Move could see synchronised strikes in autumn as new prime minister takes office
Britain is facing a wave of coordinated industrial action by striking unions this autumn in protest at the escalating cost of living crisis, the Observer can reveal.
A series of motions tabled by the country’s biggest unions ahead of the TUC congress next month demand that they work closely together to maximise their impact and “win” the fight for inflation-related pay rises.
Continue reading...US stock markets nosedive as Jerome Powell says at top bank summit the ‘overarching focus is to bring inflation back down’
US stock markets nosedived on Friday after Federal Reserve chair, Jerome Powell, warned of “pain” ahead as the central bank struggles to bring down inflation from a 40-year high.
Powell’s highly anticipated speech was more hawkish than had been expected, with the Fed chair pledging to do all he could to end rising prices. The Dow Jones Industrial Average lost just over 1,000 points, 3%, the S&P fell 3.3% and the Nasdaq dropped almost 4%.
Continue reading...MPs say it is vital tax and spending measures proposed by potential new prime minister are examined by OBR
Liz Truss has been challenged to open up her prospective emergency tax cuts and spending plans to scrutiny if she becomes prime minister and makes immediate moves to tackle the cost of living crisis.
The Office for Budget Responsibility (OBR), which produces independent forecasts based on major fiscal announcements by the government, revealed preparatory work had been under way for about a month to publish fresh economic forecasts in September.
Continue reading...Ren Zhengfei writes in leaked memo that ‘chill will be felt by everyone’ and company must focus on survival
The founder of Huawei has delivered a stark warning for the tech company’s future, sparking alarm with the frankness of his assessment and what it signals for smaller businesses amid China’s economic troubles and a global downturn.
In a leaked internal memo, Ren Zhengfei told Huawei staff “the chill will be felt by everyone” and the company must focus on profit over cashflow and expansion if it is to survive the next three years, indicating further job cuts and divestments.
Continue reading...Millions of vulnerable people will be harmed without radical policies to ease cost of living crisis, say experts
Physical and financial harm will be caused to millions of vulnerable families unless the government takes action to avert a winter catastrophe by cutting energy bills, leading economists have warned.
In the run-up to the announcement of the new energy price cap tomorrow the Resolution Foundation thinktank said radical policies such as price freezes, solidarity taxes or lower social tariffs were needed to prevent the cost of living crisis worsening.
Continue reading...Those in Europe’s inflation hotspot remain calm about rising prices, but a lack of government intervention could fuel further increases – and discontent
Like his cappuccinos, Taniel Vaaderpass, 33, isn’t bitter. His usually profitable company, OA Coffee, one of Estonia’s biggest coffee bean roasting companies, may have posted a loss for the first time last year and is set to do so again this year, but Vaaderpass remains strikingly sanguine as he sits on the terrace of the cafe he also owns on a cobbled street in the old town of Tallinn.
The central causes of Vaaderpass’s misfortune is a 240% increase in the price of unroasted green coffee and a 20% surge in the cost of the gas he uses to roast his imported beans. He also felt the need to give his staff a 10% pay rise in January despite the lack of company profits.
Continue reading...Monthly look finds deepening pessimism about personal finances and prospects for the economy
Consumer confidence in the UK is weaker than during the four major recessions of the past half century as rapidly rising inflation saps morale.
Although the UK is technically yet to enter recession, the latest barometer of sentiment from the data company GfK found the public gloomier than at any time since the survey began in January 1974.
Continue reading...Soaring cost of living is forcing up government spending on benefits, pensions and debt leaving no spare cash to lower taxes
Britain’s first double-digit inflation in more than four decades has cast doubts on the plausibility of the tax cuts being promised by Liz Truss and Rishi Sunak during their leadership battle, one of the UK’s leading thinktanks has said.
Following news that the government’s preferred measure of the cost of living rose by 10.1% in the year to July, the Institute for Fiscal Studies said higher inflation would mean extra spending on welfare benefits, state pensions and on debt interest.
Continue reading...Chinese recovery from lockdowns shows signs of fizzling out as central bank cuts interest rates
Global oil prices have dropped amid concerns over weaker growth in the Chinese economy caused by repeated Covid lockdowns and a downturn in the property sector.
A barrel of Brent crude fell by about 5% to below $94 (£78) on Monday, hitting the joint lowest levels since the Russian invasion of Ukraine as traders reacted to weaker figures from the world’s second-largest economy.
Continue reading...ONS says two bank holidays to mark Queen’s jubilee contributed to fall in output in June
Britain’s economy contracted by 0.1% in the three months to June, according to official figures that revealed the weakening outlook for the UK, which is expected to enter a recession later this year.
The dip in output in the second quarter followed 0.8% growth in the first quarter and was driven by the health sector – as Covid testing and the vaccine programme was wound down – and by retail, as household spending fell. Economists had forecast a bigger fall in output of 0.2% in the second quarter.
Continue reading...Gas prices drop sharply after a hitting a national average of $5 a gallon in mid-June
The pace of price rises dipped in the US in July as gas prices eased, bringing down the annual rate of inflation to 8.5%, still close to a multi-decade high but lower than the four-decade peak it hit in June.
