailspin, gap between areas with weak and strong labour markets would be exposedThe message from the government is clear. A booming labour market represents the silver lining to the dark cloud hanging over the economy. There are more job vacancies than there are people officially classified as out of work and firms are paying signing-on bonuses to attract staff. What’s more, as Boris Johnson said repeatedly at prime minister’s questions last week, an unemployment rate of 3.7% is the lowest since 1974.No question, the labour market is in better shape now than ministers expected even six months ago. Back then there was concern that the end of the Treasury’s furlough scheme would lead to large numbers of firms going bust and a significant increase in unemployment. Continue reading...

This year’s meeting may just manage some climate progress, but many say the forum is irrelevant in a changed worldThe highlight of the last gathering of the global elite in Davos was a spat between Greta Thunberg and Donald Trump. It was January 2020 and scant attention was being paid to reports of a new virus recently detected in China. Most of those who made the trek to the Swiss alpine resort were too busy virtue-signalling their deep concern about inequality and the climate emergency.A lot has happened in the intervening 28 months. What was assumed to be a little local difficulty in Wuhan turned out to be the start of a global crisis. The January 2021 Davos was a virtual affair, and the annual meeting of the World Economic Forum (WEF) pencilled in for January 2022 was postponed because of the spread of the Omicron variant of Covid-19. Continue reading...

Conditions have improved for a select few but on wages and flexible hours, the trend for employees is generally backwards. Can the rate-setters grasp that?Goldman Sachs has bowed to demands for a less stressful workplace by offering a “flexible vacation” scheme that allows senior bankers to take a holiday whenever they feel like a break.Generosity further down the investment bank’s global chain of command is more limited: it has told traders and admin staff – who are notorious for taking breaks lasting just a day – that they should disappear for at least one solid week out of the minimum of 15 days. Continue reading...

The banker and former regulator has seen many crises in his career, but war and political division have him worriedSir Howard Davies is a worried man. He is worried about political polarisation. He is worried about the long-term impact of Brexit on the City of London. And he is worried by the pushback against globalisation.One thing he is not especially worried about is the health of the bank he chairs, NatWest, which in its former guise as Royal Bank of Scotland was on the edge of collapse during the global financial crisis of 2008. Continue reading...

The Bank of England governor warned last week of ‘apocalyptic’ food price rises. Yet war in Ukraine, climate change and inflation are already taking their toll all over the worldApocalypse is an alarming idea, commonly taken to denote catastrophic destruction foreshadowing the end of the world. But in the original Greek, apokálypsis means a revelation or an uncovering. One vernacular definition is “to take the lid off something”.That latter feat is exactly what Andrew Bailey, governor of the Bank of England, achieved last week, possibly inadvertently, when he suggested Britain was facing “apocalyptic” levels of food price inflation. Tory ministers fumed over what they saw as implied criticism of the government’s masterly economic management. Continue reading...

Which? analysis finds cereal, mushrooms and cheese among the items to have risen the mostAt Sainsbury’s in Whitechapel, east London, the rising cost of food has forced Petra Emmanuel to change her shopping habits.“Coupled with my utilities bill, it’s ridiculous,” the 51-year-old teacher said. “Even though I don’t buy branded foods, it’s the simplest items that have seemed to have gone up. Continue reading...

We would like to hear your experiences of companies skimping on the quality of their productsWe would like to hear your experiences of “skimpflation” – a term used to describe when companies skimp on the quality of their products and services to save money instead of putting up prices. This can result in a worse experience, such as a long delay, a bad journey, or a poorer quality product.For example, does something you buy regularly still cost the same but now seems to be made out of cheaper materials or ingredients? Have you noticed changes in local cafes or restaurants? What was your experience when you went on holiday? Did you get the service you expected? Were you charged for things that used to be free? Continue reading...

