Category Archives: Economic policy

Rachel Reeves vows to use defence spending to support UK’s ‘left behind’ industrial towns

Posted on by

Chancellor says increased military spending should support ‘British jobs and British industries’

Rachel Reeves has said UK companies and jobs will be prioritised under the government’s plans for a significant increase in defence spending, with an aim to support “left behind” industrial towns and the economy at large.

Announced by Keir Starmer last week amid growing fears over Donald Trump’s commitment to European security, the government will increase defence spending to 2.5% of GDP by 2027 – worth an additional £6bn a year.

Continue reading...

UK awarded its lowest ranking for workplace gender equality in a decade

Posted on by

‘Sluggish’ pace in tackling gender pay gap and worsening employment levels push UK back to 18th in PwC index of OECD countries

Women’s worsening unemployment and participation in the workforce has pulled the UK behind Canada to its lowest ranking for workplace equality among large economies in a decade.

The “sluggish” pace of change on women’s earnings relative to men’s – which means closing the gender pay gap could take more than 30 years at the current pace – has knocked the UK back one place to 18th in the Women in Work Index produced by advisory firm PwC.

Continue reading...

Reeves warned UK inflation will push public sector unions to seek higher pay rises

Posted on by

Plan for ‘reasonable’ 2.8% rises may prove insufficient, forcing chancellor to find billions in extra funding

Rachel Reeves has been warned public sector unions will demand higher pay increases to compensate for accelerating inflation, heaping pressure on the chancellor to find billions of pounds in extra funding.

The government made recommendations in December for a 2.8% pay rise for teachers, NHS staff and other public sector workers for the financial year beginning in April, saying it was a “reasonable amount” given forecasts for the economy.

Continue reading...

UK firms mull biggest layoffs in a decade as business confidence slumps

Posted on by

Impending tax rises from autumn budget fuel collapse in sentiment and rising redundancy intentions, surveys show

UK employers are preparing for the biggest redundancy round in a decade amid collapsing business confidence as firms brace for tax increases from April that Rachel Reeves announced in her autumn budget.

In a fresh blow for the chancellor, the Chartered Institute of Personnel and Development (CIPD), which represents human resources professionals, said a survey of 2,000 employers showed redundancy intentions at their highest level in 10 years, barring the Covid pandemic.

Continue reading...

Rachel Reeves has three options to dodge an economic crisis and all are unthinkable

Posted on by

As her £9.9bn of headroom evaporates, chancellor will have to raise taxes, cut spending or break ‘iron-clad’ fiscal rules

When Rachel Reeves stood up in the House of Commons on budget day on 30 October as this country’s first woman chancellor, she was brimming with pride: “To girls and young women everywhere, I say: Let there be no ceiling on your ambition, your hopes and your dreams.”

Four months on, however, there are few women or men, young or old, at Westminster, who would envy Reeves’s lot in charge of the country’s finances. The bind she finds herself in is more the stuff of a chancellor’s nightmares than dreams.

Continue reading...

UK economy grows by 0.1% in unexpected boost for Rachel Reeves

Posted on by

ONS data showing British national output rose in final quarter of 2024 confounds forecasts of 0.1% decline

• Business live – latest updates

Britain’s economy unexpectedly picked up in the final three months of 2024, official figures have shown, easing pressure on the chancellor, Rachel Reeves, after flatlining during the summer.

Figures from the Office for National Statistics show gross domestic product rose by 0.1% in the fourth quarter of 2024 – after zero growth in the previous three months – to beat the forecasts of City economists and the Bank of England for a decline of 0.1%.

Continue reading...

Caught in the middle: UK firms brace for fallout from Trump’s global trade war

Posted on by

While UK may not be in direct line of fire, knock-on effects on global trade has British businesses worried

“We’re vulnerable at the moment,” says Fiona Conor, the managing director of Trust Electric Heating, a Leeds-based radiator manufacturer, who has been considering expanding into the US market.

