Category Archives: Economics

Jeremy Hunt makes U-turn on planned cut to energy support

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Campaigners unite with suppliers to call on ministers to give long-term help to struggling households

Ministers are under pressure to announce plans for a social tariff to help Britons struggling with their energy bills over the long term, after the government performed a U-turn on a planned cut to support for households.

On the morning of the chancellor Jeremy Hunt’s budget speech, the government confirmed the energy price guarantee would continue at its current rate, which limits a typical annual household bill to £2,500. It is being extended from April, when it was due to expire, for a further three months until the end of June.

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Budget pension shake-up is £4bn tax giveaway for wealthy, critics say

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Jeremy Hunt criticised for scrapping lifetime allowance and increasing annual contribution cap

The chancellor has been accused of unveiling a £4bn tax giveaway that will benefit the wealthiest people in the UK by dramatically increasing how much they can stash away in pensions while enjoying the full tax benefits.

Jeremy Hunt announced a major shake-up of the rules governing how much people can pay into their retirement pots, which will have no impact on the vast majority of the population but could lead to huge gains for the top few per cent of wealthy, older pension savers. Labour claimed it was a handout for “the richest 1%” and that someone with a £2m pension pot would pay up to £275,000 less in tax as a result.

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Hunt’s disability plans put 1m at risk of losing £350 a month, IFS says

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Charities and disability campaigners say chancellor’s proposals set out in his budget more ‘stick than carrot’

Up to 1 million people currently claiming incapacity benefits could lose hundreds of pounds a month as a result of plans outlined in the budget to push ahead with the “biggest reforms to the welfare system in a decade,” experts have said.

The warning came as ministers unveiled a range of measures to try to drive more people back into the workplace, including scrapping controversial “fit for work” tests for disabled claimants and stepping up the threat of benefit sanctions against part-time workers.

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SVB collapse may be start of ‘slow rolling crisis’, warns BlackRock boss

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Larry Fink tells investors more ‘shutdowns and seizures’ in US possible and predicts inflation and interest rates to rise

The collapse of Silicon Valley Bank could just be the start of “a “slow rolling crisis” in the US financial system with “more seizures and shutdowns coming”, the chief executive of the world’s largest asset manager has warned.

The CEO of BlackRock, Larry Fink, also predicted in a letter to investors and company bosses that inflation would persist and rates continue to rise, trends that both contributed to SVB’s collapse.

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UK homeowners still better off than renters despite spike in interest rates

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Average monthly cost of owning 3-bed home is £500 a year less than renting, but the gap is narrowing

Homeowners in the UK are nearly £500 better off a year than renters, according to new research from Halifax.

The average monthly cost of owning a three-bed home for first-time buyers is now £971, which is £42 lower than the average cost of renting an equivalent property, the mortgage lender said. Renters pay on average £1,013 each month – 4% more.

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Hunt likely to save spending spree for polling day, not budget speech

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The chancellor has room for giveaways in this week’s budget, but business and consumer groups fear he will hold them back for the election

Jeremy Hunt is under pressure to be generous when he delivers his first budget speech since he became chancellor last October.

The public finances have improved dramatically from the chaotic days that followed Liz Truss’s mini-budget in September, which rocked international money markets and sent interest rates on government debt soaring. The cost of financing Britain’s debt has fallen in recent months and the cost of gas on wholesale markets has tumbled.

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Silicon Valley Bank fails in largest bank collapse since 2008 crisis

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US regulators seize SVB’s assets after a run on the bank, as global institutions monitor situation closely

US regulators rushed to seize the assets of top tech lender Silicon Valley Bank on Friday after a run on the bank, marking the largest failure of such an institution since the height of the financial crisis more than a decade ago.

Silicon Valley Bank (SVB), the nation’s 16th largest bank, failed after depositors – mostly technology workers and venture capital-backed companies – hurried to withdraw their money this week as anxiety over the bank’s situation spread.

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UK shoppers slash spending as price rises and energy bills bite

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February figures from BRC highlight impact of cost of living crisis on British economy before budget

UK consumers sharply cut back their spending in February as soaring living costs damaged household finances, retailers have warned, despite strong sales of jewellery and fragrances for Valentine’s Day.

Highlighting the impact of the cost of living crisis on the economy before Jeremy Hunt’s budget next week, the British Retail Consortium (BRC) said sky-high energy bills and the rising cost of a weekly shop were forcing shoppers to cut back.

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New Brexit trading rules could take more than two years to bed in fully

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No 10 says UK is giving firms in Northern Ireland time to prepare with phased introduction

The new Brexit trading arrangements in Rishi Sunak’s revised Northern Ireland protocol could take more than two years to be fully implemented, government sources have confirmed.

Businesses in Northern Ireland say they expect a mass educational campaign to be launched across the country by HMRC and other government departments to help them put the deal announced in Windsor last Monday into operation if it is approved by parliament.

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ECB looking out for price gouging as fears grow over ‘greedflation’

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Concerns that a big driver of price rises may be firms using inflation as excuse to increase profit margins

Fears that Europe’s companies are exploiting high inflation to increase their profit margins have prompted a warning from the European Central Bank that it is closely monitoring potential price gouging of consumers.

Policymakers have repeatedly called for wage restraint but concerns are mounting that a bigger driver of the wave of price rises may be companies using inflation as an excuse to increase profit margins, a trend unions have described as “greedflation”.

