Category Archives: Economics

Sunak warned unfunded axing of national insurance would harm services

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Economists say making the policy an election pledge could cost £40bn, which is badly needed for health, education and elsewhere

Rishi Sunak has been warned against fighting an election on an unfunded plan to abolish employee national insurance amid projections the move could blow a £40bn hole in the public finances.

As the pre-election battle on the economy between the Conservatives and Labour intensified, the prime minister was on Thursday under mounting pressure to explain how the measure could be afforded while public services were crumbling.

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Budget 2024: UK taxes head for highest level since 1948 despite Hunt’s NI cut

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Borrowing and stealth taxes fund £14bn giveaway, but public spending squeeze looms after election

Britain will go into the next general election with taxes at their highest level since 1948 despite Jeremy Hunt’s 2p budget cut in national insurance contributions – with the threat of a fresh squeeze on public spending to come after polling day.

The chancellor used a combination of higher borrowing and a range of stealth taxes to fund a £14bn giveaway package and said his ambition was to phase out NICs for employees and the self-employed altogether.

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National insurance: how much will the 2p cut leave workers better off?

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Jeremy Hunt said his budget measure will benefit 27 million people – here’s how it will work

A big national insurance cut was the centrepiece of Jeremy Hunt’s autumn statement and he has done the same again for the spring budget . But just how much better off will UK employees really be?

The chancellor is cutting the main rate of national insurance contributions (Nics) paid by workers from 10% to 8% with effect from 6 April 2024, which he said would benefit 27 million workers. He also announced changes to the national insurance paid by those who are self-employed.

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Budget 2024: Jeremy Hunt announces 2p cut in national insurance

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Chancellor also scraps ‘non-dom’ tax breaks and slashes capital gains on property in pre-election gambit

Jeremy Hunt has announced a 2p national insurance cut in his budget as a pre-election gambit to revive flatlining opinion poll ratings and reboot Britain’s economy from recession.

In what could be the last major economic intervention before voters go to the polls, the chancellor said the government was making progress on its economic priorities and could now help hard-pressed families by permanently lowering certain taxes.

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Cookie Monster and Ohio senator make odd allies in shrinkflation complaint

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Democratic senator Sherrod Brown endorsed the Sesame Street star’s complaint on products getting smaller as prices remain same

The Ohio Democratic senator Sherrod Brown endorsed a key voice in the American public square – Cookie Monster – in a complaint about shrinkflation.

“Me hate shrinkflation!” the Sesame Street character posted on social media on Monday, referring to an economic phenomenon Merriam-Webster defines as “the practice of reducing a product’s amount or volume per unit while continuing to offer it at the same price”.

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Clare Lombardelli named deputy governor of Bank of England

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Ex-Treasury official and adviser to David Cameron will replace Ben Broadbent, making MPC majority female for first time

The Bank of England’s interest-rate-setting committee is set to become majority female for the first time, after the appointment of a former key adviser to David Cameron and George Osborne as one of its deputy governors.

Clare Lombardelli, the chief economist at the Organisation for Economic Co-operation and Development (OECD), will sit on the nine-member monetary policy committee (MPC) when she joins as the Bank’s next deputy governor for monetary policy.

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UK grocery price inflation falls to two-year low amid supermarket price war

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Competition helped offset impact of Red Sea shipping crisis in February, says analyst Kantar

Grocery price inflation in the UK has slowed to a two-year low as fierce competition among supermarkets offset the impact of the Red Sea shipping crisis on goods prices.

In a boost to households, supermarket prices were 5.3% higher than a year earlier in February, the lowest rate since March 2022 and down from January’s 6.8%, according to the analyst Kantar. Grocery sales grew by 5.1% in the four weeks to 18 February.

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Put aside differences to focus on growth across UK, Ed Balls tells politicians

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Former shadow chancellor is one of the authors of a new academic paper on how to bridge the regional divide

Britain needs a 20-year cross-party consensus to level up the economy and unleash the untapped potential of regions outside London and the south-east, the former Labour shadow chancellor Ed Balls has said.

Balls, one of five co-authors of an academic paper on bridging the UK’s regional divide, said it was vital that Labour and Conservative politicians put aside their differences in order to embed necessary funding and governance reforms.

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China needs to do more on ‘silent crisis’ of debt, says World Bank official

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Beijing must be more ready to support countries facing distress, says deputy chief economist

China holds the key to speeding up debt relief and ending the “silent crisis” that is holding back attempts to tackle poverty in the world’s poorest countries, a senior World Bank official has said.

Ayhan Kose, the Bank’s deputy chief economist, said Beijing needed to be more active in negotiations to provide financial support for those countries already in, or close to, debt distress.

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Rishi Sunak’s promise to grow the economy ‘in tatters’ as UK enters technical recession – business live

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UK economy shrank by 0.3% in October-December, worse than expected, putting UK in a technical recession in a blow to the PM

Net trade, household spending and government consumption all contracted in the final quarter of last year, helping to push the UK economy into a technical recession.