After a predictably unpredictable start to Donald Trump’s second term as US president, Conor is worried her options could be limited, as businesses across the UK brace for a global trade war.

Continue reading...

‘Stagflation’ fears as Bank of England cuts growth forecast and warns of price rises

Posted on by

UK economy expected to grow by just 0.75% this year, in fresh blow to Rachel Reeves’s attempts to raise confidence

Rachel Reeves’s plans for growth suffered a double blow after the Bank of England halved its forecast for the year and warned households would face mounting pressure from rising prices.

In a downbeat assessment as it cut interest rates for a third time in six months, Threadneedle Street warned people would face a fresh squeeze on living standards from rising inflation even as the economy stalled.

Continue reading...

Unambiguously bleak Bank of England forecasts pave way for spending cuts

Posted on by

Weak jobs market and above-target inflation will dent Reeves’s growth plans and may wipe out fiscal headroom

With the public finances tight and Rachel Reeves having pledged to balance the books, interest rate cuts are one of the few levers that could boost the UK’s economic growth in the short term, and the chancellor will be glad of the Bank of England’s quarter-point reduction on Thursday – and the clear signal that it is now in cutting mode.

Seven of the monetary policy committee’s (MPC) nine members backed the quarter-point drop, taking the Bank’s policy rate to 4.5%, while two wanted to be more “activist”, proposing a half-point cut. The Bank of England’s governor, Andrew Bailey, said the MPC would be “taking a gradual and careful approach to reducing rates further”.

Continue reading...

Bank of England cuts interest rates to 4.5% and halves UK growth forecast

Posted on by

Latest quarter-point reduction comes with warning households face inflation of 3.7% by autumn

The Bank of England has cut interest rates to 4.5%, as it halved its UK growth forecasts for the year and warned households would face renewed pressure from rising prices.

With the government under fire over the sluggish economy, the Bank’s monetary policy committee (MPC) voted by a majority of seven to two to reduce its key base rate, down from 4.75%, to provide some financial relief to borrowers.

Continue reading...

Reeves’s growth plans ‘exactly what economy needs’ say UK business groups – as it happened

Posted on by

This live blog is now closed, you can read more on this story here

Reeves says the supply side of the economy has been held back.

Politicians have lacked the courage to confront the factors holding back growth.

They have accepted the status quo. They have been the barrier, not the enablers, of change.

Without economic growth, we cannot improve the living standards of ordinary working people, because growth isn’t simply about lines on a graph. It’s about the pounds in people’s pockets, the vibrancy of our high streets and the thriving businesses that create wealth, jobs and new opportunities for us, for our children and grandchildren.

We will have succeeded in our mission when working people are better off.

Continue reading...

Up to 10,000 people will have to be rehoused if Heathrow third runway goes ahead, John McDonnell says – UK politics live

Posted on by

MP for Hayes and Harlington, whose constituency includes Heathrow, says homes will either be unliveable or need to be demolished

Q: Are doctors able to recognise depression? And can they decide if that affects someone’s capacity to make a decision about their health?

Whitty says doctors can identify depression. But he says it is harder for them to assess if that is affecting capacity.

That’s where help from colleagues from psychiatry, mental health more widely, is going to be useful. But that should be good medical practice, in my view, under all circumstances.

Certainly what I wouldn’t want is to be in a situation where the existence of the fact that someone who has a terminal diagnosis has some degree of low mood in itself just rules them out from any kind of medical intervention, this or any other. That shouldn’t be the case.

Continue reading...

Inflation figures to ‘make or break’ the case for an Australian pre-election February rate cut

Posted on by

Release of December quarterly CPI may be the most politically consequential set of numbers in recent times

Inflation figures due out on Wednesday could “make or break” the case for a pre-election rate cut next month, according to economists, in one of the most politically consequential set of numbers of recent times.

The market is pricing in an 84% chance of a 25 basis-point rate cut when the Reserve Bank of Australia (RBA) meets mid-next month, although those odds will rise or fall based on the December quarterly consumer price index.

Sign up for Guardian Australia’s breaking news email

Continue reading...

