Crisps and soft drinks lead surge in UK food prices as inflation rises

Analysts predict rising costs of groceries will push hard-pressed consumers to shop around even moreFood price inflation reached a 14-month high in October with the prices of favourite snacks such as crisps and soft drinksrising the most, according to new figures.Annual grocery price inflation reached 2.1% last month which is the highest since August 2020, according to grocery market analysts Kantar. Continue reading...

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UK facing income squeeze and rising destitution; ‘Britcoin’ consultation launched; Tesla shares slide – as it happened

Rolling coverage of the latest economic and financial newsLatest: Consultation on UK central bank digital currency next yearNIESR says household incomes face painful squeeze and destitutionTesla shares slide againUK grocery inflation hits 14-month high, as Christmas spending starts earlyPrimark announces expansion plans… and sees supply chain issuesFederal Reserve worried that prices of risky assets keep risingAssociated British Foods also points out that Brexit has “exacerbated” the shortage of lorry drivers in the UK, which is one cause of supply chain problems.In today’s annual results, it says:Our businesses are reliant on the availability of skilled HGV drivers.Whilst there is c..

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UK plc risks long-term stagnation and rising destitution, warns top thinktank

NIESR blames deepening malaise on economic mismanagement since 2008 amid criticism for BoE and BrexitBritain’s economy risks emerging from the pandemic into a long period of stagnation that damages household incomes and undermines plans to level up the regions, according to a hard-hitting report by the National Institute of Economic and Social Research.As it downgraded growth forecasts for next year and predicted a rise in prices that could push inflation above 5%, the thinktank accused the government and the Bank of England of mismanaging the economy since the 2008 financial crash. Continue reading...

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US lifts UK travel ban; UK consumer confidence lowest since March; Dow hits record – as it happened

Rolling coverage of the latest economic and financial news, as transatlantic leisure flights resume….and UK households grow more anxiousLatest: ‘I can finally hold him’: onboard flight BA001 after US opens border to UK visitorsDow at record high… Tesla dipsConsumer confidence weakens as households grow pessimisticFull story: ‘A moment of celebration’: UK flights to US take off from HeathrowIntroduction: US reopens its borders to UK visitors todayBA and Virgin Atlantic put aside rivalry for return of leisure flights to USThere are expected to be few if any empty seats on many of the international flights to the US from London, Paris and elsewhere on Monday, and passenger volume is..

The Guardian > Economics

What have low interest rates done for Britain? Depressingly little

Bank of England stimulus since late 2008 has done more to boost house prices than productive investmentNext year marks the 30th anniversary of Black Wednesday, a momentous day in history. 16 September 1992 will be forever remembered as the day Britain was blown out of Europe’s exchange rate mechanism by foreign currency speculators led by George Soros.John Major’s government sought to fend off the attacks by using Britain’s reserves to buy pounds and by raising interest rates. The day started with official borrowing costs at 10% but during the morning of Black Wednesday they were raised to 12% and later it was announced that they would be further increased, to 15%, the next day. Contin..

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Britain’s zombie companies won’t be reanimated by Sunak’s shocks

The UK’s long-running productivity problems are not being solved – but they must be if the economy is to get greenerRishi Sunak says his tax and spending plans, outlined in the budget, will boost the outlook for private sector jobs, wages and growth. The Bank of England’s most recent review of the economy begs to differ.It might appear that the recovery is strong and that companies can barely keep pace with customer demand. Sadly, appearances can be deceptive. If anything, the archetypal mainstream UK business – the one that stays out of the limelight, doesn’t attend award ceremonies or even bother to join the local chamber of commerce – will continue to look and behave like a zo..

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‘I went from having to borrow money to making $4m in a day’: how NFTs are shaking up the art world

Digital art is a billion-dollar business, with everyone from Paris Hilton to Damien Hirst trading in ‘non-fungible tokens’. But are NFTs just a get-rich-quick scheme masquerading as culture?“It’s actually a lot simpler than you think.” It’s a Tuesday afternoon, and somewhat to my surprise, I’m on the phone to Paris Hilton, who is graciously explaining the world of NFTs.Hilton is many things – a reality star, an heiress, an unlikely lockdown fitness guru who uses designer handbags instead of weights. But until now, she has never been considered a significant player in the art world. When artists have acknowledged her, often they’ve done so to fetishise her image. In 2008, Da..

