Category Archives: Economics

Productivity soars in sectors of global economy most exposed to AI, says report

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Employers in UK, one of 15 countries studied, willing to pay 14% wage premium for jobs requiring AI skills

The sectors of the global economy most heavily exposed to artificial intelligence (AI) are witnessing a marked productivity increase and command a significant wage premium, according to a report.

Boosting hopes that AI might help lift the global economy out of a 15-year, low-growth trough, a PwC study found productivity growth was almost five times as rapid in parts of the economy where AI penetration was highest than in less exposed sectors.

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UK cannot afford to give ‘cold shoulder’ to China, says City minister

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Bim Afolami’s comments distance British government from protectionist moves by US

The UK cannot afford to give the “cold shoulder” to China, the City minister said on Monday, in comments that will distance the British government from the Biden administration’s protectionist crackdown.

Addressing financial services bosses at the City Week conference in London’s Guildhall, Bim Afolami said it was “crucial” to engage with strategic competitors such as Beijing, and that the UK risked losing control of its economic future if it failed to find common ground.

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Dow Jones Industrial Average hits 40,000 points for first time; UK reality TV stars charged over FX scheme – as it happened

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Strong quarterly results and hope of interest rate cuts drive DJIA to new alltime high

A group of business leaders have warned Rishi Sunak that the government’s migration policies risk weakening the UK university sector, the Financial Times reports, undermining a key reason for companies to invest in the country.

The FT explains:

In a letter to Rishi Sunak, bosses at groups including miners Anglo American and Rio Tinto and industrial conglomerate Siemens, said they were “deeply concerned” by widening funding gaps and declining international student applications that were “a result of government policy”.

They said this risked “undermining the positive impact that international students have on our skills base, future workforce, and international influence”, as well as reducing the funding available for research and industry collaboration.

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Biden announces 100% tariff on Chinese-made electric vehicles

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White House levy to protect US makers from cheap imports likely to inflame trade tensions

The US president, Joe Biden, has announced a 100% tariff on Chinese-made electric vehicles as part of a package of measures designed to protect US manufacturers from cheap imports.

In a move that is likely to inflame trade tensions between the world’s two biggest economies, the White House said it was imposing more stringent curbs on Chinese goods worth $18bn.

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UK real pay grows at fastest rate in two years as unemployment rises

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Figures provide mixed message for Bank of England when it considers interest rate cut next month

The level of real pay for UK workers is rising at its fastest rate in more than two years despite a cooling of the labour market that has led to rising unemployment and falling job vacancies, the latest official figures show.

Fresh data from the Office for National Statistics showed the mild recession in the second half of 2023 has had an impact on demand for workers but has been slower to affect wages.

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Andrei Belousov: Putin picks trusted technocrat to run defence ministry

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Loyalist economist who ‘thinks years ahead’ inherits Kremlin’s biggest challenge as it prepares for the long haul in Ukraine

In 2014, Russia’s bloc of economic strategists was panicked by Vladimir Putin’s decision to annex Crimea and foment a war in east Ukraine, a move that led to western condemnation and sanctions against Russia that were seen as potentially ruinous.

But his adviser Andrei Belousov was a rare economist who publicly stood by his side, calling the damage manageable and western sanctions “insignificant” in terms of the Russian economy.

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NHS spending rise lags behind Tory funding pledges, IFS finds

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Thinktank says extra funding eaten up by higher inflation despite greater demand with service in poor state of repair

Spending on the NHS in England has risen less quickly than the Conservatives promised at the last election despite the extra demand created by the pandemic and record waiting lists, a leading thinktank has said.

The Institute for Fiscal Studies (IFS) said increases in funding from the government had been eaten up by higher than expected inflation and, as a result, NHS day-to-day spending had grown by 2.7% a year during the current parliament – below the 3.3% pledged by Boris Johnson in 2019.

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Jacob Rees-Mogg accuses Bank of England of ‘miserable incompetence’ over inflation

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MP criticises policies on interest rates and bond-selling as Tory rightwingers call for review of Bank’s independence

Jacob Rees-Mogg has accused the Bank of England of “miserable incompetence” over its failure to reduce inflation more quickly and its bond-selling strategy, as rightwing Tories prepare to renew their attacks on the Bank’s independence.

The former business secretary accused the Bank of damaging the economy with its interest rate decisions and costing the taxpayer tens of billions of pounds by selling off government debt too quickly in an attempt to reduce its balance sheet – a policy known as quantitative tightening (QT).

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World Bank and IMF can press Ghana to rethink ‘punitive’ LGBTQ law, charities say

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Charities and campaign groups are calling on bodies to say they may stop funding country if legislation comes into effect

The World Bank and the International Monetary Fund are coming under pressure to use their financial might to persuade Ghana to reconsider a proposed law that could lead to anyone who identifies as LGBTQ+ being jailed for three years.

Charities and campaign groups are calling on the global development bodies to tell Ghana they may stop funding the country if the proposed legislation – which will be challenged in the country’s supreme court next week – comes into effect.

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UK economy escapes recession with fastest growth since 2021, sending FTSE 100 to new high – business live

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Short, shallow recession is over, as UK economy grows faster than forecast in January-March quarter, by 0.6%, fastest quarterly growth in over two years


Labour’s shadow chancellor, Rachel Reeves, has posted that it’s ‘time for change’.

Following this morning’s GDP report, Reeves says:

From no growth to low growth - is that really the scale of the Conservatives’ ambitions?

Food prices are still high, families are paying more on their monthly mortgage bills and working people are worse off.

