Category Archives: Economics

No extra money for public sector pay rises, Jeremy Hunt tells ministers

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Chancellor thought to have ruled out providing extra cash if PM decides to accept pay review bodies’ recommendations

Jeremy Hunt has told ministers there will be no extra money to give millions of public sector workers an average 6% pay rise, potentially leaving departments facing a difficult choice between raising salaries or cutting frontline services.

The Guardian understands the chancellor has ruled out providing a further cash injection beyond what is already budgeted if Rishi Sunak decides to implement the recommendations of independent pay review bodies, which are expected as soon as Thursday.

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UK pay growth hits record 7.3%, despite calls for wage restraint from Bailey and Hunt – business live

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Basic pay rises at joint-fastest rate on record, protecting workers from soaring inflation but adding to pressure on Bank of England

Bloomberg agrees that the Bank of England will not be pleased by today’s jobs report, saying:

UK wage growth held at a level that Bank of England Governor Andrew Bailey said is fueling inflation, maintaining pressure for higher interest rates.

Average weekly earnings excluding bonuses held at 7.3% in the three months through May after figures for the period through April were revised up, the Office for National Statistics said Tuesday.

“These figures are another dismal reflection of the Tories’ mismanagement of the economy over the last thirteen years.

“Britain is the only G7 country with a lower employment rate than before the pandemic and real wages have fallen yet again – just as more and more families feel the devastating impact of the Tory mortgage bombshell.

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Record UK pay growth adds to pressure for interest rate rise

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Jeremy Hunt and Bank of England’s Andrew Bailey call for wage restraint to help curb inflation

Wages increased at a faster rate than expected in May, putting pressure on the Bank of England to push up the cost of borrowing at its next meeting in August.

Earnings growth hit 7.3%, driven by the strongest rise in private sector pay growth outside the pandemic period of 7.7%, the Office for National Statistics said.

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UK tax cuts unlikely before election, says Jeremy Hunt

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Chancellor calls on firms to tackle high prices as government remains far from pledge of halving inflation to 5%

Jeremy Hunt has said he must “double down” on high prices after admitting a package of pre-election tax cuts this autumn was looking unlikely.

The government would not make moves to “pump billions of additional demand” into the economy, the chancellor added.

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Older UK workers who retired early in pandemic were ‘forced into poverty’

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Thinktank challenges view that those taking early retirement under Covid were relatively well off

Half of older adults who left the UK workforce amid mass redundancies in the first year of the Covid pandemic ended up falling into relative poverty, according to the Institute for Fiscal Studies (IFS).

Britain’s foremost economics thinktank said job losses during the early stages of the crisis, coupled with the additional health risks faced by older workers, were likely to have forced many people into early retirement.

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Bank of England’s quantitative easing scheme let ‘inflation take root’

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UK economy became reliant on cheap money due to the Bank’s actions, warns former permanent secretary to the Treasury

The Bank of England’s quantitative easing money-printing programme enabled high inflation to take root in Britain, while creating “windfall gains” for the rich, a former Treasury mandarin has warned.

Nick Macpherson, who was permanent secretary to the Treasury under the last Labour government and during David Cameron’s premiership, said the central bank’s £895bn bond-buying stimulus programme had gone “too far” and made the inflation shock hitting Britain worse.

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More Australian homeowners offloading properties at a loss as interest rate rises take a toll, new data shows

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Unit owners particularly vulnerable as profitable national housing sales sank to 92.3% in the three months to March 2023, according to CoreLogic data

Properties sold at a loss increased in the March quarter with almost one in six units offloaded for less than the owner paid, data group CoreLogic said.

As owners eyed the rising cost of servicing their debts, the national proportion of resales with a nominal profit sank to 92.3% in the January-March period, down from 93.2% in the preceding three months and marking the third quarter in a row of declines.

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Shop price inflation easing, say top UK retailers before key meeting with MPs

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British Retail Consortium says figure eased to 8.4% in June from 9% in May

Britain’s biggest retailers have said shop price inflation is easing ahead of a crunch meeting with MPs on Tuesday over the soaring cost of groceries, but warned food prices were continuing to rise at near record rates.

The British Retail Consortium (BRC) said annual inflation in overall shop prices eased to 8.4% in June, down from 9% in May, as retailers cut the price of many staples including milk, cheese and eggs. Clothing and electrical goods prices also fell ahead of the summer holidays.

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Primark owner upgrades profit outlook as inflation fuels jump in sales revenue

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Associated British Foods says group sales rose by 16% with Primark saying rises supported by steeper prices

The owner of Primark and food brands including Twinings has upgraded its profit forecast for this year as sales revenue jumped thanks to inflation-fuelled price increases and as shoppers bought summer clothes.

Associated British Foods, which also owns brands including Ovaltine as well as a sugar business, said that group sales rose by 16% to £4.7bn in the three months to 27 May. Sales at Primark were up by 13% to nearly £2bn.

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Bank of England faces flak as economic history fails to repeat itself

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Critics say Bank should pay less attention to economic models and more to what is happening on the ground

With Thursday’s 0.5 percentage point increase in interest rates to 5%, the Bank of England is hoping to land a knockout blow against inflation.

The latest hike is an admission that 12 rises over more than 18 months have not been enough to tackle the problem. Or, as the minutes said, the impact of shocks from Covid and the energy price crisis “were likely to take longer to unwind than they had done to emerge”, adding that the risks of inflation remaining high “were skewed to the upside”.

