Category Archives: Economics

China’s screeching U-turn on Covid will not be an instant fix

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If Beijing is expecting an immediate boost from abandoning its tough controls it is mistaken

From zero tolerance to “let it rip”. China has not just changed its mind on how to cope with Covid, it has executed the mother of all U-turns in response to slower growth and mounting civil unrest at the draconian lockdowns.

If Beijing is expecting an immediate economic boost from abandoning its tough controls it is mistaken. There will be a growth dividend from the policy shift but the state of the world’s second biggest economy will get worse before it gets better, and it will be next spring at least before the easing of restrictions starts to pay off.

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Exodus of more than half a million from workforce ‘puts UK economy at risk’

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Loss of employees since Covid raises fears of weaker growth and higher inflation, says Lords report

An exodus of more than half a million people from the British workforce since the Covid pandemic is putting the economy at risk of weaker growth and persistently higher inflation, a Lords report has warned.

The House of Lords economic affairs committee said the sharp rise in economic inactivity – when working-age adults are neither in employment nor looking for a job – since the onset of the health emergency was posing “serious challenges” to the economy.

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Elon Musk polls Twitter users over stepping down as CEO – business live

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Elon Musk says he will honour the results of a Twitter poll asking whether the should resign as head of the social media platform

Telsa investors seem to pleased with the way that Musk’s Twitter poll is leaning towards his potential resignation, with shares up 4% in pre-market trading:

Economic data interlude:

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RMT boss says no new offers but deal achievable as rail and road passengers face strike disruption – live

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Mick Lynch speaks after talks with minister on Thursday as one in five trains expected to run today and some National Highways workers strike


RMT leader Mick Lynch has said there are “no new proposals on the table” after talks convened by rail minister Huw Merriman on Thursday.

Speaking from the picket line at London Euston station, the union chief told Sky News:

“We had an exchange about what might be possible and some ways forward and ideas that all the parties shared, and the rail minister requested that all the parties get down to some more discussions in the next period.

“We’ll look to arrange those meetings with the employers and see if we can develop some solutions to the issues that hopefully all the parties can support.

If we get a set of documentation and a pay proposal that our members want to support, it will resolve the dispute and we can take all the action away.

I hope we can do that as quickly as possible.

“We started today with 46 organisations.

And why did we do that? We did that because we wanted to make sure that we manage this strike safely and effectively for every patient, the people that I’m speaking with here tonight in this room, and every other patient in England and Wales and Northern Ireland.

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Bank of England raises interest rates to 3.5% in ninth increase in a year

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Majority of MPC rate-setters back hike of 0.5 percentage points despite fears UK is entering a long recession

Mortgage payers are braced for higher borrowing costs, after the Bank of England pushed up its base rate by 0.5 percentage points to 3.5% despite saying inflation has peaked and Britain is about to enter “a prolonged recession”.

The Bank hiked interest rates on Thursday for the ninth time in a year, to the highest level in 14 years, but told borrowers to prepare for fresh increases in the new year.

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Goldman Sachs bankers brace for hefty cut to bonuses

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Bonus pool could be slashed by up to 40%, in possibly the lender’s largest cut to payouts since the financial crisis

Goldman Sachs bankers are reportedly at risk of having their bonus pool slashed by up to 40%, in what could be the lender’s largest cut to payouts since the 2008 financial crisis.

The bank is still in the process of deciding the size of its bonus pools for 2022, but the prospective cut could mean its 3,000 investment bankers endure the most significant drop in variable pay among their peers, according to the Financial Times, which first reported the news.

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Microsoft to buy 4% stake in London Stock Exchange

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US tech company signs 10-year strategic partnership with LSEG for data analytics and cloud technology

Microsoft will buy 4% of the London Stock Exchange as part of a multibillion-pound deal to work together on data analytics and cloud technology.

The US tech company will buy the stake from a consortium of Blackstone and Thomson Reuters, and will take a seat on the board of the London Stock Exchange Group (LSEG). The consortium previously sold the financial data company Refinitiv to LSEG in a £22bn takeover.

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UK economy returns to growth as GDP rises 0.5% in October

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Growth figure shrank 0.3% in a quarter, reflecting concerns over lengthy recession

Britain’s economy returned to growth in October as activity bounced back from the impact of the additional bank holiday for the Queen’s funeral, however a long recession is still expected.

The Office for National Statistics said gross domestic product (GDP) rose by 0.5% on the month, after a decline of 0.6% in September when many businesses closed their doors during the national mourning period.

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Economists hail end to zero Covid in China but huge human toll is feared

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Low rate of vaccination of elderly and a lack of natural immunity mean country may be in for a bumpy ride

Beijing’s abrupt dismantling of zero-Covid controls has been welcomed by economists, even as the country braces itself for the human impact of letting the disease spread through a vulnerable population.

The leadership’s abrupt U-turn on how it handles the pandemic appears to have been triggered by protests against controls that began last month, a nationwide show of discontent on a scale China had not seen in decades.

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Without effective vaccines, China’s economy may not heal

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Changes to zero-Covid policy could prove insufficient if lockdowns are expected to continue

China’s nearly three-year policy of enacting strict lockdowns to contain outbreaks of Covid-19 came with a heavy price for the world’s second largest economy.

The question for its president, Xi Jinping, and his inner court of advisers is whether a sudden relaxation of lockdown rules brought in this week will both prevent a recurrence of the shockwave of protests across the country and turn the economy around.

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Markets optimistic as China eases Covid rules, but experts warn of danger ahead

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Amid signs that supply chain woes are improving, economists remain uncertain that China is ready to live with Covid

Global shares and the price of some key commodities have risen on hopes that the easing of China’s strict zero-Covid measures would help to bring down inflation, even as some experts warned that the country was not prepared to live with the disease.

