Economy

The dollar has tumbled in the past fortnight from a 20-year high as signs of inflation easing in the US fuel speculation that the Federal Reserve will soon slow down its rate rises. The greenback has fallen more than 4 per cent against a basket of six peers so far in November, leaving it on track for the biggest monthly fall since September 2010, according to Refinitiv data. It is still up about 11 per cent for the year to date. This month’s fall comes as investors scrutinise early indications that US inflation may finally be easing, potentially paving the way for the Fed to reduce the speed at which it has been boosting borrowing costs. Some data, such as those on the housing and manufacturing sectors, have also suggested the broader economy is facing rising headwinds, another deterrent to Fed monetary tightening. “Everything is pointing to disinflation in the US and with that we will see a slowdown in the US economy in the first quarter of next year . . . That forms the basis for the weaker dollar story,” said Thierry Wizman, a strategist at Macquarie. The dollar’s drop has alleviated some of the pressure on a global economy that was creaking under the strain of a strong dollar, which helps to drive up inflation in smaller economies and adds to debt sustainability problems for countries and companies — particularly in emerging markets — that have borrowed heavily in the US currency. The euro has risen to nearly $1.04 after sinking below 96 cents in September, and the UK pound’s recovery from September’s all-time low gained further momentum. The yen has rebounded somewhat from a slide to a 32-year low against the dollar that had prompted the Japanese government to spend billions propping up its currency.Still, much depends on how the Fed reacts to data showing US consumer and producer prices grew at a slower annual rate in October than September — and whether that trend continues. At the central bank’s November meeting, chair Jay Powell did not explicitly signal a fifth consecutive 0.75 percentage point increase, which traders understood as a sign of the Fed’s openness to a half percentage point rise as soon as next month. Indications of easing inflation have also upended wildly popular wagers in currency markets on a stronger dollar.“We expect the US dollar’s powerful climb over the past year to reverse in 2023 as the Fed’s hiking cycle comes to an end,” HSBC foreign exchange strategists wrote in note to clients this week. “It has peaked.”In recent weeks, traders have trimmed their bets on a stronger dollar to the lowest level in a year, according to figures from the Commodity Futures Trading Commission, which provide a snapshot of how speculative investors such as hedge funds are positioned in currency markets. The greenback’s historic ascent earlier this year came as a wave of rapid price increases swept the globe, prompting big central banks — with the notable exception of the Bank of Japan — to rapidly tighten monetary policy. But rate rises elsewhere were largely unable to keep pace with the Fed, which thanks to the relatively robust US economy was able to lift borrowing costs faster than peers in other developed economies, bolstering the appeal of the dollar. At the same time, fears of a global recession and the financial market volatility unleashed by rapid monetary tightening also favoured the US currency, which as the ultimate safe harbour of the global financial system tends to rise in times of stress.Both those tailwinds are now set to fade, according to HSBC, which argued that “gravity should take hold” for the dollar as the often chaotic sell-off in global bond markets, caused in part by central bank rate rises, calms.Despite the about-turn in markets, a few hawkish speeches from Fed officials in recent days have tempered bets that the Fed is slowing down. The dip “looks like an overreaction given Fed speakers so far have made it clear the job is not done”, said Athanasios Vamvakidis, head of G10 foreign exchange strategy at Bank of America.While the dollar may not surpass the 20-year high it hit in late September, Vamvakidis warned that inflation remained high. “We are not out of the woods yet . . . Even if inflation has peaked it will be sticky and volatile on the way down.” With traders firmly focused on month-by-month US inflation figures, a slight upside surprise could easily cause the entire global currency market to skew back in the other direction, he added.That sentiment was evident in remarks by St Louis Fed president James Bullard on Thursday, who said that rates would need to be raised to a minimum of 5 per cent in order to tame inflation. Positions in the futures market currently reflect that investors see interest rates peaking at 5 per cent in May.“It’s premature to call a peak in the dollar, because the Fed expects further rate hikes,” said Joe Manimbo, an analyst at Convera. More

