Rishi Sunak will be looking at key indicators such as GDP growth, public debt levels and inflation as he draws up his autumn budget
Britain’s economic recovery from Covid is at growing risk from severe shortages of workers and materials, as well as mounting living costs for households, as Rishi Sunak prepares his budget and spending review.
Here are five key charts that will underpin the chancellor’s statement on Wednesday afternoon.
Continue reading...Chancellor concedes only 20% of transport funding boost is new and other commitments in £26bn spending plans are recycled
Labour has accused Rishi Sunak of presiding over a “smoke and mirrors” budget after he conceded that just 20% of his biggest single spending commitment unveiled before the speech is made up of new money.
The Treasury has committed to almost £26bn of spending in a rush of announcements before Wednesday’s budget and spending review. It is expected to contain no tax cuts and the chancellor has sought to reassure anxious Tory MPs that he is a fiscal Thatcherite at heart.
Continue reading...Data collected from 38 member countries says UK among the major economies now in the slow lane
The world’s major economies have seen their rapid recovery after easing Covid restrictions begin to run out of steam in the past month as a resurgence in the virus depressed consumer spending, according to the Organisation for Economic Cooperation and Development.
There are signs that the recovery in the US and Japan is losing momentum, the OECD said, while parts of Europe and China have slowed as consumers remain reluctant to eat out, visit attractions and shop as they did before the pandemic.
Continue reading...G7 countries will lose $5tn a year by 2050 if temperatures rise by 2.6C
The economies of rich countries will shrink by twice as much as they did in the Covid-19 crisis if they fail to tackle rising greenhouse gas emissions, according to research.
The G7 countries – the world’s biggest industrialised economies – will lose 8.5% of GDP a year, or nearly $5tn wiped off their economies, within 30 years if temperatures rise by 2.6C, as they are likely to on the basis of government pledges and policies around the world, according to research from Oxfam and the Swiss Re Institute.
Continue reading...Experts say recovery at risk amid sharp fall in EU workers and dwindling interest in UK jobs from abroad
Britain’s employers are struggling to hire staff as lockdown lifts amid an exodus of overseas workers caused by the Covid pandemic and Brexit, industry figures reveal.
According to the Chartered Institute of Personnel and Development (CIPD) and the recruitment firm Adecco, employers plan to hire at the fastest rate in eight years, led by the reopening of the hospitality and retail sectors as pandemic restrictions are relaxed in England and Wales on Monday.
Continue reading...Twelve months after the pandemic struck the Guardian’s economic tracker reveals real risk of lasting damage
When Boris Johnson announced the first stay-at-home order, effectively shutting down whole sections of the economy, it was hoped the tide could be turned within 12 weeks. As many months later, lockdown measures are being relaxed for a third time and Britain still faces a lengthy road to recovery from the worst recession for 300 years.
As restrictions ease, the chief economist at the Bank of England, Andy Haldane, warned that despite the reopening of the economy, the risk of a “jobs equivalent of long Covid” remains for workers across the country.
Continue reading...FTSE 100 posts biggest daily gain for over a month as investors buoyed up by vaccine and US economy hopes
The pound has hit its highest level against the dollar for almost three years as global markets were buoyed up by hopes for a faster economic recovery from the coronavirus pandemic.
Sterling rose by 0.5% to hit a 33-month high against the dollar on Monday, trading above $1.39 on the global currency markets for the first time since 2018, while also rising to a nine-month high against the euro of almost €1.15.
Continue reading...Departure to cost EU 0.5% of GDP but UK 2.25% by end 2022, according to first official estimate since deal was agreed
The economic blow dealt by Brexit will be four times greater in the UK than the EU, according to the latest forecasts by Brussels.
A month into the new relationship, the European commission said the UK’s exit on the terms agreed by Boris Johnson’s government would generate a loss in gross domestic product (GDP) by the end of 2022 of about 2.25% in the UK compared with continued membership. In contrast, the hit for the EU is estimated to be about 0.5% over the same period.
Continue reading...Tax experts and economists outline ‘fairest, most efficient’ way to repair public finances and quickly raise £260bn
The government has been urged to launch a one-off wealth tax on millionaire households to raise up to £260bn in response to the coronavirus pandemic, as the crisis damages Britain’s public finances and exacerbates inequality.
The Wealth Tax Commission – a group of leading tax experts and economists brought together by the London School of Economics and Warwick University to examine the case for a levy on assets – said targeting the richest in society would be the fairest and most efficient way to raise taxes in response to the pandemic.
Continue reading...Foreign secretary says it is not known when 0.7% target, set in law, will be restored
The foreign secretary has decided legislation is required to cut the aid budget since the current fiscal uncertainty means the government may feel obliged to miss the commitment to spend 0.7% on gross national income on overseas aid for longer than a year.
Legislation would be laid, Dominic Raab told MPs in an oral statement, but he did not give a date for doing so. The Foreign Office has indicated it is unlikely to be introduced until the second half of next year.