China’s government on Wednesday announced a significant shift towards living with the virus. People with Covid-19 who have mild or no symptoms can quarantine at home, while officials have been instructed to stop launching temporary lockdowns. Testing will no longer be required for “cross-regional migrants”.

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Is the UK really facing a second winter of discontent?

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Comparisons with 1979 are misleading – strikes over pay now are smaller in scale and focus, and stoked by inflation

Britain is facing a winter of strikes, as industrial action on the railways spreads to the health service and other key sectors of the economy. Such is the wave of discontent that more than 1m working days could be lost to disputes in December, the most since 1989, during Margaret Thatcher’s final years in power.

With inflation at the highest rate in 41 years amid the cost of living crisis, it’s not difficult to see why workers are pushing for better pay. Coming after the worst decade for average wage growth since the Napoleonic wars, including deep real-terms pay cuts for many in the public sector, it’s even less surprising still.

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UK retailers boosted by November sales of winter coats and hot water bottles

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Total sales rose by 4% but figures were helped by inflation masking lower volumes, says BRC

Britain’s retailers benefited from a November sales boost fuelled by Black Friday discounts and colder weather as consumers bought winter coats, hot water bottles and hooded blankets, according to industry data.

In its latest snapshot of high street and online spending, the British Retail Consortium (BRC) said sales growth picked up last month compared with October, despite mounting concern over the cost of living crisis.

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Timetable of trouble: the wave of strikes set to hit the Tories this winter

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Rampant inflation and government policy has brought matters to a head: so where is disruption going to hit and what are the unions asking for?

Strikes are not something most managers think about. The oft-mentioned “winter of discontent” and year-long miners’ strike were features of the late 1970s and mid-1980s. Since then, industrial action in the private and public sectors has fallen to a level so low that academics have given up studying it.

When pay talks began a year ago for the current financial year, inflation was rising, but the Bank of England was reasonably certain it would be temporary. Union leaders prepared for a post-pandemic battle over pay, but not one that would probably end in strike action.

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UK house prices fall at fastest pace since 2020 amid fallout from mini-budget

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Nationwide warns inflation and rising interest rates will weigh down housing market

UK house prices have fallen at their fastest rate for two and a half years as the fallout from Liz Truss’s disastrous mini-budget put buyers off according to Nationwide, which warned inflation and rising interest rates would weigh on the market in the coming months.

The price of an average home dropped 1.4% to £263,788 in November, according to the lender’s house price index, accelerating a slowdown that saw prices fall 0.9% in October. It was the third monthly fall in a row, and the biggest drop since June 2020.

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New York and Singapore top the list of world’s most expensive cities in 2022

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Sydney sneaks into Top 10 as rising energy prices send inflation soaring globally, Economist Intelligence Unit survey finds

New York was the world’s most expensive metropolis in 2022, sharing the unwanted title with Singapore, as soaring energy prices doubled the inflation rate across the major global cities, according to the Economist Intelligence Unit’s annual survey.

Last year’s leader Tel Aviv dropped to third, while Sydney snuck into the Top 10 and Moscow and St Petersberg in Russia scaled the rankings by as much as 88 places as sanctions and buoyant oil prices propelled prices higher, the EIU’s Worldwide Cost of Living report found.

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Thurrock council admits disastrous investments caused £500m deficit

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Tory-led Essex authority is on brink of bankruptcy and has appealed to government for emergency bailout

A Tory-led council has admitted a series of disastrous investments in risky commercial projects caused it to run up an unprecedented deficit of nearly £500m and brought it to the brink of bankruptcy.

The staggering scale of the catastrophe at Thurrock council in Essex – one of the biggest ever financial disasters in local government – is contained in an internal report made to the council’s cabinet, which reveals it has lost £275m on investments it made in solar energy and other businesses, and has set aside a further £130m this year to pay back investment debts.

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Covid’s still a big issue for China – and that’s trouble for global economy

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The economic outlook for China is not good however its leaders respond to anti-lockdown protests

For much of the world there has been hope for some time that the worst economic shocks from the Covid pandemic are in the rearview mirror. In China, however, there are important reminders that risks to the world economy still remain.

Three years since the virus first spread, protests in several Chinese cities against the Beijing government’s strict zero-Covid policies have reignited concerns in financial markets over the economic costs of the pandemic. Global oil prices have fallen back, while the Chinese yuan and stock markets across Asia have taken a hammering.

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Shares in UK’s top housebuilders fall as housing market cools

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Large estate agent chain’s profits also hit as interest rate rises and cost of living crisis put off potential buyers

Shares in one of the UK’s biggest estate agent chains and some of the largest British housebuilders fell on Friday, amid the latest warnings about the outlook for the housing market, as potential homebuyers are squeezed by rising interest rates and the cost of living crisis.

The share price of LSL Property Services, one of the UK’s largest estate agent chains, tumbled by as much as 11% after it warned on profits for the second half of the year and said conditions in the housing market had become more challenging than anticipated.

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Annual UK energy bills would have hit £4,279 without emergency support, Ofgem says

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Regulator raises cap for start of 2023 by £730 but government limits typical bill to £3,000 from April

The energy regulator Ofgem has said its price cap will reach £4,279 from January – but households will be shielded by the government’s emergency intervention to keep a lid on bills.

Ofgem said the cap, which is adjusted every quarter, will increase by £730 for the three months from the start of next year. However, the government’s energy price guarantee (EPG) will limit typical household bills to £2,500. Analysts had expected the cap to sit at about £4,200.

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