Rolling coverage of the latest economic and financial news

• Great British slowdown has hamstrung our economy – thinktank

The “Great British Slowdown” has left families £1,400 poorer, according to the Resolution Foundation this morning.

The thinktank has published a new report, showing how the slowdown in economic change over the last 15 years has left the country poorer.

“The British economy has spent the past 15 years struggling from one major crisis to another. But while many people assume this severe economic turbulence has led to major economic change, in fact the opposite is true. Our economy is instead suffering from a Great British slowdown, which has hamstrung our economy, and left families £1,400 poorer.

“Britain needs more, not less, economic change. We need successful firms to grow, and struggling ones to shrink.

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Country needs successful firms to grow and struggling ones to shrink, says Resolution Foundation

The UK needs more businesses to fail, or at least shrink, to solve the economy’s long-running productivity crisis, a study has argued.

The country’s lack of “economic dynamism”, whereby weaker firms or lower productivity sectors shrink, and more productive ones grow, has caused GDP to be 4% lower between 2008 and 2019 than it would otherwise have been, according to a paper published on Monday by the Resolution Foundation.

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In his new book, Technofeudalism, the maverick Greek economist says we are witnessing an epochal shift. At his island home of Aegina, he argues it’s no longer the global finance system that shapes us, but the ‘fiefdoms’ of tech firms

What could be more delightful than a trip to Greece to meet Yanis Varoufakis , the charismatic leftwing firebrand who tried to stick it to the man, AKA the IMF, EU and entire global financial order? The mental imagery I have before the visit is roughly two parts Zorba the Greek to one part an episode of BBC series Holiday from the Jill Dando era: blue skies, blue sea, maybe some plate breaking in a jolly taverna. What I’m not expecting is a wall of flames rippling across a hillside next to the highway from the airport and a plume of black smoke billowing across the carriageway.

Because even a modernist villa on a hillside on the island of Aegina – a fast ferry ride from the port of Piraeus and the summer bolthole of chic Athenians – is not the sanctuary from the modern world that it might once have been. The house is where Varoufakis and his wife, landscape artist Danae Stratou, live, year round since the pandemic, but in August 2023 at the end of a summer of heatwaves and extreme weather conditions across the world, it feels more than a little apocalyptic. The sun is a dim orange orb struggling to shine through a haze of smoke while a shower of fine ash falls invisibly from the sky. A month later, two years’ worth of rain will fall in a single day in northern Greece, causing a biblical deluge and never-before-seen levels of flooding.

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Mental health issues and lack of faith in government support are driving desire to change status

Mental distress and financial insecurity has pushed 40% of self-employed workers to say they would switch to a salaried job if they could secure the same income, according to an academic study that has tracked self-employment trends during the Covid-19 pandemic.

About one in eight would accept a 20% pay cut to get out of self-employment, such is the damage done to their mental health and the expectation that government support will not be forthcoming should another crisis wreck their business.

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There is no sign that furlough drove people away from the labour market, and research on Roosevelt’s New Deal found that big government bound the country together

Liz Truss is back in the news, but a small state is out of fashion – or at least with the punters. The new British social attitudes survey finds that seven in 10 of us think it’s definitely government’s job to control prices, up from three in 10 in 2006. Only 30% wanted public spending increased in 2009; now that’s 55%.

This has libertarians turning in their Tufton Street graves. But they should relax. Partly that’s because the surge in support for big government shouldn’t be a surprise and may be temporary. The survey was carried out in autumn 2022, when people faced unpayable energy bills without government support. And it followed a pandemic posing health and economic challenges individuals couldn’t hope to address alone.

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Her worst ideas were reversed, but today’s economy is similarly floundering as Sunak prepares for his own autumn budget

Imagine an alternative world. Liz Truss has just completed her first year in office this weekend, having miraculously survived when her mini-budget triggered the worst political and economic meltdown since Black Wednesday.

Andrew Bailey has been fired as Bank of England governor, the Office for Budget Responsibility has been abolished and the Treasury has been reformed : it’s no longer a bastion of orthodoxy but a ward of No 10’s pro-growth coalition. The International Monetary Fund has been ignored – despite the pound hitting a record low against the dollar – while high inflation and borrowing costs have fuelled a soaraway government deficit.

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Some surveys predict recession, but with pay and confidence rising, they may be wrong. That’s the best we, and the PM, can hope for

Another year of stagnation beckons. Well into 2024, we’ll see the UK economy lurch from side to side, like a zombie, unable to move forward. While the government wrestled with the fallout from last year’s Liz Truss mini-budget and the Bank of England killed off what enthusiasm was left by raising interest rates, it was inevitable a sense of stultifying gloom would dominate this year. But now it looks like next year will be much the same.

Predictions from some independent economists and business groups even show that a recession in which the economy goes backwards for much of 2024 is more likely.

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Mounting optimism that home-loan costs have peaked after Bank of England keeps interest rates on hold

UK lenders are expected to launch another round of mortgage rate cuts next week amid optimism home-loan costs have peaked after the Bank of England’s decision to keep interest rates on hold .

So far Nationwide is the only big lender to reduce mortgage rates since the Bank announcement on Thursday. NatWest went earlier in the week after official data showed an unexpected fall in UK inflation in August.

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Service sector and manufacturing output falls, with cost of living crisis also hitting businesses

• Business live – latest updates

Britain’s economy is at growing risk of recession after industry figures showed the sharpest monthly fall in private sector activity, outside of the Covid pandemic, since the financial crisis.

In a sign that higher interest rates and the cost of living crisis are combining to depress consumer demand, the latest snapshot from S&P Global and the Chartered Institute of Procurement and Supply (Cips) showed a steep drop in the UK’s dominant service sector and manufacturing output in September.

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