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Forbes billionaire list: Trump loses $1bn as elite club gets 233 new members

Post-US election boom in stock markets and continued rise in oil price help bring global total of billionaires to nearly 2,300 individuals

US president Donald Trumps fortune has fallen by about $1bn to $3.5bn over the past year, as measured by Forbes magazine in its annual list of the worlds billionaires.

However, overall it has been a good 12 months for the worlds wealthiest individuals, with a record 233 moving into the billionaire bracket, taking the global number of people with nine-zero fortunes to 2,043 the most in the 31-year history of the list.

The billionaires in Forbes list are worth a combined $7.67tn (6.18tn) more than three times the UKs annual gross domestic product (GDP).

Kerry Dolan, co-editor of the Forbes billionaires list, published on Monday, said the gains are mostly the result of booming stock markets and the rising price of oil over the past 12 months.

Number of billionaires

Global markets have hit record highs due to the so-called Trump bump following Trumps election, with the Dow Jones soaring above 20,000 points for the first time and the UKs FTSE 100 closing at a record 7,415 points last week.

The fall in Trumps net worth is due to a drop in the value of office space in Midtown Manhattan, where the president owns about 10 buildings. Forbes said Trump had fallen from the worlds 324th-richest person to 544th.

Forty percent of Donald Trumps fortune is tied up in Trump Tower and eight buildings within one mile of it, Forbes said. Lately, the neighbourhood has been struggling (relatively speaking).

Trump has refused to publish his tax returns to show the true scale of his wealth, but during the campaign he claimed he was worth in excess of $10bn.

Dolan said that in previous years the real estate tycoon had challenged Forbes for underestimating his fortune. We contact everyone we can to give them the opportunity for feedback. Over the last 31 years we have been compiling this list Trump has given us a lot of feedback, believe me, You guys are too low I am worth far more than you say, she said. He didnt call back to dispute our estimate. I would hope that running the country is more important to him right now than Forbess value of his net worth.

The richest person in the world remains Microsoft founder Bill Gates, who saw his fortune grow by $11bn to $86bn. He is followed by investor Warren Buffett, and Amazon founder Jeff Bezos, who was this years biggest gainer with a $27.6bn increase in his fortune to $72.8bn.

Top 10 richest

The US accounts for the biggest population of billionaires with 565, up 25 on last year. But China is catching up with 319 billionaires, and a further 68 if Hong Kong and Macau are included. Germany is third with 114 billionaires.

The number of UK billionaires increased from 50 to 54, with new entrants including Philip Day, the man behind Edinburgh Woollen Mill, and Simon Nixon, the co-founder of moneysupermarket.com.

The richest people in the UK are the Hinduja family, who control a conglomerate of businesses including cars and banks and are worth $15.4bn. Property and internet investors David and Simon Reuben come second with a $15.3bn fortune. The third richest, and among the biggest gainer, is Jim Ratcliffe the founder and chairman of chemicals group Ineos.

UK richest

Among the biggest British losers is Sports Direct founder Mike Ashley whose fortune dropped by 25% to $2.6bn. His wealth, which is largely held in Sports Direct shares, has roughly halved over the past two years as shares collapsed following the Guardian expos of Victorian workhouse-style conditions in its distribution warehouses.

Sir Philip Green and his wife, Tina, the owners of Arcadia, which owns Topshop and once owned BHS, also lost just over $1bn, with their fortune slumping to $4.8bn. They fell more than 100 places to 339th.

Oxfam said the creation of so many new billionaires in one year was a sign of economic sickness rather than health.

Our warped economic model leads to more unequal societies that trap millions of people in poverty – it allows an elite group to accrue extreme wealth while one in nine people go to bed hungry every night, Max Lawson, Oxfams head of inequality policy, said. We need to build a more human economy where the super-rich pay their fair share of tax, workers earn a living wage, and governments invest in decent healthcare and education to give everyone a good start in life.

The number of women on the list increased to 227, from 202 in 2016. A record 56 of the women are self-made billionaires the highest ever. All but one of the 15 newly self-made female billionaires came from the Asia-Pacfic region, including Vietnams first self-made female billionaire Nguyen Thi Phuong Thao who took her budget airline VietJet Air public last month.

Yoshiko Shinohara, who started her temp agency in her one-bedroom Tokyo apartment, became Japans first self-made female billionaire. She enters the list due to a 50% surge in the stock price of her company Temp Holdings, which is designed to get more women into the workforce.

The richest woman on the list is Frances Liliane Bettencourt, who inherited a stake in LOreal from her father. Shes worth $39.5bn.

There are just 10 black people on the list, a drop of two from last year. The richest black person is Nigerian cement tycoon Aliko Dangote with an estimated fortune of $12.2bn. There are only three black women on the list, including Oprah Winfrey who has a $3bn fortune.

Read more: https://www.theguardian.com/business/2017/mar/20/forbes-billionaire-list-trump-loses-1bn-as-elite-club-welcomes-233-new-members


The financial benefits of the EPA data Trump doesn’t want you to know about

Making EPA data easily accessible to the private sector plays a significant role in many billion-dollar industries, from renewable energy to auto manufacturing

For more than 25 years, Walter Hang has helped local governments, engineers and homeowners make sense of hazardous waste. To do that, he digs into the enormous data vault maintained by the US Environmental Protection Agency (EPA) and pinpoints information that is useful for his clients to assess the health and financial risks from nearby industrial properties and toxic waste sites.

Hang, who runs Toxics Targeting, now fears this trove of knowledge will become more difficult to access as the EPAs newly minted chief, Scott Pruitt, begins a broad rollback of regulations and shrinks the agencys staff. President Trump has vowed to weaken the EPA, contending that its rules for protecting public health stifle business development. The Trump administration has already eliminated or buried some information on EPA websites and moved to muzzle agency employees.

What Trump doesnt acknowledge is that EPA data isnt just an enforcement tool. The agency employs more scientists than any other government agency except Nasa. Decades of work by those scientists have generated valuable information about air and water pollution, chemical toxicity and hazardous waste cleanup. This information has enabled businesses to develop new products and services and create jobs in the process.

No one has estimated the financial benefits of making EPA data easily accessible to the private sector. But anecdotal evidence shows it plays a significant role in many billion-dollar industries, from lending and real estate to renewable energy development and auto designs and manufacturing. For example, chemical companies use the data to come up with less toxic compounds for dyeing textiles.

Banks wont loan money to a property developer without ensuring that the land is free of contamination, which can be an expensive liability. They rely on pollution data from the EPA, says Hang, who compiles the information into reports for companies in real estate development and transaction.

We are trying to make sure we get as much data as we can, and were trying to make sure we dont have data gaps, Hang says.

Hang isnt alone in worrying about access. Several campaigns, carried out mostly by university professors and students, to download and secure EPA data have sprung up since the November election. One of the first of such efforts began not in the US but in Canada. Matt Price, a history professor at the University of Toronto, helped organize guerrilla archiving events in December. Offering free pizza and coffee, these events recruited a small army of volunteers who began downloading EPA data to secure servers.

