At Cop26 the wealthy countries cast themselves as saviours, yet their efforts are hopelessly inadequate and will prolong the injusticeThe story of the past 500 years can be crudely summarised as follows. A handful of European nations, which had mastered both the art of violence and advanced seafaring technology, used these faculties to invade other territories and seize their land, labour and resources.Competition for control of other people’s lands led to repeated wars between the colonising nations. New doctrines – racial categorisation, ethnic superiority and a moral duty to “rescue” other people from their “barbarism” and “depravity” – were developed to justify the violence. These doctrines led, in turn, to genocide.George Monbiot is a Guardian columnist Continue reading...

Bank of England’s decision to hold interest rates offers reprieve, but house price growth forecast to slow

Rolling coverage of the latest economic and financial news

Monetary Policy Committee votes 7-2 to leave borrowing costs at current record low of 0.1%

City wrongfooted after committee decides to hold rate despite forecast of 5% inflation by springThe pound fell heavily after the the Bank of England wrongfooted the City by leaving interest rates at their record low level of 0.1%, despite forecasting a jump in inflation to 5% by next spring.Sterling dropped by more than two cents against the US dollar when it emerged that only two members of Threadneedle Street’s nine-member monetary policy committee voted for a rise, confounding expectations of an increase in the cost of borrowing to 0.25%. Continue reading...

It’s no use telling developing nations to decarbonise. The west must accept it bears the bulk of the blame for the climate crisisA couple of hundred years ago Britain was not a lot different from many poor countries today. Life expectancy was low, infant mortality was high, living standards barely rose from year to year, water-borne diseases were rife. People worked long hours and life for the struggling was, as Thomas Hobbes put it, “nasty, brutish and short”.Then the Industrial Revolution came along and Britain, followed by other countries in the world’s temperate zones, discovered the elixir of economic growth. After pretty much flatlining for more than a thousand years, incomes per head started to rise much more quickly.Larry Elliott is the Guardian’s economics editor Continue reading...

Rising inflation and winding down of Covid likely to weigh on central bank’s decision makers

Rolling coverage of the latest economic and financial news

Final snapshot on economy before Bank’s decision shows strong rise in activity in services sectorThe Bank of England is considering raising interest rates for the first time since the onset of the coronavirus pandemic, against a backdrop of rising inflationary pressures and a rebound in economic growth.In a final snapshot from the economy before the rate decision is announced on Thursday, monthly data showed a stronger-than-expected rise in activity in Britain’s dominant services sector during October. Continue reading...

Officials announces tapering of programme amid fears central bank may raise rates to curb inflationThe US Federal Reserve has announced it is winding down the massive stimulus programme it put in place at the onset of the Covid-19 pandemic amid fears that the central bank may have to raise rates soon to control rising inflation.Fed officials have been debating for months over whether and when to taper the stimulus programmes that it set up to head off the economic headwinds caused by the pandemic. They announced on Wednesday that they would begin cutting that stimulus by $15bn a month but left interest rates unchanged. Continue reading...

George Gater was a congenial colleague at the National Economic Development Office (NEDO) in the 1970s. Some of his colleagues involved in the organisation of the “little neddies”, the industrial working parties, tended to favour the interests of particular sectors. But George never lost sight of the ultimate purpose of the activity – improving the performance of the British economy – on which economists like me were more focused. Our lunchtime conversations ranged more widely, to such matters as the influence of social and historical factors in national economic performance. Continue reading...

Analysis: contradictory data has split experts over whether the Bank of England will raise rates or notIt is a sign of the confusion surrounding the Bank of England’s interest rate decision on Thursday that investors are unusually divided over which direction the central bank will go.Financial markets show that more than six in 10 investors are anticipating a hike in the cost of borrowing while a majority of City economists take the opposite view, telling a Reuters survey they expect rates will remain at historic lows, at least for the time being. Continue reading...

