Analysis: Investors often turn to US currency in times of uncertainty and there are plenty of reasons for them to be jittery
It is two decades since the euro was last trading below $1.00 (£0.84) against the US dollar. Now the single currency is once again teetering on the brink of parity.
There are a host of reasons why, although the prompt for the most recent slide in the currency has been the fear Europe faces an energy crunch this winter.
Continue reading...Euro slides to a 20-year low of $1.0001 on anxiety that Europe will fall into recession, as Heathrow introduces limit on summer holiday passengers
The euro is teetering ever closer to parity with the dollar.
It’s now trading at just $1.0005, on concerns that the shutdown of the Nord Stream 1 gas pipeline for maintenance could become permanent.
“While we believe that a cessation of Russian gas supply to Europe is a real possibility, one that would cause a Eurozone-wide recession with three consecutive quarters of economic contraction, there are also good reasons to assume that gas supplies will resume after the maintenance.”
Continue reading...Boost in demand in June on back of jubilee celebrations fails to prevent third successive fall
Britain’s retailers are suffering the sharpest drop in spending since the depths of the coronavirus pandemic as hard-pressed consumers tighten their belts as a result of soaring inflation.
The monthly health check from the British Retail Consortium (BRC) reported a third successive drop in activity as the cost of living crisis continued to bite.
Continue reading...Analysis: If Johnsonomics stands for anything, it is a lack of plan or vision to address Britain’s economic woes
Boris Johnson entered Downing Street in July 2019 with a promise. The doubters, doomsters and gloomsters were going to get it wrong again: his leadership would make Brexit a success, re-igniting an economy stalled by the divisions over Europe.
Three years later, almost to the day, he prepares to leave with the country reeling from a political implosion of his own making, and an economy teetering on the brink of recession.
Continue reading...US unemployment rate held steady at 3.6%, labor department said, as jobs report indicated resilience
The US economy added 372,000 jobs in June, an indicator of resilience despite signs of slowing economic growth.
The jobs reports is seen as a key indicator on whether high inflation – and central bank efforts to tame it with interest rates rises – is beginning to bite down on the wider American economy.
Continue reading...Analysis: Rishi Sunak’s successor treading tightrope between spending to keep PM in power and dealing with economic crisis
Should he remain in the job for longer than some political commentators expect, Nadhim Zahawi faces a balancing act as chancellor. He must walk the line between doing what it takes to prevent the political implosion of Boris Johnson’s government, and dealing with the worst succession of economic shocks to hit Britain since at least the 1970s.
As the fourth Conservative chancellor in as many years, parachuted in after Rishi Sunak resigned with a stinging critique of Johnson’s devil-may-care attitude towards tax and spending, Zahawi is expected to face heavy pressure from the prime minister to cut taxes to revive the economy.
Continue reading...The children’s commissioner for England urged MPs to take urgent steps to tackle child poverty
The children’s commissioner for England has called on the government to develop urgent plans to tackle child poverty, amid the cost of living crisis that is hitting the most vulnerable in society hardest.
Rachel de Souza said children were increasingly worried about the soaring price of basic essentials and the impact on their lives, telling MPs on the Commons education committee that urgent steps were required to tackle poverty ahead of a difficult autumn for families.
Continue reading...West’s response to effects of Covid and Ukraine war condemned as shortsighted ‘collective failure’ to invest in future human capital
The international community would be “playing with fire” if it failed to help Africa recover from Covid and the impact of the Ukraine war, the International Monetary Fund’s director for the continent has said.
Failure to invest and support the continent was shortsighted and detrimental to the global economy, as half of the new entrants into the global workforce over the next decade would come from sub-Saharan Africa, Abebe Aemro Selassie, director of the IMF’s Africa department, told the Guardian.
Continue reading...Workers at big chains struggle to make ends meet as prices increase but their wages have not
Minerva Rodriguez has worked at McDonald’s in Houston, Texas, for more than 23 years. She is paid $12 an hour and says she is doing the work of two to three people because the restaurant is chronically understaffed. Now she, like many Americans, is facing another crisis: runaway inflation. And while she has noticed the food prices at her store have increased, pay has not.
“The wages are incredibly low and not sufficient for the work we do,” said Rodriguez, who joined the Fight for $15 and a union movement to push for higher wages and better working conditions. “They don’t want to lose that extra money. If they can have their present workers do double the job and not have to pay another worker it’s a benefit for them, but what happens with us? With food costs rising and gas prices rising, how are we supposed to live?”
Continue reading...Coalition government consults health experts, economists and growers in race to clear legal hurdles within two years
Germany is mulling over the consequences of soon becoming the world’s largest potential market for legally sold cannabis, as the country’s left-liberal government presses ahead with plans to allow the controlled distribution of the drug among adults.
Olaf Scholz’s coalition government has in recent weeks reiterated its 2021 coalition-deal vow to legalise for recreational use what its Green and liberal party minister have taken to referring to as Bubatz, a slang word for weed popular among German rappers.
Continue reading...Weakening economy, cost-of-living squeeze and rising interest rates are cooling market, index shows
Annual house price gains across the UK have slowed for a third month as the weakening economy, cost of living squeeze and rising interest rates started to have an impact on the property market.
The average UK house price hit a new record high of £271,613, but there are “tentative signs of a slowdown,” Nationwide building society said.