Construction remains the one area of weakness, particularly in the commercial sector. That’s no surprise.

Real estate is particularly exposed to the effect of higher interest rates, and the upheaval of the pandemic is still rocking the office and retail sector - with increased home working and online shopping permanently changing demand. That’s not a trend that’s unique to the UK.

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Biden White House to expand tariffs on Chinese trade

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President likely to add sectors such as electric vehicles, batteries and solar cells to range of levies set up under Donald Trump

Joe Biden is expected as early as next week to announce fresh tariffs on Chinese trade, with levies focused on strategic sectors including electric vehicles, in a review of measures first put into place under Donald Trump.

An announcement planned for Tuesday will keep the blanket tax rises introduced by the president’s predecessor but supplement them with targeted levies on industries connected to EVs, including batteries and solar cells, according to reports.

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Bank of England keeps interest rates at 5.25% but hints at a June cut

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Policymakers say they want to see more evidence that price pressures are easing before cutting rates

• Business – live

The Bank of England has signalled it could start cutting interest rates as early as June after inflation was found to be “moving in the right direction”, as it kept borrowing costs on hold at 5.25% for the sixth time in a row.

Alongside the decision to keep rates on hold, the Bank said inflation was already on course to hit its target of 2% and would fall to just 1.6% in two years, opening the door to future cuts in interests.

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Eurozone exits recession as ‘big four’ economies beat forecasts

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France, Spain, Germany and Italy helped by lower inflation and prospect of interest rate cuts

The eurozone has bounced back from its shallow technical recession after a stronger than expected performance by its “big four” economies in the first three months of 2024.

After two successive quarters of 0.1% contraction in the second half of 2023, the 20 nations that use the single currency posted growth of 0.3% between January and March.

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Thames Water collapse could trigger Truss-style borrowing crisis, Whitehall officials fear

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Exclusive: Concerns over effect on UK’s finances lead officials to believe utility should be renationalised before general election

Senior Whitehall officials fear Thames Water’s financial collapse could trigger a rise in government borrowing costs not seen since the chaos of the Liz Truss mini-budget, the Guardian can reveal.

Such is their concern about the impact on wider borrowing costs for the UK, even beyond utilities and infrastructure, that they believe Thames should be renationalised before the general election.

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Oil price could exceed $100 a barrel if Middle East conflict worsens, World Bank warns

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Increase in cost of crude could drive inflation up and force central banks to keep interest rates high

• Business live – latest updates

A serious escalation of tensions in the Middle East would push the price of oil above $100 (£80) a barrel and reverse the recent downward trend in global inflation, the World Bank has said.

The Washington-based institution said the recent fall in commodity prices had been levelling off even before the recent missile strikes by Iran and Israel – making interest rate decisions for central banks tougher.

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Jeremy Hunt’s scope for tax cuts hit by higher-than-expected borrowing

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Government borrowed £120.7bn in the last financial year, with just under £12bn in March

Jeremy Hunt’s scope for a substantial pre-election tax giveaway has been hit after the latest set of official figures showed the UK’s public finances in worse shape than thought at last month’s budget.

Figures from the Office for National Statistics (ONS) showed the government borrowed £120.7bn in the 2023-24 financial year – £6.6bn more than the Office for Budget Responsibility (OBR) had expected.

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Most difficult global outlook since 1930s heralds end of US-led world order | Larry Elliott

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IMF has revised up growth forecasts but medium-term prospects remain poor as globalisation goes into reverse

The 2020s are almost halfway over and are on course to be the most difficult decade for the global economy since the 1930s. Every finance minister and central bank governor at the spring meeting of the International Monetary Fund in Washington last week knows that, even if they were not prepared to admit it publicly.

The IMF likes to look on the bright side. It revised up slightly its forecast for global growth and now thinks scarring from the coronavirus pandemic and the cost of living crisis will be less severe than it originally feared. Interest rates have risen without triggering the recessions that were predicted. A soft landing has been finessed. The performance of some countries – the US and India to take two examples – has been strong.

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Brexit plans in ‘complete disarray’ as EU import checks delayed, say businesses

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Trade bodies say ongoing confusion about when checks will come in is ‘incredibly challenging’

Businesses have described Britain’s Brexit border plans as being in “complete disarray” after it emerged the introduction of some checks on EU imports will be delayed.

Post-Brexit border rules, due to come into force on 30 April, will require many meat, dairy and plant products from the EU to be physically checked at government border control posts (BCPs).

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Clustering of AI firms in south and east of England will foil levelling up – report

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Hi-tech ‘golden triangle’ of Oxford, Cambridge and London risks deeper regional inequalities, says thinktank

Investments in new technologies such as artificial intelligence (AI) are “profoundly skewed” towards the “golden triangle” of Oxford, Cambridge and London, and risk deepening existing regional inequalities in England, according to research.

Ministers have promised to level up the country, narrowing the gap between the best- and worst-performing areas, but the rapid rollout of generative AI and automation could cut against that aspiration, according to the Institute for the Future of Work (IFOW).

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Middle East conflict risks sharp rise in oil prices, says IMF

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In the UK, anxiety over the crisis after Iran’s missile strike on Israel drives down UK shares

An escalating Middle East conflict risks leading to higher oil prices, a reversal of the recent fall in inflation and a puncturing of the optimistic mood in financial markets, the International Monetary Fund has warned.

The Washington-based IMF said it was closely monitoring events in the region after Iran’s missile strike on Israel at the weekend and stressed the possibility that a war between the two countries could lead to higher interest rates.

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