ALL YOUR NEWS IN ONE PLACE - Finance
Interest rate rise will be as useful as medieval bloodletting | Letter

Interest rate rise will be as useful as medieval bloodletting | Letter

The Bank of England?s recent rate increase will do nothing to curb inflation, says Jean-Claude FouqueOnce upon a time, doctors would bleed patients who were in poor health as a cure. We now know this was not a good idea, and yet the Bank of England keeps raising its base rate while predicting a prolonged recession (Report, 4 August). Why? Because this is the traditional way to try to curb inflation when an economy is overheating. Raising interest rates is supposed to divert excess liquidity from spending to saving. But millions are already in poverty and the energy cost increases in the autumn will make matters worse. There is no excess liquidity.Most importantly, current pressures are due to external factors ? mainly the Ukraine war, so how can raising interest rates help? Could it be that the Bank feels it must be seen to be doing something? I would call this the Titanic syndrome, ie we know it won?t do any good, but let?s rearrange the deck chairs anyway.Jean-Claude FouqueCradley, Herefordshire

July could be ‘lull before the storm’ for retailers and consumers

July could be ‘lull before the storm’ for retailers and consumers

Cost of living crisis and rising inflation predicted to hit consumer confidence and spending July could be the ?lull before the storm? for retailers and consumers after the heatwave boosted sales of summer clothing, picnic treats and electric fans despite the intensifying cost of living crisis, experts have warned.Figures from the British Retail Consortium (BRC) revealed a 2.3% sales rise last month compared with a 6.4% rise the year before. Continue reading...

A third of UK parents cutting back on children’s pocket money

A third of UK parents cutting back on children’s pocket money

Cost of living crisis has meant the average amount given to children has fallen to lowest level since 2001Children?s piggy banks are paying a high price for the cost of living crisis after almost a third of parents cut back on pocket money during the last year.The average amount that is going into the pockets of under-16s each week has dropped by 23% to ?4.99 this year from ?6.48 in 2021, according to research from the lender Halifax ? the lowest amount since 2001. Continue reading...

Bank of England will probably need to raise rates again, says deputy governor

Bank of England will probably need to raise rates again, says deputy governor

Central bank must tackle inflation pressures that are gaining foothold in UK economy, says Dave RamsdenThe Bank of England will probably have to raise interest rates further from their current 14 year-high to tackle inflationary pressures that are gaining a foothold in Britain?s economy, its deputy governor, Dave Ramsden, has said.The spread of inflation was showing up in rising British pay and companies? pricing plans, having originally been triggered by the reopening of the world economy from Covid-19 lockdowns and then by Russia?s invasion of Ukraine, Ramsden said. Continue reading...

Who knows if Truss or Sunak is right on the cost of living crisis – where are all the economists?  | Simon Jenkins

Who knows if Truss or Sunak is right on the cost of living crisis – where are all the economists? | Simon Jenkins

The profession seems to have gone AWOL, just when we could do with a bit of modelling on tax cuts v handoutsCut taxes? No, give handouts. Go for growth? No, fight inflation. Increase debt, curb debt. Raise interest rates, lower them.Two members until recently of the same cabinet seem at opposite extremes of the economic spectrum. Both studied economics at Oxford. They must have attended similar lectures and read the same books. What?s their problem?Simon Jenkins is a Guardian columnist Continue reading...

US inflation falls to 8.5% in July but still close to multi-decade high

US inflation falls to 8.5% in July but still close to multi-decade high

Gas prices drop sharply after a hitting a national average of $5 a gallon in mid-JuneThe pace of price rises dipped in the US in July as gas prices eased, bringing down the annual rate of inflation to 8.5%, still close to a multi-decade high but lower than the four-decade peak it hit in June.July?s figure, while still high, represents a significant fall from the annual rate of 9.1% recorded in June and will raise hopes that inflation has finally peaked in the US. It follows other indicators that have suggested price rises are moderating. Continue reading...

China’s export sector posts stronger than expected figures for July

China’s export sector posts stronger than expected figures for July

Outbound shipments grew 18% after struggle with shortages of raw materials and lockdowns in first half of yearChina?s export industries performed strongly last month after spending the first half of the year hampered by shortages of raw materials and pandemic-related lockdowns at major ports.Offering an encouraging boost to the economy, outbound shipments grew 18% in July from a year earlier, the fastest pace this year, official customs data showed on Sunday, beating analysts? expectations for a 15% gain, though imports remained sluggish.Analysts had expected exports to fade amid growing signs that Europe, the US, UK and Australia are heading for recession, dampening the outlook for global consumption.

Government needs a big-bang solution or faces consequences of rising energy bills

Government needs a big-bang solution or faces consequences of rising energy bills

New prime minister must drop small state rhetoric and come up with response to impending crisisHard though it is to remember, the UK?s energy price cap was originally marketed as a modest measure designed to protect households on expensive variable tariffs from being fleeced. Nobody in early 2019 had the slightest inkling that by the summer of 2022 it would be a key barometer of the UK?s economic health.Yet here we are ? one pandemic and one unfinished war later ? on tenterhooks for the latest intelligence on what is likely to happen to household gas and electricity bills this winter. Continue reading...