Janet Leighton spends a third of her working week speaking to employees about their money worries.Part of her mission at Timpson, the UK retailer best known for its shoe repair and key cutting services, is to make that stress disappear. “I’m not a qualified financial adviser,” she says, “but I know how to make budgets and I know my colleagues.” Leighton is the company’s Director of Happiness — a seemingly frivolous title for a meaningful role she’s held since 2018. She says she recently helped one staff member source and purchase a car. Timpson paid the seller £1,990 and Leighton knocked up a manageable repayment plan for the employee spread over 12 months. “We don’t want them to struggle and go to a loan shark or a payday lender,” she explains.“If people have got problems, we want to know,” says Leighton, adding that employees inevitably bring financial concerns into the workplace. “We want people to give excellent customer service, so we need to enable them to do that. Ultimately, we are a commercial business. If we help our colleagues, we know this will come back to us tenfold.”In addition to the £450,000 in interest-free loans Timpson has collectively granted to its 5,000 staff — with the average individual loan somewhere between £500-£1,000 — it also gives away at least £50,000 in cash gifts a year. When one employee’s grandmother passed away, he was on the hook with his siblings to cover funeral costs. Timpson says it provided his share. The company also rewards staff financially for life milestones — from quitting smoking to getting married and learning how to drive — and pays the related tax bill.Timpson, given its history as a family company and the relatively low wages of many of its workers (its average shop floor worker earns around £20,000-£23,000 a year), has a paternalistic culture. Its approach to the financial wellbeing of employees has, until now, been relatively unique. But the number of employers in the UK getting more involved in the financial affairs of their staff is growing. Companies are not only stepping in to negotiate better rates on mobile phone tariffs and energy bills for the entire workforce, but also managing an individual’s personal money woes by issuing loans or coming up with plans to pay off credit card debt. The same is happening in the US. According to a recent Bank of America report, 97 per cent of US employers surveyed feel responsible for employee financial wellness, up from 41 per cent in 2013.In the past, if an employee was in trouble, it would land on the desk of the human resources team. Today, financial wellbeing is on the agenda in corporate boardrooms. The pandemic accelerated this trend as managers were forced to confront the physical and mental health concerns of workers, paying closer attention to the personal lives of their employees than ever before. Providing access to online exercise classes and meditation apps, work-life balance coaching and workshops on how to make parenting easier were a few new perks on offer in many companies. That blurring of private and professional boundaries has cemented a remarkable cultural shift. Workers are more comfortable discussing personal issues and political topics — from ill health and childcare troubles to climate change to racial injustice — with colleagues and bosses. The importance of financial wellbeing — in some ways the most sensitive area in someone’s personal life — has only grown as the cost of living crisis bites. Inflation is rising more than wages. Everyday purchases including food and fuel are becoming more unaffordable. To make ends meet, even those in full-time employment are turning to salary advances, overdraft extensions, payday loans, friends and family and credit card debt.A recent report from the Money and Pensions Service shows there are more than 11mn working-age people in the UK who are deemed “financially struggling” or “financially squeezed”. Around 14 per cent have no savings at all and 19 per cent have savings of less than £500. “Many of these people are juggling the challenges of a busy working life, variable income and a young family,” says MaPS, a public body sponsored by the UK government’s Department of Work and Pensions. This is precarious as two-thirds of adults receive unexpected bills every year. “The breakdown of a car or domestic appliance could mean calling on costly, short-term credit. It could even tilt people into a debt crisis,” the report warns. If employees are routinely struggling to make ends meet, an obvious fix might be to simply pay them more. Executives, however, are facing their own financial pressure and are finding ways to ease the economic pain felt by employees if they are unable, or unwilling, to offer widespread pay increases.A new-look benefits packageOffering a more thoughtful benefits package is how Phil Bentley, chief executive of Mitie, a facilities management company that employs 68,000 largely lower-income workers in the UK, says it supports its staff.