Increase from 1% to 1.25% follows US Federal Reserve and European Central Bank tightening monetary policy
Japan’s central bank has increased interest rates to a fresh 31-year high as it attempts to combat global inflation linked to the war in Iran.
The Bank of Japan voted to raise its target interest rate from 1% to 1.25%, the highest level since 1995.
Continue reading...Although Mark Carney welcomed offer to become bloc’s first associate member, no one seems to know what that means
Mark Carney received a rapturous reception in the European parliament when he gave his speech on Thursday welcoming a proposal for Canada to become the EU’s first-ever associate member.
Politicians queued to shake his hand and take selfies. One described the speech as a historic moment. “Europe has extended a hand, and Canada has taken it,” said the German Green MEP Terry Reintke, who borrowed a Canadian ice hockey shirt for the occasion.
Continue reading...Economists urge John Healey to press Bank to change policy that is costing the exchequer billions of pounds
Economists have urged the chancellor, John Healey, to press the Bank of England to slow down its bond-selling programme that has already cost the exchequer billions of pounds.
The Bank’s monetary policy committee (MPC) meets this week to not only decide the level of interest rates but also whether they should freeze or slow the sale of government bonds, known as gilts, bought as part of the rescue operation after the 2008 banking crash.
Continue reading...Ex-Tory chancellor says economy has ‘fallen off a cliff’ since Brexit but rejoining union could be ‘quite simple’
The former chancellor George Osborne said Britain’s economy had “fallen off a cliff” since Brexit and that rejoining the European Union’s customs union would be the fastest route to recovery.
Osborne, who was sacked as chancellor by Theresa May after being part of David Cameron’s cabinet at the time of the referendum, said it was important to rebuild links with the EU.
Continue reading...Some buyers say they are ready to absorb the fallout of housing weakness if it means boosting home ownership across the board
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Falling property prices have come at the worst possible time for Alex Hogan and his partner. They are now weighing up whether they can afford to have another child.
Locked out of the established housing market, the Queensland couple resorted to buying a block of land to build a family home.
Continue reading...Economics graduates also appear to be affected as demand for them falls in well-paid roles in finance
AI may be warping the job prospects for students in the previously high-demand subjects of computer science and economics, according to a detailed look into the careers of recent UK graduates.
Data obtained for the 2027 Guardian University Guide published on Saturday shows that coding and software development were the fastest-falling occupations for graduates last year, while employer demand for graduates in well-paid roles in financial categories such as economists and management consultants also declined.
Continue reading...Critics say threshold pushes higher-paid staff to cut back on work and often mothers to stop working to avoid losing entitlement
John Healey has been urged to fix the £100,000 childcare “cliff edge”, that means some higher-paid employees cut back on work to avoid losing their entitlement.
Since the latest expansion of taxpayer-funded childcare in 2024, families with young children in which both parents earn less than £100,000 a year can be entitled to 30 hours a week of care - or none at all, if one of them cross that threshold.
Continue reading...Trump responds after Canada imposes $20bn in retaliatory tariffs and Canadian PM vows to diversify trade abroad
The US is banning dairy products, most alcoholic beverages and motorcycles from Canada, the White House said on Tuesday, as the trade war between the two neighbors and longtime allies escalates.
The ban will take effect in three weeks and comes after Canada imposed retaliatory tariffs on $20bn in US imports earlier on Tuesday.
Continue reading...Hamza Chowdhury says he will challenge party leader and has received nominations from other Green councillors
Healey says Andy Burnham set out in his statement to MPs last week what he thought had gone wrong
The fundamentals of our economy [were] hollowed out through a series of past policy decisions, political power was centralised, weakening the relationships between the people, the businesses and the institutions who can make things happen beyond Whitehall. The economic enablers were privatised and outsourced, leaving accountability to a thicket of arm’s length bodies and regulators, too often without the predictability or the pace that underpins a thriving market economy. And our country was deindustrialised as the cost to make anything, to build anything here soared, and our dependence on unreliable sources grew, including in areas critical to our national security and sovereignty.
Let me be clear, I recognise that the costs of business, its energy bills, regulation, burdens, planning constraints, labour costs, have grown since Covid and I want to draw the line.
And whether it is the cost of business or the cost of living, the only way we deal with these in the long term is growth.
Continue reading...Beijing wants banks and insurers to bolster investment in stock market as it helps to replenish cash reserves
China will inject $54bn (£40bn) into its financial sector as Beijing attempts to shore up banks and insurers in the face of faltering economic growth.
A host of financial institutions said they were due to receive billions of yuan in capital from state institutions including the ministry of finance and even the company that runs the country’s tobacco monopoly.