Price says he and his colleagues sprang into action after experiencing their own war on science by former Canadian prime minister Stephen Harper, a conservative who slashed funding for science and ended important environmental monitoring projects. Price and others stepped up to preserve Canadian environmental data during that crisis.

We probably focused immediately on the EPA because of the extremely hostile language that came out of the Trump campaign around the EPA, says Price. We have put a kind of faith in the state as the long term guarantor of the integrity of scientific data. I think that faith may be misplaced.

Many companies rely on the agencys data to build products that tackle some of the biggest health and environmental problems. They sign research and development agreements with the EPA, which provides technical assistance in return for a share of any sales a company generates as a result.

EPA had 97 such contracts active in 2015, which yielded $232,318 in royalties for the agency. The previous year, 129 contracts produced royalties of $438,786.

Aclima, a San Francisco company that develops air-quality sensors and software, is working with the EPA to improve the devices sensitivity in detecting pollution. EPA air pollution data, gathered for decades at a regional scale, serves as an important reference and quality check for the company. Aclima has partnered with Google to collect air quality data by putting its mobile sensors on the StreetView cars that Google uses to create its maps. It plans to offer the resulting data to the public later this year.

Aclima CEO Davida Herzl says the EPAs air pollution data plays a foundational role in everything the company does. Anytime we lose information that is important to public health, that is a concern, Herzl says. It would be a massive blow to the business community in ways that arent always discussed. Innovation and private sector research is happening on top of that foundation of science that EPA has been developing for over 30 years now.

Even businesses that are set to benefit from Trumps plan to loosen environmental regulations are worried about losing access to EPA data, which they need for complying with state or local laws and for their own internal accounting of efficiency and performance, says Gretchen Goldman, research director at the Center for Science and Democracy, a program at the Union of Concerned Scientists.

The American Gas Association, which represents natural gas distribution utilities, recently notified members to download any EPA data they need in case it is removed from the agencys website. Pam Lacey, the associations chief regulatory counsel, says gas utilities use EPA data and other online resources to track methane emissions, a potent greenhouse gas. The data shows distributors have cut methane emissions by 74% since 1990.

They continue to do more work and theyd like to be able to keep the data that demonstrates what theyve done and what theyre doing on an ongoing basis, Lacey says. Also, some companies have their own internal goals for sustainability, and they would want to use that official EPA data.

None of the EPA data has been restricted or eliminated yet, say the scientists involved in the data backup campaigns, but they arent taking any chances. Their concern stretches beyond protecting existing EPA data, however. Major budget cuts, if implemented, means the agency may be unable to collect new data.

EPA officials within the Trump administration did not respond to a request for comment.

Their goal is to defund programs that gather data, says Jared Blumenfeld, former administrator of EPA Region 9 (California, Nevada, Arizona and Hawaii), who left the agency in May 2016. Its much, much harder in a digital age to get rid of data. Its a lot easier to not fund science so you dont have the data in the first place.

Read more: https://www.theguardian.com/sustainable-business/2017/mar/15/epa-data-trump-benefits


US Federal Reserve raises interest rates to 1% in bid to hold off inflation

Fed chair says US economy in strong health as she announces third rate rise since 2008 and the first of several expected this yearJanet Yellen discusses interest rate rise live updates

The US Federal Reserve has sought to head off rising inflation with a third interest rate rise since the 2008 financial crash and the second in three months, taking the base rate from 0.75% to 1%.

The central bank set aside concerns about the impact of higher interest rates on consumer spending to confirm analyst projections that it is prepared to increase rates several times this year to keep a lid on inflation as it rises above its 2% target level.

The Feds chair, Janet Yellen, said a wide range of indicators showed the US economy was in rude health, allowing its interest rate setting committee to push rates back towards historically normal levels. Policymakers voted nine to one to raise rates.

Speaking after the decision, Yellen said she had met Donald Trumps treasury secretary, Steven Mnuchin, a couple of times but had only been introduced to the president himself.

I fully expect to have a strong relationship with secretary Mnuchin, she said. We had good discussions about the economy, about regulatory objectives, the work of the FSOC [Financial Stability Oversight Council] global economic developments, and I look forward to continuing to work with him. She said she had had a very brief meeting with Trump and appreciated that as well.

Earlier in the day the Department of Commerce said retail sales had inched up by 0.1% in February, and that they had been better than it had previously estimated in January.

US interest rates

The Department of Labor said consumer prices were 2.7% higher in February than a year earlier. After excluding the costs of food and energy, inflation was 2.2%. A housing market index from the National Association of Home Builders also surged to its highest level since 2005.

US stock markets moved up on the news, rising 90 points in the minutes after the decision, and US crude rose 2%. The increases were modest following Yellens signals in December that interest rates were on an upward path. Investors were also caught out by Yellens bullish comments in the wake of the announcement and by projections showing that 11 of her 17 policymaking colleagues saw borrowing costs rising another three times in 2017.

Dennis de Jong, the managing director of the currency trader UFX.com, said: Given the bloating effect Donald Trumps presidency has had on US inflation, it would have been more of a surprise had Fed Chair Janet Yellen not announced a rate hike at todays Federal Reserve meeting.

Trumps grand plans for American infrastructure spending have signalled an about-turn for US economic policy after just one rate increase in ten years, weve now seen two in the space of three months, and plenty more are expected for 2017.

This all spells bad news for US borrowers, who will likely have to foot a larger bill over the coming months. With at least three more hikes on the cards by the end of the year, todays news could hit many where it hurts the most the pocket.

US CPI

Some economists argue that weak wages and productivity growth in the US will limit the Feds rate increases to a handful before reaching a peak at around 2%.

Gus Faucher, the deputy chief economist at the stockbroker PNC, said: I think the concern, in terms of why the Fed is raising rates now, is that inflation is picking up. The unemployment rate is 4.7% and thats putting upward pressure on prices.

He told the Guardian economic forces were acting against a return to interest rate levels of 4-5% seen before the 2008 crash.

We have slower labor force growth because of the ageing of the baby boomers, [and thus] slower productivity growth in terms of output per worker, he said. That has reduced the potential for long-run growth, its reduced inflationary pressures, and I think rates in the future will be lower than they have been in the past.

US retail sales

Faucher also said further interest rate rises could dent consumer spending, which has come to rely on cheap loans.

I do think eventually that higher interest rates are going to have an impact on rates for car loans, so that may be a problem for automakers. It may be a problem for big-ticket durable items, home appliances, stuff like that. There is a ceiling on those effects, though, and Faucher doesnt think they will affect home loans.

There isnt much bleed over into mortgage rates; its mostly the short-term borrowers, he said.

Fed policymakers are known to be concerned that the tax cuts and extra government spending Trump has demanded could overheat the economy and lead to a deep recession. Should that happen, the Fed will want to have substantial interest rates in place.