“On low pay, people struggle to manage household budgets. We have always been pushing for higher pay for our people. But it is up to our clients [that contract our services] to agree to it. If we can’t [raise] pay, then we have to do it via the benefits package,” says Bentley. “We have to be smarter.” Mitie has launched a £10mn “winter support” package to help the company’s lower paid colleagues. In addition, it says, it has given out retail gift vouchers and one-off cost of living payments.Recommendations of pensions advisers, staff discounts for retailers, subsidised gym membership, bicycle loans and train season ticket loans used to be regular perks. Now companies are going further by providing access to third parties that can help restructure debt, provide sizeable loans or access to earnings in quicker time, rather than leaving employees beholden to standard payment cycles. In the UK, companies are achieving this by partnering with fintechs such as Salary Finance or Wagestream. In the US, financial wellness tools and apps including DailyPay and PayActiv have been around for longer.Mitie launched a loans programme through Salary Finance in December 2017. Since then, 10,000 loans have been taken out, with a total value of £25mn. Colleagues have saved around £3mn in interest by using the scheme, the company says.“The cost of living crisis . . . is not new,” says Asesh Sarkar, chief executive of Salary Finance. The company enables savings plans and facilitates personal loans, backed by Virgin Money in the UK, repayments for which are automatically taken out of an employee’s pay packet. Supermarket chain Tesco, one of the UK’s biggest private sector employers, has announced it is partnering with the company.“People don’t save,” continues Sarkar. “They accumulate huge levels of debt and millennials are far worse off than their parents. It’s more acute now, but it’s not new. It’s become normalised. So employers are now looking to do something about it.”“Most UK adults are not financially literate,” Sarkar adds. “Before, you would say you should always have three months’ salary saved. It’s now a free for all. No one knows what to aim for.” But while some individuals are spending carelessly, a bigger issue is that the odds are stacked against those who do not. Sarkar has particular concerns about buy now, pay later agreements, which “create habitual levels of debt”. He sees this as an example of how the economy perpetuates a system that works against the lowest earners who are seen as the riskiest borrowers by banks and are charged hundreds of pounds more per year for basic services. “In finance, it is normalised that the poorest in society pay more for products,” Sarkar says, adding this would be considered unthinkable in other sectors such as retail. Salary Finance is soon hoping to launch mortgage products, using its lobbying power to secure better rates for those most likely to get the worst deals from traditional banks.But these direct and indirect transactions are complicating the nature of relationships between employers and their staff. Workers are often giving away far more information about themselves to their bosses. It may also be an uncomfortable situation to owe money to your employer.Caroline Siarkiewicz, chief executive of the Money and Pensions Service, says while it was good that employees were more vocal about money concerns and that employers were keen to help, the dynamic carries some risk. As a worker, she says, “you would be admitting you need support”.“Employers also see that you might have made some bad decisions and there is a fear of being judged,” says Siarkiewicz, adding there might be a perception that it may influence promotions, pay rises and broader workplace advancement. But it is also a grey area for employers, with executives increasingly asking where the limit is for corporate involvement in the lives of individual workers. There are risks too. Companies could take on liabilities they never envisioned, for example if an employee defaults on a loan. There may also be adverse effects of choosing to help one employee financially over another, risking accusations of favouritism. There are also tax implications for handing out cash benefits above a certain amount.Establishing boundariesOne solution seems to be establishing a partnership with an outside organisation. Employees can seek help without revealing details to their employer. Yet, this too can become ethically murky.By passing on contact details about a third party service, employers are also unwittingly advocating for a company that may not be regulated by the Financial Conduct Authority, like a bank would be. They are also indirectly funnelling business to the financial institutions that support these third party companies.