World Economic Forum says taxing carbon emitters would cost less than economic fallout from climate crisisCreating an international price for carbon emissions could reduce global greenhouse gases by 12% at a cost of less than 1% of global GDP, according to a new report from the World Economic Forum (WEF) and PwC.The report found that if global governments agreed together to set a price for pollution to help cut carbon emissions the cost would be less than the economic losses triggered by the fallout of a runaway climate crisis. Continue reading...

Rolling coverage of the latest economic and financial news

The governor blundered by suggesting an early hike – but the least costly option is to wait and seeDid the governor of the Bank of England, Andrew Bailey, err in exaggerating the prospects of an interest rate rise? It seems so. Mr Bailey’s intervention, along with his chief economist’s, suggested the base rate might rise this week. City traders are now betting that it will do so – with the Bank’s rate-setting monetary policy committee (MPC) due to pronounce on Thursday. The governor is now damned if rates rise – giving the impression that the central bank can be talked into a hike. And he is damned if they do not – because he signalled rises that did not arrive.There is no pressing reason for money to be made dearer. For many, employment is far more precarious than the official figures suggest. Business surveys report more pessimism than optimism about the UK’s prospects. The chancellor did not help by precipitately withdrawing the fiscal stimulus. The budget ended the furlough scheme, reduced benefits and raised taxes, leaving – as the Institute for Fiscal Studies revealed – wages stagnant for years to come. This, combined with higher interest rates and a bumpy path out of Covid, risks a recession, not a recovery. Continue reading...

Treasury watchdog predicts inflation will keep real household incomes below 2019 levels for another two yearsBritish households will remain worse off than before the pandemic until 2023 as rising inflation hits living standards, the Treasury’s economics watchdog has warned as Rishi Sunak sought to defend his budget.Charlie Bean, a former Bank of England deputy governor and board member of the Office for Budget Responsibility, said that growth in household incomes, after taking account of inflation, would effectively stall over the next two years. Continue reading...

New 15% rate on firms that have avoided paying tax on US soil will help to improve education and infrastructure – treasury secretaryThe treasury secretary Janet Yellen has said US multinationals who have spent years avoiding paying tax on American soil will be forced to help fund improvements to education, social and infrastructure programmes, thanks to the landmark global tax deal.Speaking in Ireland, where 800 US companies are based, Yellen said the new global tax rate agreed by 136 OECD countries halted the “race to the bottom” where multinationals scoured the world for the lowest corporation tax rate, failing to pay their dues to the populations that helped them make billions every year in profits. Continue reading...

Rolling coverage of the latest economic and financial news, as UK manufacturing output growth slows to an eight-month low

The Bank of England is expected to raise interest rates in the next month and we would like to find out how people may be affectedIt’s expected that the Bank of England will begin to increase interest rates this month or next to tackle rising inflation. Interest rates are currently at a historic low of 0.1%.We would like to understand more about the impact any increase may have on household finances.. Do you have concerns about your mortgage or debt repayments? Or perhaps a rise will help with savings? Or is there another reason why you will be keenly watching for the Bank’s decision? Continue reading...

Can the Granite city diversify into non-fossil fuel industries in time to avoid the fate of UK coal-mining areas?The oil companies know it. The car dealers selling top of the range Porsches get it, as do the hoteliers and the restaurateurs. Change is coming to Aberdeen: the UK centre of North Sea fossil fuel production since the 1970s is trying to avoid becoming the city of stranded assets.The Granite city became Scotland’s boom town almost by accident. It was Dundee down the coast that was originally identified as a probable hub for offshore production when exploratory work established large reserves of oil and gas under the continental shelf. Continue reading...

Thatcherites hate the ‘big state’, but economic realities are forcing the party into messy compromisesThe days of the big state are back. Plans announced by Rishi Sunak last week mean public spending as a share of the economy is on course to reach levels not seen since the Thatcherite revolution was about to begin in the late 1970s. The Iron Lady’s disciples are having kittens at the prospect.It’s worth saying that the economy has changed substantially over the past four decades, with manufacturing accounting for a much smaller share of national output and the service sector growing in importance. Since the 1980s, the UK has run a large and persistent trade deficit in goods, only partly offset by a surplus in services. Continue reading...