Read more: https://www.theguardian.com/business/2017/mar/15/us-federal-reserve-raises-interest-rates-to-1


Q&A: What will happen if the US Federal Reserve raises interest rates?

Janet Yellen, the Fed chair who has been criticised by Donald Trump, is set to raise rates for third time since financial crash

The US central bank is poised to raise interest rates for only the third time since the financial crash of 2008. With its headquarters just round the corner from the White House, the Federal Reserve and its chair, Janet Yellen, are in Donald Trumps sights.

On the campaign trail Trump said Yellen should be ashamed of the Feds low interest rate policy, and accused the bank of creating a false stock market. Trump has called for higher rates, but Yellen can not take a positive presidential reaction for granted.

The reaction of markets across the world is even less predictable. So what is the likely impact on the US and the global economy?

What is the Fed expected to do?

The Federal Reserve raised the base interest rate by a quarter of a percent in December last year and is expected to follow with a further rate rise on Wednesday. Some analysts expect a quarter-point rise, though most of the betting is now on a half point, pushing the base rate to a range of 1% to 1.25%.

Why will it raise rates?

The US economy has grown for the last 30 quarters and shows no sign of slackening off. Consumer spending is robust and the latest jobs numbers showed employment increasing and unemployment staying low.

Fathom Consulting, an economic forecaster, said spare capacity in the labour market was disappearing fast and it would not be long before wages started to rise rapidly. Wage rises push up demand, and that triggers higher prices.

The Fed has a remit to control inflation, but also to mintain high levels of employment. By raising rates, it will appear to do both.

How will consumers and corporate America react?

The Fed is betting businesses will shrug off the extra cost of borrowing, continue to invest in the US economy and create jobs.

Setting aside concerns about Brexit and a string of potentially destabilising elections on the continent, Fed policymakers have judged that the strength of the economy is enough to override a series of rate rises, possibly taking the base rate to almost 2% by the end of next year.

Consumers have embraced the Trump rhetoric of tax cuts and deregulation to continue spending, undeterred by the prospect of higher mortgage costs.

How will the market react?

Central banks like to signal their intentions, albeit in opaque language, to prevent investors being spooked. This rise was heavily trailed in recent weeks and has been priced in as a certainty by market participants in New York, London and Tokyo though some would be surprised by a half-point rise.

Turbulence could come from the foreign exchange markets if the dollar rises following a slump in the Turkish lira, Indonesian rupiah, Mexican peso or other developing world currency. More importantly, the bond markets could overreact.

Why do the bond markets matter?

Much of the world borrows money in dollars or seeks to lend to the US government and US corporations in dollars. A rise in interest rates would encourage an influx of funds into the US, pushing up the dollar relative to other countries. A rise in the Fed funds rate would also increase the cost of borrowing.

When the Fed first hinted in 2013 that it planned to stop pumping funds into the financial system, the prospect of higher borrowing costs for those holding dollar debts spooked the bond markets. Turkey and Russia were highlighted as countries with corporate sectors that expanded quickly based on heavy borrowing using dollar-denominated bonds. It was clear that much of Turkeys corporate sector could go bust if its interest bill jumped too far or fast.

Such was the strength of the reaction, Ben Bernanke, who at the time chaired the Federal Reserve, abandoned his plan. A similar reaction preceded a rate rise in December 2015, and while markets regained their composure, the extra costs imposed on Turkey and Russia hit their economies hard and arguably shored up the position of their authoritarian leaders.

Is a currency war possible?

Trump has already attacked China for artificially depressing its currency, even when Beijing was doing all it could to close the gap between the yen and the dollar. Now China is letting the yen fall and with interest rate rises in the US pushing up the dollar, the gap will widen, increasing the cost of US exports and reducing import prices.

Trump can only complain about the currency, but he could make good on threats to impose tariffs on Chinese goods, sparking a trade war.

Is there any reason to keep rates on hold?

Annual US GDP growth since the 2008 crash has averaged 2.1%. This might seem like a healthy rate, but it is the slowest recovery from recession since the second world war. Business investment remains low and productivity in the US, as elsewhere in the developed world, is growing sluggishly. To boost borrowing and demand, the Fed needs to keep credit cheap.

But Trump plans to make up for the tightening of monetary policy by cutting taxes and running up a huge budget deficit. He also plans to take his shears to corporate and consumer regulations, unleashing a surge in economic activity.

Bloomberg said investors expect three more rises before the end of the year. Fathom Consulting said there was enough momentum in the economy for rate increases of 25 basis points seven times between now and the end of next year.

Read more: https://www.theguardian.com/business/2017/mar/14/us-federal-reserve-interest-rates-janet-yellen-donald-trump


Greek activists target sales of homes seized over bad debts

Protests thwart plans to hold around 25,000 auctions as banks struggle to sell properties to settle shortfalls

The cavernous halls of Athens central civil court are usually silent and sombre. But every Wednesday, between 4pm and 5pm, they are anything but. For it is then that activists converge on the building, bent on stopping the auctions of properties seized by banks to settle bad debts.

They do this with rowdy conviction, chanting not a single home in the hands of a banker, unfurling banners deploring vulture crows, and often physically preventing notaries and other court officials from sitting at the judges presiding bench.

Poor people cant afford lawyers, rich people can, says Ilias Papadopoulos, a 33-year-old tax accountant who feels so strongly that he has been turning up at the court to orchestrate the protests with his eye surgeon brother, Leonidas, for the past three years.

We are here to protect the little man who has been hit by unemployment, hit by poverty and cannot keep up with mortgage payments. Banks have already been recapitalised. Now they want to suck the blood of the people.

The tall, bearded brothers were founding members of Den Plirono, an activist group that emerged in the early years of Greeces economic crisis in opposition over road tolls. The organisation, which sees itself as a peoples movement, then moved into the power business restoring the disconnected electricity supplies of more than 5,000 Greeks who could not afford to pay their bills. Auctions are their latest cause. Solidarity is the only answer, Papadopoulos insists.

Rich people have political influence. They can negotiate their loans and are never in danger of actually losing the roof over their heads.

The protests have been highly effective. In law courts across Greece, similar scenes have ensured that auctions have been thwarted. Activists estimate that only a fraction of auctions of 800 homes and small business enterprises due to go under the hammer since January have actually taken place. Under pressure to strengthen the countrys fragile banking system, Athens leftist-led government has agreed to move ahead with around 25,000 auctions this year and next. In recent weeks they have more than doubled, testimony, activists say, to the relaxation of laws protecting defaulters.

There is not a Greek who does not owe to the banks, social security funds or tax office, says Evangelia Haralambus, a lawyer representing several debtors. Do you know what it is like to wake up every morning knowing that you cant make ends meet, that you might lose your home? It makes you sick.

Seated in the fourth floor office of the United Popular Front (Epam), a framed picture of Che Guevara behind her, the lawyer belongs to the growing numbers who believe Greece would be better off out of the eurozone.