“If, as the employer, you bring in an independent broker, they are not terribly independent. The job of a company is to provide easy access to information, but without endorsing it”, says Octavius Black, chief executive of workplace training provider MindGym. He sees these efforts as an untested area with possible downsides should a company be blamed for something going wrong in the financial affairs of a member of staff, or the entities providing the services. “Psychologically, an employee might feel their employer is liable even if, legally, they are not,” he adds.While their intentions may be good, companies are opening themselves up to accusations of profiting from their own employees. Timpson, for example, charges an administration fee of 5 per cent per loan transaction. While this is far less than the average annual percentage interest rate of up to 1,500 per cent charged by payday lenders, or more than 20 per cent APR for a typical credit card, it is still a means through which an employer stands to gain.But there is another school of thought that argues doing nothing is no longer an option. Workers today face a world where they have less job stability and more individual risk around unemployment, sickness and longer retirements as people live longer. Economist Minouche Shafik argues in a paper, based on her book What We Owe Each Other: A New Social Contract, that the rise of temporary contracts, part-time arrangements and the so-called gig economy means “workers increasingly carry the risk of how many hours they will work, keeping their skills relevant, supporting themselves if they get sick, and securing their income for when they are old.”In order to achieve a reasonable standard of living, many workers end up taking on debt, but then have no hope of earning enough to pay it off. Even those who are relatively well off are in a precarious situation. Nearly 40 per cent of US workers earning over $100,000, surveyed by consulting firm Willis Towers Watson, are living pay cheque to pay cheque. This is twice as many as the number in 2019.With governments tightening their belts and banks increasingly risk averse — declining two out of every three loan applications, particularly those from lower earners and shift workers with unpredictable incomes — employers are in the line of sight. “They are the most significant financial institution in your life. They are giving you money when everyone else is taking your money,” says Peter Briffett, chief executive of Wagestream, a charity-backed fintech.Wagestream does not issue loans. Instead, armed with employer data on work schedules and pay per shift taken, its app allows full-time staff and casual workers to have real time visibility on earnings rather than waiting until the end of the month to see if the numbers add up. It charges a £1.75 flat fee per transaction, like an ATM charge, should employees opt to fast-track up to 30 per cent of their monthly pay. They also charge a platform fee to employers, such as NHS Trusts and retailers. “We see more and more employers paying. It’s taken a while for us to prove that people do more work and they are easier to retain [once they have this access to their data] . . . the propensity for employers to pay is now higher.”Diana, who asked to withhold her last name, works at retailer The White Company and uses the Wagestream app to access her next month’s earnings if she is falling short. She hopes to avoid the financial turmoil she faced when her previous marriage collapsed. Back then, she was forced to go to payday lenders, increase her credit card limit and make high interest rate payments. “It caused great stress, depression and sleepless nights because I was worried about the money. I don’t want to be in that position again,” she says. Those like Diana are not saving and might spend more frequently, according to academics. But they are staying in the black; avoiding late bill payments, bank overdraft fees and other charges that can trigger a debt spiral.For corporations, there are commercial interests to protect. Financial stress costs companies hugely in the form of absenteeism and lost productivity as employees deal with personal money issues while on the clock. Those who are financially stressed are also more likely to look for jobs elsewhere, costing companies more in recruitment and training at a time of chronic skills shortage. “Every industry seems to be short of people,” says Rupal Kantaria at management consultancy Oliver Wyman. “If a company is desperate to keep talent and you can help an employee from descending into some negative financial spiral, that is good for everyone.”“The employee will also have a greater sense of belonging to an organisation and loyalty . . . This is a moment of necessity, but it’s also a moment of opportunity for employers.”Photographs by Anna Gordon and Jon Super for the FT; Jason Alden/Bloomberg and MitieThe Financial Literacy and Inclusion Campaign charity, backed by the Financial Times, lobbies for greater promotion of financial literacy and produces educational content for schools, organisations and individuals. For more articles about the subject, go to ft.com/ftflic. To donate to FLIC, email [email protected] More