Get over-50s back to work to tackle UK labour shortage, says John Lewis boss

Get over-50s back to work to tackle UK labour shortage, says John Lewis boss

Sharon White says government should ?think much more? about encouraging Covid retirees to return on flexible basisThe boss of John Lewis has said that the 1 million mostly over-50s who left their jobs during the Covid pandemic should be encouraged back to work to tackle the labour shortage that is pushing up inflation and wages.Dame Sharon White, a former second permanent secretary at the Treasury and chief executive of media and postal regulator Ofcom, said she had never seen such a difficult economic situation facing businesses. Continue reading...

No 10’s refusal of emergency budget shows Tories have lost control of economy, says Labour – as it happened

No 10’s refusal of emergency budget shows Tories have lost control of economy, says Labour – as it happened

This blog is now closed. You can read all our coverage on the cost of living belowCost of living crisis ? all our coverageEarlier this year Jacob Rees-Mogg, the Brexit opportunities minister and one of the most hardline Brexit enthusiasts in the government, tried to persuade colleagues to get the government to commit to getting rid of all retained EU law within four years. He proposed a June 2026 ?sunset clause?, which would mean all remaining EU regulations (the ones imported into UK law after Brexit) would cease to apply beyond that point, unless an active decision had been taken to retain a UK version.As my colleague Aubrey Allegretti reported at the time, Rees-Mogg failed - one official said the goal was ?impossible? - and instead Rees-Mogg announced the creation of a dashboard allowing voters to monitor what EU laws were still in place. Continue reading...

Liz Truss and Rishi Sunak meet members at Tory leadership hustings in Darlington – as it happened

Liz Truss and Rishi Sunak meet members at Tory leadership hustings in Darlington – as it happened

Candidates to replace Boris Johnson take questions amid reports of emergency planning for winter blackoutsLiz Truss, the frontrunner in the Tory leadership contest, has hit back at claims from the Rishi Sunak camp that her economic plans would amount to an ?electoral suicide note? for the Tories because they would not protect people from soaring energy bills. (See 9.13am.) Speaking on a visit to Reliance Precision Ltd, a defence company in Huddersfield, she insisted that her approach would help people. Here are the main points she made.My campaign is all about growing the British economy ... What I care about is Britain being successful. I don?t agree with these portents of doom. I don?t agree with this declinist talk.I believe our country?s best days are ahead of us. What I?m going to do, if selected as prime minister, is keep taxes low, get the economy growing, unleash the potential right across Britain. That?s what I?m about.What I?m doing is making sure people are paying less taxes and also having a temporary moratorium on the green energy levy to save people money on their fuel bills.I?m not going to write the budget in advance. We?ll see what the situation is like in the autumn. But I?m committed to making sure people are supported and I?m committed to growing the economy.What I don?t believe in is taxing people to the highest level in 70 years, and then giving them their own money back.We are Conservatives, we believe in low taxes. What I?m not going to do is announce the next budget in advance - of course we?ll need to deal with the circumstances as they arise - but my fundamental principle is that people should keep more of their own money.The latest projections of annual energy bills exceeding ?4,200 from January is the latest in a series of terrifying warnings over the past week, from the Bank of England and others. Families on low incomes cannot afford these eye watering sums and as a nation we can?t afford to ignore an impending disaster.Both candidates to be prime minister must now recognise the extraordinarily fast-changing situation and act to protect the hardest hit from the coming emergency. Continue reading...

While Biden is tackling inflation and shaping a green economy for the US, Britain is being left behind | Carys Roberts

While Biden is tackling inflation and shaping a green economy for the US, Britain is being left behind | Carys Roberts

The Inflation Reduction Act is a big win for jobs and the environment, but Truss and Sunak have nothing similar to offerOver the weekend, US Democrats overcame months of political struggle to pass the Inflation Reduction Act in the Senate, marking a major victory for the president, Joe Biden, and for ?Bidenomics? before the US midterms.The bill makes the single largest climate investment in US history, with $369bn for climate and clean energy. It is expected to enable the US to get two-thirds of the way towards its Paris agreement commitments while reducing energy costs. It lowers health costs for millions of Americans. It seeks to tackle inflation by directly reducing costs for individuals and by reducing the deficit through closing tax loopholes and increasing tax on corporates and the wealthy.Carys Roberts is executive director of the Institute for Public Policy Research Continue reading...

If the Murdoch press is so panicked about recession, why did it back austerity and Brexit? | Polly Toynbee

If the Murdoch press is so panicked about recession, why did it back austerity and Brexit? | Polly Toynbee

As Liz Truss and Rishi Sunak slug it out for PM, rightwing papers are waking up to the looming economic catastropheThe gloves are off and it?s bare-knuckle, below-the-belt slugging. Good. High time they grappled with the terrifying enormity of the waves of destitution rolling over millions already neither heating nor eating, facing unpayable bills. Liz Truss stumbled badly by telling the Financial Times she would only help them ?in a Conservative way? with tax cuts not ?handouts?, her gofers explaining she is ?enabling people to keep more of the money that they earn?. No use now saying she was ?misrepresented? yet again: she?s been panicked into promising her own emergency budget.Rishi Sunak in the Sun makes lethal (and true) accusations that ?Liz?s plan? to deal with rising bills this winter is to ?give a big bung to large businesses and the well-off?. ?Worse still,? he writes, ?she said she will not provide direct support payments to those who are feeling the pinch most.? Scrapping the health and social care levy only gives the average worker ?170 and someone on the living wage ?less than ?60?, while ?pensioners will not get a penny?.Polly Toynbee is a Guardian columnist Continue reading...