Continue reading...Prices up 3.1% on a year ago, with fresh food prices in particular rising sharply, figures show
Shop prices have hit their highest rate of inflation in almost 14 years as businesses grapple with soaring supply chain costs and a cut in household spending, figures from the British Retail Consortium (BRC) show.
They were up 3.1% on a year ago in June, up from 2.8% in May – the highest rate of inflation since September 2008, according to the BRC-NielsenIQ shop price index.
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Motoring group RAC say UK fuel retailers are engaging in ‘rocket and feather’ pricing, after petrol and diesel both touched record highs over the weekend.
Prices at the pumps jumped sharply (over the last few months as wholesale prices have risen.
“We are struggling to see how retailers can justify continuing to put up their unleaded prices as the wholesale cost of petrol has reduced significantly.
This is sadly a classic example of ‘rocket and feather’ pricing in action, and one which the Competition and Markets Authority will no doubt be looking at very closely. It seems as if retailers are making matters worse for themselves by not lowering their forecourt prices despite having a clear opportunity to do so.
Continue reading...Volume of Russian crude bought and then exported by India suggests some of it may end up in European petrol stations
The huge blue and red hull of the SCF Primorye came into port at Vadinar, western Gujarat, India, earlier this month. The 84,000-tonne oil tanker, built in 2009 and sailing under the Liberian flag, had arrived from the port at Ust-Luga, a settlement in Russia near the border with Estonia.
Until 2017, the Vadinar oil refinery was controlled by Essar – the Indian owner of the Stanlow refinery in Ellesmere Port. Since then a consortium including the sanctioned Russian state-owned oil firm Rosneft and the commodities trader Trafigura, which holds a 24.5% stake, have owned Nayara Energy, which runs the refinery.
Continue reading...David Lammy, the shadow foreign secretary, confirms party won’t seek to rejoin single market or EU bloc
Labour has broken its long silence on Brexit, laying out detailed plans to improve, not scrap, the deal Boris Johnson struck with the EU, in a move it concedes will enrage remain supporters.
On the sixth anniversary of the Brexit referendum, the shadow foreign secretary, David Lammy, confirmed the party would seek only limited changes and would not seek to rejoin the single market which would bring the return of free trade and free movement of people.
Continue reading...Sunak’s attempt to make a distinction between increases in pensions and wages fuels a sense of political favouritism
The government has got itself into a fine muddle on the triple lock pension guarantee, David Cameron’s gift-cum-bribe to older voters in 2010 that has ricocheted down the years. On the one hand, Boris Johnson and Rishi Sunak argue that awarding inflation-matching pay rises to public sector workers would risk an “inflationary spiral” and so should be avoided. On the other, the chancellor maintains that lifting the state pension by 10% – the figure likely to be produced by the triple lock formula – wouldn’t create inflationary pressures.
The position makes no sense. Income increases, whether delivered via pension payments or pay packets, all contribute to aggregate demand and spending capacity. Sunak’s attempt to make a distinction – “pensions are not an input cost into the cost of producing goods and services we all consume so they don’t add to inflation in the same way,” he said – only fuelled the sense of naked political favouritism. Teachers, to alight on the next bargaining battleground, aren’t manufacturing soap suds either.
Continue reading...Interest on debt payment leaps 70% on a year ago to £7.6bn, a monthly record
Government borrowing was higher than expected in May at £14bn as soaring inflation sent interest payments on the UK’s debt to a monthly record.
The Office for National Statistics (ONS) said debt interest payments leapt 70% on a year ago to £7.6bn, the third highest debt interest payment made by central government in any single month and the highest payment in May on record.
Continue reading...EU withdrawal fuelling higher import costs and costing British workers nearly £500 a year, says Resolution Foundation
Britain’s cost of living crisis is being made worse by Brexit dragging down the country’s growth potential and costing workers hundreds of pounds a year in lost pay, new research claims.
The Resolution Foundation thinktank and academics from the London School of Economics said the average worker in Britain was now on course to suffer more than £470 in lost pay each year by 2030 after rising living costs are taken into account, compared with a remain vote in 2016.
Continue reading...Rail unions set to walk out on Tuesday, as clashes loom over public sector pay offers falling short of inflation
A wave of 1970s-style economic unrest is threatening to spread from the railways across the public services, as unions representing teachers and NHS workers warn of potential industrial action over pay.
With the country preparing for rail strikes on Tuesday, Thursday and Saturday which will see half the network shut down, the biggest teaching union, the National Education Union (NEU), told the Observer that unless it receives a pay offer much closer to inflation by Wednesday, it will be informing education secretary Nadhim Zahawi of its plan to ballot its 450,000 members. The move could lead to strikes in schools in England in the autumn, the union said.
Continue reading...Exclusive: Emergency council cuts feared across England caused by inflation and higher energy costs
School-building projects, swimming pools and libraries have been earmarked for emergency funding cuts because town halls have been hit by an unexpected £1.7bn hole in their budgets, the Guardian can reveal.
Rampant inflation and soaring energy bills mean that council leaders have been forced to rip up financial plans from a few months ago, with higher than anticipated staff pay bills also contributing to their newfound deficits. Without help from Whitehall, it will leave them no option but to cut services and put up council tax next April.
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