New York Governor Kathy Hochul called in the National Guard, deploying about 150 members to help with snow removal and resident needs in the hardest-hit parts of Erie County. At a press conference Saturday afternoon, Hochul said she would sign a request for a federal emergency declaration to seek reimbursements for expenses on storm response.Erie County Executive Mark Poloncarz said most residents heeded driving bans and stayed home, which he believes averted tragedies.”We’ve avoided a lot of the incidents and accidents that unfortunately have taken lives in the past,” he said at the news event in Hamburg, N.Y., one of the areas hardest hit by snow. “I believe lives have been saved.”Erie County, which has felt the brunt of the snowfall, recorded totals of 77 inches in Orchard Park, New York, the site of the NFL’s Buffalo Bills home field.Squalls began blowing in from Lake Erie and Lake Ontario on Thursday to produce the region’s first major snowstorm of the season, more than a month before the start of winter.According to the National Weather Service, conditions could persist through Monday morning.Nearly 90 crashes have been reported and almost 290 people were rescued from roads, Hochul said. “We do have some passenger vehicles that have been abandoned,” she said. “They’re being dealt with, but the scale is nowhere near what we’ve seen with storms from the past.”The roof of a long-time bowling alley in Hamburg collapsed under the weight of the snow, she added.State police issued more than 390 tickets, many of which went to tractor trailer drivers, for travel ban violations, Hochul said.Nearly three feet of snow had fallen at Buffalo Niagara International Airport, where many flights were canceled on Saturday. Buffalo, the second-largest city in New York, was placed back under a travel ban on Saturday morning.”This has been a very unpredictable storm with the snow bands moving, back and forth, north to south,” Buffalo Mayor Byron Brown told CNN. “The snow has come down very fast, very wet, very heavy.”Buffalo saw daily record snowfall of more than 16 inches, topping the one-day record of 7.6 inches recorded in 2014, the National Weather Service said on Saturday.At least two deaths were reported on Friday. Poloncarz said in a tweet that two residents died of apparent heart attacks while shoveling snow.County officials warned people to stay off roads to keep clear for snow removal crews. Poloncarz said some communities could see driving bans lifted later by Saturday evening. Illustrating the highly localized nature of lake-effect snow, accumulation levels varied widely across the region. Still, 11 counties remained under an emergency declaration issued on Thursday by Hochul.The U.S. National Weather Service forecasts lake-effect snow will dump up to 14 inches in the counties of Chautaqua and Cattaraugus Saturday night through Sunday. Snow bands are forecast to bring up to 2 feet of snow in Oswego and Lewis counties beginning Sunday morning.After a northward shift that will impact the Niagara County, the Buffalo area should brace for more snowfall late Saturday, according to Erie County Department of Homeland Security and Emergency Services Commissioner Daniel Neaverth.”It’s going to eventually swing back down through the county sweeping all the way back through,” he said. More

WASHINGTON (Reuters) – Atlanta Federal Reserve President Raphael Bostic said Saturday he is ready to “move away” from three-quarter-point rate hikes at the Fed’s December meeting and feels the Fed’s target policy rate need rise no more than another percentage point to tackle inflation.”If the economy proceeds as I expect, I believe that 75 to 100 basis points of additional tightening will be warranted,” Bostic said in remarks prepared for delivery at the Southern Economic Association. “I believe this level of the policy rate will be sufficient to rein in inflation over a reasonable time horizon.”That would set the Fed policy rate at a range between 4.75 and 5%, slightly below the peak rate expected by investors. It is currently set in a range between 3.75% and 4%.The Fed at its December meeting is expected to raise rates by half a percentage point after using three-quarter point increments at its last four meetings, a view endorsed by Bostic as well as a range of other Fed officials recently. Bostic said that given the inflation surprises of the past year, it is possible the “landing rate” might be higher than he currently anticipates, and that he was going to be “flexible in my thinking about both the appropriate policy stance and