Prince of Wales urges G20 to set aside differences and build sustainable economyCop26 is “the last chance saloon” to save the world from runaway climate change, Prince Charles has told world leaders in Rome ahead of the crucial climate summit in Glasgow.Speaking to an audience including Boris Johnson on the sidelines of the gathering of the G20 group of industrialised nations, Charles said it was the moment to begin a green-led economic turnaround. Continue reading...

The chancellor is politically astute, but there is less substance in his investment plans than it appearsFor a chancellor who billed his budget as a moment to kickstart the UK’s economic rebirth after the pandemic, Rishi Sunak’s hour-long speech lacked substance.A reform of alcohol duties – which seemed to excite the teetotal Sunak enough to visit a brewery immediately after the speech – may help the drinks industry, but it was a distraction too far for many business leaders. They were left in the dark about the overall strategy and how policies were likely to be implemented. Continue reading...

Fishing rows notwithstanding, much of Europe looks on at the UK’s plight with astonishment – and even, still, sympathyAt the recent celebration of the life and achievements of my friend and fellow Remainer John le Carré, I was asked by a leading academic whether I was absolutely certain that we could rejoin the European Union.The answer is that I am not. But as the evidence of the damage of that foolish referendum decision accrues, it is becoming more and more certain that we should try. At the very least, we should be repairing fences and attempting to re-establish as close a relationship as possible – a cause championed by Labour’s impressive shadow chancellor, Rachel Reeves. Continue reading...

Agreement allows duty-free access for limited amounts of EU-made metals and fends off retaliatory EU tariffs due in DecemberThe US and EU have agreed to end a festering dispute over US steel and aluminium tariffs imposed by former president Donald Trump in 2018, removing an irritant in transatlantic relations and averting a spike in EU retaliatory tariffs, US officials have said.Commerce secretary Gina Raimondo told reporters on Saturday that the deal would maintain US section 232 tariffs of 25% on steel and 10% aluminium, while allowing “limited volumes” of EU-produced metals into the US duty free. Continue reading...

Higher borrowing costs will hit hard-pressed families, but the City is betting on an interest rise this weekAfter Rishi Sunak’s budget, it’s over to the Bank of England. On Thursday this week Threadneedle Street will put an end to the frenzied will-they, won’t-they speculation on the matter of whether we are about to see the first interest rate rise since the onset of Covid-19.Financial markets are betting this is the moment of lift-off from the current historic low of 0.1%, against a backdrop of soaring inflation and with the economy within a hair’s breadth of its pre-pandemic peak. Continue reading...

We can respond to environmental crisis with good planning, Jeff Sparrow writes in an extract from his bookIn his book Capitalist Realism, Mark Fisher diagnoses the dominance of a ‘business ontology’, a mentality that can only conceive of human activities insofar as they’re profitable.For instance, researchers associated with the International Monetary Fund recently noted that whales – especially great whales – capture from the atmosphere considerable amounts of carbon, which they store in their huge bodies and take down to the ocean floor when they die. A single great whale can thus sequester 33 tons of carbon dioxide – a not-insignificant quantity, given that a tree only absorbs 22kg annually. Whales also feed populations of phytoplankton with their waste, and, globally, those phytoplankton capture some 37bn metric tons of carbon dioxide, four times the emissions sequestered by the jungles of the Amazon. Continue reading...

Poll also shows that more than half believe it is affecting shop prices, as experts forecast it is likely to be twice as costly as CovidAlmost twice as many voters now believe Brexit is having a negative effect on the UK economy as think it is benefiting the nation’s finances, according to the latest Opinium poll for the Observer, carried out during budget week.The survey comes after Richard Hughes, the chairman of the Office for Budget Responsibility, said his organisation calculated that the negative impact on GDP caused by the UK’s exit from the EU was expected to be twice as great as that resulting from the pandemic. Continue reading...

