Category Archives: Economics

UK food price rises could hit 15% over summer, report says

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Ukraine war, China lockdowns and Brexit help push up inflation, with products that rely on wheat worst hit

Food price rises in the UK could hit 15% this summer – the highest level in more than 20 years – with inflation lasting into the middle of next year, according to a report.

Meat, cereals, dairy, fruit and vegetables are likely to be the worst affected as the war in Ukraine combines with production lockdowns in China and export bans on key food stuffs such as palm oil from Indonesia and wheat from India, the grocery trade body IGD warns.

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Federal Reserve announces biggest interest rate hike since 1994

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Fed confirms 0.75 percentage-point increase as Americans across country hit hard by rising prices and shortages of key items

With soaring inflation and the shadow of recession hanging over the United States, the Federal Reserve announced a 0.75 percentage-point increase in interest rates on Wednesday – the largest hike since 1994.

Until this week the Fed had been expected to announce a smaller increase. At a press conference, the Fed chair, Jerome Powell, said the central bank decided that a larger hike was needed after recent economic news, including last week’s announcement that inflation had risen to a 40-year high.

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Why is the ECB still fiddling over a potential eurozone crisis? | Nils Pratley

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Christine Lagarde is failing to heed the lesson of last decade’s crisis: act quickly and act clearly

Perhaps the European Central Bank was feeling left out as the financial world turned its attention to the US Federal Reserve’s interest rate hike. But emergency meetings of major central banks are supposed to produce more substance than the weak offering that emerged from Frankfurt after a morning of contemplation: a plan to accelerate work on a “new anti-fragmentation instrument”.

The fragmentation in question is the widening of bond yields between eurozone countries. In short, as interest rate rises have come into view, weaker economies are having to pay meaningfully greater rates to borrow than the likes of Germany – about 2.4 percentage points more in the case of Italy.

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Markets brace for sharpest rise in US interest rates in almost 30 years

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Federal Reserve expected to increase cost of borrowing by 0.75 percentage points to curb rising inflation

The world’s financial markets are bracing themselves for the sharpest rise in US interest rates in almost 30 years, as America’s central bank takes action to halt rising inflation.

After days of frenzied investor speculation and signs of growing central bank anxiety, the Federal Reserve is expected to increase the official cost of borrowing by 0.75 percentage points for the first time since 1994.

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Pound falls to lowest level since pandemic crash

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Unemployment rise and prospect of new Scottish independence referendum fuel recession fears

The pound has fallen to its lowest level against the dollar since the onset of the Covid pandemic amid growing concern over the strength of the British economy.

Sterling dropped by more than a cent against the dollar to trade below $1.20 on foreign exchange markets for the first time since March 2020, as City traders reacted to mixed figures from the jobs market and the prospect of a fresh referendum on Scottish independence.

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UK pay falls at fastest rate for more than a decade

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Inflation and soaring energy bills cause squeeze on living standards, as unemployment rises slightly

Average wages in the UK are falling at the fastest rate for more than a decade as annual pay growth fails to keep pace with the rising cost of living.

The Office for National Statistics said annual growth in regular pay, excluding bonuses, fell by 2.2% in the three months to April after adjusting for its preferred measure of inflation – the biggest fall since November 2011.

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Global markets plunge as Fed mulls biggest rate rise in decades

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US investors fret about possible recession as S&P 500 plummets into bear territory and global markets feel aftershocks

Fears about a possible recession have pounded stock markets around the world amid reports that US Federal Reserve could raise interest rates by as much as 0.75% this week – its biggest single hike in borrowing costs for nearly 30 years.

As Wall Street’s benchmark S&P 500 index fell almost 4% on Monday into bear territory, prompting selloffs from Sydney to Shanghai, US central bank policy makers will begin a two-day meeting on Tuesday with expectations mounting that they will lift rates by at least 0.50%.

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CBI warns UK government over Northern Ireland protocol

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Impasse over Brexit deal forcing companies to reconsider investing in Britain, says business lobby group

The UK’s foremost business lobby group has warned the government that its threat to override the Northern Ireland protocol is forcing companies to think again about investing in Britain and dragging down the economy.

The Confederation of British Industry (CBI) said immediate talks with the EU, rather than political grandstanding, were needed to resolve the impasse over the protocol, which governs post-Brexit trade between the EU, Northern Ireland and Great Britain.

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Sanctions are hitting hard enough to hurt Russia, if not stop it

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Analysis: the assault in Ukraine continues, but it seems clear that real damage is being done to Putin’s economy

• Russia-Ukraine war: latest updates

Sanctions have affected many aspects of life in Russia, but one particular shortage has sent the wealthy elite into a spin: beauty clinics are running out of Botox.

The business daily newspaper Kommersant reported this month that Botox imports saw a threefold drop to 74,500 units in the period between January and March compared with the same time last year, after one western manufacturer stopped exporting to Russia.

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Climate crisis is ‘battering our economy’ and driving inflation, new book says

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Climatenomics lays out how ‘supply chain disruptions’ has become a euphemism for the effects of climate change

Forget Ukraine, coronavirus, corporate greed and “supply chain issues”, when it comes to inflation the climate crisis is the real, lasting, worry, according to a new book, and one that’s only likely to get worse.

Climatenomics, by former White House reporter and director of Environmental Entrepreneurs (E2) Bob Keefe, is a narrative account of how the climate crisis is fundamentally altering not just the US but global economies.

