PM expected to expand shortage occupation list to help businesses fill jobs amid recession warnings
Liz Truss is expected to loosen immigration rules in an attempt to stimulate economic growth amid warnings of a recession.
The prime minister is set to expand the government’s shortage occupation list in order to help businesses fill vacancies by recruiting overseas workers with less bureaucracy.
Continue reading...Money spent on the green transition or skills would reap a dividend. But this cash is just going to the rich
The billions of pounds of extra borrowing signalled by Kwasi Kwarteng in his not-so-mini budget can be justified as long as the money isn’t flushed down the toilet.
Funds for renewable energy projects or to boost skills training would generate a return over the next decade.
Continue reading...Labour leader attacks ‘casino economics’ in wake of £45bn package of tax cuts announced by chancellor
Sir Keir Starmer has accused the government of “gambling the mortgages and finances” of the British people with its “casino economics”.
Speaking before his party’s conference in Liverpool, the Labour leader tweeted: “Tory casino economics is gambling the mortgages and finances of every family in the country. Labour will secure growth for working people, that benefits all communities. My government will deliver a fairer, greener future.”
Continue reading...Tax cuts to cost Treasury around £37bn in 2023-24, official figures reveal
There are no urgent questions in the morning, and so Kwasi Kwarteng, the chancellor, will be delivering his statement soon after 9.30am.
The Commons starts sitting at 9.30am, but they always begin with prayers in private, and so Kwarteng will be up a few minutes later.
The last time they did it one third of the beneficiaries were people buying second homes or buy to let, so we are sceptical that this is the magic bullet to increase homeownership. What we really need to do is to build more houses and to help get people onto the property ladder by increasing the supply of housing.
When this has been done before, it has often fuelled an already hot market and many of the beneficiaries have been people buying a second or third home, rather than the first time buyers that we really want to help who are often trapped in private rented accommodation where they’re paying as much in rent every month as they would in a mortgage.
Continue reading...Strategy of sweeping tax cuts gets hostile reception from markets and economic thinktanks, leaving some Tory MPs aghast
Kwasi Kwarteng has been accused of delivering a reckless mini-budget for the rich after his £45bn tax-cutting package sent the pound crashing to its lowest level against the dollar in 37 years.
In a high-risk strategy designed to revive Britain’s stagnant economy, the new chancellor announced more than £400bn of extra borrowing over the coming years to fund the biggest giveaway since Tony Barber’s ill-fated 1972 budget.
Continue reading...Threadneedle Street makes clear on eve of tax-cutting mini-budget that plans risk triggering more rate rises
The Bank of England has warned Kwasi Kwarteng the economy is in recession and it will most probably need to push interest rates higher after Friday’s tax-cutting mini-budget.
On the eve of a major package of support from the chancellor designed to break what he called the economy’s “cycle of stagnation”, Threadneedle Street said the UK economy was heading for a second consecutive quarter of falling output, with gross domestic product set to shrink 0.1% in the three months to September.
Continue reading...Third outsized rate increase in a row as central bank struggles to fight runaway inflation, increasing the cost of everything
The Federal Reserve announced another sharp hike in interest rates on Wednesday as the central bank struggles to rein in runaway inflation.
The Fed raised its benchmark interest rate by 0.75 percentage points, the third such outsized rate increase in a row, bringing the Fed rate to 3%-3.25% and increasing the cost of everything from credit card debt and mortgages to company financing.
Continue reading...MPC is dominated by people with little ‘real world’ knowledge and prone to groupthink, says ex-committee member
Members of the Bank of England’s interest-rate setting body should be appointed by the devolved administrations and by English MPs in order to counter groupthink, a former member of Threadneedle Street’s monetary policy committee has said.
David Blanchflower said the committee was dominated by people with little knowledge of the “real world”, and greater diversity of thought was needed to ensure the interests of ordinary people were reflected.
Continue reading...Sir Bob Kerslake calls on government to protect at-risk tenants as it did during pandemic
The former head of the civil service has warned of a looming “catastrophic” homelessness crisis caused by the cost of living unless the government reintroduces the eviction ban that protected tenants during the Covid-19 pandemic.
Sir Bob Kerslake, who chairs the Kerslake Commission on Homelessness and Rough Sleeping, said a failure to act “could see this become a homelessness as well as an economic crisis and the results could be catastrophic; with all the good achieved in reducing street homelessness since the pandemic lost, and any hope of the government meeting its manifesto pledge to end rough sleeping by 2024 gone”.
Continue reading...This week’s decision could pit Bank of England governor Andrew Bailey against an expansionary PM and chancellor
A lightning strike from the Bank of England awaits. Having delayed its decision until after the period of national mourning for the death of the Queen, Threadneedle Street could this week launch the biggest rise in borrowing costs for at least 25 years.
Announcing its plans a day before Kwasi Kwarteng’s mini-budget on Friday, the central bank is widely expected to use a fast and forceful rate increase to show its commitment to tackling soaring borrowing costs – despite the gathering storm clouds for the British economy.
Continue reading...On Black Wednesday anniversary, sterling hits 37-year low against dollar and 17-month low against euro
Fears that the British economy is already in recession after a slump in retail sales last month triggered heavy selling of the pound on international money markets taking it to a 37-year low against the dollar.
With average UK wages continuing to fall behind rising prices and the Bank of England expected to push up interest rates next week, sterling fell by more than 1% against the US currency to $1.135, its lowest since 1985.
Continue reading...Study says global economy is in steepest slowdown after a post-recession recovery since 1970
The world may be edging toward a global recession as central banks simultaneously raise interest rates to combat persistent inflation, the World Bank has warned.
The three largest economies, – the US, China and the eurozone – have been slowing sharply, and even a “moderate hit to the global economy over the next year could tip it into recession”, the bank said in a study.