We see our country as a country under occupation. It is inadmissible what has happened to Greece, she splutters. These vulture crows, homing in on the properties of the poor, are all part of the larger plan to control us.

Epam is among the fringe groups on both the left and right seeking to capitalise on the outrage over auctions as anti-euro sentiment mounts.

Few issues have highlighted prime minister Alexis Tsipras volte-face over austerity more than this. Resistance to home foreclosures was a rallying cry of the leftist leader before he assumed power in January 2015.

Tsipras decision to enforce some of the harshest austerity measures to date the price of a third bailout programme to avert default and debt-stricken Greece exiting the eurozone has exacted a heavy toll. Amid accusations of betrayal, his own popularity and that of his Syriza party, have plummeted.

The leaders much-vaunted promise that not a single home would be seized from Greeks unable to keep up with mortgage payments has become the stuff of satire played on radio shows to emphasise what is widely perceived as Tsipras hypocrisy.

But seven years into the crisis, any government would ignore non-performing loans (which will never be repaid, in full or at all) at its peril. A slowburning 106bn fuse under the Greek economy the equivalent of 50% of GDP they are regarded as the biggest risk to the banking systems stability. Some 41.3% of mortgage holders are estimated to have defaulted on loans.

Non-performing loans now account for 45% of all loans which is very high, said the Bank of Greeces governor Yannis Stournaras. It is imperative for the survival of Greek banks and the Greek economy that they are reduced. Our plans is to reduce them by about 40bn in the next three years, he added, blaming the weekly court dramas, squarely, on strategic defaulters. There are strict income criteria and property criteria that protect the poor.

In an atmosphere that has become increasingly explosive, as anti-austerity protesters again take to the streets , the anti-auction activism has also turned ugly.

Attacks against public notaries who are processing the sales have soared. Recently the downtown office of a prominent notary was ransacked by masked men belonging to an anti-establishment group who said they wanted to send a message to the crows. In court the officials are abused and booed out of the room by baying crowds.

We have been wrongly singled out, said notary Athina Karamanlis, struggling to speak above the din of protesters taunting her.

Our association has stated clearly that it will not condone the auction of primary residences. But it is our duty to follow the law. There are auctions that people want for all sorts of reasons.

The drama has forced the government to rethink its strategy. Fears are mounting that if the banks fail to recover losses, a Cypriot-style bail-in could follow and the government has announced that it will pushed ahead with electronic auctions. But the prospect of mass auctions at a click of a button has only incensed critics further.

It will create huge tensions and destabilise Greek society, said Papadopoulos, claiming that laws protecting the poor had been increasingly whittled down. They will have to evict people from their homes and that wont be easy. The people will react in unforeseeable ways.

Read more: https://www.theguardian.com/world/2017/mar/11/greek-activists-target-sales-of-homes-seized-over-bad-debts


Trumps honeymoon with the stock market will soon be over | Nouriel Roubini

His promises have rallied the Dow Jones but his inconsistent, erratic and destructive policies will take a toll on growth

When Donald Trump was elected president of the US, stock markets rallied impressively. Investors were initially giddy about Trumps promises of fiscal stimulus, deregulation of energy, health care and financial services, and steep cuts in corporate, personal, estate, and capital-gains taxes. But will the reality of Trumponomics sustain a continued rise in equity prices?

It is little wonder that corporations and investors have been happy. This traditional Republican embrace of trickle-down supply-side economics will mostly favour corporations and wealthy individuals, while doing almost nothing to create jobs or raise blue-collar workers incomes. According to the non-partisan Tax Policy Center, almost half of the benefits from Trumps proposed tax cuts would go to the top 1% of income earners.

Yet the corporate sectors animal spirits may soon give way to primal fear: the market rally is already running out of steam, and Trumps honeymoon with investors might be coming to an end. There are several reasons for this.

For starters, the anticipation of fiscal stimulus may have pushed stock prices up, but it also led to higher long-term interest rates, which hurts capital spending and interest-sensitive sectors such as real estate. Meanwhile, the strengthening dollar will destroy more of the jobs typically held by Trumps blue-collar base. The president may have saved 1,000 jobs in Indiana by bullying and cajoling the air-conditioner manufacturer Carrier; but the US dollars appreciation since the election could destroy almost 400,000 manufacturing jobs over time.

Moreover, Trumps fiscal stimulus package might end up being much larger than the markets current pricing suggests. As Ronald Reagan and George W Bush showed, Republicans can rarely resist the temptation to cut corporate, income and other taxes, even when they have no way to make up for the lost revenue and no desire to cut spending. If this happens again under Trump, fiscal deficits will push up interest rates and the dollar even further, and hurt the economy in the long term.

A second reason for investors to curb their enthusiasm is the spectre of inflation. With the US economy already close to full employment, Trumps fiscal stimulus will fuel inflation more than it does growth. Inflation will then force even Janet Yellens dovish Federal Reserve to hike up interest rates sooner and faster than it otherwise would have done, which will drive up long-term interest rates and the value of the dollar still more.

Third, this undesirable policy mix of excessively loose fiscal policy and tight monetary policy will tighten financial conditions, hurting blue-collar workers incomes and employment prospects. An already protectionist Trump administration will then have to pursue additional protectionist measures to maintain these workers support, thereby further hampering economic growth and diminishing corporate profits.

If Trump takes his protectionism too far, he will undoubtedly spark trade wars. Americas trading partners will have little choice but to respond to US import restrictions by imposing their own tariffs on US exports. The ensuing tit-for-tat will hinder global economic growth and damage economies and markets everywhere. It is worth remembering how Americas 1930 Smoot-Hawley Tariff Act triggered global trade wars that exacerbated the Great Depression.

Fourth, Trumps actions suggest that his administrations economic interventionism will go beyond traditional protectionism. Trump has already shown his willingness to target firms foreign operations with the threat of import levies, public accusations of price gouging and immigration restrictions (which make it harder to attract talent).

The Nobel laureate economist Edmund S Phelps has described Trumps direct interference in the corporate sector as reminiscent of corporatist Nazi Germany and fascist Italy. Indeed, if Barack Obama had treated the corporate sector in the way that Trump has, he would have been smeared as a communist; but for some reason when Trump does it, corporate America puts its tail between its legs.

Fifth, Trump is questioning US alliances, cosying up to American rivals such as Russia, and antagonizing important global powers such as China. His erratic foreign policies are spooking world leaders, multinational corporations and global markets generally.

Finally, Trump may pursue damage-control methods that only make matters worse. For example, he and his advisers have already made verbal pronouncements intended to weaken the dollar. But talk is cheap, and open-mouth operations have only a temporary effect on the currency.

This means that Trump might take a more radical and heterodox approach. During the campaign, he bashed the Fed for being too dovish, and creating a false economy. And yet he may now be tempted to appoint new members to the Fed board who are even more dovish, and less independent, than Yellen in order to boost credit to the private sector.

