Aurelia Butler

Shortly before Easter, Glyn Potts began to suspect that the children had not been eating. Potts, a statuesque headmaster in his mid-forties, watched uneasily from the mezzanine over the central lobby of Newman Roman Catholic College in Oldham. Every lunchtime, hundreds of schoolchildren materialised from all directions, jostling out of their classrooms and descending noisily down staircases to the benches below. Many rushed off to collect hot food or to the ever-popular panini counter. But from his vantage point above, Potts could see that some of them were just waiting, hanging back until right before the bell rang to signal the end of the lunch break. More and more kids had begun sidling up to the dinner ladies at the end of lunch break, asking if any chips were going spare. These were the “jam” kids, Pott’s term for children whose families were “just about managing” and so didn’t meet the British government’s threshold for free school meals. The jam kids were now routinely coming into school without the £2 they needed for a hot dish, a pudding and a drink. They were queueing for scraps.In the five years since he became headmaster at the school for 11- to 16-year-olds in the former mill town next to Manchester, Potts had seen other things that disturbed him. He’d watched as Covid laid bare Oldham’s overcrowded, clapped-out housing, high levels of multi-ethnic poverty and dependency on service jobs, all of which contributed to some of the country’s highest infection rates.Ministers imposed local lockdowns on Oldham on and off through 2020, in an attempt to quell the spread of disease. As a result, more face-to-face school hours were lost in the area than elsewhere in the country. Potts discovered that some children had begun riding around on the Greater Manchester tram network, using its free WiFi to do their homework. When that service was switched off, they moved to McDonald’s. 

Newman College’s canteen: the school began absorbing the cost of feeding pupils who couldn’t afford lunch but didn’t qualify for free meals © Thomas Duffield

Then, as the pandemic abated, the cost of living crisis and rising inflation bore down on the same families. School attendance levels were poor. Some kids started turning up late, telling teachers they couldn’t afford to ride the bus. The school had to step in in the case of one exam-age pupil who had been working so many hours a week it broke the law.But the jam kids presented a particular challenge. At first, the staff at Newman rang the parents of the students who had been turning up without lunch money, to investigate. Eventually, Potts decided the school would begin absorbing the cost of feeding the extra pupils, seating them in a separate classroom to avoid the indignity of the queue.There is something reminiscent of military precision to Potts’s controlled demeanour. As he moves through Newman’s corridors, he orders children to tuck in their shirts or tie their shoelaces. His manner with the kids is not brusque but brisk, as if he is reminding them of a standard they’ve mutually agreed to uphold. In his office, I’d noticed a copy of Soul Fuel for Young Explorers, a best-selling, adventure-themed devotional written by the explorer Bear Grylls. Before he was a teacher, Potts was indeed briefly in the army and still serves as a volunteer cadet. He is a born problem-solver.But in his time as a headmaster, Potts has become an expert in some unexpected fields. He never thought teaching would involve understanding the finer points of housing policy, for example. Once the number of his pupils living in homeless accommodation began to rise, he had to learn. Over the past academic year, I have shadowed Potts and visited his school. In that time, his responsibility for solving problems originating far beyond the school’s grounds has only increased. Each time we spoke, it was amid a new chapter of political upheaval or economic hardship for the UK, as prime ministers and their allies came and went, and inflation crept ever higher. Like many teachers facing the country’s escalating socio-economic crises, Potts and his staff have had to do much more than educate.AutumnNewman College was created more than a decade ago from the merger of two Catholic schools, one predominantly white and one with 70 per cent Muslim pupils. The premise was better integration following Oldham’s 2001 race riots, when ethnic tensions erupted into a series of violent clashes between white and Asian youths.Today, the school’s 1,500 students come from across the borough, from the more-moneyed moorland communities at its fringes to areas of acute poverty at its urban core. “We’ve got children who come in from Saddleworth in Ferraris,” Potts explained, the first time we spoke, of the pretty Pennine villages seven or eight miles away, “and children who’ve got nothing”. The school’s parliamentary constituency of Oldham West and Royton is ranked fourth-worst in the UK for child poverty, according to the charity Action for Children. More than half of the kids there are living below the breadline.Unlike neighbouring Manchester, Oldham has not recovered from a long economic decline that began when its cotton mills started closing. Those mills once made the town rich, drawing workers from all over the British empire. Now many are empty. Aerospace manufacturing buoyed the local economy for a time. BAE Systems’ vast plant here constructed the iconic Lancaster bomber during the second world war, not only providing skilled employment but an anchor in the community for families who lived in the surrounding terraces and 1930s semi-detached houses. The factory closed its doors in March 2012, six months before Newman opened its own around the corner.Potts and I first spoke in August 2022, on a patchy line as he drove his son to watch a women’s Hundred cricket match at Old Trafford. In the last days of that long, politically rancorous summer, the Conservative party leadership campaign was in full swing, following the resignation of Boris Johnson. There was only one other national news story: soaring energy prices. Seven miles down the A62 in central Manchester, the leftwing campaign Enough is Enough had just been launched to protest against the rising cost of living. Trade unionist Eddie Dempsey’s invective bounced off the pavements: “We’re not going to let these people take the piss out of us any longer,” he bellowed, of a government in search of its next leader.I was struggling to imagine what the cold months ahead would bring, I told the headmaster. Potts had no such difficulty. He’d just left a school finance meeting and the numbers were fresh in his mind. Usually, he explained, Newman’s hardship fund provides about £3,500 a year for items — blazers, jumpers, purple-and-blue striped ties, school bags or stationery – for children who can’t afford them. But, with a week to go until the beginning of term, it had already shelled out twice the normal amount.