the pacing.”But at some point, he said, the Fed would need to pause and “let the economic dynamics play out,” given that it may take what he estimate as anywhere from 12 to 24 months for the impact of Fed rate increases to be “fully realized.””Being more cautious as policy moves deeper into restrictive territory seems prudent,” Bostic said, even if it turns out to be the case that rates have to be raised again later.One thing the Fed should guard against, Bostic said, is any temptation to cut rates before inflation is “well on track” to fall to the Fed’s 2% target, even if the economy were to “weaken appreciably.” “We want the public and markets to clearly understand our aims, and the fact that we are going to be unwavering in the pursuit to bring underlying inflation back toward our 2% objective,” Bostic said.Recent inflation data have come in lower than expected. But key price increase measures have still been running at 2 to 3 times the Fed’s target level. More

BOSTON (Reuters) – For all the tumult and disruptions of the coronavirus pandemic, U.S. labor markets have come out on the other side not far from the strong conditions that prevailed before the crisis, a paper presented at a Boston Fed research conference said. Almost all of the hit the U.S. labor market took in 2020, when COVID-19 struck, was tied to temporary layoffs which were swiftly rescinded, said the paper presented on Saturday.Adjusted for these temporary shifts, “the labor market remained surprisingly tight throughout the crisis, despite the dramatic job losses” and by the spring of this year had recovered and returned to extremely tight conditions. “I think if we were going to see large scale changes, we would have seen them by this point,” said Lisa Kahn, an economics professor at the University of Rochester, who was one of the co-authors. The U.S. unemployment rate rode a virtual rollercoaster in 2020. From a 3.5% reading in February of that year, it spiked to 14.7% in April of that year, before undergoing a much faster than expected recovery that has resulted in very low rates of unemployment — it stood at 3.7% last month — and very robust levels of job creation. Fears the pandemic would cause deep and lasting damage to the economy generated a historically aggressive campaign of stimulus by the government and the Federal Reserve, as elected officials and central bankers were mindful that the weaker policy response to the Great Recession over a decade ago led to a slow recovery for the economy. That policy response is now seen as a key driver in the massive surge of inflation following the most acute phase of the pandemic. Faced with the highest levels of inflation in forty years, the Fed is aggressively raising its short-term rate target to help lower price pressures. As part of that effort Fed officials recognize their actions could push the economy into recession and will very likely drive up the unemployment rate. “By raising rates, we are aiming to slow the economy and bring labor demand into better balance with supply. The intent is not a significant downturn,” Boston Fed leader Susan Collins said on Friday in remarks that opened the conference at her bank. Collins was optimistic there is a pathway to price stability that entails only a modest unemployment rate increase.Lawrence Summers, a Harvard University professor and one time contender to lead the central bank, renewed his criticism of the Fed while discussing the paper on Saturday and said the idea the labor market was only temporarily upended by the pandemic is correct. He reiterated that the Fed and the broader government erred in providing massive levels of stimulus and that is why inflation is so high now. Given what the government did, “it is hard to imagine how that could have led to anything other than a substantially inflationary situation,” Summers said. More

The writer is shadow chief secretary to the TreasuryJeremy Hunt’s Autumn Statement was an hour-long reckoning with his party’s 12 years in power. Another package of tax rises and spending cuts; another appeal to the public to tighten their belts. The Conservative reputation for sound economic stewardship has been destroyed, killed by their own hand. The chancellor tried to blame both Covid-19 and President Vladimir Putin’s invasion of Ukraine. Real as these challenges are for all countries, only in the UK did the government respond by driving the economy off a cliff in a catastrophic ideological experiment. Only here did we have emergency interventions from the Bank of England to prop up the pension system. And only in Britain has there been such a shattering of international confidence that our own prime minister had to own up to it at the G20.The public is now being sent the bill for the eccentricities of September’s “mini” Budget. Yet the made-in-Downing-Street aspect of Hunt’s plan is not just about the past 12 