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‘Skimpflation’: frustration as US firms skimp on service as prices rise

As labor shortages and supply chain problems bite, consumers have a growing sense they’re getting less for their money“Flight cancelled”; “service temporarily suspended”; “not currently available”; “longer than normal wait times”: these are the messages that confront US consumers daily as the economy struggles to find a post pandemic footing. Now the phenomenon has a name: “skimpflation”.It’s a simple in concept – struggling with shortages of workers and goods, companies are skimping on what they offer consumers while, in many cases, charging the same price or more for that service. Continue reading...

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Bank governor denies policymakers ‘bottled it’ by failing to raise rates

Andrew Bailey says interest rates will rise when clearer picture about the labour market emergesThe governor of the Bank of England has signalled that interest rates will need to rise towards 1% in the coming months and rejected suggestions that his team of policymakers “bottled it” by failing to impose a widely expected increase.Speaking to BBC Radio 4’s Today programme on Friday, Andrew Bailey said interest rates would rise when a clearer picture emerged about the end of the furlough scheme and unemployment. Continue reading...

The Guardian > Economics

US adds 531,000 jobs in October; Bank of England ‘sorry’ about rising inflation – as it happened

Rolling coverage of the latest economic and financial newsLatest: US added 531,000 jobs last monthSeptember and August revised higher tooJobless rate falls to 4.6%MPs call for inquiry into Liberty Steel tycoon Sanjeev GuptaPound hits five-week low as losses continueIntroduction: UK households face two-year squeezeBoE governor ‘very sorry’ for rising cost of livingUK interest rates are not going back to their levels before the financial crisis, governor Andrew Bailey pledges.He won’t say whether the markets are correct to forecast UK rates at around 1% by the end of next year, but it’s correct to think in those terms.When we talk about interest rates rising, it’s important to put it..

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Suez Canal to raise fees, heaping pressure on global supply chains

With shipping industry still recovering from Ever Given crisis, transit tolls are increasing by 6% The Suez Canal Authority is increasing the fees it charges ships passing through the critical waterway, in a move expected to pile further inflationary pressure on global supply chains. It will seek to capitalise on the recovery in cargo trade by raising its transit tolls by 6% from February, 11 months after the canal was blocked for nearly a week by the Ever Given container ship. About 12% of international trade passes through the canal, which is the shortest maritime route between Asia and Europe. Continue reading...

The Guardian > Economics

US adds 531,000 jobs in October as Biden hails ‘historically strong recovery’

President says ‘our economy is on the move’ as jobs growth outpaces 450,000 new positions analysts had predictedUS employers added a solid 531,000 jobs in October as the American economy appeared to withstand the impact of coronavirus and continued its recovery.The strong number provides a boost to Joe Biden, whose presidency has been battered by political setbacks in recent months as it struggles to enact his domestic agenda and suffered a major defeat in the race for governor of Virginia. Continue reading...

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Never mind aid, never mind loans: what poor nations are owed is reparations | George Monbiot

At Cop26 the wealthy countries cast themselves as saviours, yet their efforts are hopelessly inadequate and will prolong the injusticeThe story of the past 500 years can be crudely summarised as follows. A handful of European nations, which had mastered both the art of violence and advanced seafaring technology, used these faculties to invade other territories and seize their land, labour and resources. Competition for control of other people’s lands led to repeated wars between the colonising nations. New doctrines – racial categorisation, ethnic superiority and a moral duty to “rescue” other people from their “barbarism” and “depravity” – were developed to justify the vio..

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Homebuyers welcome extra months to lock into record low mortgages

Bank of England’s decision to hold interest rates offers reprieve, but house price growth forecast to slowBank’s rate decision leaves economists gasping for airHomebuyers have been given a few more months to lock into the record low mortgage rates that have helped keep the housing market booming during the pandemic, experts have said, after the Bank of England held the base rate at 0.1%.Lenders had been repricing their home loans upwards in recent days amid speculation the rate would rise to 0.25%, and many of the cheapest deals have been withdrawn. Continue reading...

The Guardian > Economics

Bank of England governor denies being ‘unreliable boyfriend’ after leaving interest rates unchanged – business live

Rolling coverage of the latest economic and financial newsLatest: Bailey insists he didn’t commit to rate rise todayVote was ‘very close call’ he insistsAnalysts criticise communications – Bank’s credibility could be tarnishedUK interest rates left at record low of 0.1%MPC votes 7-2 to leave borrowing costs unchangedBank sees inflation at 5% next AprilUK car sales hit a 30-year low last month, as the global supply chain crisis continues to hit the auto sector.Registrations of new vehicles fell by almost a quarter last month, compared to the previous October, as carmakers struggle to obtain the semiconductors needed to build cars. Continue reading...