Some Tory stalwarts may be angry but state of the economy could be what brings the prime minister down

BoE’s Huw Pill says MPC faces its biggest challenge in 25 years, and indicates further monetary tightening needed to avoid wage-price spiral

Tansy Hoskins, author of a book on the impact of fast fashion, says the true cost of knock-off clothes is being paid by garment workersBrowse the makeup sections of Aldi, Lidl, Primark and many more, and it won’t be long before you come across “dupes”. Immensely popular with generation Z, these are near “duplicates” of luxury items created by budget brands. Copyright issues aside, how ethical are they? I spoke to Tansy Hoskins, whose books dissect the impact of fast fashion.I’ll never forget being a teenager and discovering my Reeboks were actually knock-off “Reeborks”. The shame! Aren’t dupes fakes by another name?

Bank of England’s Huw Pill warns ‘further work needs to be done’ after recent base rate risesThe Bank of England will intensify its squeeze on the economy over the coming months as it seeks to bring down the highest inflation rate in 40 years, its chief economist has warned.Noting that Threadneedle Street was facing its toughest challenge since being granted independence in 1997, Huw Pill said “further work needs to be done” to bring the annual inflation rate back to the government’s 2% target. Continue reading...

Attempts to boost flagging GDP growth hindered by Covid lockdowns, Ukraine war and Sino-US tensionsAt a recent online gathering of top Chinese economists, a palpable sense of urgency filled the virtual meeting room. In recent weeks, a slew of reports by Chinese and foreign economists pointed to a deteriorating economy. Outside the country, talk of China being the engine of global economic growth no longer convinces.During the meeting Huang Yiping, a Peking University professor and a former central bank adviser, urged Beijing to “do whatever it takes to save the economy”. Huang was paraphrasing a line from the height of the European debt crises more than a decade ago, when the European Central Bank’s then president, Mario Draghi, said it was ready to “do whatever it takes to preserve the euro”. Continue reading...

Part of April increase may be down to people staying in to save money, says ONSConsumers in Great Britain carried on spending last month despite the highest inflation rate in 40 years, providing high street and online retailers with a surprise boost.The Office for National Statistics (ONS) said there was a 1.4% monthly jump in retail sales in April but said the trend was still weak and that part of the increase might be down to people staying in to save money. Continue reading...

Consumers increasingly pessimistic about economy and personal finances amid deepening cost of living crisisConsumer confidence in the UK has fallen to the lowest level since records began in 1974 amid growing concern over the cost of living crisis.Stoking fears that Britain is heading for a recession caused by the squeeze on family budgets, the latest monthly snapshot showed consumers are now gloomier about their prospects than they were during the 2008 financial crisis. Continue reading...

Kristalina Georgieva cites Russia’s war in Ukraine and cost pressures caused by China’s zero-Covid policiesGlobal finance leaders should prepare for multiple inflationary shocks, the head of the International Monetary Fund has warned, as fears of a global economic downturn continue to hit markets around the world.The IMF’s managing director, Kristalina Georgieva, said it is becoming harder for central banks to bring down inflation without causing recessions. Continue reading...

Analysis: the chancellor has a set of options for making the tax system fairer at the same time as bringing in revenueSuppose the chancellor wanted to follow Scottish Power’s advice, and give Britain’s most hard-up households £1,000 towards their energy bills this winter? Would it be possible to raise the £10bn needed in a way that didn’t just tax the same people he would be trying to help? I can think of at least three options, any of which would do the job, and all of which would make the tax system better as well. Continue reading...

Postal service says potential rise would help offset higher staff and energy costs and fall in parcel deliveriesRoyal Mail has warned that it is likely to raise prices again for stamps and letters, as part of efforts to combat rising costs and offset a post-pandemic slowdown in parcel deliveries.The delivery company said on Thursday it would try to make up for falling revenues and higher staff and energy costs through “price increases and growth initiatives” over the next year, having already raised the price of sending letters and parcels by 7% and 4% respectively. Royal Mail said it had also introduced a fuel surcharge in some of its contracts, in a move that finance chief Mick Jeavons said was “fairly measured”. Continue reading...

