Economic growth of sorts, but UK plc is going nowhere

Economic growth of sorts, but UK plc is going nowhere

GDP is likely to edge sideways in 2023 (if that) but the true impact of rising interest rates has yet to be feltUK economy staged modest recovery in JanuaryBusiness live ? UK GDP grows by 0.3%It is three years this month since the UK went into lockdown and the path of the economy over that period is now strikingly clear. There was an instant collapse in activity that reduced output by more than a quarter followed by a two-stage bounceback interrupted by a second lockdown.By the end of 2021, the economy ? as measured by gross domestic product (GDP) ? was pretty much back to where it was before the coronavirus pandemic struck. Over the past 12 months it has remained at that level rather than returning to its pre-lockdown growth path. Continue reading...

Boots shoppers to earn fewer Advantage card points as retailers’ costs rise

Boots shoppers to earn fewer Advantage card points as retailers’ costs rise

From May, loyalty card holders will collect 3p of points for every ?1 spent at health and beauty chain, down from 4pBoots is cutting the points per pound shoppers can earn on their loyalty card by a quarter, while offering discounts on its own-brand products.The health and beauty chain told customers via email that from May, holders of the Boots Advantage card would collect 3p worth of points for every ?1 spent, instead of 4p. They will keep the number of points they have already collected, which will still be worth the same amount. Continue reading...

UK economy rebounds as Jeremy Hunt finalises budget

UK economy rebounds as Jeremy Hunt finalises budget

January GDP growth of 0.3% bigger than expected, driven by education, health and recreation sectorsAnalysis: Economic growth of sorts, but UK plc is going nowhereBusiness live updates: UK economy returns to growthThe UK economy rebounded more than expected in January, providing a modest boost to the chancellor as he puts the finishing touches to next week?s budget.Growth of 0.3% month on month was driven by a broad-based return of activity across the education, health and recreation sectors, including the return of football?s Premier League after the winter World Cup, the Office for National Statistics (ONS) said. Continue reading...

Budget 2023: Hunt plans to raise pension cap and improve childcare help

Budget 2023: Hunt plans to raise pension cap and improve childcare help

Chancellor likely to announce increase to ?40,000 pension annual limit and lifetime allowanceJeremy Hunt is considering a boost for the pensions of middle-class professionals and more help with childcare for parents in next week?s budget, as he tries to get more people into the workforce.The chancellor is likely to announce significant increases to pensions allowances in a bid to tackle the ?pension trap?, which has led many workers to take early retirement. Continue reading...

Why did Silicon Valley Bank fail?

Why did Silicon Valley Bank fail?

Shutdown and takeover of bank by regulators can be traced to the Fed raising interest rates and risk-averse investorsUS regulators seize assets of Silicon Valley Bank amid institution?s failureThe shutdown and takeover of Silicon Valley Bank by regulators on Friday can be traced to the US Federal Reserve raising interest rates and souring the risk appetite of investors.Here is the sequence of events that led to the failure: Continue reading...

Silicon Valley Bank fails in largest bank collapse since 2008 crisis

Silicon Valley Bank fails in largest bank collapse since 2008 crisis

US regulators seize SVB?s assets after a run on the bank, as global institutions monitor situation closelyWhy did Silicon Valley Bank fail?US regulators rushed to seize the assets of top tech lender Silicon Valley Bank on Friday after a run on the bank, marking the largest failure of such an institution since the height of the financial crisis more than a decade ago.Silicon Valley Bank (SVB), the nation?s 16th largest bank, failed after depositors ? mostly technology workers and venture capital-backed companies ? hurried to withdraw their money this week as anxiety over the bank?s situation spread. Continue reading...

If the British economy can’t pay better wages, then it must shrink

If the British economy can’t pay better wages, then it must shrink

Vacancies are high, but pay is not rising. Nor will the Bank of England allow it to. That means something else has to giveSome of Britain?s biggest industries need to shrink and they need to start thinking about how to do it now.Hospitality is one. Manufacturing could be another. These sectors are among many to say they cannot find the workers they need at the price they have traditionally paid. Continue reading...