Continue reading...Accountancy firm warns of stalled economic recovery without EU trade agreement
Failure to strike a post-Brexit trade deal would cut the UK’s economic growth rate by more than half next year, delaying a full recovery from the coronavirus pandemic, according to a report.
The accountancy firm KPMG said the economy would suffer heavily should the UK fail to secure a trade deal with the EU before the end of the Brexit transition period at the end of December, just as the country attempts to escape the deepest recession since records began.
Continue reading...World economic outlook says 2020 impact is less than thought but there will be deep scars
The International Monetary Fund has scaled back its estimate of the hit to the global economy from Covid-19 this year but warned that the final bill for the pandemic would total $28tn (£21.5tn) in lost output.
Gita Gopinath, the IMF’s economic counsellor, described coronavirus as the worst crisis since the Great Depression, and said the pandemic would leave deep and enduring scars caused by job losses, weaker investment and children being deprived of education.
Continue reading...Reductions in government support as the original furlough scheme ends point towards a brutal round of redundancies
The UK economy continued its rapid rebound from the depths of the coronavirus lockdown in August, the latest official data on growth is expected to show on Friday, but many economists are braced for a grim winter as job losses mount.
The Bank of England’s chief economist, Andy Haldane, predicted last week that GDP would be “only around 3-4% below its pre-Covid level” by the end of the third quarter, covering July to September.
Continue reading...Several Conservative backbenchers argue that focus must be on supporting a continued economic recovery
The chancellor, Rishi Sunak, has been urged not to introduce tax hikes in his November budget by Conservative backbenchers who argue they would damage economic recovery.
The intervention followed speculation the Treasury could raise £20bn through extra levies to deal with the fallout from Covid-19.
Continue reading...Rolling live coverage of business, economics and financial markets as investors anticipate new approach to inflation
Something to sink your teeth into before lunch: more discounts on dining out.
Related: Eat out to help out scheme to be extended by some restaurants
Mark Haefele, chief investment officer, UBS Global Wealth Management, said:
While we expect the Fed to shy away from more radical easing measures, such as explicit controls on government bond yields, we believe Powell will likely outline other dovish measures. These could include a move toward average inflation targeting, giving the central bank more leeway to allow inflation to overshoot the 2% target while keeping rates pegged close to zero.
Maybe the age of the independent, activist central bank head is also coming to an end. Fiscal policy is more powerful and monetary policy needs to work in harmony with it. Monetary policy is being asked to do things (like tackle economic inequality) that it really isn’t suited to. But, here we are, waiting for Jay Powell to turn up at Grafton’s Saloon. He’s already done everything he can, he’s almost out of bullets and he may even have already won the fight, but we have placed our faith in him and desperately want fresh encouragement.
Continue reading...Surge in shares contrasts with Covid-related downturn and growing unemployment
The economic collapse in Britain during the second quarter of 2020 was the most brutal on record. Unemployment is forecast by the Bank of England to soar to 2.5m by Christmas. The Brexit cliff edge approaches. Yet in the City, the FTSE 100 has been on the up.
Never has the disconnect between financial trading and economic fundamentals appeared so extreme. What explains surging asset prices (the FTSE jumped 2% on the same day it was revealed the economy had slumped by 20%) when the outlook for many workers is so grim?
Continue reading...GDP falls 20.4% – the worst of any G7 nation in the three months to June
Britain has entered the deepest recession since records began as official figures on Wednesday showed the economy shrank by more than any other major nation during the coronavirus outbreak in the three months to June.
The Office for National Statistics (ONS) said gross domestic product (GDP), the broadest measure of economic prosperity, fell in the second quarter by 20.4% compared with the previous three months – the biggest quarterly decline since comparable records began in 1955.
Continue reading...Official measure to be declared this week as coronavirus lockdown shrinks GDP by 21% in second quarter
Britain’s economy will be officially declared in recession this week for the first time since the 2008 financial crisis, as the coronavirus outbreak plunges the country into the deepest slump on record.
Figures from the Office for National Statistics on Wednesday are expected to show that gross domestic product (GDP), the broadest measure of economic prosperity, fell in the three months to June by 21%.
Continue reading...As the UK faces what may be its worst ever recession, we begin a monthly series exploring the financial shock to business and living standards
One month after a national lockdown was declared in an attempt to limit the spread of Covid-19, it is clear that Britain is heading for the deepest recession in living memory.
Boris Johnson’s government launched unprecedented restrictions on 23 March, telling the British public that they must stay at home and bringing life as the nation knew it to an abrupt halt.
Continue reading...The Covid-19 outbreak is forcing politicians and central bankers to set aside ideology and orthodoxy to prevent a global collapse
It is as if the lights have been switched off. The global economy has been plunged into darkness as countries hunker down in response to the Covid-19 pandemic.
Most recessions develop gradually over time. When the last one started in 2008 it took the Bank of England six months to spot it. This time it is different. Then it was a financial virus, this time it is the real thing. Commentators often say the economy is hitting the wall or is falling off a cliff on the weakest of evidence. Today the cliches are horrifyingly true.
Continue reading...