Cop26 breakthrough will require rich nations to finally make good on promise to help poorer onesNext month’s Cop26 talks could end in abject failure. Anybody who has monitored the tortuous attempts of the World Trade Organization to piece together a global free trade agreement knows how hard multilateral negotiations can be.A breakthrough in Glasgow is possible but requires two things to happen: the world’s leading emitters of greenhouse gases need to accelerate their net zero carbon plans; and they have to recognise it is their own self-interest to help the less fortunate countries already struggling with the effects of global heating. Continue reading...

Data from government’s independent forecasting unit suggests interest payments could increase by 13% in 2023Homeowners face the biggest rise in mortgage costs since the financial crisis, with the amount of interest they pay set to jump by 13% in 2023, data from the government’s independent forecasting unit suggests.Politicians and analysts seized on a table “buried” in a report published by the Office for Budget Responsibility (OBR) alongside the budget, which stated that mortgage interest payments were set for their biggest rise since at least 2008. Continue reading...

The Covid threat to GDP is waning, but don’t expect the pain wrought by leaving the EU to subside any time soon

Analysis: Sunak’s latest budget details more than £1tn in spending, but rather less in revenue. Here’s a break down of taxes raised and spending by department Continue reading...

Tougher regulation means banks and insurers face extra audits and capital rules for unsustainable assetsThe Bank of England has told banks and insurers it is prepared to use its powers to crack down on them if they fail to manage climate risks.The warning came as the central bank begins to review a potential introduction of capital requirements linked to unsustainable assets. Continue reading...

IFS says ‘staggering’ annual drop by mid-2020s will follow unprecedented two-decade hit to earnings in UKThe biggest wage squeeze in British economic history will leave the average worker almost £13,000 a year worse off by the middle of the 2020s, Rishi Sunak has been warned.The Institute for Fiscal Studies (IFS), the UK’s leading tax and spending thinktank, said an unprecedented two-decade hit to earnings would leave average household disposable income 42% lower than it would have been had wages grown at pre-2008 financial crisis rates. Continue reading...

Office for Budget Responsibility warns public spending would have to decrease or borrowing go up

IFS warns take-home pay will fall due to rising prices and taxes; Sunak announces universal credit taper reduction and fuel and alcohol duty cuts

Analysis: chancellor left with little choice but to go PM’s way, though one passage of his speech was telling

Chancellor announces measures to help households, with lower alcohol and fuel duties

Rishi Sunak will be looking at key indicators such as GDP growth, public debt levels and inflation as he draws up his autumn budgetBritain’s economic recovery from Covid is at growing risk from severe shortages of workers and materials, as well as mounting living costs for households, as Rishi Sunak prepares his budget and spending review.Here are five key charts that will underpin the chancellor’s statement on Wednesday afternoon. Continue reading...

Analysis: measures will affect the NHS, public sector pay, business rates, climate, levelling up and the cost of livingRishi Sunak will use the budget and spending review on Wednesday to set out the government’s priorities up to the next election, while attempting to move on from crisis-management mode more than a year and a half into the Covid-19 pandemic.The chancellor is expected to benefit from an improved economic outlook after a faster-than-expected recovery from the winter lockdown, although he must balance a desire to end emergency support with pressures from an unfolding cost-of-living crisis before a difficult winter. Continue reading...

Slowing growth and tax rises to come, let alone higher wage costs and staff shortages, mean many firms are facing a grim outlookBudget speeches normally last for about an hour and by tradition chancellors spend the first 10 minutes or so pointing out how well the economy is performing. All do this regardless of their political affiliation, and they usually have to be selective in their choice of statistics to support their claims.We know Rishi Sunak will conform to type because he has already been rehearsing some of his lines: Britain will be the fastest growing economy in the G7 this year; unemployment will peak at less than half of what was feared when the pandemic began; the budget deficit is coming down much faster than the Office for Budget Responsibility expected in the spring. Continue reading...