Government to meet tech firms following collapse of Silicon Valley Bank UK

Government to meet tech firms following collapse of Silicon Valley Bank UK

Industry leaders expected to call for state intervention to avoid failure of hundreds of UK firmsThe UK government is coordinating an emergency meeting with tech firms, who are expected to call for state intervention to avoid the failure of hundreds of firms following the collapse of Silicon Valley Bank UK (SVB UK).The chancellor, Jeremy Hunt, also spoke with the Bank of England governor, Andrew Bailey, on Saturday morning, just hours after the collapse of SVB UK?s parent company, which marked the largest failure by a bank since the 2008 financial crisis. Continue reading...

Hunt likely to save spending spree for polling day, not budget speech

Hunt likely to save spending spree for polling day, not budget speech

The chancellor has room for giveaways in this week?s budget, but business and consumer groups fear he will hold them back for the electionJeremy Hunt is under pressure to be generous when he delivers his first budget speech since he became chancellor last October.The public finances have improved dramatically from the chaotic days that followed Liz Truss?s mini-budget in September, which rocked international money markets and sent interest rates on government debt soaring. The cost of financing Britain?s debt has fallen in recent months and the cost of gas on wholesale markets has tumbled. Continue reading...

Britain’s older electorate can live with low GDP. It’s high inflation they abhor | Torsten Bell

Britain’s older electorate can live with low GDP. It’s high inflation they abhor | Torsten Bell

Tories can take heart that the over 65s won?t punish poor GDP, research finds. Just don?t hit them in the pocketBritain is a stagnation nation, with next to no productivity growth and zero real wage growth post-financial crisis. And that?s before inflation hit 40-year highs. Can British politics chart a course out of this low-growth mess?The demographics won?t help. That is the takeaway from an interesting recent paper by Oxford?s Tim Vlandas. Britain is getting older (we?ll have around 2.5 million more people aged over 65 in 2030 v 2020). Some of the growth effects are obvious (fewer workers means lower GDP), but the indirect impacts on growth via politics are Vlandas?s focus. He raises two concerns. Continue reading...

Hunt budget being overshadowed by Lineker row is no bad thing for chancellor | Larry Elliott

Hunt budget being overshadowed by Lineker row is no bad thing for chancellor | Larry Elliott

Wednesday?s announcement will not change big picture for UK economyThe only way was up for Jeremy Hunt when he took over at the Treasury last October. Appointed by Liz Truss in an attempt to save her job, he was the fourth chancellor of 2022 and the Conservatives were at rock bottom.The economic legacy handed to Hunt was dire. Inflation was above 10%, living standards were falling, and house prices were going down while interest rates were going up. In the aftermath of Truss?s departure from Downing Street, the Bank of England said the economy was already in recession and would remain that way for the whole of 2023. Opinion polls were pointing to a landslide victory for Labour at the next election. Continue reading...

‘Global greedflation’: big firms ‘driving shopping bills to record highs’

‘Global greedflation’: big firms ‘driving shopping bills to record highs’

Analysis by UK union shows large corporations have improved profits with price rises in cost of living crisisLarge corporations have fuelled inflation with price increases that go beyond rising costs of raw materials and wages, pushing shopping bills to record highs, according to an analysis of hundreds of company accounts.Highlighting a trend dubbed ?greedflation?, the research indicates that supermarkets, food manufacturers and shipping companies are among hundreds of major firms who have improved their profits and protected shareholder dividends, giving an extra lift to prices, while the cost of living crisis has meant workers face the biggest fall in living standards in a century. Continue reading...

Extreme poverty could be eradicated globally by 2050 – report

Extreme poverty could be eradicated globally by 2050 – report

Higher growth should mean stable employment and wages, with low- and middle-income countries seeing biggest improvementsThe end of extreme poverty may finally be achieved by 2050, spurred by economic growth in low-income countries, according to a new economic forecast.Though the Covid pandemic began to reverse progress in eradicating extreme poverty, and additional challenges will emerge, the damage may have a very limited impact on the overall trajectory of economic growth, according to a Center for Global Development (CGD) report. Continue reading...

