Browsing: Economy

Economy
Is Donald Trump an aberration or a symptom of a deeper US malady?

The assault on the US Capitol by Donald Trump’s supporters, incited by the president himself, was the predictable outcome of his four-year-long assault on democratic institutions, aided and abetted by so many in the Republican party. And no one can say that Trump had not warned us: he was not committed to a peaceful transition of power. Many who benefited as he slashed taxes for corporations and the rich, rolled back environmental regulations and appointed business-friendly judges knew they were making a pact with the devil. Either they believed they could control the extremist forces he unleashed, or they didn’t care. Where does America go from here? Is Trump an aberration, or a symptom of a deeper national malady? Can the US be trusted? In four years, will the forces that gave rise to Trump, and the party that overwhelmingly supported him, triumph again? What can be done to prevent that outcome? Trump is the product of multiple forces. For at least a quarter century, the Republican party has understood that it could represent the interests of business elites only by embracing anti-democratic measures (including voter suppression and gerrymandering) and allies, including the

Economy
Lockdown leading to 'very difficult period' for UK economy, warns Bank governor

The Bank of England governor, Andrew Bailey, has said the economy is in a “very difficult period” due the latest Covid-19 lockdown and it would probably delay the recovery. In comments on Tuesday that echoed warnings from the chancellor, Rishi Sunak, a day earlier that the economy “is going to get worse before it gets better”, Bailey said it would bounce back, but only after the lockdown had ended and concerns about the spread of the virus had receded. “[We’re] in a very difficult period at the moment and there’s no question that it’s going to delay, probably, the trajectory,” he said. In a speech online to the Scottish Chambers of Commerce he said the shape of the recovery, while delayed, would broadly follow the forecast made by the Bank’s monetary policy committee (MPC) last November. Bailey said the unemployment rate, which he previously expected to peak at about 7%-8% in the summer would be lower after the government extended its job protection scheme and other measures to safeguard household incomes. However, the rate was likely to rise above the 4.9% that official figures estimate for the three months to October. Bailey said

Economy
Biggest fall in UK retail sales since 1995 despite online boom

UK retail sales suffered the biggest decline in 25 years last year as the closure of non-essential shops during lockdowns more than outweighed the online spending boom fuelled by Covid-19. The British Retail Consortium (BRC) said total sales fell by 0.3% last year from the level in 2019 – the worst performance since records began in 1995 – reflecting the impact of government lockdowns and shifting consumer spending trends. However, the overall drop in spending masks an explosion in sales for some shops, and a dramatic collapse for others. Amid a decline in spending in pubs, restaurants and hotels during the crisis, sales of food bought from shops increased by 5.4% on the year. However, sales of all other products fell 5% from a year earlier. While online sales were boosted during lockdown as consumers largely stayed away from the high street, sales of non-food items in physical shops collapsed by 24%. The decline in sales volumes comes after the first annual fall since 1995 in 2019, when years of weak wage growth hurting households’ finances and Brexit fears led to a 0.1% drop in retail sales compared with 2018 levels. Helen Dickinson,

Economy
The Guardian view on Starmer and the family: these bones need flesh | Editorial

Sir Keir Starmer’s sincerity when he talks about family is palpable. On Radio 4’s Desert Island Discs last year, as in a speech given on Monday, he appeared most animated when speaking of his feelings towards his parents, wife and children. The bonds between generations, and couples, clearly mean a great deal to him, as they do to most people. In 2021 our society is more honest than it used to be about the degree to which such relationships can and do go wrong. But our ties to the people we share our lives with remain, for most of us, an enormously important aspect of who we are.Policies geared towards families have always been part of social democratic politics. The Child Poverty Action Group, one of the charities supported by the 2020 Guardian and Observer appeal, helped persuade Harold Wilson’s Labour government to introduce a new child benefit, paid to mothers, in the 1970s. Under New Labour, the Sure Start programme channelled funding at under-fives as part of a successful effort to reduce child poverty. More recently, the Labour peer Alf Dubs led a campaign to give child refugees the right to be united with family members.But Sir Keir is

Economy
Rishi Sunak warns UK economy will get worse before it gets better

Rishi Sunak has warned Britain’s economic performance will worsen before the coronavirus vaccine helps to improve the outlook for jobs and growth. The chancellor told the House of Commons that, while the vaccine provides hope, there was a need for tougher national restrictions to contain the spread of the virus and that this would have a “further significant economic impact”. “While the vaccine provides hope, the economy is going to get worse before it gets better,” he said. Speaking in the Commons for the first time since the government launched a third national lockdown, Sunak said the Treasury’s emergency support measures were helping to protect jobs and businesses and that the vaccine was the “most important economic lever” to reboot the economy. But despite calls from business leaders, trade unions and Labour for a fresh package to match the challenges posed by the latest restrictions, the chancellor only restated the support now available under previously announced schemes. Sunak said he was confident that “this comprehensive support” – which totals more than £280bn in higher spending and tax cuts since the pandemic began – would help Britain through until the spring. Indicating that