The school’s uniform instills discipline in the students and encourages a greater sense of equality © Thomas Duffield

Potts deemed the school uniform “brilliant, beautiful”, and he meant that sincerely. It was not only a means of instilling discipline, he explained, it also muted the differences between “haves” and “have-nots”. At Newman, 43 per cent of pupils are eligible for free school meals, compared with a national average of 24 per cent. In a low-wage economy, however, free meals are only a superficial proxy for poverty. Children generally only get them if their household is already receiving welfare benefits. So, even before the start of the school year, Potts was worrying about the families who didn’t qualify but were nonetheless poor, those who were so low-paid “it’s almost not worth them having a job”. Potts was concerned about his own budget too. That week, Newman’s governing body had reiterated that mental health support must not be cut for the children, many of whom were still adjusting to school life post-lockdown. He agreed with them but, he said, “these are the things that cost”.A fortnight later, the autumn term had begun. Queen Elizabeth had just died. Liz Truss was prime minister and, while the British state was focused on the royal funeral arrangements, food prices were rising quickly. At Newman, financial pressures on households were already apparent. Spending in the school canteen had gone up dramatically. Parents, Potts surmised, were calculating that £2 for a school dinner was cheaper than anything they could put together in a packed lunch.There were also subtler signs of a squeeze. The Year 11s (15- and 16-year-olds due to take their GCSEs and leave school the following summer) were worried about whether everyone would be able to afford to go to their prom. “It seems to me that it’s in the psyche of the young people at the moment,” said Potts. “Money isn’t to be wasted and they’re starting to understand the school does more than perhaps it should.”WinterIn late November, under overcast skies, I headed back to visit Potts in person. Since we’d last spoken, Truss had already departed Downing Street, and been replaced by Rishi Sunak. Thanks to the turmoil at the top of government, the country was on its fifth education secretary in five months. The latest food inflation figures, published by the British Retail Consortium that morning, were running at 12.4 per cent, way above the 1.1 per cent from the year before. The school’s entry lobby seemed colder than the temperature outside.As Potts ushered me, businesslike, upstairs to his office, he explained that ever since its opening, Newman has had faulty heating and a leaking roof. Ten to 12 classrooms a day get flooded when it rains, he said, “and in Oldham it rains quite a lot. It’s the drizzle that kills us.”Newman was built under the last Labour government’s private finance initiative, a scheme designed to replace public buildings, keeping the costs off the government’s books and leasing them back to the state over decades.