Government under pressure on economy as British households anticipate worsening finances

Posted on by

CBI says businesses plan to cut jobs and raise prices while debt charity says millions are ‘facing worries’

The government is under growing pressure to get momentum back into the economy amid warnings that businesses plan to cut jobs and raise prices, while millions of families believe their finances will worsen this year.

Before a major speech this week by the chancellor, Rachel Reeves, designed to restate Labour’s commitment to improving the economy, the CBI said private sector firms were urgently assessing their budgets to offset measures announced in last October’s budget.

Continue reading...

Hospitality firms ‘to incur £1bn costs from employer NICs on 774,000 more workers’

Posted on by

Industry body says businesses and jobs at risk unless Rachel Reeves’s tax changes delayed or altered

The hospitality industry will incur an extra £1bn of costs for 774,000 of its workers who will be newly eligible for employer national insurance contributions from April, endangering jobs and businesses, a leading industry body has claimed.

UKHospitality, which represents thousands of restaurants, hotels, pubs, cafes and nightclubs, is calling on the government to delay or alter changes to the tax announced in Rachel Reeves’s October’s budget in order to protect jobs.

Continue reading...

‘So immoral’: gig economy workers forced to pay fee to receive their wages

Posted on by

Retail assistants on low pay using YoungOnes platform docked cash or told to wait up to 30 days for earnings

Retail assistants have accused a gig economy firm of “holding them to ransom” by making them pay a fee if they want to receive their wages within a month.

A new payment system brought in by YoungOnes, which supplies “freelance” retail assistants to many well-known high street stores, charges gig workers 4.8% of their earnings to be paid in one minute or 2.9% to be paid in three days. If they decline, they typically have to wait 30 days. Previously the workers were paid in three days, without a charge.

Continue reading...

Rachel Reeves heads to China to build bridges, but a new golden era of relations is impossible

Posted on by

Seeking business partners post-Brexit is sound policy, but even in these darker geopolitical times the UK will ultimately side with the US

Rachel Reeves will fly with a delegation of City grandees to China this week as Labour seeks closer economic links with Beijing as part of its quest for growth.

With the outlook increasingly rocky at home after a run of soft economic data, the chancellor is sorely in need of a positive story to tell.

Continue reading...

Swinney to warn opposition of fuelling populism if Scottish budget not passed

Posted on by

Scottish Labour, Greens and Lib Dem MSPs accuse first minister of ‘creating false narrative’

John Swinney, Scotland’s first minister, will warn opposition parties that they will fuel populist forces if they prevent his budget from being passed this month.

In a keynote speech in Edinburgh on Monday to mark the new year, Swinney will say Scottish voters would be astonished and public services damaged if MSPs fail to allow the budget to go through.

Continue reading...

UK ministers warned housing crisis puts plans for NHS and economy at risk

Posted on by

Damning report reveals millions in England are living in poor-quality housing that threatens their health

Ministers have been warned that efforts to save the NHS and grow the economy will fail unless they tackle the housing crisis, as a damning report reveals millions of people are living in substandard homes that risk worsening their health.

In total, 4.5 million people aged 50 or above with an existing health condition in England are living in poor-quality housing with one or more problems such as rising damp, rot or decay that may be making them even sicker, the Centre for Ageing Better analysis found. Of those, 1.7 million are aged 70 or over.

Continue reading...

Mexico announces record drug seizure one week after Trump threatens tariffs

Posted on by

Soldiers and marines discover drugs in Sinaloa, while separately authorities arrest more than 5,200 migrants

Mexican security forces have impounded more than a ton of fentanyl pills in what officials have called the biggest seizure of the synthetic opioid in the country’s history.

Soldiers and marines found the fentanyl at two properties in the northern state of Sinaloa, late on Tuesday – exactly a week after Donald Trump threatened to impose 25% tariffs on products from Canada and Mexico unless the two neighbouring countries cracked down on the flow of immigrants and drugs across their borders with the US.

Continue reading...