If that fails, Trump could unilaterally intervene to weaken the dollar, or impose capital controls to limit dollar-strengthening capital inflows. Markets are already becoming wary; full-blown panic is likely if protectionism and reckless, politicised monetary policy precipitate trade, currency, and capital-control wars.

To be sure, expectations of stimulus, lower taxes and deregulation could still boost the economy and the markets performance in the short term. But, as the vacillation in financial markets since Trumps inauguration indicates, the presidents inconsistent, erratic, and destructive policies will take their toll on domestic and global economic growth in the long run.

Read more: https://www.theguardian.com/business/2017/feb/02/trump-honeymoon-stock-market-dow-jones


‘I feel used and betrayed’: readers affected by the recession on who they’ll vote for

Eight years after the economic collapse, are Americans better off? As the election nears, readers share their experiences and how it will affect their vote

Eight years ago, the US economy went to hell. Lehman Brothers bank collapsed, the first of many. As a financial crisis swept the globe, unemployment soared, house prices and stock markets collapsed. Today, stock markets are at record highs, house prices have bounced back, the unemployment rate is 5%, half its peak during the recession. And yet …

Earlier this month we told the stories of five people who lived through the recession, many of whom said the recovery feels hollow. Below readers who responded to the story share their experiences and how it will impact their vote.

Craig from Jacksonville, Florida

Are you better off today than you were in 2008? I am about the same. In 2008 I was just two years out from finishing my undergraduate degree. I had the option to graduate early but when things began to turn dark, every intelligent person I knew told me to hold off. I remained in school for another year thinking I could wait it out. Boy, was I wrong. I ended up going to graduate school hoping to wait out the storm again. Turns out, that didnt help much either. After graduating as a highly skilled student, finding full-time employment was about as easy as finding affordable living in Manhattan.

Since then, I worked just about everywhere. I have done consultant research, bussed tables, worked in an emergency room and even spent a year working at a Florida beach bar all while applying for applicable jobs in my field that came with benefits. I finally have a job, but the amount of debt I have acquired and the amount of job insecurity I still feel has me on edge about as bad as 2008.

Who will you vote for? I am absolutely terrified of what is to come November 8. I am still a Florida registered voter so maybe my vote counts (if it does not end up on a beach somewhere). I plan to close my eyes and vote for Clinton. My biggest fear is that an economic bubble worse than 2008 is coming and that I will go back to bussing tables and serving drinks again.

Lori from Denver, Colorado

Are you better off today than you were in 2008? I am better off than I was in 2008. In 2008, I just started working after an awful divorce. My ex-husband was a homebuilder and laid off in the crash and there went my maintenance and child support. Today, Im an executive assistant for a CEO. Im better off because my first job after being a stay-at-home mom for 13 years paid $50,000 and I was thrilled. In 2016, Im now at $75,000 so Ive taken some job risks but its paid off.

But everything else my cost of living seems to have absolutely skyrocketed. I literally live paycheck to paycheck. I have two kids in college and I pay their auto, health insurance and cellphones. Its crazy and Im a tad frightened for the world theyll enter soon. Not sure theyll ever be able to buy a home, at least here in Colorado.

Who will you be voting for? I literally despise the Clintons so I cant vote for HRC. I always wanted to vote for the first woman, too. Theyre too sleazy for me. Trump scares the shit out of me. I was leaning toward him in the beginning because I do think a business person might bring a fresh perspective but, Jesus, not now.

I think Ill write in Bernies name. I dont know what else to do.

A
A supporter of Bernie Sanders carries a placard during a rally outside the Democratic national convention in July. Photograph: Dominick Reuter/Reuters

Kurt Johnson from Woodstock, Georgia

Are you better off today than you were in 2008? I am better off than I was in 2008. The economy was in a total nosedive. Obama wasted no time approving large measures to stop the bleeding. I work in real estate investing. Real estate where I live has returned to 2007 prices and as a result, we have enjoyed a good ride of appreciation of homes we have bought over the last eight years.

Who will you be voting for? I cant vote for the current Republican candidate under any circumstances. He is not fit to be a CEO, much less a president. I would be fine with things staying as they are so Hillary doesnt concern me that much. The Senate and House will keep her from making any changes for better or worse so I can stomach another four years until a respectable Republican runs in 2020.

Willard from San Jose, California

Are you better off today than you were in 2008? I am better off than I was in 2008.
The economy is in far better condition. Housing has recovered.

Who will you be voting for? The economy will play a role with how Ill vote. Both parties make big promises which I dont expect to be fulfilled. But at least Trump does discuss trade, jobs and manufacturing. If Congress agreed with a fraction of his bluster it might improve the economy.
But Ill NOT be voting for HRC because she is corrosive, divisive and corrupt to the core. On account of her, and with the current administrations help our trust in the Department of Justice has been destroyed.
Ill be voting Trump.

Donald
Donald Trump in Greensboro, North Carolina, last week. Photograph: Evan Vucci/AP

Eric from Framingham, Massachusetts

Are you better off today than you were in 2008? I am worse off than I was in 2008. I have not had a steady income since I left teaching in 2012. I lost my home to Wells Fargo and now live with a friend. I dont have health insurance.

I have a masters degree in education, a BA, speak three languages, and I am a veteran with combat experience, yet dont have a full-time job or meaningful part-time work. I dont make more than $15,000 a year. Its unlikely that at 53 I will ever work full-time again. So what, another 20-plus years of this meaningless existence?
When people do that horrible thank you for your service [thing], I want to scream and tell them that serving my country as a soldier and my community as a teacher were the worst mistakes of my life. I should have gone into business, gone for my self and not the greater good, and been selfish and greedy instead.
Left behind, no. Forgotten.

Who will you be voting for? Not voting, dont care.

Leslie from Wilmington, North Carolina

Are you better off today than you were in 2008? I am worse off than I was in 2008.

Why? I had to close the company. I went from earning $70,000 a year to now working two jobs, one full time for $37,000 a year and one part time (evenings and weekends) to bring my salary to $41,000. My health insurance costs have skyrocketed. Food is more expensive. I have a home that I cannot sell as I am still underwater. I had to use all my savings to help pay for my daughters education so she is not lumbered with loans when she graduates.

Who will you be voting for? I hate them both. I do feel that if Clinton is elected it will be the same, no change in the housing market, no change in income, no change in healthcare costs just more of the same. It is appalling and tragic that we have two awful people to choose from. It just shows the level of corruption and dysfunction in this country.

Jacob Lutz from Portland, Oregon

Are you better off today than you were in 2008? I am about the same.

Why? In 2008, I was a student and a cashier at Kmart. I was transitioning from foster care to adulthood while balancing a part-time job with my first and last attempt at higher education. I was overwhelmed with the responsibility of college and surviving on $6.75 an hour but managed to survive thanks to my home states support system for foster children and lack of financial burden.

Today, I am a motorcycle technician and make around $30,000 a year and owe $20,000 in student loans. I also pay $200 a month for health insurance and bills on top of barely supporting myself. The stress is still the same but Ive gotten better at handling it. Lowering my hopes and expectations significantly has helped too.

