UK wage squeeze continues; US inflation jumps to 40-year high of 8.5% – as it happened | Business

Time to wrap up.

The cost of living squeeze on UK workers has continued, with wages failing to keep pace with prices.

Regular pay shrank in the quarter to February, with basic earnings up only 4% – failing to match inflation which was over 6% that month.

The latest UK labour market report also showed that public sector workers’ pay was shrinking by over 4% in real terms, and that long-term illness from Covid was taking people out of the jobs market.

That helped to pull the unemployment rate down to below its pre-pandemic levels, and to the joint-lowest point since the 1970s.

Our economics editor Larry Elliott says that the pandemic’s impact on the over-50s and public sector staff is particularly troubling:

US inflation has hit its highest rate since 1981, rising 8.5% over the year to the end of March. The war in Ukraine drove up energy costs for Americans, and food and housing costs also jumped.

Economists said the latest surge in prices would intensify pressure on the US Federal Reserve to hike interest rates, but some also hope that this could be the peak for inflation.

Growth in UK retail sales slowed last month as fears over the rising cost of living led to the sharpest drop in consumer confidence since the 2008 financial crisis:

The World Trade Organisation has cut its forecast for global trade growth this year, from 4.7% to 3%, due to the economic disruption caused by the Russia-Ukraine war.

The WTO also warned that poorer countries risk food shortages.

Development charity Oxfam is also deeply concerned. It warned that more than a quarter of a billion people around the world could be pushed into extreme poverty this year amid a surge in global food prices after Russia’s invasion of Ukraine, the ongoing impact of Covid and rising global inequality.

The World Bank is providing more financial support to Ukraine, by approving a $1bn (£770m) package to help keep critical services running.

Russia’s economy is on track to contract by more than 10% in 2022, the country’s former finance minister Alexei Kudrin says, following the crippling sanctions imposed following the invasion of Ukraine.

Sri Lanka is to default on its debts for the first time since independence in 1948, as a deep financial crisis forces it to preserve scarce foreign exchange reserves.

Sri Lanka’s finance ministry announced all debt payments would be temporarily suspended while it agreed a bailout with the IMF, saying:

The government is taking the emergency measure only as a last resort in order to prevent further deterioration of the republic’s financial position.

Frances O’Grady will stand down as general secretary of the Trades Union Congress at the end of the year.

The first woman to hold the post in the TUC’s 154-year-old history, she said it had been the greatest honour of her life to serve the trade union movement during a turbulent decade for workers.

Extinction Rebellion protesters have forced the closure of the insurance market Lloyd’s of London, after using superglue, chains and bicycle locks to block entrances to the building.

Protesters dressed as tea ladies pour ‘realitea’ and ‘honestea’ outside Lloyd’s headquarters in the City of London. Photograph: Vuk Valcic/ZUMA Press Wire/REX/Shutterstock

The group is demanding that Lloyds stops insuring fossil fuel projects.

The chief executive of easyJet has insisted that the great summer getaway will not be ruined, despite as many as a fifth of staff being off sick amid a wave of Covid, resulting in hundreds of flight cancellations.

The online fashion retailer Asos expects to take a £14m hit to its profits and a 2% reduction in growth, following its decision to stop trading in Russia in response to Moscow’s invasion of Ukraine.

One of the UK’s biggest accounting firms, Deloitte, is under investigation by regulators for its audits of Go-Ahead, after the bus and rail operator was embroiled in a scandal for wrongly withholding £50m of taxpayers’ money.

German investor optimism has dropped to its lowest level since early in the pandemic, with the Ukraine war and rising inflation hitting confidence.

Goodnight. GW

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