For Newman, the result has been a weird trade-off. Under its PFI agreement, the school receives a chunk of money back each year from the owner, via the local authority, in recognition of the building’s persistent leaks and fluctuating temperatures. Ironically, this “failure payment” has provided a cushion for the school’s budget through a period of sustained public sector austerity, brought in and maintained by successive Conservative-led governments since 2010 in the form of budget cuts and freezes. The extra cash is not enough to protect it indefinitely, however, particularly as inflation bites.“Anyone want to bet £10,000 the roof didn’t leak over the weekend?” Potts asked at a staff meeting later in the year. “Good,” he replied to the bemused silence. “You would have lost your money.”Despite the dilapidation in the hallways, Potts’s office was cheerful. Self-portraits of smiling pupils lined its bright red walls. The glossy cover of a flip-chart featured the faces of a class of departing Year 11s – a gift at the end of his first year as headteacher in 2018 – formed into a composite portrait of John Henry Newman, the 19th-century cardinal and theologian after whom the school is named. Paperwork was laid out methodically in A4 piles on the floor, evidence of some sprawling administrative task my visit was interrupting. We sat at the boardroom table which dominated one half of the office, from where Potts and his senior leadership team attempted to solve the, at times, insoluble puzzles of class scheduling, recruitment and finance. In London, the government had just unveiled its second budget in less than two months. The first, Kwasi Kwarteng’s disastrous “mini-Budget”, had been swiftly discarded after causing a mini-market meltdown. The outlook for schools in general seemed better than Potts had expected, but there was still scant detail for him to go on. Since he had to set a budget for the following April without knowing what money would be coming in, he was already planning to cut back on textbooks and axe extracurricular trips to ensure the books balanced. While brutal, macro decisions were being made in the Treasury, the micro ones were being determined in this room. I asked what cancelling the school trips might mean for his kids: “You’re going to think I’m over-egging the pudding here, but I can categorically tell you this,” he replied. “We took some children away to Castlerigg, which is a sort of retreat house over in Cumbria, in Keswick, and it was the first time one of the students had seen a live cow. And they were laughing, because they do just look like the cartoon.” That might be an extreme example, he conceded, by now in full flow, but the point of such trips is to make “citizens of the world”.“From a completely moral standpoint: my children, I want them to be competing with Eton, with Oxbridge, that kind of thing,” he said. “They’re not going to be able to do that if I can’t even give them a glimpse of what is a standard trip for some of these other institutions.”Another puzzle has been how to make the most, or anything at all, of the government support offered for catch-up tutoring, intended for children who had fallen behind during the pandemic. Potts had been finding it hard to attract tutors out to Oldham when he had to compete with schools elsewhere, including in Manchester, which is growing rapidly. Most of the kids at Newman were reliant on a school bus service that could not accommodate evening catch-up sessions.But the government had also asked schools to find 60 per cent of the necessary funding if they want to continue the support into next year – a requirement Potts would find impossible. In the end, he decided, there would be no option but to hand back the money. Rather than helping students who were being left behind, he said, the scheme was “absolutely” widening the gap with more affluent areas still further.“I understand that we have to be accountable for money,” Potts said, of the ministerial impulse to control spending at the centre. But, “we won’t be spending it on headteachers’ golden toilet seats”.As we sat musing over finances, Christmas was just a few weeks away. With the budget looking uncertain, financial pressures on households were becoming apparent too. Children had begun asking if the hardship fund would pay for the school bus, or whether any food was going in the bin at the end of the day. Staff had started putting sandwiches out at the front of school at 3.10pm; some were dipping into their own pockets to provide food. More kids were turning up looking “tired, hungry and dishevelled”, with “no breakfast to perk them up”. More families seemed to be getting evicted; the first glimmers of a new trend.I asked Potts how worried he was about the next few months. Usually composed and quick to reply, Potts was silent and, for a moment, I thought he might cry. When I listened back to my recording later, I counted an eight-second pause. “There’s a selfish bit of this,” he said, eventually. “There’s a selfish bit of this, because if someone is harmed, or dies, I haven’t got the tools.”SpringIn January this year, Potts was getting to grips with housing policy. The trend in evictions had escalated since we last spoke, as landlords sold up or increased rents. More families were simply failing to pay.This was new territory for Newman College. Manchester has had a family homelessness crisis for at least a decade as the city’s growth outstripped the ability of poorer families to pay rising rents. Oldham has traditionally been viewed as the cheaper alternative – so much so that it has long accommodated disproportionate numbers of asylum seekers, placed there by Home Office contractors on tight margins, as well as homeless families from stretched services elsewhere.Government figures for January to March this year showed an 80 per cent rise in Oldhamers deemed homeless and eligible for statutory rehousing, with a similar rise in the number of children living in temporary accommodation. The town’s homeless figures are now nearly twice the English rate.

One Newman pupil trying to revise in the living room of temporary accommodation told the school they were struggling to read. “I can’t do it, the lights aren’t bright enough,” the teenager explained. The first reaction might be “get a grip”, said Potts, recounting the tale. “But if you’re not at a desk, if you’ve not got a light . . . all of a sudden everything becomes harder, doesn’t it?”The school was working with the Catholic charity Caritas in the hope of providing lamps or desks for those without. Having reported on Manchester and Oldham for more than a decade, I was surprised to hear about this sharp rise in homelessness numbers. I checked with Oldham College, a couple of miles away from Newman. It was seeing the same thing. The number of students flagged as homeless had risen 60 per cent year on year. The broader harm done to kids during the multiple Covid lockdowns – mental health problems, neglect, persistent truancy, harmful social media use – had also proved stickier than Newman had anticipated, compounded by the new economic climate. Referrals to Newman’s safeguarding system, where staff log concerns about student welfare, from bullying, to mental health problems, to neglect, were “going through the roof” according to one of the college’s social workers, Rebecca Ashworth.“There were a lot of kids [who] were just not seen,” she said, of the lockdown periods when agencies were not checking in with children face-to-face. “And we’re seeing it now, with serious case reviews from that period: a lot of child abuse and deaths happened in that time.” At school, many children were struggling to acclimatise to “the new normal”. Some just never came back. Persistent truancy has roughly doubled at Newman since before the pandemic, a statistic that holds true across the country.Teacher recruitment was becoming nearly impossible. Before Christmas, the school had advertised for seven jobs, some of them on starting salaries of £25,000-£28,000. Three had had no applicants at all by the time I spoke to Potts in April, days after the latest teacher training statistics revealed that the government had missed its recruitment target by 40 per cent over the previous year.Staff discuss the school’s leaking roof at a meetingPotts was considering paying for a new graduate to go through training in order to obtain a geography teacher. It wouldn’t cost much more than advertising for months for applicants who never applied. Newman also needed a physics teacher. But as Potts told his senior leadership team: “You may as well just ask for a supermodel, it’s not going to happen.” One of the humanities teachers had left to become a driving instructor.Sometimes, Potts thinks about quitting. Lots of his peers have. With less than five years under his belt, he is the fourth longest-serving of 14 headteachers in Oldham. “That’s not ideal,” he said. “I should [still be] the new boy.”Newman had another problem. In the words of assistant headteacher Kate Diveney, the school was becoming a “victim of our own success”. Newman currently has both the highest number of kids in care in the borough and the largest quota of children with special educational needs. In a perverse incentive, each time a new child is registered with special needs, the school must pay the first £6,000 towards their support out of its own budget. As Newman’s reputation as a good school for kids with special needs spread by word of mouth from parent to parent, the school was being hit harder financially.Mental health has become an “absolutely massive” issue too, Diveney said, with referrals for suicidal thoughts and self-harm having risen “exponentially” since Covid. “We cannot cope with the demand.” Support staff have noticed an uptick in family breakdowns. One child known to police and social services to be living in a home in which domestic abuse was taking place had to stay there because there was no other available accommodation. “There’s nowhere for them to go,” Diveney said.All those issues, and more, are being constantly sifted and addressed by staff. Feedback, said Potts in November, showed worrying signs of emotional strain; staff members told him that they “want to cry sometimes”.In the new year, some of the school’s lower-paid workers had begun asking if they could take home the spare sandwiches at the end of the day. “We’ve had to say no,” said Potts, who was fretting about losing those staff – some of whom work with the school’s most vulnerable children. “They know they can work in Asda and get better pay.”SummerIn mid-June, I paid my last visit to Newman. Summer, or north-west England’s version of it at least, was back. Strikes had been scheduled for a fortnight’s time, as the teaching unions faced down the government over pay. Potts was trying to work out how the school would provide staffing on those days.On the playground, a boisterous group of teenagers was eager to answer questions. As the boys messed about and the girls rolled their eyes, the kids were unhesitatingly positive when I asked them about their futures. They had all noticed inflation, measuring its jumps in the price of cans of Vimto, Freddos and meal deals. Did it affect them? They all nodded. “It’s annoying,” said one girl, quietly. “The cost of living crisis has gone up, but [my parents are] being paid the same, so it’s not making a difference. It’s not balanced.”