Chief of business association calls for stimulus that aids ‘hardest hit’ with rising food and fuel billsTackling rising food and fuel bills will not add to inflation and people who are “the hardest hit” need help now, the head of the UK’s biggest business association has warned.Official figures published on Wednesday revealed UK inflation soared to 9% in April – its highest level for more than 40 years – as the rising cost of gas and electricity pushed household energy bills to record levels. Continue reading...

As inflation hits 9%, four English businesses explain how they are negotiating soaring pricesNotifications arrive every day at Loveone, an Ipswich gift shop, heralding price increases of 5% to 10% on products it sells, usually adding a couple of pounds to the sticker price.“If I don’t get my orders in by a certain date then I will have to pay more,” says Cathy Frost, who has run the shop for 15 years. “I can kind of hold my prices for the moment as I ordered stock six months ago, but if the things I’m ordering now are going to be more expensive, I’m asking: ‘Will people pay more?’” Continue reading...

In today’s newsletter: As inflation hits a 40-year high of 9%, Archie Bland explores the causes of the crisis, and the potential solutions left out of the debate

Shortages of grain and fertiliser could cause ‘mass hunger and famine, says chief, as World Bank pledges $12bn to ease shortfall

Tories say taxes must fall to curb inflation, even at the cost of a higher deficit. Labour should argue that public spending could be increased for the same reasonThe Bank of England this week joined the ranks of the “enemies of the people”. Damned for the governor’s gloomy but accurate assessment that UK consumers face an “apocalyptic” spike in food prices, the Bank found itself on the front pages of the populist press. The Old Lady of Threadneedle Street stood accused of being “asleep at the wheel” as prices soared.But hiking interest rates would not have stopped escalating costs. The Bank’s governor, Andrew Bailey, was right when he said that inflation – which reached a 40-year high of 9% – had been driven by international events. Covid supply chain disruptions, the Russian invasion of Ukraine and Brexit are all beyond his control. Higher interest rates are not going to produce more oil or more wheat and bring down the prices of key commodities.Do you have an opinion on the issues raised in this article? If you would like to submit a letter of up to 300 words to be considered for publication, email it to us at guardian.letters@theguardian.com Continue reading...

Low wages growth, inflation, price rises and jobseeker are combining to put talk of a strong recovery from the pandemic into contextThe latest wage price index figures confirm that when Australians go to the polls this Saturday, their real wages will be lower than at the last federal election. Not only that, but so bad has been the fall that real wages are now essentially no different from what they were when Tony Abbott took office in 2013.In the latest minutes of the Reserve Bank board, the bank noted it decided not to wait for this latest wage data because while the board “agreed that this information would be helpful … the recent evidence on wages growth from the Bank’s liaison and business surveys was clear”. Continue reading...

Jane Jones, a supermarket worker from Flintshire, Wales, tells how desperate customers are stealing everyday things

Analysis: UK among hardest-hit countries thanks to perfect storm of war in Ukraine, Covid and BrexitBritain’s inflation rate has soared to the highest level since the early 1980s. After a record increase in gas and electricity bills in April, inflation is the highest in the G7. Having reached 9% last month, it is above the 8.3% rate in the US and Germany’s 7.4%. Japan, an economy characterised by low inflation for decades thanks to an ageing population, has the lowest rate at 1.2%.Here are some of the reasons why prices are rising faster in the UK than in other major economies. Continue reading...

UK inflation hits 9%, its highest level since 1982, with food inflation highest since 2011, and low-income families are worst hit

Average pump price for petrol hits 167.64p a litre and for diesel 180.90p a litre amid accusations of profiteeringThe prices of fuel at UK forecourts have hit record highs, as the cost of living crisis intensifies.The average pump price for petrol reached 167.64p a litre, the RAC said, surpassing the previous record of 167.30p set on 22 March. Continue reading...