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BoE doves and hawks who voted to leave interests rates unchanged

Monetary Policy Committee votes 7-2 to leave borrowing costs at current record low of 0.1%Bank of England’s rate decision leaves many economists gasping for airThe Bank of England’s nine-strong monetary policy committee has the task of maintaining inflation at 2% over the medium term, or three years ahead. Despite a forecast showing the consumer prices index (CPI) measure of inflation will hit 5% in the new year, the committee voted 7-2 against raising interest rates, instead keeping them at 0.1% – their lowest on record. Continue reading...

The Guardian > Economics

Bank of England’s rate decision leaves many economists gasping for air

Analysis: decision to keep rates on hold is not unpopular but governor’s signalling is roundly criticisedIt is “compulsory for the Bank of England governor to be an unreliable boyfriend”, Andrew Bailey joked during a press conference to explain why the central bank he runs kept interest rates on hold when action of some kind was expected.As quips go, it fell flat in financial markets, where currency traders sold the pound, knocking more than 1% from sterling’s value against the US dollar. Continue reading...

The Guardian > Economics

Bank of England keeps UK interest rates on hold at 0.1%

City wrongfooted after committee decides to hold rate despite forecast of 5% inflation by spring The pound fell heavily after the the Bank of England wrongfooted the City by leaving interest rates at their record low level of 0.1%, despite forecasting a jump in inflation to 5% by next spring.Sterling dropped by more than two cents against the US dollar when it emerged that only two members of Threadneedle Street’s nine-member monetary policy committee voted for a rise, confounding expectations of an increase in the cost of borrowing to 0.25%. Continue reading...

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Cop26 will be derailed unless the rich world meets its obligation to the poor | Larry Elliott

It’s no use telling developing nations to decarbonise. The west must accept it bears the bulk of the blame for the climate crisisA couple of hundred years ago Britain was not a lot different from many poor countries today. Life expectancy was low, infant mortality was high, living standards barely rose from year to year, water-borne diseases were rife. People worked long hours and life for the struggling was, as Thomas Hobbes put it, “nasty, brutish and short”.Then the Industrial Revolution came along and Britain, followed by other countries in the world’s temperate zones, discovered the elixir of economic growth. After pretty much flatlining for more than a thousand years, incomes p..

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Why is the Bank of England considering an interest rate rise?

Rising inflation and winding down of Covid likely to weigh on central bank’s decision makersCoronavirus – latest updatesSee all our coronavirus coverageInflation could be about to run out of control, spurring workers to demand higher wages to protect their living standards. A self-perpetuating spiral of higher wages leading to higher inflation is the fear that stalks all central banks. There is also a growing sense among some policymakers that the pandemic emergency is over, and so the emergency cut in interest rates from 0.75% in March 2020 should be reversed. Continue reading...

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US Federal Reserve to begin tapering pandemic stimulus package – as it happened

Rolling coverage of the latest economic and financial newsLatest: Fed begins tapering its pandemic stimulus programmeFed will cut $120bn package by $15bn per month, from NovemberFactors pushing up inflation ‘expected to be transitory’ADP payrolls up 571,000 last monthEarlier:UK service sector growth at three-month highUK house prices climb but outlook for market ‘extremely uncertain’Here’s our news story on how average UK house prices defied expectations and continued to climb last month... despite the phasing out of the government’s stamp duty holiday.But as Nationwide points out, the outlook is unclear, with the path of interest rates, consumer confidence and employment levels ..

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Services growth adds to rate rise calls with Bank decision on knife-edge

Final snapshot on economy before Bank’s decision shows strong rise in activity in services sectorThe Bank of England is considering raising interest rates for the first time since the onset of the coronavirus pandemic, against a backdrop of rising inflationary pressures and a rebound in economic growth.In a final snapshot from the economy before the rate decision is announced on Thursday, monthly data showed a stronger-than-expected rise in activity in Britain’s dominant services sector during October. Continue reading...