Headmaster Potts: ‘We have to know what we want from education’ © Thomas Duffield

Potts had cut the Lake District trips, but he had recently purchased some inexpensive matinee tickets for students to see the musical Hamilton in Manchester, because “we know our kids haven’t been to the theatre, and they are going to be testing against kids in their GCSEs who go to the theatre all the time”. If they get that opportunity, he said, as we stood looking at a silent hall of grey exam desks, “that might be the spark. They might be the new Willy Russell.”Potts had been right to worry about the jam kids: while a lot of the hardship fund once went towards children who couldn’t afford school trips, this year it was spent on bus fares or “a pen and a pencil”, on warm coats or on children who have “got no shoes”. Dialogue with some families has been tricky, he said. Previously, “they’ve never had to say, ‘Actually, I can’t afford it’.” More than £3,000 was owed in unpaid lunch bills by the end of the school year.The subject of toxic masculinity had come up repeatedly in our conversations over the year. Potts worried, in particular, about the growing popularity of the online influencer Andrew Tate, the former kickboxer whose brand of misogyny had been gaining growing traction online. “I’ve got Muslim boys who say, ‘He’s misunderstood, sir’; white boys saying, ‘He really values women. That’s why he sleeps with them.’” He frowned.Ideally, in this climate, there would be a “life skills” lesson on the curriculum, he added, teaching “mental resilience, finding jobs, dealing with homophobia and racism”. (Tate was charged with rape and human trafficking the day after our conversation.) An anti-gay slur is cropping up more and more, having disappeared for a while. Potts has been called a “soft man” in the past, he said. “Don’t we need a few more soft men in the world right now?”When we spoke for the final time in mid-August, Potts was back at his desk. Nine months after the chancellor’s Budget, he still did not know exactly how much money he would be allocated in the coming year. The day before, new figures had revealed that 28 per cent of secondary school pupils nationally had been persistently absent – missing at least 10 per cent of school time – over the year. The children’s commissioner, Dame Rachel de Souza, warned “that if further action is not taken, we risk normalising disengagement from education and irrevocably breaking the social contract between schools and families”. “I took some relief in the fact this is now a national issue,” Potts said. His attempts to solve the staffing problem had also trundled on since we last spoke. Newman was now training three graduates to fill the gaps in geography, religious studies and IT. The hardship fund had effectively become “unlimited”, he said. The money will just need to be trimmed from elsewhere.I asked Potts a question that had kept coming back to me throughout the year: Are we asking schools to solve problems that should, ultimately, be up to others to solve? “It’s an interesting way of thinking about it,” he replied, apparently unruffled, “because we are held responsible for these measures. We know full well that the child is not going to learn if the child is not going to stay awake. But I accept there’s a mission creep within schools. We’ve become an emergency service before it’s an emergency.”I was reminded of a conversation we had had weeks earlier, looking down from the mezzanine at the kids rushing to get their lasagnes and paninis. The bigger question, he said then, was not about how much money Newman would put into the hardship fund this year, or next. “We have to know what we want from education,” Potts had concluded, gazing down at his young charges. “There’s going to come a point where we’ve got to question what we want the future of our country to be.”Jennifer Williams is the FT’s northern England correspondentFollow @FTMag to find out about our latest stories first More