Economy
Cut UK interest rate below zero to aid growth, says Bank policymaker

Cutting the UK’s official interest rate below zero would be good for growth and could be done without crippling commercial banks, a Bank of England policymaker has said.Silvana Tenreyro, one of the nine members of Threadneedle Street’s monetary policy committee, said negative rates had worked in other countries and would assist the UK’s recovery from its Covid-19 slump.In an online speech to the University of the West of England, Tenreyro rejected the argument that the profitability of banks would be adversely affected if the Bank cut the official cost of borrowing – bank rate – from a record low of 0.1% to below zero.The Bank is looking at the technical feasibility of negative rates for Britain’s financial system, and is expected to publish its views on this after next month’s policy meeting.Members of the MPC are divided on whether any fresh stimulus should be provided by increasing the purchase of assets under the quantitative easing programme or by following the recent example of Denmark, Sweden and the eurozone and pushing rates below zero.Tenreyro said she did not want to prejudge the Bank’s review or whether the economy would need additional support but made it clear that she would be in

Economy
UK firms fear twin force of Covid plus Brexit will force them under

Small businesses and manufacturers are bracing themselves for a fight for survival this year, according to fresh survey data, as they negotiate the twin threats of Covid-19 and weaker post-Brexit trade with the EU. More than 250,000 small firms expect to fold without further government financial support, according to a quarterly poll by the Federation of Small Businesses (FSB). Manufacturers’ trade body Make UK said its members expected lower investment in the UK and to have a harder time recruiting talent. Just under 5% of the 1,400 companies surveyed by the FSB said they were expecting to close down this year, the largest proportion in the history of the trade body’s Small Business Index, established in the wake of the 2008 banking crash. If the same degree of pessimism applies across the UK’s 5.9m small businesses, that would suggest as many as 295,000 fear they will go under. The vast majority of firms surveyed, 80%, did not expect their prospects to improve over the next three months, with tough lockdown restrictions likely to stay in place. Close to a quarter had cut staff over the last three months, while one in seven expected

Economy
Are soaring markets and house prices an 'epic bubble' about to pop?

There was plenty of bad news in America last week. A mob of Donald Trump supporters stormed the Capitol building. The number of new Covid-19 infections hit a record high. Employment fell by 140,000. None of it fazed Wall Street which continued to climb to dizzying new heights. That’s the way with financial markets: when they are in that sort of mood they go up when the news is good and they go up when the news is bad. Last week’s disappointing jobs report was a case in point. The fact that businesses had been shedding labour meant Joe Biden would have even more of an incentive to deliver an expansionary tax and spending package soon after he becomes president on 20 January. The loss of jobs, in the eyes of Wall Street, was not a bad thing at all: rather, it was a reason to continue buying into a stock market that is higher than it was before the pandemic began. Despite a strong performance last week, shares in London still have some way to go before they reach their pre-crisis level. Here, the asset class that has defied the depressed state

Economy
There will be no spring recovery. Sunak must prepare for a double-dip recession

With the development of the coronavirus vaccine, there had been light emerging at the end of the tunnel after a long and difficult year. After the worst year for growth since the Great Frost of 1709, the post-Covid thaw this spring seemed as if it was set to launch the UK economy into a roaring 2020s.Now, clear signs are emerging that Britain’s economy will be hit hard by tougher restrictions needed to contain the surge in Covid-19 infections, fuelled by a new faster-spreading variant first identified late last year in southern England. Far from a boom in 2021, the economy is destined for a double-dip recession.The new restrictions to contain the spread of the disease, including stay-at-home orders and the closure of schools under lockdown 3.0 in England, will heap renewed pressure on already struggling companies.Faced with the extra restrictions, and rapid growth in coronavirus infections – which would have led people to voluntarily put their normal activities on hold in any event, exposing the false choice between lockdowns and allowing the economy to run free – the consultancy Oxford Economics expects gross domestic product (GDP) to fall by 4% in the first three months of 2021. This would follow

Economy
We may have avoided no-deal, but this is still Brexit tier 3

Donald Trump’s starring role in the storming of the Capitol on Wednesday marked a fitting end to the courtship of the US president by Boris Johnson. Just think: before the president lost convincingly to Joe Biden, our prime minister – a master of procrastination and prevarication – was holding out for a Trump victory and a world-beating UK-US trade deal, which might well have involved a no-deal Brexit.Johnson enthusiasts tell us what a brilliant tactic it was for the prime minister to take the negotiations with the EU to 11th hour, but the likelihood is that a deal of some sort was only decided on when the US option disappeared. As it is, the deal is most certainly thin, as described by Labour Leader Sir Keir Starmer: it does not cover the 80% of our economy accounted for by services, and involves massive increases in bureaucratic form-filling for businesses from manufacturers to road hauliers and wine merchants, not to mention British citizens in general. It particularly hurts the young, who are overwhelmingly against Brexit.Before going on, I should like to wish readers, including green-ink Brexiters, a Happy New Lockdown. Life must go on, which is why not just this government,

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