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Labour piles pressure on Sunak with plan to prevent ‘mortgage catastrophe’

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Shadow chancellor Rachel Reeves says party would force banks to take a range of steps to protect borrowers

Labour has piled further pressure on Rishi Sunak to take action to help struggling mortgage holders as the Bank of England prepares to raise interest rates again to levels not seen since before the 2008 financial crash.

Rachel Reeves, the shadow chancellor, said on Wednesday that if Labour were currently in power, it would force banks to offer a range of support to borrowers, including letting them move on to interest-only mortgages and extending their repayment period.

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Ukraine lacks capacity to process huge sums in aid, official admits

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Largest amount of money Kyiv previously worked with was $6bn a year in 2014, Mustafa Nayyem says

Ukraine will struggle to absorb the expected billions of western private and public sector aid for its recovery not due to corruption, but a simple lack of capacity to process and invest such huge sums, a senior Ukraine official has said on the eve of the UK-sponsored Ukraine recovery conference in London.

“It is about the capacity to work with this amount of money,” said Mustafa Nayyem, the head of the Ukraine State Agency for Restoration and Infrastructure Development.

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Why is inflation in the UK worse than in other major economies?

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While the rate has fallen from its October peak of 11.1%, the figure for May is expected to stay stubbornly high

UK inflation is expected to have remained stubbornly high in May despite a string of forecasts earlier this year predicting a sharp fall in response to tumbling energy prices.

Official figures are expected to show on Wednesday that the UK’s consumer prices index (CPI) eased slightly last month, to 8.4%, from 8.7% in April.

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Grocery inflation in Great Britain eases to 16.5% but remains high

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Supermarket inflation slows to lowest rate this year, although households still under pressure

Supermarket inflation in Great Britain has eased to its lowest level this year but remains high, forcing people to change how they eat and cook as household budgets are strained, according to the data firm Kantar.

Grocery inflation declined to 16.5% in the four weeks to 11 June, down from 17.2% last month and a record 17.5% in March. It remains at its sixth-highest level since the financial crisis in 2008, Kantar said.

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Nature at risk of breakdown if Cop15 pledges not met, world leaders warned

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Author of landmark UK review into the economic value of nature joins UN environment chief in calls for ‘action, not just words’ on biodiversity goals

Humans are exploiting nature beyond its limits, the University of Cambridge economist Prof Sir Partha Dasgupta has warned, as the UN’s environment chief calls on governments to make good on a global deal for biodiversity, six months after it was agreed.

Dasgupta, the author of a landmark review into the economic importance of nature commissioned by the UK Treasury in 2021, said it was a mistake to continue basing economic policies on the postwar boom that did not account for damage to the planet.

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Sunak, Hunt and homebuyers brace for an economic Big Wednesday

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The midweek inflation bulletin could be the most significant piece of government data published this year

This Wednesday will mark the longest day of the year and not long after the sun comes up the Office for National Statistics (ONS) will publish its latest cost of living bulletin. To say the data is eagerly awaited is an understatement. There is unlikely to be a more significant piece of official data released in the current parliament.

The reason is simple. Despite raising interest rates 12 times since December 2021 in an attempt to quell upward price pressures, inflation is proving harder to shift than the Bank of England imagined.

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Tesco boss: food inflation has probably peaked but prices will stay high

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Ken Murphy says higher costs of grocery imports because of Brexit are partly to blame for rising prices

The chief executive of Tesco has said food inflation has probably peaked but warns that prices are likely to stay high.

Ken Murphy, the head of the UK’s biggest supermarket chain, said the price of milk, bread, cooking oil and some vegetables such as broccoli had come down this month but inflation continued in other essentials, including rice and potatoes, as aweather issues and locked-in increases in the price of labour and energy continued to bite.

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‘I’m left with nothing’: Nigerians feel brunt of economic shakeup

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President Tinubu’s policies please foreign investors, but a devalued currency and soaring petrol prices mean ‘national sacrifice mode’ is widely unpopular

Nigerians are feeling the strain as their new president pushes through a series of unpopular policies that have earned him praise from foreign investors.

Bola Tinubu, who was sworn in on 29 May, has surprised many observers by taking a running start to his tenure of Africa’s most populous country. In little over two weeks he has banished a longstanding petrol subsidy, ejected the country’s central bank governor and ended restrictions on the rate of the naira, Nigeria’s currency.

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Beyoncé concert in Stockholm blamed for unexpectedly high Swedish inflation

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Start of superstar’s world tour ‘seems to have coloured inflation’, says economist, after tens of thousands of fans flocked to the capital for concerts

Swedish inflation fell below 10% in May, official statistics showed, but was still higher than expected with some analysts suggesting superstar Beyoncé had tipped the scales.

Consumer prices rose by 9.7% in May year-on-year, down from 10.5% in April, the first time inflation has come in under 10% in over six months.

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UK wage growth jumps, making interest rate rise more likely

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Unemployment rate unexpectedly falls to 3.8% in three months to April, in sign of strength for jobs market

UK wages grew at a faster than expected pace in April, reinforcing expectations the Bank of England will raise interest rates next week.

Figures from the Office for National Statistics show growth in average regular pay, excluding bonuses, strengthened to 7.2% in the three months to April – the highest level on record, excluding the Covid pandemic.

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