Last week’s Brics summit is disappearing in the rear-view mirror and with it, mercifully, some of the wildly unrealistic discussion of a new currency issued by the grouping’s five emerging market members — aimed at dethroning the dollar.Policymakers watching challenges to the greenback’s global dominance can return to the more realistic challenge from an existing currency, the Chinese renminbi. While European governments have envied the dollar’s international role since the 1960s and hoped in vain that the euro would supplant it, Beijing’s bid has emerged rapidly and for a more pressing reason, as the US weaponises the dollar. But it will encounter serious difficulties from China’s fundamental problems — which are different from Europe’s traditional weaknesses but, if anything, more deep-seated.The European desire to challenge the dollar — expressed forcefully in 2010 by Nicolas Sarkozy, then French president, following the global financial crisis — seems largely based on envy of its status as a reserve and trading currency. That role that had survived the final collapse of the Bretton Woods fixed exchange rate system in 1973. The US government and American companies, so European complaints went, could borrow cheaply and avoid exchange rate risk because commodities and other traded goods were priced and invoiced in dollars.What Sarkozy appeared not to grasp was that, even though the crisis first emerged in the US, it also underlined the indispensability of the dollar as a bank funding and payments currency. Its resilience was underlined by the Federal Reserve’s heroics during the crisis, preventing total global financial seizure by extending swap lines to fellow central banks.Neither the weak financial regulation that led to the crisis nor persistently eccentric fiscal policy (including self-inflicted debt crises) have destroyed markets’ belief in a currency underpinned by the Fed. Not even the destructive presidency of Donald Trump managed that. Meanwhile, the eurozone government bond market and banking system remain fragmented by national boundaries.These advantages of the dollar endure. One version of the Brics fairytale is some pitiful rambling from Moscow about the shaky dollar being challenged by a Brics currency backed by gold. But the problems that gold is supposed to solve are absent: the US currency has manifestly not been debased by hyperinflation nor the Fed’s monetary policy independence seriously compromised.The US policy giving impetus to China’s campaign comes from a different source: the weaponisation of those payments and funding functions to impose sanctions on America’s enemies. When this was limited to the likes of Iran it caused irritation — including to the EU, whose companies were strongly deterred from trading there — but not great alarm.Now it is spreading to more countries and the US is entertaining far-reaching ideas such as seizing Russia’s central bank reserves to pay for the reconstruction of Ukraine. As my Financial Times colleagues have extensively detailed, more EMs are concerned about relying on the global economy’s dollar-denominated plumbing.Unlike the euro, which had very few intrinsic advantages over the dollar, China has relatively advanced digital payments systems and can portray the official digital renminbi as a way of skirting US sanctions. But here, too, it hits a problem that the euro has also encountered. The dollar system is an interlocking set of institutions that it will be hard to replace piecemeal. Cross-border payments can be made in renminbi, but if either end of the transaction ultimately involves a dollar payment, it is still vulnerable to sanctions from the US Treasury. Oil-producing countries may take payment in renminbi, but they are unlikely to want to hold assets in a currency subject to capital controls.And China would have serious weaknesses as a guardian of the global financial system. The privacy fears around central bank digital currencies can be overblown. But going full-tilt into using a digital renminbi is a leap of faith that the Chinese government, a world expert in snooping, won’t manage to collect and exploit personal data from its users.Similarly, a hyperactive US administration using American banks to go after Russian oligarchs is one thing. But China imposes broad-ranging trade sanctions on countries — in the case of Australia merely for having the temerity to call for an investigation into the origins of Covid-19. The roles of an international currency change over time. Yet ultimately, confidence in a global standard involves fundamental trust in its issuer’s openness and reliability.True, the US willingness to weaponise global networks of payments and other functions, already considerable, will most probably intensify if Trump wins the election. Governments fearing US sanctions might well want to diversify the financial systems they rely on, including towards the renminbi. But China under Xi Jinping is not only seeing its growth model in serious trouble but is moving further towards a repressive state that intervenes extensively in its economy, its citizens’ lives and the security of the region and beyond.A Brics currency challenging the dollar is a fantasy, but for its part China has self-inflicted problems that will hamper the renminbi’s attempts to take over the US currency’s role on a large [email protected] More

