New report upgrades outlook for UK economy with growth now forecast at 1.1% rather than 0.7%
The International Monetary Fund has warned the trade tariffs favoured by US presidential candidate Donald Trump could hurt global growth, as it upgraded its forecast for the UK economy.
The Washington-based organisation said tariffs trigger tit-for-tat trade wars that impoverish the economies involved in the dispute and the wider global economy.
Continue reading...Treasury weighing proposals as chancellor attempts to plug £22bn hole in public finances
Ministers are considering a tax raid of up to £3bn on the gambling sector as Rachel Reeves casts around for funds to shore up the public finances.
Treasury officials are understood to be weighing up proposals, put forward by two influential thinktanks and backed by one of the party’s top five individual donors, to double some of the taxes levied on online casinos and bookmakers.
Continue reading...Borrowing of £8.4bn last month could threaten OBR forecast for £114.1bn deficit for 2023-24 as a whole
Jeremy Hunt has been handed disappointing news from the public finances after government borrowing was higher than expected in February, leaving the national debt at the highest levels since the 1960s.
The Office for National Statistics said public sector net borrowing was £8.4bn in February, £3.4bn less than in the same month a year ago. However, it was higher than any economist expected in a Reuters poll that predicted a deficit of £6bn.
Continue reading...Despite signs of revival, the true costs of conflict are impossible to calculate because no one can say how long it will last
Cafe Merkaz is busy. A handful of patrons sit at its half dozen tables on Jerusalem’s Hanevi’im Street on a sunny lunchtime, while inside the coffee grinders grind and a pile of sandwiches on the counter shrinks hour by hour.
“A month or so ago, things looked pretty desperate. But we had twice as many people through the door this morning by 10am as we had in entire days back then. Now I think the year is just going to be tough, but we’ll hang on,” said Yaakov Saly, the 27-year-old owner.
Continue reading...25% jump in firms facing ‘critical’ financial distress, with property and construction sectors featuring heavily, says Begbies Traynor
More than 47,000 UK companies are on the brink of collapse after a 25% jump in the number of businesses facing “critical” financial distress in the final three months of 2023, according to a report.
It marks the second consecutive quarter-on-quarter period when critical financial distress has risen by a 25%, the latest “Red Flag” report by insolvency specialists Begbies Traynor found.
Construction (7,849)
Support services (7,096)
Real estate & property services (6,228)
Professional services (4,347)
General retailers (3,133)
Telecoms & IT (2,830)
Health & education (2,719)
Media (1,828)
Financial services (1,373)
Food & drug retailers (1,343)
Continue reading...The then chancellor’s plan proved to be of no economic benefit and was decried by scientists – but it clearly set out the political aims of ‘Dishy Rishi’
There is no blue heritage plaque above the stainless-steel open kitchen at the branch of Wagamama at London’s Festival Hall – but the restaurant might have claims to one. It was here, in delivering a couple of plates of katsu curry – one chicken, one vegan – on 8 July 2020, that our current prime minister in effect launched his campaign for the country’s leadership.
During that lockdown spring as pandemic chancellor, Rishi Sunak had one of the few enviable public roles: he was cast as the man who saved the economy by giving money away. By the time he pitched up at Wagamama that lunchtime, his various Covid-help schemes had dished out £176bn in furlough payments and loans and deferred taxes. In those efforts Sunak, little known before the crisis, had sometimes looked like the only sober and responsible member of her majesty’s government. The headline act of his summer budget statement, “eat out to help out”, changed that narrative.
Continue reading...Country needs successful firms to grow and struggling ones to shrink, says Resolution Foundation
The UK needs more businesses to fail, or at least shrink, to solve the economy’s long-running productivity crisis, a study has argued.
The country’s lack of “economic dynamism”, whereby weaker firms or lower productivity sectors shrink, and more productive ones grow, has caused GDP to be 4% lower between 2008 and 2019 than it would otherwise have been, according to a paper published on Monday by the Resolution Foundation.
Continue reading...Differing experts have urged the Monetary Policy Committee to both cut interest rates and to raise them
Turn up. Take the temperature of the economy. Raise interest rates. That’s the been the pattern from the responsible technocrats at the Bank of England for more than a year now – and they show no sign of stopping.
Between the depths of the global financial crisis in March 2009 and the start of the Covid-19 pandemic, interest rates were changed only five times, and three of those were in response to unexpected shocks: one after the Brexit vote in 2016, and two at the arrival of the pandemic in 2020. There was one period of more than seven years when interest rates were pegged at 0.5%.
Continue reading...Chancellor also expected to tell markets that government spending will remain within strict limits
Jeremy Hunt will defend the government’s vision for Britain’s economic future in a speech to City executives in London on Friday when he will lay out plans for investment and growth.