Pandemic has laid bare inequalities in a capital bracing itself for autumn budgetThe morning rush hour used to be the busiest time of day for Jayant Amin’s newsagent in the heart of the City of London, before Covid-19. Having watched five neighbouring shops close in the building he occupies opposite Mansion House tube station, he is one of the survivors hoping to benefit from the slow return of office workers.“I’ve seen ups and downs. We survived the 2008 financial crisis, but this is the worst one,” he said. Trade remains slow for Amin and his wife, Rajeshree, who have run the shop for two decades. Next month he will be granted the freedom of the City of London in recognition of his long service, giving him the right to drive sheep over London Bridge. However, it is flocks of office staff he is hoping for. Continue reading...

Leaked documents by Treasury and Covid taskforce are based on five-month stint of home working in England

Economists have failed to take account of ‘immense risks and potential loss of life’, says author of landmark reviewMany economic assessments of the climate crisis “grossly undervalue the lives of young people and future generations”, Prof Nicholas Stern warned on Tuesday, before the Cop26 climate summit in Glasgow.Economists have failed to take account of the “immense risks and potential loss of life” that could occur as a result of the climate crisis, he said, as well as badly underestimating the speed at which the costs of clean technologies, such as solar and wind energy, have fallen. Continue reading...

Silvana Tenreyro predicts spike in prices in next few months will probably prove to be short-livedAn interest rate rise before Christmas is unlikely despite rising energy prices and supply shortages that are expected to push inflation towards 5%, according to the Bank of England policymaker Silvana Tenreyro.Setting herself against colleagues Michael Saunders and the governor, Andrew Bailey, who have warned in recent weeks that inflationary pressures could warrant a rapid response by the central bank, Tenreyro said it was unclear whether a rise in the cost of borrowing before Christmas would control the escalating price of imported goods. Continue reading...

Government accepts Low Pay Commission’s recommendation of 6.6% increaseThe UK’s “national living wage” is to go up to £9.50 an hour from next April, meaning a pay rise for millions of low-paid workers.Ministers have accepted the Low Pay Commission’s recommendation for a 6.6% increase from £8.91, which applies to workers aged 23 and over. For those aged 21 to 22, the minimum will increase from £8.36 to £9.18. Continue reading...

From a pub owner to the mayor, the city is under pressure from cuts, the Covid crisis and inflationWith business rates due to increase, VAT going up, energy prices on the rise and inflation pushing up food and drink costs, pub owner Sam Hagger is dreading the next few months.“It is going to be catastrophic. There’s no other way to describe it,” says Hagger, the founder of the Beautiful Pubs Collective, which runs three venues in Leicester. “There’s a headwind on the horizon that we can’t deal with.” Continue reading...

From the business section to the food magazine, Guardian editors are becoming focused on one dominant storyOnce upon a time, it was really only environment journalists who covered the climate crisis. At the Guardian, this is rapidly changing, as the emergency sprawls into more and more aspects of our daily lives, from food to fashion, football to finance, art to agriculture.Here, 10 Guardian journalists describe how the climate crisis is changing their job. Continue reading...

The spending review will expose the tensions between the interventionist prime minister and his traditionalist chancellorLook at the two main political parties in England and Wales, and consider which one seems to have most changed.Labour? It has been collectively fretting for decades about the appeal of Conservatism to the working class, while solidifying into a party dominated by the educated bourgeoisie. In terms of basic beliefs, it remains the party of the big centralised state. Leaving aside the brief spells of Margaret Beckett and Harriet Harman as acting leader, all 19 of the party’s chiefs have been white men, and its current frontbench does not quite reflect the diversity its leaders extol. Continue reading...