UK data has painted a contradictory picture over the past month. The economy grew faster than expected in the second quarter, consumer confidence is up and public borrowing was significantly lower than feared on the back of strong tax receipts. But purchasing managers’ indices, or PMIs, which measure real time economic activity, dropped to their lowest level since January 2021, sales were weak and unemployment has started to climb. The diverging trends have caused confusion in the markets, leading to fluctuating bond prices and interest rate predictions. The two-year government bond yield and December rate expectations quickly increased after record-high wage growth was reported earlier in the month, only to fall again following underwhelming sentiment indicators. So what’s going on? Inflation and wage growthEconomists say the rollercoaster of conflicting economic news is largely owing to stagflation, which indicates a period of high inflation coupled with a stagnating economy. When this happens, measures that are not adjusted for price growth can rise quickly. The trend is clearly visible in UK wages, which rose at the fastest pace on record in the three months to June, and high job-to-job moves — reflecting workers trying to limit the hit to their finances coming from high inflation and rising rates. While inflation is easing, prices still grew by an annual rate of 6.8 per cent in July, more than three times the Bank of England’s target of 2 per cent. In cash terms, total wages are up 21 per cent from the three months to February 2020, but when adjusted for inflation they are largely unchanged. This strong wage growth likely helped the 5-point increase in UK consumer confidence in August. “During a period of stagflation you would expect indicators in nominal/cash terms — such as wages and tax revenues — to be rising by more than real indicators, such as the PMIs, real gross domestic product or real gross domestic product growth,” said Paul Dales chief UK economist at Capital Economics.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Public finances The fast price and wage growth rates have been good news for the country’s public finances. In the first four months of the current fiscal year, borrowing came in at about 17 per cent less than forecast by the Office for Budget Responsibility, the UK fiscal watchdog.The government’s finances “have benefited” from high inflation, said Victoria Scholar, head of investment at Interactive Investor, an online investment service. “Inflation tends to provide a boost to government tax receipts because it pushes earners into higher tax brackets, particularly with wage growth currently at a record high,” Scholar explained.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

The economy The combination of high inflation — which boosts VAT and corporate tax — and high wage growth — which boosts income, national insurance and flat tax allowances — “tells us little about the state of the real economy,” said Thomas Pugh, economist at consulting firm RSM UK. In fact, the UK economy is smaller than it was before the pandemic in the final three months of 2019, having largely stagnated since the end of 2021. This is despite lower wholesale energy prices and extensive government support to businesses and households, which helped avoid an economic contraction over the winter and the spring.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

“What we are seeing is an economy that is suffering from a big terms-of-trade shock”, said James Smith, research director at the Resolution Foundation think-tank, referring to the period when British imports became much more expensive than exports following Russia’s invasion of Ukraine and the imposition of increased trade barriers with the EU after Brexit. According to Smith this “shock” resulted in prices and wages increasing rapidly and interest rates rising. “The combination of all that is starting to get some traction on the real economy,” he said. The outlookRising interest rates will test the UK’s economic resilience in the coming months, economists warn, with the first pressures already visible in the unemployment rate, which rose to 4.2 per cent in the three months from June, the highest in nearly two years. Mortgage approvals also fell by nearly 10 per cent between June and July. Last month retail sales disappointed too, falling 1.2 per cent compared with the previous month. However, this may have been driven more by unusually wet weather than by underlying weaknesses in consumer demand. The real worrying sign came from tumbling PMIs, which indicated a downturn in activity in both the services and manufacturing sectors in August. Rather than conflicting with more positive official economic statistics, which are published with a longer time lag, PMIs are closer to real time indicators, say analysts.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Economists say the most recent PMIs suggest interest rates are starting to weigh on economic activity. At its next monetary policy meeting in September, the BoE is expected to increase interest rates for the 15th consecutive time since December 2021. The central bank’s benchmark rate now stands at 5.25 per cent, a 15-year high.This could put a further brake on economic activity, eventually reversing the positive news in the latest wage and public finance data.“If the PMIs mean that the economy is heading for a mild recession, as we expect, then in time that would lead to less robust tax revenues and slower wage growth,” said Dales. More