Continue reading...Swap rates rise to three-year high as increase in oil prices leads to fears of higher inflation
Homeowners in the UK are braced for a jump in mortgage rates, driven by higher inflation and interest rate increase expectations amid turmoil in the global bond markets.
UK swap rates, which lenders use to price mortgages, have risen to a three-year high, as this week’s global bond market sell-off ripples through the economy.
Continue reading...Bank says gold reserves held in London could be traded more easily and the move will allow it to respond more rapidly in a ‘crisis situation’
The Dutch central bank says it has moved 86 tonnes of its gold reserves out of the US and Canada to London, citing “increasing geopolitical unrest”.
De Nederlandsche Bank (DNB) said gold reserves held in London could be traded more easily than those held in New York and Ottawa.
Continue reading...Fair to say the current sell-off is international, but the PM has said little yet to make investors rethink the UK’s status
It’s too soon to say the bond markets have turned on Andy Burnham. Tuesday’s spike in gilt yields, taking the UK’s 30-year borrowing costs to their highest level since 1998, was part of an international sell-off of government debt.
The main contributors are well known. The Iran war, by increasing the cost of energy, has overturned the comforting start-of-the-year thesis of falling global inflation and interest rates. A plunging Japanese yen has kicked away another assumed source of financial stability. The US treasury secretary, Scott Bessent, hasn’t calmed nerves with his solo, and so far futile, attempt to bring down US yields. Meanwhile, the early stage of the AI revolution is an exercise in issuing squillions of debt before long-term returns on capital can possibly be assessed meaningfully.
Continue reading...PM says he has a ‘clear diagnosis of what has gone wrong’ with UK, and pays tribute to Keir Starmer after his predecessor quit parliament
My colleague Richard Partington, the Guardian’s senior economics correspondent, grew up, like Andy Burnham, in the Warrington suburb of Culcheth. He has been home to find out what people there are saying about the new PM.
Yesterday, Kemi Badenoch announced a reshuffle, replacing Mel Stride with Andrew Griffith as shadow chancellor and Priti Patel with Tom Tugendhat as shadow foreign secretary.
Continue reading...Yield on 30-year gilts highest since 1998 as rout triggered by global factors underlines tricky backdrop John Healey faces
The chancellor’s headroom against Labour’s fiscal rules could be almost halved at his first budget if the current global bond sell-off persists into the autumn, economists say.
The UK’s long-term borrowing costs jumped to their highest level since early 1998 on Tuesday as investors dumped government bonds, betting on higher inflation.
Continue reading...Trump’s Operation Economic Outcast is expected to push many Iranians into deeper poverty as food inflation soars
For many Iranians, the new US sanctions campaign, called Operation Economic Outcast, seems superfluous given the grim economic situation in their country.
Iranians are facing runaway food inflation, closed petrol stations and a seemingly never-ending depreciation of the nation’s currency caused by a lack of foreign exchange reserves.
Continue reading...Unpopular new policy comes as midterms loom and control of Congress could be decided by several Michigan races
Every day $1bn worth of goods crosses the river dividing Detroit, Michigan, and Windsor, Ontario, two largely blue-collar US and Canadian cities that have come to act as one in the creation of North America’s auto industry.
News this week of Donald Trump’s escalating trade spat with Canada has everyone worried. Political and economic leaders and observers labeled the move an act of “hubris” , blamed Trump’s “ego”, and called the escalation “insanity”.
Continue reading...Test of US rhetoric will rest on whether nations such as India, China and Russia view economic threats as credible
Tehran has vowed to retaliate against any country that cooperates with the US attempt to impose fresh sanctions against Iran in what the Treasury secretary, Scott Bessent, has billed as “the single greatest financial offensive ever marshalled against an adversary”.
In advance of the US announcement, the United Arab Emirates, Iran’s single biggest trading partner in the Middle East, announced it was ending all trade with Iran, a move Tehran believes was coordinated between Washington and the UAE.
Continue reading...Resolution Foundation suggests economy may finally be emerging from shadow of 2008 financial crisis
Productivity in the UK – a vital measure of economic health – is growing more strongly than official figures suggest, according to analysis from the Resolution Foundation.
The thinktank suggests the chancellor, John Healey, may have inherited an economy finally starting to emerge from the long shadow of the 2008 global financial crisis.
Continue reading...July data shows total public debt was £2.98tn, or 94% of GDP – up £96bn on a year earlier
The UK government ran a larger than expected £1.8bn deficit in July, underlining the challenges facing the chancellor, John Healey, as he draws up his first budget.
City economists had expected a shortfall of zero for July, a month when Treasury receipts tend to be swollen by self-assessment income tax payments.
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