The chancellor will say he wants to promote policies that allow the private sector to re-tool the UK’s industrial base and re-skill the workforce to generate strong growth over the next decade.
Continue reading...Comparisons with 1979 are misleading – strikes over pay now are smaller in scale and focus, and stoked by inflation
Britain is facing a winter of strikes, as industrial action on the railways spreads to the health service and other key sectors of the economy. Such is the wave of discontent that more than 1m working days could be lost to disputes in December, the most since 1989, during Margaret Thatcher’s final years in power.
With inflation at the highest rate in 41 years amid the cost of living crisis, it’s not difficult to see why workers are pushing for better pay. Coming after the worst decade for average wage growth since the Napoleonic wars, including deep real-terms pay cuts for many in the public sector, it’s even less surprising still.
Continue reading...IFS and Resolution Foundation say Jeremy Hunt’s policies will shock middle England, with higher taxes here to stay
Traditionally elections in Britain are decided by swing voters in a relatively small number of seats. Parties go to considerable lengths to tailor their policies to the perceived demands of those getting by on average incomes. Pollsters have even coined names for the archetypal electors that need to be wooed: Basildon man and Worcester woman.
So it will be of some concern to government strategists that the post-autumn statement analysis by thinktanks focused heavily on how the measures announced by Jeremy Hunt had an effect on those not particularly poor but not especially rich either. Both the Resolution Foundation and the Institute for Fiscal Studies highlighted the return of the “squeezed middle”.
Continue reading...About 8% of borrowers – 130,000 firms – have so far failed to repay government-backed emergency loans
Taxpayers have been left to foot a £421m bill to cover soured Covid debts, after one in 12 businesses defaulted on state-backed emergency loans distributed at the height of the pandemic, official figures reveal.
In the first set of figures detailing the performance of government-backed loans offered to struggling firms during the outbreak, the Department for Business, Energy and Industrial Strategy said about 8% of 1.6m borrowers – roughly 130,000 – failed to repay their debts as of March this year.
Continue reading...Analysis: If Johnsonomics stands for anything, it is a lack of plan or vision to address Britain’s economic woes
Boris Johnson entered Downing Street in July 2019 with a promise. The doubters, doomsters and gloomsters were going to get it wrong again: his leadership would make Brexit a success, re-igniting an economy stalled by the divisions over Europe.
Three years later, almost to the day, he prepares to leave with the country reeling from a political implosion of his own making, and an economy teetering on the brink of recession.
Continue reading...OECD singles out cost of living crisis as a cause of Britain’s slide down growth league table
Boris Johnson’s attempt to reset his troubled premiership has received a double blow after petrol prices had their biggest daily rise in 17 years and a leading international thinktank said the UK economy would slow to a standstill next year.
Fears that Britain is heading for a prolonged period of 1970s-style stagflation intensified amid fresh evidence of the damaging impact of the war in Ukraine on the cost of living and growth.
Continue reading...Investors worry resurgence of Covid-19 cases will slow economic growth and stall global recovery
Fears that the fast-spreading Delta variant of Covid-19 will hurt the global recovery sent stocks sliding on Thursday, as investors worried that economic growth could be slowing.
Shares fell sharply in London and across other European exchanges, after losses in Asia-Pacific markets, on concerns that the economic rebound from the shock of the pandemic may have peaked, and on signs of a slowdown in China.
Continue reading...Figures from the jobs website Indeed expose the impact on employers as they struggle to recruit staff
The number of EU citizens searching for work in Britain has fallen by more than a third since Brexit, according to a study that exposes the impact on UK employers as they struggle to recruit staff.
Figures from the jobs website Indeed show searches by EU-based jobseekers for work in the UK were down by 36% in May from average levels in 2019. Low-paid jobs in hospitality, the care sector and warehouses recorded the biggest declines at 41%.
Continue reading...Slow Covid-19 vaccine progress in low-income countries will widen divisions between rich and poor nations
The global economy is set for the fastest recovery from recession for more than 80 years, but poor nations are at risk of falling further behind wealthy countries amid slow progress with the Covid-19 vaccine, the World Bank has said.
In its half-yearly outlook report, the Washington-based institution said the world economy was forecast to grow at 5.6% this year, in a sharp upgrade from previous estimates it made in January for growth of 4.1%.
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...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...Exporters badly hit already but KPMG says ‘biggest headaches’ have yet to come’ for importers
British firms are warning of further Brexit red tape as the government prepares to introduce a long list of new controls on imports from the European Union in April and July.
In the coming months further checks are due to be phased in at the UK border, controlling everything from the import of sausages and live mussels to horses and trees, as well as the locations these checks can take place.
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