The Guardian > Economics

US Federal Reserve winding down Covid stimulus

Officials announces tapering of programme amid fears central bank may raise rates to curb inflationThe US Federal Reserve has announced it is winding down the massive stimulus programme it put in place at the onset of the Covid-19 pandemic amid fears that the central bank may have to raise rates soon to control rising inflation.Fed officials have been debating for months over whether and when to taper the stimulus programmes that it set up to head off the economic headwinds caused by the pandemic. They announced on Wednesday that they would begin cutting that stimulus by $15bn a month but left interest rates unchanged. Continue reading...

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Letter: George Gater obituary

George Gater was a congenial colleague at the National Economic Development Office (NEDO) in the 1970s. Some of his colleagues involved in the organisation of the “little neddies”, the industrial working parties, tended to favour the interests of particular sectors. But George never lost sight of the ultimate purpose of the activity – improving the performance of the British economy – on which economists like me were more focused. Our lunchtime conversations ranged more widely, to such matters as the influence of social and historical factors in national economic performance. Continue reading...

The Guardian > Economics

Is a UK interest rate rise certain? Good question

Analysis: contradictory data has split experts over whether the Bank of England will raise rates or notIt is a sign of the confusion surrounding the Bank of England’s interest rate decision on Thursday that investors are unusually divided over which direction the central bank will go.Financial markets show that more than six in 10 investors are anticipating a hike in the cost of borrowing while a majority of City economists take the opposite view, telling a Reuters survey they expect rates will remain at historic lows, at least for the time being. Continue reading...

The Guardian > Economics

Global pollution price could cut greenhouse gases by 12%, says report

World Economic Forum says taxing carbon emitters would cost less than economic fallout from climate crisisCreating an international price for carbon emissions could reduce global greenhouse gases by 12% at a cost of less than 1% of global GDP, according to a new report from the World Economic Forum (WEF) and PwC.The report found that if global governments agreed together to set a price for pollution to help cut carbon emissions the cost would be less than the economic losses triggered by the fallout of a runaway climate crisis. Continue reading...

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Four UK energy suppliers collapse; BP sees high winter gas prices – as it happened

Rolling coverage of the latest economic and financial newsLatest: Four small energy suppliers collapseOmni Energy, MA Energy, Zebra Power and Ampoweruk cease tradingBP: gas prices to remain high over winterGazprom doesn’t book more gas capacity to Europe in 2022Maersk: Global supply chain crisis continues…Yahoo to pull out of ChinaPfizer: Revenues and earnings more than double thanks to vaccineBP profits boosted by rising oil and gas pricesBack on BP... the energy giant has stated that global oil demand has bounced back above the key level of 100 million barrels a day which was last seen before the Covid-19 pandemic.BP chief financial officer Murray Auchincloss told a conference call thi..

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The Guardian view on Bank of England: talking itself into a rate rise | Editorial

The governor blundered by suggesting an early hike – but the least costly option is to wait and see Did the governor of the Bank of England, Andrew Bailey, err in exaggerating the prospects of an interest rate rise? It seems so. Mr Bailey’s intervention, along with his chief economist’s, suggested the base rate might rise this week. City traders are now betting that it will do so – with the Bank’s rate-setting monetary policy committee (MPC) due to pronounce on Thursday. The governor is now damned if rates rise – giving the impression that the central bank can be talked into a hike. And he is damned if they do not – because he signalled rises that did not arrive.There is no pre..

The Guardian > Economics

The road to net zero: Aberdeen looks to a future without oil

Can the Granite city diversify into non-fossil fuel industries in time to avoid the fate of UK coal-mining areas?The oil companies know it. The car dealers selling top of the range Porsches get it, as do the hoteliers and the restaurateurs. Change is coming to Aberdeen: the UK centre of North Sea fossil fuel production since the 1970s is trying to avoid becoming the city of stranded assets.The Granite city became Scotland’s boom town almost by accident. It was Dundee down the coast that was originally identified as a probable hub for offshore production when exploratory work established large reserves of oil and gas under the continental shelf. Continue reading...

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Squeeze on UK incomes to last until late 2023, says OBR

Treasury watchdog predicts inflation will keep real household incomes below 2019 levels for another two yearsBritish households will remain worse off than before the pandemic until 2023 as rising inflation hits living standards, the Treasury’s economics watchdog has warned as Rishi Sunak sought to defend his budget.Charlie Bean, a former Bank of England deputy governor and board member of the Office for Budget Responsibility, said that growth in household incomes, after taking account of inflation, would effectively stall over the next two years. Continue reading...

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