Who will you be voting for? I had more faith in Bernie than Hillary regarding the economy but since hes not an option, Im with her. I still believe Hillary knows how to listen to what people are wanting and has the clout in Washington to get more done.

U.S.
Hillary Clinton greets the crowd after speaking at a fundraiser in San Francisco earlier this month. Photograph: Lucy Nicholson/Reuters

Peter Berry from Seattle, Washington

Are you better off today than you were in 2008? I am worse off than I was in 2008. I no longer have a good, well-paying job and benefits. I was forced by circumstances to use up a good portion of my retirement savings to relocate and survive. I also used a lot of my savings to pay off my sons college law school loans as he has been unable to find even an entry-level job in the law profession.

I had a successful, lifelong, professional career that disappeared overnight, and was unable to find comparable work because of my age and the terrible state of the economy.

I think my efforts to navigate my way through the economic downturn likely mirror those of so many others. It isnt just the loss of decent paying jobs that has been an issue. Its also the erosion of savings meant for retirement. Also the enormous debts that have been run up for financial bailouts and the cheap money used to inflate the stock market will have to be faced eventually.
I believe the entire political establishment has been complicit in what has happened. I worked on Obamas first election campaign and contributed quite a bit of my own money believing the hope and change message. I felt optimistic that it was a possibility. Now I just feel used and betrayed.

Who will you be voting for? I will be voting for Jill Stein because she represents the only real choice that exists. The Democrats and Republicans are the same in virtually every meaningful respect and do not represent the interests of the average person at all. The definition of a wasted vote is voting for either of them.

Read more: https://www.theguardian.com/business/2016/oct/22/guardian-readers-economy-recession-election


The Guardian view on the US presidency: the time is right for a female leader | Editorial

Editorial: Hillary Clinton failed to take account of the populist anger and lost ground to the rightwing demagoguery of Donald Trump. But in belatedly recognising widespread frustration with elites she deserves to win

The final presidential debate, thankfully the last set piece in a wretched campaign, revealed what is admirable and loathsome in American politics. Hillary Clinton displayed a razor-sharp intelligence and a quick wit. Her facility with facts trumped Donald Trumps lack of them. Americans finally saw on Wednesday why Secretary Clinton had got rich from giving lectures after leaving office. Her fluency with words, which has earned her $22m in speaking fees, appeared to silence her opponent. Mr Trump, a boastful, thin-skinned billionaire who trades in racism and misogyny, was left squawking on the sidelines of the debate. His jibes revealed aman out of his depth. His answer was to plunge down deeper. By disgracefully refusing to rule out calling this a rigged election he gave up a fight he had by then lost.

Americans should vote for Secretary Clinton as an able and proven politician. A Trump presidency would be bad for America and dangerous for the world, so a vote for Secretary Clinton is the most effective way of preventing it. Mr Trump has been exposed for questionable tax arrangements, outrageous business practices and irregularities at his charity. The billionaire is a grabber and kisser of women who he presumed gave consent because he was famous. There are numerous allegations of sexual assault by Mr Trump. He has demonstrated that he has neither the conscience, training nor sense of history and the desire to be judged well by it to occupy the White House. Secretary Clinton possesses such attributes. She has a serious and sustained commitment on issues like education, healthcare and equality, and she has stood consistently for the rights of women, ethnic minorities, children and the disabled through her long career.

However, there are fewer reasons to vote for Secretary Clinton than one would have hoped. For more than two decades she has been part of a political establishment that shaped a dysfunctional country. She has been unable to escape being tarnished by the most damaging policies notably around criminal justice ofher husbands administration. There are well-founded concerns, highlighted by transcripts of her speeches, that she is too close to Wall Street to be an effective check onits excesses ifelected.

The mood for change

Even so, as the first female president she would represent a symbolic transformative change in American politics. In some ways what Secretary Clinton has had to deal with are ingrained cultural attitudes about what success and leadership look like. These were exposed by the finding that Mr Trump would win if only men voted and Secretary Clinton would win if only women voted. That most men favor MrTrump over Secretary Clinton demonstrates at some level a more insidious sexism than the one Mr Trump peddles: that centred on the mind, not the body. It is a hostility deeply embedded but rarely conceded against seeing women as genuinely equal.

There is little doubt that the 2016 presidential campaign has been one of the most confrontational contests of the modern era. The mood for change has been more pervasive and volatile, and has been supercharged by Mr Trump, a braggart with tyrannical instincts. The backdrop to this election has been genuine and understandable public anger about economic insecurity, growing inequality and frustration with elites. Mr Trump on the right and Bernie Sanders on the left have reflected that mood in their very different ways. That is not going to disappear after 8 November. The election has also raised real questions about the crisis of American democracy. Mr Trump encouraged violence against opponents and threatened to jail Secretary Clinton if he took office.

The civility that has marked out US democracy as ordered and restrained appears dead. The next president will have to resurrect it. The political topography of a polarized and resentful nation has been obscured by the preternatural equanimity of Barack Obama. Mr Trump has in some ways skilfully exploited these divisions. On social security he has moved to the left on the campaign trail, telling jobless Americans that he would not touch their benefits. Mr Trump also wants to repeal the Affordable Care Act, the landmark measure that increases health coverage for low-wage workers and benefits large numbers of immigrants and minorities. This contrasts with the real estate magnates offer to expand the US health programme for the elderly Medicare which benefits overwhelmingly older, whiter voters.

These dog whistles have been part of American politics for decades. But they come at a time when there is a sense that there are too many losers from economic growth in the country. Driving discontent in the US is a system that no longer defuses high levels of inequality with opportunities for all. Themiddle classes are poorer today than in 2000. Since the Great Recession the top 1% of families in the US have captured 52% of the income growth. Theres understandable anger that the wealthy were bailed out while ordinary Americans were hollowed out. Voters rage that, in the current incarnation of globalization, jobs that disappeared when the US decided to import rather than manufacture did not come back they simply popped up elsewhere, usually in China.

The Sanders effect

Nowhere has this fury been more keenly felt than in the countrys former manufacturing heartlands, tapping into Americas long history of resistance to free trade and making protectionism a potent political force once again. The politician who has shaped the politics of the country and accounted for populist anger is Senator Sanders. The man from Vermont understood, earlier than most, that voters see the economy as rigged against them by a political system that has been corrupted by big money. His campaign was backed three to one by millennials in the Democratic primaries. This month his favorability ratings in opinion polls are only bettered by MichelleObama.

Senator Sanders insurgent campaign has transformed Democratic politics forcing Secretary Clinton to adopt, albeit sotto voce, key planks of his program such as a federal minimum wage of $15 an hour, tuition-free public college and opposition to the Trans-Pacific Partnership President Obamas big trade deal. Until this week, Secretary Clinton failed to outline enough of a bold reform program. Tellingly, she offered signs of one in the final televised debate, making unprompted promises to push immigration reforms, a key Sanders point, within the first 100 days of her presidency.