weeks but about the past 12 years. Low rates of economic growth have left the country less able to weather external shocks and left our citizens worse off. The UK’s current problems can be laid firmly at the door of No 10 and 11 Downing Street and their many recent Conservative inhabitants. But no political party can escape the responsibility of ensuring financial stability.It is a responsibility Labour understands and will meet. We have seen what happens to the public finances after a rightwing sugar rush of irresponsibility. We won’t respond with a mirror image of that disaster. Where we have spending proposals we will explain how they would be funded.For today’s Labour party, financial stability must be the foundation but is not an end in itself. Instead, it should serve as the platform for the UK to put in place a proper long-term plan for growth.If the UK had enjoyed even the average growth rate of OECD countries over the past decade, British households would be £10,000 a year better off than they are. That is the price of low growth. The UK is also the only G7 country not to recover its pre-Covid position in terms of gross domestic product. The real impact of sluggish growth will be felt in people’s incomes. The Office for Budget Responsibility, silenced by Hunt’s predecessor Kwasi Kwarteng and now tasked with describing the bleak terrain, points out that real household disposable income will fall by 7 per cent over the next two years. The question originally posed by Ronald Reagan — are you and your family better off under this government? — has been answered officially and in the negative by the government’s own economic watchdog. Where does all this leave the country? After the turmoil of recent months, no one should be in any doubt about the ability of the financial markets to punish a country. No wonder Bill Clinton’s strategist James Carville wanted to be reincarnated as the bond market — that way, as he pointed out, you can intimidate everybody. Business needs certainty and stability after the endless chopping and changing of recent years; a start-up environment which ensures the UK is the best place possible to start and grow a business; a plan that makes the UK a world leader in the transition to cleaner energy and gives the country the energy security it needs. A proper growth plan also means fixing the holes in the Brexit deal and having a grown-up relationship with our European neighbours. And, crucially, a commitment that every part of the UK will enjoy the fruits of the growth we seek. We saw last week all too starkly where the past 12 years have taken us. It’s now time to combine financial stability with a proper long term growth plan to give people hope for the future, make the country more prosperous and its citizens better off. More

It said shareholder representatives of the Presiding and Nomination Committee had responded positively to Gottschalk’s recommendation to propose Weidmann for election to the supervisory board at the annual general meeting in May 2023.”It is also intended that he will subsequently be elected the successor of Helmut Gottschalk as chairman,” the bank said in a statement.Weidmann, an economist, quit last year as head of the Bundesbank after a decade of fruitless opposition to the European Central Bank’s aggressive stimulus policy of sub-zero interest rates and massive government bond purchases. More

The Autumn Statement has made it quite clear: winter is coming for our personal finances and despite what the chancellor claims, it’s the people in the middle who are now feeling the chill. If you’re renting or have young children, this is especially the case — yet there was precisely nothing in Thursday’s announcement for you.British workers are living through a two-decade stagnation in wages, a squeeze on real incomes on a scale not seen since the 1820s, according to analysis by the Resolution Foundation think-tank. The chancellor has provided support for the very poorest and relief for the very richest (there was some symbolic tax tinkering, but none of the rumoured nasties). Meanwhile, those in the middle face higher council tax, energy bills and a protracted squeeze from higher income taxes as thresholds enter the deep freeze. The pain will be particularly acute if you’re on the cusp of a frozen threshold. Those earning £50,000 — just below the higher-rate tax threshold — stand to pay nearly £2,000 a year in extra income tax by 2028, according to calculations by accountants Moore Kingston Smith, factoring in the likely effects of “fiscal drag” as inflation pushes up pay. If you’re a parent, this will be even more costly due to the removal of child benefit. A similar cliff edge awaits at the £100,000 threshold where the personal allowance is tapered away and access to “free” childcare hours are lost.Young professional workers in London and the south-east are suffering