July’s figure, while still high, represents a significant fall from the annual rate of 9.1% recorded in June and will raise hopes that inflation has finally peaked in the US. It follows other indicators that have suggested price rises are moderating.
Continue reading...Latest updates: Lib Dem leader says Tory leadership hopefuls have no plan to help millions of families struggling with price rises
The Joseph Rowntree Foundation, a leading poverty charity, says, in the light of the latest forecast about how energy bills will rise (see 10.54am), the government needs to at least double the help already provided to help people through the cost of living crisis. This is from Peter Matejic, its chief analyst.
The latest projections of annual energy bills exceeding £4,200 from January is the latest in a series of terrifying warnings over the past week, from the Bank of England and others. Families on low incomes cannot afford these eye watering sums and as a nation we can’t afford to ignore an impending disaster.
Both candidates to be prime minister must now recognise the extraordinarily fast-changing situation and act to protect the hardest hit from the coming emergency.
Unite said the 4% increase for staff in middle pay bands announced by the government last month is a “massive pay cut” because of soaring inflation.
The union will now consult with its 100,000 health members across the NHS in both England and Wales on whether they accept the “imposed deal” or want to challenge it through industrial action, which could mean strikes this winter.
Continue reading...Cost of living crisis has meant the average amount given to children has fallen to lowest level since 2001
Children’s piggy banks are paying a high price for the cost of living crisis after almost a third of parents cut back on pocket money during the last year.
The average amount that is going into the pockets of under-16s each week has dropped by 23% to £4.99 this year from £6.48 in 2021, according to research from the lender Halifax – the lowest amount since 2001.
Continue reading...Meanwhile £700m of support funds in business rates relief remains unpaid by local councils
Debt repayments, staff shortages and rising energy bills have pushed almost two-thirds of the UK’s top 100 restaurants into the red, according to research that reveals the impact of the pandemic, Brexit and the cost of living crisis on the hospitality sector.
With a recession looming and further increases in energy bills weighing on businesses, a separate report found that £700m of business rates relief remains unpaid with only half of English councils paying out the support funds.
Continue reading...Outbound shipments grew 18% after struggle with shortages of raw materials and lockdowns in first half of year
China’s export industries performed strongly last month after spending the first half of the year hampered by shortages of raw materials and pandemic-related lockdowns at major ports.
Offering an encouraging boost to the economy, outbound shipments grew 18% in July from a year earlier, the fastest pace this year, official customs data showed on Sunday, beating analysts’ expectations for a 15% gain, though imports remained sluggish.
Analysts had expected exports to fade amid growing signs that Europe, the US, UK and Australia are heading for recession, dampening the outlook for global consumption.
Labour’s Rachel Reeves says Conservatives are ‘playing blame game’ for UK’s economic problems
Liz Truss has been accused of being “deeply irresponsible” for threatening to tinker with the Bank of England’s mandate on the brink of a recession.
The shadow chancellor, Rachel Reeves, attacked the Tory leadership frontrunner after Truss and her allies repeatedly questioned the performance of the Bank’s governor, Andrew Bailey, and said she would review the institution’s remit.
Continue reading...Base rate raised by 0.5 percentage points to 1.75%, as Bank says inflation will hit 13% in October
Vladimir Putin’s invasion of Ukraine has left Britain on course for a recession lasting more than a year and inflation above 13%, the Bank of England has warned as it raised interest rates for a sixth successive time.
Threadneedle Street said it had no choice but to increase borrowing costs by 0.5 percentage points to 1.75%, blaming Russia for cost of living pressures not seen in more than four decades and a 5% drop in living standards straddling this year and next – the biggest since records began in the 1960s.
Continue reading...South of England experiencing faster recovery than north, Scotland and Northern Ireland
Visits to high streets and shopping centres dipped to below pre-pandemic levels last month, with the north of England – plus Scotland and Northern Ireland – trailing behind the south in terms of the overall recovery from Covid-fuelled gloom.
Footfall decreased by 14% in July compared with 2019, reversing gains made in April, as retailers struggled to entice shoppers amid a heatwave in the third week of the month and surging inflation.
Continue reading...As energy bills soar, survey shows almost half of homes are worried about paying rent or mortgage
More than one in eight UK households fear they have no further way to make cuts to afford a sharp increase in annual energy bills this autumn.
More than a quarter of households earning less than £20,000 worry they will be unable to cope with higher bills, with families in Yorkshire, the south-west and Northern Ireland the least confident about covering their costs, according to the latest rebuilding Britain index of 20,000 people by Legal & General.
Continue reading...Sharpest contraction is in energy-intensive industries, such as petrol, coking coal and ferrous metals
China’s factory activity unexpectedly shrank in July as sporadic Covid outbreaks disrupted the sector and the slowing global economy weighed on demand.
The official manufacturing purchasing managers’ index (PMI) fell to 49.0 in July from 50.2 in June, China’s National Bureau of Statistics said on Sunday. That was weaker than forecast, below the 50-point mark separating expansion from contraction.
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