Although domestic politics has framed the campaign, Secretary Clintons election would be greeted with relief and optimism in most world capitals other than Moscow and Damascus. Despite her hawkish outlook, she will have no alternative but to recognize that the 21st century no longer always looks to the United States as an indispensable hegemon, whether benign or threatening. Secretary Clinton should focus on US soft, not hard, power dealing with climate change and working out fairer global trade arrangements.

If Secretary Clinton is elected she must recognize the mood without pandering to its demons. She needs to bring the bold ambition about the role of government to this era that Theodore and Franklin Roosevelt each did in earlier times. She has the intelligence, the seriousness and the experience to do this. TheUS presidency is hugely powerful: 10% of all posts in federal government are allocated on the basis of political patronage. Secretary Clinton offers the best chance of ensuring those jobs go to competent people. Her choice of Treasury secretary in the aftermath of the banking crisis will be watched with special care, as will an olive branch appointment to Senator Sanders of the kind that president Obama made to her in 2008. She offers the greatest hope that the supreme court defends abortion rights and looks again at issues like campaign finance as well as background checks on gun owners. Yet America will soon find itself weakened at home and abroad if the new president is as badly served by congress as Mr Obama has been for most of his tenure.

There is a danger, if Mrs Clinton wins, thatthe Republicans will relapse into the Hillary-hatred that has marked them for a quarter century. The tragedy of this election isthat, to become president, Secretary Clinton has had to talk more radically than she actually felt; to be an effective president she may be compelled to act more conservatively than shenow says she wants to do.

Read more: https://www.theguardian.com/commentisfree/2016/oct/21/guardian-view-on-us-presidency-time-is-right-for-female-leader-hillary-clinton


Trump presents vision for creating 25m jobs in economic policy speech

The Republican presidential nominee projected audaciously that millions of new jobs would be created broadly within a two-term Trump presidency

Donald Trump attempted to combat widespread criticism of his sketchy economic policies by setting out what he presented as a new vision for the country that he audaciously claimed would create 25m new jobs in a decade and put the American worker first.

Addressing one of the countrys most august economic debating societies, the Economic Club of New York, the Republican presidential nominee sought to dispel the criticism that has dogged his campaign that his mathematics do not add up in balancing tax cuts and new spending. Sticking closely to a pre-prepared script despite an initial malfunctioning of his teleprompter – he delivered a speech that was billed in advance by his senior advisers as the culmination of his thinking on how to get America back to work.

American cars will travel the roads, he said, American planes will soar the skies, American ships will patrol the seas, American steel will send new skyscrapers into the clouds, American hands will rebuild this nation, and American energy harvested from American sources will power this nation.

Despite the unapologetically populist tone, Trump tried to puncture criticisms that his plan lacked substance by putting figures to his ambitions. He projected 25m new jobs would be created broadly within the timeframe of a two-term Trump presidency, as a result of an average annual growth rate that would rise from current projections of about 2% to 3.5% through his tax-cutting and trade policies.

The audaciousness of that boast is underlined by comparison with previous presidents. It would bring American job creation levels back to the golden days enjoyed by Bill Clinton in the 1990s when the dotcom boom and an expanding global economy saw 21m jobs created under his watch.

By contrast, Barack Obamas two terms in the White House have seen almost 10m jobs created within a sluggish recovery from the 2008 collapse.

Even more audaciously, Trump said he could achieve such a boon to employment while keeping the national budget deficit neutral. If we achieve 4% growth it will reduce the deficit, he said.

Buoyed by new polls showing him in effect tied nationally with his Democratic rival Hillary Clinton, the real estate billionaire said he could pull off such a turnaround in the US economy through a combination of traditional conservative tax cutting and by tearing up trade deals and bringing jobs back to America from Mexico and China. His words were given added poignancy, though he did not make overt reference to the fact, by the setting of his speech in the ballroom of the Waldorf Astoria on Park Avenue, a legendary hotel bought by a Chinese insurance company in 2014.

On taxes, Trump proposed to simplify the tax code into three brackets down from seven, and to take poor earners out of tax altogether with individuals with an income under $25,000 (19,000) and married couples under $50,000 paying no tax.

However, with his tax cuts applying to all earners, no matter how wealthy, they would have a regressive effect. The Tax Policy Center has calculated the richest 0.1% would on average see tax cuts under his plan of $1.3m in 2017 compared with just $5,100 for everybody else.

Trump tried to counter that criticism that he was putting forward policies that would benefit the 1% by modelling how average families would fare under his vision. A married couple earning $5m a year with two children and $12,000 in child care expenses would only get a 3% reduction in their tax bill, he said, compared with a 35% reduction for a similar couple earning $50,000 and with $8,000 in child care.

People earning $5m will receive virtually no change in their tax bill at all, he said.

But in other parts of his address, he underlined reforms that would be to the advantage of wealthy Americans, including his proposed abolition of the estate tax that is only paid on inheritances valued at over $5m. He also repeated his promise to slash the business tax rate from 35% to 15%, earning a robust cheer from the many corporate leaders eating lunch on the ballroom floor in front of him.

Trumps economic manifesto has been widely criticized by analysts. This week the global firm Oxford Economics predicted that the US economy could shrink by $1tn by the end of a single term Trump presidency as a result of his proposed tax cuts, barriers to trade and mass deportation of undocumented immigrants.

That would be the equivalent of 5% of US GDP, with knock-on effects for growth around the world.

One of the specific sticking points with the Trump plan highlighted by experts has been how the sums add up. On the one hand, he wants to see massive tax cuts, greater he said than any time since President Reagan; but on the other he also wants to pump more money into the US military and to preserve spending on social security and medicare.

Independent analysis has calculated that his tax cuts would bring down federal revenues by almost $10tn (trillion) over a decade, leaving even less fat in the system to cover his other ambitions.

The point was raised in a question to Trump after his speech from Martin Feldstein, an economics professor from Harvard, who asked the Republican nominee what assets he would deploy to offset the sharp reduction in federal revenue from tax cuts. The candidate replied that he believed eventually, over time it will work out. The big thing over neutrality is the amount of business we will generate, and how we will stop companies take jobs out of the country.

Despite the new figures that he peppered through his talk, the policy he outlined remained posited on faith that his strong leadership would bring about levels of growth and job creation that have eluded recent incumbents of the Oval Office. This is what our new future will look like, he said. Im going to lower your taxes, Im going to get rid of regulation, Im going to unleash American energy. We are going to put the American worker back to work.

Read more: https://www.theguardian.com/us-news/2016/sep/15/donald-trump-jobs-vision-25-million-economic-policy


One month after the referendum, are predictions of Brexit blight coming true?

Though the Leave vote hit share values hard, many have recovered. But other sectors of the economy will be counting the cost for years

The overall impact of the historic referendum that saw the UK unexpectedly vote to leave the European Union has so far, in the space of a month, been less severe than some of the more apocalyptic warnings had suggested. But there have been winners and losers across the economy.