HONG KONG/TOKYO (Reuters) – In Hong Kong’s highest court, five judges are deliberating whether to recognise same-sex marriages conducted overseas.Their decision, expected later this year, could influence Asian financial hubs from Tokyo to Singapore to draft more inclusive laws as a drawcard for the diverse, global talent that multinational corporations from banks to technology giants are seeking to hire and retain.”Corporates have a massive role to play. They still drive the conversation in a lot of these countries where the legislators aren’t,” said Janet Ledger, chief executive of Community Business, a not-for-profit organisation that promotes diversity and inclusion in companies across Asia.Only Taiwan and Nepal allow same-sex unions in Asia, where largely conservative values still dominate politics and society.Some countries, however, have recently taken inclusive steps, including India, where the Supreme Court is debating whether to allow same-sex marriage in the world’s most populous nation; South Korea, where lawmakers proposed a same-sex marriage bill in May; and Singapore, which last year scrapped a British colonial era law criminalising sex between men.In Hong Kong, the five-year legal battle by democracy and LGBTQ rights activist Jimmy Sham for his New York marriage to be recognised at home has helped raise awareness, with a poll this year showing over 60 percent of respondents supported same-sex marriage, almost double the number in 2013.Hong Kong will also host Asia’s first Gay Games in November, its first major LGBTQ-focused event, and if the Court of Final Appeal rules in Sham’s favour, the city would be the most advanced among its financial hub peers in terms of LGBTQ rights, activists and businesses say.”Hong Kong has a real opportunity to take the lead here and give a clear message,” said Gigi Chao, the vice chair of listed Hong Kong property firm Cheuk Nang Holdings and a prominent gay rights advocate in Asia.”I am confident that we will get there in the end,” Chao told Reuters. “WAKE UP”Business groups in Hong Kong, Singapore and Japan have become increasingly vocal in making the case that Asia’s leading economies must do more to encourage diversity.In Japan, the only Group of Seven (G7) nation without legal protection for same-sex unions, corporations are seen as a key driver for change as Tokyo aims to increase its clout as a global financial centre.”Japan’s recognition of marriage equality would raise its profile in Asia–Pacific,” wrote the American Chamber of Commerce in Japan, whose members include over 600 companies, including nearly 100 Fortune-500 firms across 60 sectors.”Japan cannot afford to lose talent to their global competitors,” it added in a report published in April.A poll this year by Kyodo news agency of just over 1,500 people showed that nearly 70 percent supported same-sex marriage.But Japan’s 126 million population remains largely conservative and many lawmakers, including members of the ruling Liberal Democratic Party, have opposed such unions, saying they cherish traditional family values.”For LGBTQ people, Japan is not considered an easy location,” Moriaki Kida, the CEO and chairperson of global consulting firm EY Japan, told Reuters.     “Headquarters must wake up and instil values, purpose and then also their employee policies that are encompassing everywhere around the world,” Kida said.POLITICS & FINANCELGBTQ people also face hurdles in largely conservative South Korea, which Human Rights Watch says lacks legal protections against discrimination based on sexual orientation and gender identity.Four in 10 South Koreans support legalising same-sex marriage, according to a Gallup poll in May, but any change to the law would need to be approved by the political parties, who are closely allied with conservative religious groups. “South Korea has always gone through a rapid change and it will continue to. The only obstacle I think is politics,” said Kiyong Shim with Seoul-based Youth LGBTQ organization Dawoom.While corporates rarely lobby Asian governments directly on LGBTQ rights, activists say they show their support through sponsorship of LGBTQ events and Pride-themed marketing.In Singapore, the annual Pink Dot gathering for the LGBTQ community and allies was sponsored by 91 companies, though under rules laid down by the government, foreigners can not attend the event and foreign companies can not sponsor the rally.Foreigners can take part in the commercial Pink Fest event, which this year included a careers fair hosted by WeWork and sponsored by Dyson, Nomura and Standard Chartered (OTC:SCBFF) Bank.Singapore is keen to cash in on the so-called “pink dollar”, or the spending power of the LGBTQ community, and since the government scrapped the law criminalising sex between men, members of community say they feel more confident.But alongside the decriminalisation of sex between men, the government also amended the constitution so that only parliament can decide on the definition of marriage, effectively rendering court challenges pushing for same-sex marriages futile.While activists acknowledge that changing traditional values takes time, they say corporates are best placed to influence business-minded governments like that of Singapore.Kathy Teo of Singapore’s first LGBTQ chamber of commerce, said society as a whole benefits from inclusivity.     “The best talent in the world are not just LGBTQ individuals but they’re also comprised of people and individuals who are actually more progressive,” said Teo, whose “Q Chamber” includes Google (NASDAQ:GOOGL), IBM (NYSE:IBM), P&G, and fintech firm Revolut as members. “Who prefer to live and work in places where diversity, inclusivity and innovation can thrive, as opposed to not.” More

The base text was approved by 430 votes against 17. The bill can still be tweaked by an amendment.The exemption, which would expire Dec. 31, covers many of the most labor-intensive sectors, such as civil construction, textile and footwear producers, transportation and communications firms, reducing their labor costs in order to retain jobs.The payroll tax relief replaces the employer’s social security contribution of 20% of payroll with rates ranging from 1% to 4.5% of gross revenue.The proposal now returns for Senate consideration due to modifications introduced reducing municipalities’ pension contributions to 8% to 18% of each city’s Gross Domestic Product (GDP) from 20%.The Senate’s version had put forward an 8% rate, applicable solely to smaller cities, a change that the Finance Ministry had opposed. More

SYDNEY (Reuters) – Australia and the European Union will resume free trade talks on Thursday with a teleconference between Australia’s Trade Minister Don Farrell and EU Commissioner for Trade Valdis Dombrovskis, a month after the two sides failed to reach a deal. Differences over access for Australian agricultural products, particularly beef, to EU markets saw Australia walk away from signing an agreement in Europe in July.Australia is keen to have wider access for its beef, lamb, dairy products and wines, much of which are subject to tariffs and quotas.Both sides are looking to diversify trade, with EU flows affected by the Russia and Ukraine war and Australian exports hurt after major trading partner China imposed blocks on a raft of farm products in a 2020 political dispute.Farrell said in an interview with Reuters last week that he hoped for an improved EU offer when he next speaks with Dombrovskis, whom he has invited to visit Australia. A source familiar with the matter said the teleconference would take place on Thursday.Farrell also said a free trade agreement would simplify European investment in Australia’s burgeoning critical minerals sector, in part by smoothing access through mandatory Foreign Investment Review Board (FIRB) screening.Australia supplies around half of the world’s lithium, as well as other minerals such as rare earths used in batteries for electric cars and defence, amid a global push to diversify supply chains away from dominant producer China.”We want European investment … but they’ve got to understand that as part of that process they’ve got to make a realistic offer,” he said.The EU and Australia opened negotiations in 2018. More