Why are we talking about Britain's cost of living crisis? The real culprit is bosses' ‘greedflation’

Why are we talking about Britain's cost of living crisis? The real culprit is bosses' ‘greedflation’

Soaring profits are a bonanza for executives and shareholders, but all that?s on offer for workers are real-terms pay cutsThese days there is a lot of talk about a ?cost of living crisis?, but as Unite?s most recent research confirms, we should actually be talking about a cost of profiteering crisis. From rising supermarket prices, to energy bills, to transport costs, we are all paying the price.Take UK Power Networks, the National Grid power distributor. Last financial year, according to Companies House, it made a staggering ?1.3bn pre-tax profit. Billions in profit, bonanzas for the executives and shareholders, while there are only real pay cuts on offer for workers. Continue reading...

There’s a deeper story to Silicon Valley Bank’s failure. What can we learn from it? | Robert Reich

There’s a deeper story to Silicon Valley Bank’s failure. What can we learn from it? | Robert Reich

Financial deregulation lead to the crash in 2008 and it could again in 2023. It?s time to make banking boring againOn Friday, bank regulators closed Silicon Valley Bank, based in Santa Clara, California. Its failure was the second largest in US history and the largest since the financial crisis of 2008.Will other banks fail? On Sunday, regulators closed New York-based Signature Bank. Continue reading...

Silicon Valley Bank’s failure is predictable – what can it teach us? | Joseph Stiglitz

Silicon Valley Bank’s failure is predictable – what can it teach us? | Joseph Stiglitz

The collapse of SVB highlights deep failures in the conduct of regulatory and monetary policyLive coverage of Silicon Valley Bank collapseGlobal banking shares slide as SVB fallout spreadsWhy did it collapse and is this the start of a banking crisis?The run on Silicon Valley Bank ? on which almost half of all venture-backed tech startups in the US depend ? is in part a rerun of a familiar story, but it?s more than that. Once again, economic policy and financial regulation have proven inadequate.The news about the second-biggest bank failure in US history came only days after the Federal Reserve chair, Jerome Powell, assured Congress that the financial condition of US banks was sound. But the timing should not be surprising. Given the large and rapid increases in interest rates Powell engineered ? probably the most significant since the former Fed chair Paul Volcker?s interest-rate hikes of 40 years ago ? it was predicted that dramatic movements in the prices of financial assets would cause trauma somewhere in the financial system. Continue reading...

Relief in the UK over Silicon Valley Bank. Panic in the US | Nils Pratley

Relief in the UK over Silicon Valley Bank. Panic in the US | Nils Pratley

Sale of SVB?s British subsidiary to HSBC is a satisfactory fix but Fed emerges with less of a worthy haloLive coverage of Silicon Valley Bank collapseWhy did it collapse and is this the start of a banking crisis?Comment: SVB?s failure is predictable ? what can it teach us?The good news is that it took only a long weekend to find a fix ? a good one ? for the UK end of the doomed Silicon Valley Bank. Our tech executives can stop writing emotional pleas to the chancellor about their unique importance to the nation?s prosperity. The bad news is that US regulators? solution for the very much larger parent bank raised more questions than it answered. The fallout from the failure of SVB, plus the closure of Signature Bank, could get a lot worse yet.Let?s start with the positive, though. The sale of SVB?s UK subsidiary to HSBC for ?1 is satisfactory from almost every angle. The customers will pass to Europe?s biggest bank, a haven they might have chosen before their cash was trapped at the end of last week. They now have immediate access to their money. The Treasury will be delighted that it has avoided putting public funds at risk. The likely plan B, involving lines of credit to the SVB UK?s customers, sounded horribly messy. Continue reading...

Alcopops and non-chart CDs ejected from UK ‘inflation basket’

Alcopops and non-chart CDs ejected from UK ‘inflation basket’

E-bikes, home security cameras and frozen berries added to ONS list in sign of changing shopping habitsTwo ubiquitous consumer items of the 1990s ? alcopops and CDs ? will no longer count towards the monthly update of Britain?s cost of living after the latest shake-up of the shopping basket used to measure price changes.In a sign it is no longer fashionable to order a fruit drink laced with booze in a pub and that the age of the compact disc is over, the Office for National Statistics said both products had fallen foul of its annual audit of the UK?s spending habits. Continue reading...