Continue reading...Economists accuse bondholders of standing to make huge profits at the expense of the crisis-hit country
More than 100 economists and academics have urged international lenders to crisis-stricken Zambia to write off a significant slice of their loans during financial restructuring talks this month.
Zambia is seeking up to $8.4bn (£7.3bn) in debt relief from major lenders, including private funds run by the world’s largest investment manager, BlackRock, to help put its public finances back in order.
Continue reading...MPC members will look at other developments in UK and abroad in mission to increase interest rates
The drop in inflation from 10.1% in July to 9.9% last month is not going to trouble the Bank of England’s policymakers when they meet next week to set interest rates. Its monetary policy committee (MPC) is on a mission to increase the cost of borrowing to bring down inflation to 2%. Prices growth that sticks at almost 10% is still too high. One month’s figures are not a trend.
The nine MPC members will also ponder several other developments at home and abroad that can be considered reasons to increase interest rates.
Continue reading...Businesses may have to wait until November, although package could still be activated next month
British businesses have been warned by government officials that they will have to wait longer than households for financial support with their energy bills amid delays in launching the £150bn scheme, according to reports.
Company bosses are increasingly worried about the prospect of delays to the arrival of support because fixed energy contracts come to an end in October for hundreds of thousands of firms.
Continue reading...The new chancellor is reported to have told Treasury staff there was a need to ‘do things differently under fresh leadership’. This live blog is now closed
At the lobby briefing yesterday Downing Street admitted that Liz Truss had not completed her government reshuffle. New appointments were suspended following the death of the Queen.
According to an analysis by Arj Singh for the i, 55 posts remain unfilled. Singh says that, to fill all the posts that Boris Johnson had in his government, Truss will need to appoint 21 junior ministers in the Commons, nine Commons whips and 25 Lords ministers.
The removal of Sir Tom Scholar as the lead permanent secretary at the Treasury should be a cause for celebration.
Having worked in his department for nearly two years I saw at first hand the malign influence of the Treasury orthodoxy at play. Whether it was foot-dragging and passive resistance to creating a Treasury office in the north (in Darlington), which he fiercely resisted, or the botched arrangements in the construction of the bounceback loans during the pandemic, all roads led back to him.
I hope very much that our new prime minister will build on her excellent decision and remove responsibility from the Treasury for driving economic growth. It has no idea how to deliver this. The system obsesses about measuring inputs, counting out the money distributed to departments, but has little clue of how to measure outcomes. Departments are infantilised in their management of money, with savings being automatically clawed back to the centre. This of course removes any incentive to think innovatively, creatively or cost-effectively.
Continue reading...Health secretary says Truss did not focus too much on rewarding friends as new ministers attend first cabinet meeting
According to a report by Jason Groves in the Daily Mail, Liz Truss may announce an end to the ban on fracking this week. During the leadership campaign she said she wanted to allow fracking, but only in areas where there was a clear public consensus in favour.
On the Today programme this morning Lord Deben, the Tory peer who chairs the Committee for Climate Change, said fracking was not a solution to the UK’s energy problems. He explained:
The price of gas is not affected by the relatively small amount that we can get, in addition to the North Sea or indeed from fracking.
This is an international price and we would be paying the same price we got out of the fracked gas as we are for the gas we’re using now.
Continue reading...Latest updates: culture secretary will not serve in Truss’s cabinet and is expected to receive peerage from Boris Johnson
Philip Hammond, who was chancellor when Theresa May was prime minister, has joined Rupert Harrison, another Tory Treasury alumnus (see 10.02am), in criticising the Truss camp this morning for disparaging Treasury orthodoxy. Hammond told Times Radio:
When I hear people talking about Treasury orthodoxy, I do worry that what they might sometimes be talking about are economic facts of life. And yes, the Treasury will ensure that politicians, however senior, are confronted with the realities of the economic facts of life. “Yes, Minister, you may wish to do this. But you need to understand that the consequences will be as follows.” And we can’t legislate to change the laws of economics, unfortunately. And I think Liz Truss understands that very well.
Obviously, I worked very closely with her. She was chief secretary to the Treasury when I was chancellor, she understands the laws of economics as well as anybody does. And it’s essential that the political solutions that a government crafts, go with the grain of the laws of economics, because if you try and confront the laws of economics, you will come unstuck.
I think it is right and unavoidable that the government needs to provide support to people dealing with these huge energy bills as a short term solution, but we have to be clear, and I think [Truss] will be clear, that this can only be government support to deal with the immediate emergency energy prices being sky high, largely because of the war in Ukraine.
At the same time we’ve got to be honest about the fact that energy bills in the future are going to be higher than they were, traditionally, as we move to ensure energy self sufficiency, and to decarbonise our economies. That has always been the case; decarbonisation doesn’t come free.
Continue reading...Funding still needs to be approved but could offer breathing space amid country’s economic turmoil
The International Monetary Fund has tentatively offered Sri Lanka a $2.9bn (£2.5bn) loan to help the country recover from the worst economic crisis since it gained independence from Britain in 1948.
The funding is meant to provide some breathing space for Sri Lanka, which is scrambling to restructure nearly $30bn in debt to creditors including China, India and a string of international banks.
Continue reading...Five-sticker packs for football tournament in Qatar are 12.5% more than for Russia 2018
Inflation has come for the football sticker album. Collecting and completing the official Panini Fifa World Cup Qatar 2022 album will cost fans an average of about £870.
Panini, which first produced a World Cup sticker album for the 1970 tournament in Mexico, has priced five-sticker packs for the Qatar 2022 album at 90p each. That is a 12.5% increase on the 80p cost of a five-sticker pack for the Russia 2018 album. For Euro 2016 a pack cost 50p.
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