from a growing sense of impending financial doom — and politicians need to listen to them. “I’m a reasonably well paid middle class professional, so I feel guilty about moaning as I’m obviously better off than so many others,” says Max, a reader in his early 30s who messaged me after a recent podcast. Renting with friends in a shared house, he has been leading negotiations with their landlord after being hit with a 30 per cent rent increase. He has given up all hope of ever being able to buy a home and would struggle to afford renting a one-bedroom flat with his partner.A pay rise would be welcome, but it would need to be pretty huge to cover the surge in his living costs, which are increasing at a faster rate than his friends with mortgages. The coming recession only adds to his jitters. Almost one in five UK households rent privately, and across England, rents are rising at twice the rate seen between 2018 and 2021. Those who can’t afford to buy are in an invidious position. “Even if you don’t move, rents are going up as the current shortages are dictating market prices,” says the property expert Henry Pryor.He doesn’t expect first-time buyers to benefit from the market’s current woes. “Nine out of ten of my most recent new business inquiries have decided to postpone until next year, and it will be Easter before sellers accept that prices have changed,” he predicts. The amount of floor space renters get for their money has declined by around one-fifth over the past 20 years, and if they need to move, finding a new place is a nightmare. The website Spareroom.com reports that there are currently seven renters chasing every available room in London. Expect something akin to a job interview if you apply for a house share (one friend was even asked for his CV).I met a 20-something TV producer this week who has been trying for months to shift from east to west London, but rooms and flats anywhere near her price range get snapped up online within minutes. Since moving jobs, she spends three hours a day traversing the capital. Her landlord has just served eviction papers as he wants to sell up. Some pundits predict more “accidental landlords” could be prompted to sell before Hunt’s cuts to capital gains allowances kick in next April, which means the market could get even tighter. Other landlords no doubt want to get out before the Renters’ Reform Bill makes its way through parliament (Ministry of Justice data shows evictions are at their highest level since records began in 1999).Those in their 20s and 30s who have managed to buy a home face a different set of financial pressures. With the Office for Budget Responsibility predicting a 9 per cent fall in house prices, recent buyers are more at risk of negative equity and higher loan-to-value ratios make for more expensive mortgage rates. This only adds to the sense of foreboding when fixed-rate deals expire.Some homeowners might be cutting holidays, big-ticket purchases and shelving plans for home improvements — but I know others who are putting starting a family on hold, fully aware of the high cost of childcare. Others — including Jess, a recent guest on Money Clinic podcast — are timing the conception of their second children to explicitly coincide when the 30 “free” hours of nursery care kicks in for their first-born. With no word of the childcare reforms promised (albeit fleetingly) at the doomed “mini” Budget, and nothing yet appearing on the horizon to replace Help to Buy, this surely presents a political opportunity for the Labour party to exploit? The promise of free or much better subsidised childcare for the under 3s would be a guaranteed vote winner with the younger generation, as would any state-backed programme to incentivise building homes for rent.Before you ask which magic money tree could fund this largesse, look no further than the homes you currently live in. One of the many sacred cows that the chancellor was said to be sizing up for slaughter in the build-up to the Autumn Statement was capping or removing main residence relief. Landlords and second home owners have to pay capital gains tax when they sell up, but there’s no such tax on homeowners sitting on huge amounts of housing equity after surfing the wave of low interest rates.You may well shudder at the thought of this kind of relief being tinkered with by a future government — as someone working hard to pay off my mortgage, I certainly would. But the financial divide between owners and renters is getting deeper, and policymakers simply cannot go on ignoring it. When you look at this from the perspective of those being charged ever increasing amounts with little security of tenure, I can think of 8mn renters who would have no problem voting for it. Claer Barrett is the FT’s consumer editor and the author of “What They Don’t Teach You About Money”. [email protected]; Twitter and Instagram: @Claerb More