NEW DELHI (Reuters) – India’s economy grew at its fastest pace in a year in the April-June quarter, driven by services and manufacturing, data is expected to show on Thursday, though economists warn of a slowdown ahead.According to the median forecast in a Reuters poll of economists, India’s gross domestic product (GDP) grew 7.7% in the past quarter, up from 6.1% growth in the previous quarter and its fastest expansion since April-June 2022.Economists say lower commodity prices helped manufacturers increase margins and offset the impact of 250 basis points of cumulative interest rate increases since May 2022.Suvodeep Rakshit, economist at Kotak Institutional Equities said he expected growth to be driven by services on the output side and investment on the expenditure side. Strong growth in India’s services sector, which makes up more than half of its economic output, has helped Asia’s third-largest economy buck the global slowdown that has left many major economies, including China, stuttering. S&P Global India services Purchasing Managers’ Index has remained firmly above the 50-mark separating growth from contraction for nearly two years, the longest stretch since August 2011.To support growth, Indian government has been front-loading its annual spending on infrastructure. In the first three months of the fiscal year that started on April 1, India had spent nearly 28% of its capital expenditure budget of 10 trillion Indian rupees ($120.91 billion).Deutsche Bank’s chief India economist Kaushik Das said a 3% decline in wholesale prices will also contribute to the strong headline growth by reducing the “GDP deflator” used to calculate real economic growth by stripping out price changes.MODERATION AHEADEconomists say that price effect could reverse in coming months, and growth could cool off. After above average rainfall in July, August has been uncharacteristically arid, which pushed up prices of food staples, curtailing discretionary spending. Dry weather could also hit agriculture output and eat into power of the population in India’s hinterlands where a majority depend on agricultural income. Additionally, slowing global growth and exports and a comparison with higher growth rates a year ago will also weigh on growth in quarters ahead. “There is some evidence that sequentially the activity is slowing,” said Rahul Bajoria, economists at Barclays. “The widespread consensus in the market is that things will slow down.”($1 = 82.7084 Indian rupees) More

SINGAPORE (Reuters) – The euro stood at a 15-year high on the yen on Thursday on signs of sticky inflation in Europe, while the dollar was squeezed ahead of consumption, inflation and jobs data that could add to evidence of a softening economy.Annual inflation in Germany and Spain barely slowed in August, against expectations, data on Wednesday showed.Traders figured it increased chances of a rate hike in Europe next month to about 50-50, and bought the euro which rose 0.4% to $1.0923.It was steady in early Asia trade and is now up three sessions in a row on the dollar and five straight sessions on the yen, where it hit a 15-year top at 159.76 yen.Sterling also rose along with the euro, and was last holding gains at $1.2713.China PMI data is expected to come in soft later in the day, keeping the yuan little changed in early offshore trade.Europe-wide inflation data is also due later on Thursday, as is U.S. personal consumption data and core PCE – which is the Federal Reserve’s favoured inflation gauge.U.S. payrolls data is due on Friday, and the dollar has been under pressure as second-tier figures this week such as job openings and private payrolls have pointed to softness.Overnight the Commerce Department revised down second-quarter growth to 2.1% from an estimate of 2.4%.The dollar index, while still up more than 1% for August, has fallen 1% for the week so far as traders reckon U.S. interest rates may have stopped rising – even if they stay high. “Market expectations that Fed rates have plateaued are continuing to creep higher,” said analysts at ANZ Bank.Two-year Treasury yields are down about 17 basis points (bps) to 4.888% this week and Fed funds futures imply about a 40% chance of a hike by year-end, compared with about 55% at the start of the week.Ten-year yields are down 12 bps to 4.1139%.The Antipodean currencies made a round trip on the dollar overnight, unable to hold gains ahead of likely soft Chinese data, and as hikes might also be done in Australia and New Zealand. [AUD/]After briefly poking above $0.60, the New Zealand dollar traded at $0.5953 on Thursday, while the Aussie was firm at $0.6418. Both have been hit hard by fears of a deepening malaise in China’s economy, and are set for their worst monthly drops since February, with falls larger than 3.5%.The yen has been another weak performer this month, dropping 2.6% on the dollar as investors figure interest rates are likely to stay low in Japan and high in the United States.It has been steadying with traders wary of the risk of official intervention, and was last at 146.07 per dollar.========================================================Currency bid prices at 0017 GMTDescription RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.0930 $1.0924 +0.05% +1.99% +1.0932 +1.0917 Dollar/Yen 146.0600 146.2650 -0.13% +0.00% +146.1600 +146.0150 Euro/Yen 159.65 159.74 -0.06% +13.79% +159.7300 +159.5300 Dollar/Swiss 0.8780 0.8785 -0.02% -5.01% +0.8784 +0.8784 Sterling/Dollar 1.2715 1.2719 -0.02% +5.15% +1.2722 +1.2711 Dollar/Canadian 1.3532 1.3534 +0.02% -0.10% +1.3537 +1.3536 Aussie/Dollar 0.6483 0.6476 +0.13% -4.88% +0.6484 +0.6472 NZ Dollar/Dollar 0.5955 0.5956 +0.00% -6.21% +0.5959 +0.5945 All spotsTokyo spotsEurope spots Volatilities Tokyo Forex market info from BOJ More