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US Federal Reserve’s key inflation gauge ticks up in January

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Consumer prices rose 0.6% from December to January, up sharply from a 0.2% increase from November to December

The Federal Reserve’s preferred inflation gauge ticked higher in January, a sign that price pressures remain entrenched in the US economy and could lead the Fed to keep raising interest rates well into this year.

Friday’s report from the commerce department showed that consumer prices rose 0.6% from December to January, up sharply from a 0.2% increase from November to December. On a year-over-year basis, prices rose 5.4%, up from a 5.3% annual increase in December.

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Pakistan’s fresh £580m loan from China intensifies debt burden fears

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Loan is on top of £25bn that cash-strapped Islamabad already owes Beijing and Chinese commercial banks

China has agreed to loan Pakistan $700m (£580m) to help it weather its worst economic crisis in a generation, in a development that will intensify concern among western countries about cash-strapped Islamabad’s debt burden to Beijing.

The loan comes on top of $30bn (£25bn) that Pakistan already owes China and Chinese commercial banks. Securing the financing will help to unlock bailout cash from the International Monetary Fund (IMF).

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UK inflation could fall below 2%, Citi forecasts

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Falling gas prices and CPI decline could boost public finances before 2024 general election

Britain’s inflation rate could fall to below 2% by the end of the year, according to new financial industry forecasts, handing the chancellor a boost to the public finances before a general election in 2024.

Predictions that falling gas prices will accelerate the decline this year in the consumer prices index (CPI) from last month’s level of 10.1% could also support a recovery in household living standards and persuade the Bank of England to cut interest rates earlier than expected.

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Lloyds accused of ‘stuffing bankers’ pockets’ after proposed pay hikes for top bosses

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Chief executive Charlie Nunn could receive £9.1m payout, while top performing bankers to share £446m bonus pot for work in 2022

Lloyds Banking Group has been accused of “stuffing the pockets of already overpaid bankers” after proposing increases for top bosses that could result in a £9.1m payout for its chief executive, Charlie Nunn.

The bank revealed on Wednesday that staff would share a £446m bonus pot – the highest in four years – for their work in 2022, despite reporting flat annual profits, after an increase in the money put aside for a potential jump in defaults.

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Will Jeremy Hunt’s budget cut UK debt or help the public sector?

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Surprise surplus lands the chancellor with a dilemma – but he is unlikely to listen to calls to change course

Inflation is the chancellor’s friend if he only considers his income.

The official figures for the public finances show total tax revenues rose by 13.2% in January from the same month a year ago.

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Shell and Vitol accused of prolonging Ukraine war with sanctions ‘loophole’

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Exclusive: Ukrainian economic adviser urges energy firms to heed deadline to halt trade of ‘Russian-origin oil products’

The oil company Shell and energy trader Vitol have been accused of prolonging the war in Ukraine by exploiting a “loophole” in the EU sanctions regime to bring products derived from Russian oil into Europe through Turkey.

Oleg Ustenko, the economic adviser to the Ukrainian president, Volodymyr Zelenskiy, has urged the energy companies to commit to a deadline to halt the trade of a “Russian-origin oil products” to reduce Vladimir Putin’s war coffers, the Guardian can reveal.

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EU tipped to avoid recession after gas crisis eases

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Economic growth forecast to be 0.8% in 2023 but households still face cost of living pressures

The EU is predicted to narrowly avoid recession as a result of a milder-than-expected energy shock, although households face difficult times ahead as cost of living pressures ease only gradually, the European Commission has said.

Economic growth for the 27 countries of the EU is forecast to be 0.8% in 2023, compared with a 0.3% projection last autumn, when fears of winter power outages and the rising cost of living ran high. In the 20-country eurozone, the economy will expand by 0.9% in 2023, boosted by a better-than-expected performance in Germany and Italy, as well as relatively stronger growth in Spain.

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Brexit is a self-inflicted wound of unparalleled severity | Phillip Inman

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Quitting the EU has stalled business investment, making us reliant on workers who are now scarce. Hence rising wages, high inflation and increased interest rates. Result? A looming recession

Whenever Andrew Bailey, the governor of the Bank of England, talks about the economy, he is forced to mention the toll taken by Brexit.

Business leaders, initially reluctant to criticise the Tory decision to quit the EU, have begun to find their voice. Most recently, leading City figure Guy Hands called Brexit a “complete disaster” and a “bunch of total lies” that has harmed large parts of the economy.

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UK can expect year of stagnation after narrowest of escapes from recession

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Marginal expansions and contractions in 2023 will do little to solve a lack of investment and export shortfall

It was a recession in all but name: that is the conclusion of many economists who argue that while the official data shows the UK economy stood still in the last three months of 2022 rather than contracting, it is still in bad shape.

To be precise, the economy actually expanded by 0.01% in the fourth quarter, an increase so statistically insignificant that it is rounded down to zero. Had Britain not added just £77m to its £2.2tn gross domestic product (GDP) then it would have fallen into a technical recession, characterised by two consecutive quarters of negative growth.

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Sunak should expand free childcare to tackle workforce shortages, says CBI

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Business group says as much as £9bn of investment is needed to improve system

Rishi Sunak should funnel billions of pounds into free childcare to help get more parents into work to tackle acute workforce shortages, according to Britain’s leading business group.

The Confederation of British Industry (CBI) said the government urgently needed to announce extra funding and changes to childcare and early years support, arguing that a more accessible and affordable system was an immediate economic priority.

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