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UK employers take on workers at slower rate after fall in applicants

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Shortage of candidates since January means thousands of vacancies unfilled

UK employers increased the number of new staff in May at the slowest pace since early 2021 after a steep fall in the number of workers responding to job adverts.

After an increase in job switching by workers last year, often to secure higher pay, employers said the shortage of candidates since January meant they were unable to fill thousands of vacancies.

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Global supply chain crisis fuels push to local manufacturing as China’s appeal dims

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Analysis: US to examine with fresh urgency easing reliance on China as pandemic disruptions expose global economic vulnerabilities

Everyone has a story to tell about the supply chain problems that have affected the global economy, from the beginning of the pandemic through to the disruption caused by the war in Ukraine. From shortages of Ikea furniture and Christmas turkeys, to the dearth of computer chips that sent the cost of secondhand cars soaring, the dislocation of a once smooth-running system has caused havoc in the global economy.

But while predictions about the easing of bottlenecks have come and gone without any improvement, it has become clear the disruptions of the past two years or more are spurring fundamental changes to the world economy that could have yet more profound impacts on our lives.

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Zero-growth warning for UK economy as petrol prices surge

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OECD singles out cost of living crisis as a cause of Britain’s slide down growth league table

Boris Johnson’s attempt to reset his troubled premiership has received a double blow after petrol prices had their biggest daily rise in 17 years and a leading international thinktank said the UK economy would slow to a standstill next year.

Fears that Britain is heading for a prolonged period of 1970s-style stagflation intensified amid fresh evidence of the damaging impact of the war in Ukraine on the cost of living and growth.

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City donations worth £15m raise concerns over influence on UK politics

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Total donated to parties by financial firms and individuals tied to the sector over two years, report says

Concerns have been raised over the City’s influence on Westminster, after a report found financial firms and individuals tied to the sector donated £15m to political parties and gave £2m to MPs during the pandemic.

The campaign group Positive Money tallied the gifts, expenses and donations handed to MPs, peers and their parties, as well as the value of income from politicians’ second jobs, saying it contributed to finance’s “oversized influence” on policymaking.

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Thousands of UK workers begin world’s biggest trial of four-day week

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With work changed for ever by the pandemic, businesses are testing whether pilot represents a recognition that ‘the new frontier for competition is quality of life’

More than 3,300 workers at 70 UK companies, ranging from a local chippy to large financial firms, start working a four-day week from Monday with no loss of pay in the world’s biggest trial of the new working pattern.

The pilot is running for six months and is being organised by 4 Day Week Global in partnership with the thinktank Autonomy, the 4 Day Week Campaign, and researchers at Cambridge University, Oxford University and Boston College.

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‘Same nightmare week after week’: UK firms fed up with post-Brexit EU trade

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Exporters fear Northern Ireland protocol row will spur trade war with Brussels, making an already difficult job even harder

Mark Brearley is still frustrated by Brexit. More than a year from Britain’s formal withdrawal from the EU, on terms agreed by Boris Johnson’s government, exporting the goods his company produces hasn’t got any easier for the London-based manufacturer.

Describing it as “the same nightmare week after week”, he says: “A lot more time is spent with things going wrong. The EU really feels like the hardest place in the world to ship things to sometimes.”

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Most small firms fear long-term fallout from UK’s cost of living crisis

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Half worry rocketing prices will cut spending, while three in four fear long-term damage to businesses

Three-quarters of small and medium-sized companies are worried about the long-term impact the cost of living crisis, soaring energy bills and rising inflation will have on their business, a survey has found.

Just over half (51%) of SMEs said they were concerned that rocketing prices would dent consumer spending, in response to Barclays’ SME Barometer, a quarterly survey of business sentiment conducted for the bank.

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China funnels its overseas aid money into political leaders’ home provinces

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Schools, stadiums or airports help the presidents of countries that receive cash from Beijing tighten their grip on power

China’s financing of overseas projects has disproportionately benefited the core political supporters of incumbent presidents or prime ministers of those countries that receive the funds, according to a new book.

During the 20th century, China was mostly known as a recipient of international development finance. Its overseas development programme was modest – roughly on a par with that of Denmark. But over the course of one generation, as Beijing emerged as the world’s second-largest economy, its footprint began to extend far beyond its borders – often in the form of infrastructure initiatives such as Belt and Road.

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Ukraine war weighs heavy as apocalyptic mood shrouds Davos

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From a warning of third world war to global stagflation or depression, gathering is unsurprisingly sombre

The impact of Russia’s invasion of Ukraine dominated a delayed and slimmed-down World Economic Forum this year but it took George Soros to articulate what many of those making the trip to the Swiss Alps had been thinking.

Davos would not be Davos without a broadside from the 91-year-old philanthropist and former speculator, but the conflict in eastern Europe prompted his most apocalyptic warning yet.

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Royal Mail ‘at crossroads’ as pandemic parcel boom fades

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Postal service says it needs to adapt to post-Covid business world amid near-9% drop in profits and union pay battle

Royal Mail has warned that the company is at a “crossroads” and needs to urgently adapt to the post-pandemic environment as parcel deliveries, originally boosted by Covid lockdowns, continue to wane.

It piles further pressure on the postal company, as it struggles to reach a pay deal with unionised staff who are pushing for an inflation-based pay rise as the cost of living soars.

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