The pound

Sterling went on a rollercoaster ride on referendum night, ending up down 8% against the dollar as the results confirmed a victory for the Leave camp. Since then, its decline has continued and the pound is now at levels not seen since 1985, having lost about 12% against the US currency. Compared with the euro, the pound has fallen by 9% since the vote and is at a three-year low making holidays in euroland more expensive.

The decline comes as investors worry about weakness in the UK economy and the prospect of interest rate cuts to boost demand. This month the Bank of England left rates on hold but said most members of its monetary policy committee expected a cut in August if the economy did not improve.

The weak pound is a boon to exporters but will make imported goods more expensive. On Thursday, Unilever the business behind brands including Dove, Flora, Bertolli, Hellmans and Persil became the first major food and consumer goods company to warn that companies were likely to pass on increased costs to customers.

Stock markets

Markets were caught by surprise by the Leave result and a record $2tn was wiped off the value of global shares. But since then, there has been something of a recovery, particularly for the FTSE 100, which has regained all lost ground and more, and is currently at 11-month highs. However, the leading UK index is chock-full of companies with international operations, which are less exposed to any slump in the UK economy, and which earn in dollars, thus gaining from the new lower exchange rate.

The weak pound has also raised the prospect of UK-listed companies being snapped up by foreign rivals because suddenly they look cheap. Just last week chip designer ARM agreed to be taken over by Japans SoftBank for 24bn, while South African retailer Steinhoff has agreed to buy Poundland. Analysts believe more deals will follow.

Markets have also been lifted by bargain hunters who believed valuations had fallen too far, as well as by the quick resolution to the political crisis threatening to engulf the government following Theresa Mays appointment as prime minister.

However, the mid-cap FTSE 250, which is more exposed to the UK economy than the 100 index, has yet to reach the level it was sitting at before the referendum result, despite recovering more than 13% from its lows. It is now down 2% from its pre-Brexit level.

Housing market

There has been a spate of profit warnings from estate agents, and many are making gloomy forecasts for the rest of the year. Agents in some upmarket parts of London have reported a bounce in interest from overseas buyers keen to take advantage of weak sterling, but for the mainstream market there are signs both interest and price growth have cooled.

On Friday, LSL, Britains second-biggest estate agent group owner of Your Move and Marsh & Parsons among others said business had slowed since the vote and warned that its annual profits would be significantly lower than anticipated. London-focused Foxtons issued a similar warning in late June.

Forecasts for the rest of the year are for falling interest from buyers and price drops, particularly in the most expensive parts of the market. French bank Socit Gnrale said last week that a price correction of even 40-50% in the most expensive London boroughs could be possible.

The Royal Institution of Chartered Surveyors (Rics) says its members expect sales to slump over the summer, because buyer inquiries fell significantly in June. Ricss findings were cited by the Bank of England when it announced that it was revising down its forecast for price rises.

Housebuilders

Shares in housebuilders lost around 40% of their value in the immediate aftermath of the Brexit vote, with investors worried that an economic slowdown in the UK would hit their business, despite the country seeing record low interest rates.

There has been some recovery since then, but the companies have failed to regain all their losses. Barratt Developments, Britains biggest housebuilder, is still down around 28%, and it has said that it may build fewer homes because of the current uncertainty.

Even before the vote, upmarket rival Berkeley had warned in June of a 20% drop in reservations of new homes.

Barratt
Barratts share price is down 28%. Photograph: Bloomberg via Getty Images

Commercial property

The commercial property market was already stalling in the months running up to the referendum as investors put plans on hold to await the result. The UKs decision to leave the EU has not encouraged them back.

Rics said last week that there had been a significant drop in confidence and demand among investors and tenants since the vote. Both rent and capital value expectations are now in negative territory, it reported, adding that office and retail properties have been hardest hit.

Funds invested in commercial property were forced to close their doors for a while, as panicked savers tried to withdraw their cash. Those barring withdrawals included funds run by Standard Life, M&G Investments and Aviva Investors. Last week, they started to reopen for business, but some investors who want to get their money out will take a hit. Aberdeen Asset Management, for example, is adjusting payments downwards by 7%.

Banks

The banking sector has been hard hit by the Brexit fallout, thanks to a combination of low interest rates, worries about future access to European financial markets and the prospect of a general downturn.

With expectations of another rate cut in August, the banks are braced for more strain on their stretched balance sheets, at the same time as the economy is slowing and the risk of bad debts is increasing.

Moreover, so-called passporting arrangements, under which banks can sell financial products throughout Europe even though the UK is not part of the single currency, could come under threat after Brexit.

Banks most exposed to the UK market have been hardest hit, with Lloyds Banking Group and Royal Bank of Scotland down 25% and challenger bank Virgin Money falling 35%.

Profit warnings

Estate agents have been the only businesses to issue profit warnings following the Brexit vote. However, British Airways owner International Airlines Group was quick off the mark to say the uncertainty would hit demand, closely following by easyJet. Last week, the budget airline added that the fall in the pound had cost it 40m.

Other travel companies are also suffering as, along with increased concerns about terror attacks, they face the prospect of UK holidaymakers ditching more expensive overseas trips and staying at home.

But executives at Heathrow airport said on Friday that the Leave vote had been good for business, with the falling pound encouraging international visitors to spend more in its shops, as well as making it easier to raise money from foreign investors.

FIRST SIGNS OF ECONOMIC IMPACT

The first real sign that Brexit is having an impact on the economy emerged last Friday, with a Markit survey showing business activity in services and manufacturing shrinking in July at its fastest rate since the global financial crisis in 2009. The data suggested that UK GDP could contract by 0.4% in the third quarter, according to Markit.

Until then, the data had been equivocal. The International Monetary Fund, which before the referendum had warned of possible recession if the Leave campaign won, cut its forecast for UK growth in 2017 by 0.9% points to 1.3% from its April estimate. But that is still similar to its forecasts for Germany and France.

A report from the Bank of Englands regional agents last week showed that a majority of firms were not planning to mothball investment or change their hiring plans.

The latest job figures looked upbeat: showing unemployment at its lowest level for more than a decade, with 31.7 million people in work in the three months to the end of May 176,000 more than for the three months to February 2016.

On the high street, however, the volume of retail sales fell by 0.9% between May and June. This compared to a rise of the same amount in the previous three months, and showed the effect of falling consumer confidence in the run-up to and immediate aftermath of the EU vote.

This was backed up by a survey from the British Retail Consortium and KPMG showing retail sales in the three months before the vote at their weakest for seven years, while market research group GfK recorded the biggest slide in consumer confidence for 21 years in a one-off poll following the referendum.

Inflation is on the rise, with official figures showing that dearer air fares and driving costs helped to push the consumer price index up by 0.5% in the year ending in June, up from 0.3% previously.

With higher prices on the way after the Brexit vote, inflation could breach its 2% target during 2017.

Read more: https://www.theguardian.com/business/2016/jul/23/brexit-one-month-after-referendum-blight-predictions


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