Analysis: Chancellor has sought to deflect criticism by citing global factors but has hinted about support

Faced with the the biggest inflation rise in 40 years, the Bank must do more than berate workersIn the 25 years since the Bank of England was made independent, politicians have happily played along with the idea that they have no place in monetary management. Yet with inflation now reaching 9% – levels last seen 40 years ago – that pretence has broken.Instead, senior Conservative MPs scolded the Bank for letting prices soar, suggesting Covid stimulus measures had been allowed to go on too long. For his part, the governor of the Bank of England, Andrew Bailey, also abandoned neutrality with his repeated calls for workers to exercise “restraint” and sacrifice higher wage demands.Sahil Jai Dutta is a lecturer in political economy and co-author of Unprecedented: How Covid-19 Revealed the Politics of Our Economy Continue reading...

Headline CPI rate fuelled by increase in household bills and rising transport costs

Rolling coverage of the latest economic and financial news

Archie Norman backs UK plans to scrap parts of protocol, saying lorries require ‘700 pages of documents’

Most workers face fifth month of falling living standards despite soaring City bonusesSoaring bonuses for City bankers and high signing-on fees for construction and IT professionals pushed Britons’ average annual pay up by 7% in March, but most workers suffered a fifth consecutive month of falling living standards.Without bonus payments, workers were paid an average 4.2% wage increase in the three months to the end of March, well below the 7% inflation rate recorded in the same month, according to the Office for National Statistics. Continue reading...

Bank of England’s Andrew Bailey blames UK’s highest inflation rate for three decades on Russia-Ukraine war and Covid

Rolling coverage of the latest economic and financial news

European Commission downgrades growth prospects from 4% to 2.7%, while economy slows rapidly in China

Developed nations need to thwart the economic fallout from the Ukraine war from destroying the lives of the world’s most vulnerableBig shocks to the global economy, such as Russia’s invasion of Ukraine, understandably capture the most attention. But a new worldwide pattern of “little fires everywhere” may be equally consequential for longer-term economic wellbeing. Over time, these small fires can coalesce into one that is just as threatening as the initial large fire that acted as the catalyst.In addition to causing widespread death and destruction, and displacing millions of people, the Ukraine war continues to stoke strong stagflationary winds throughout the global economy. The resulting damage – whether in the form of higher food and energy prices or new supply-chain disruptions – cannot be easily or rapidly countered by domestic policy adjustments. Continue reading...

Leading economists publish letter to Rishi Sunak in response to proposed financial services and markets billA group of 58 leading economists and politicians, including the former business minister Vince Cable, has written to the chancellor to say that scaling back City regulation will put the UK at risk of another financial crash.The open letter, which has also been signed by the former Greek finance minister Yanis Varoufakis and Columbia University professor Adam Tooze, was sent in reaction to the Queen’s speech, which outlined Rishi Sunak’s plans to “cut red tape” through a financial services and markets bill. Continue reading...

Andrew Bailey’s appearance at select committee will come amid work from chancellor to find new ways to ease cost of livingThe Bank of England governor, Andrew Bailey, will face a grilling from angry Conservative MPs over inflation on Monday, as cabinet sources moved to quell the incendiary remarks about the Bank’s independence.The governor’s appearance before MPs – which has been likened to the showdowns with former Bank boss Lord Mervyn King during the 2008 crash – will come amid intense work from the chancellor, Rishi Sunak, to find new measures to ease the cost of living before the summer recess. Continue reading...

Covid has amplified the threats that accompany the country’s role as an economic superpowerChina has been central to the story of globalisation over the past 30 years, but now it is struggling. More than two years after Covid-19 cases were discovered in Wuhan, the world’s most populous country has yet to get on top of the virus. Draconian lockdowns have been imposed because China’s vaccines are less effective than those available in the west, and immunity levels are lower as well.Growth is slowing, and not just because of the tough restrictions insisted upon by President Xi Jinping. Flaws in China’s economic model coupled with a more hostile geopolitical climate mean the days of explosive expansion are over. Continue reading...