Household expenditure fell by 0.1% in real terms (adjusted for inflation) in Q4 2023, following a downwardly revised fall of 0.9% in Q3, as consumers cut back in the cost of living squeeze.

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Even a technical recession is a headache for Rishi Sunak

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Governments try to generate a feelgood factor before an election. The UK has the opposite: a feel-bad factor

In the end it wasn’t really that close. The UK economy is now technically in recession after contracting by 0.3% in the final three months of 2023.

The official data brings to an end a miserable year for the UK. Growth in 2023 as a whole was just 0.1% – the weakest performance outside the Covid pandemic year of 2020 since 2009.

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Japan loses crown as world’s third-largest economy after it slips into recession

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Fall in rank below Germany has been attributed to a weak yen and country’s ageing, shrinking population

Japan has been eclipsed by Germany as the world’s third-biggest economy and has slipped into recession, according to data released Thursday, as the country battles a weak yen and an ageing, shrinking population.

Japan’s economy, now the world’s fourth-biggest, grew 1.9% in 2023 in nominal terms – meaning it is not adjusted for inflation – but in dollar terms its gross domestic product (GDP) stood at $4.2tn compared with $4.5tn for Germany.

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Bank of England governor dampens hopes of interest rate cut

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Andrew Bailey says cost of living had been higher than expected in December despite ‘encouraging’ inflation news

The Bank of England governor has doused hopes that better-than-expected inflation news last month will accelerate cuts in interest rates, stressing the need for further evidence of wage moderation before Threadneedle Street moves.

Appearing before the House of Lords economics committee on Wednesday, Andrew Bailey said it was “encouraging” that inflation had remained unchanged at 4% in January but the previous month’s figure for the cost of living had been higher than predicted.

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US inflation hotter than expected in January at 3.1%

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While inflation has fallen sharply since peaking above 9% in June 2022, many are still feeling the pinch of high prices

Inflation was hotter than expected across the US last month as it continues to fall back from its highest levels in a generation.

Price growth dropped to an annual rate of 3.1% in January, according to official data; above economists’ expectations of 2.9%. In December, the consumer price index stood at 3.4%.

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UK pay growth slows less than expected as workers bid up wages

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December figures prompt predictions Bank of England may cut interest rates later than previously expected

Pay growth slowed less than expected in December, prompting predictions the Bank of England could start cutting interest rates later than previously expected.

Earnings growth, excluding bonuses, fell only modestly to 6.2% in October to December 2023 from a revised 6.7% in the previous three months, as workers continued to bid up their wages amid skills shortages and a record number of people with long-term sickness.

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Dover Port health body fears gangs of meat smugglers looking to bypass new post-Brexit checks

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Authority weighs up legal action against government over new checks on imported meat taking place 22 miles inland

The Port of Dover could become a target for criminals smuggling illegal and diseased meat into the country under new post-Brexit plans that will involve lorries from the continent being checked 22 miles inland, the port’s health authority has warned.

The Dover Port Health Authority (DPHA) is now considering legal action against the government over its decision to end physical checks of imported meat at a post within the port. Instead, lorries will be directed to a new checking facility half an hour’s drive up the M20 at Sevington, Ashford.

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CBI tells Jeremy Hunt to focus on green investment instead of tax cuts in budget

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Lobby group joins calls for chancellor to resist pre-election giveaways next month and spend on projects to boost economy

A leading business lobby group has urged Jeremy Hunt to resist calls for large-scale tax cuts in his budget next month, saying the government needs to avoid “short-termism” and devote spending to projects that boost the economy.

Adding its voice to a growing clamour for green investment, the Confederation of British Industry said pre-election giveaways at the budget should be kept to a minimum to allow for a surge in spending to achieve net zero.

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China has seen a fourth month of falling prices, but will it act to curb deflation?

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Plunge in consumer prices has fuelled calls for a stimulus package – yet Beijing may stick to the new normal of lower growth

• China consumer prices plunge at fastest rate for 15 years

China’s economy has gone from bad to worse – and it is only February.

Figures released on Thursday showed consumer prices fell by 0.8% in January compared with a year earlier, outstripping economists’ expectations and marking the biggest contraction in 15 years.

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China consumer prices plunge at fastest rate for 15 years as deflation fears deepen

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Plummeting food prices feed steep annual drop amid renewed calls to stimulate economy and offset weakening demand

China’s consumer prices fell at their fastest pace in 15 years in January, as the world’s second-largest economy sank deeper into deflation amid weakening demand.

Data released on Thursday showed that China’s consumer price index tumbled last month, falling by 0.8% compared with a year earlier. It marks the fourth consecutive month of declines, as well as the sharpest drop since September 2009, when the global economy was still grappling with aftershocks from the 2008 banking crisis.

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