Treasury criticises Moody’s after UK credit rating is downgraded

Credit ratings agency warns hard Brexit would damage economy’s long-term health hours after Theresa May’s Florence speech

The Treasury has hit back at warnings by the credit ratings agency Moody’s that the likelihood of a hard Brexit and a squeeze on the public finances would damage the UK economy’s long-term health.

Announcing its decision just hours after Theresa May gave her speech in Florence on the government’s Brexit strategy, the ratings agency said it had cut the UK’s credit rating to Aa2 from Aa1 partly in response to the looming prospect of the UK’s access to the European Union’s single market and customs union being reduced.

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UK draws record overseas tourists after pound’s Brexit plunge

European and North American visitors lead the way in July, with spending also increasing, ONS figures show

Overseas visitors flocked to Britain in record numbers in July and spent more than ever before in response to the improved spending power offered by the low pound.

Non-UK residents made 4m visits to Britain in July, an increase of 6% from a year ago and spent £2.7bn, up 3% on July 2016, according to the Office for National Statistics.

Related: Pound slips against euro ahead of Theresa May’s Brexit speech – business live

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UK budget deficit narrows in boost for Philip Hammond

Public finances still rising as a proportion of GDP despite unexpectedly strong figures for August

Britain’s public sector spending deficit dropped to its lowest August total since 2007 following a boost in VAT revenues and a squeeze on local authority borrowing.

The deficit in August stood at £5.7bn, down 18% compared with the same month last year, beating forecasts in a Reuters poll of economists that had pointed to a much larger deficit of £7.1bn.

Related: UK public finances beat forecasts, as Ryanair boss apologises over cancellations – business live

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UK shoppers continue to spend despite rising prices

Retail sales rise by more than expected, particularly clothing and footwear, despite squeeze on household budgets

Britain’s consumers continued spending after the summer sales, despite the steepest annual growth in non-food store prices in almost three decades.

Growth in retail sales volumes rose by 1% in August after the Office for National Statistics revised the figure for July up to 0.6%, beating analysts’ expectations for an increase of 0.2%. The pound leapt against the dollar on the figures, which add weight to a potential rate hike by the Bank of England for the first time in a decade.

Related: UK growth will trail Italy, France and Germany next year, says OECD

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UK growth will trail Italy, France and Germany next year, says OECD

Pound’s Brexit slide has pushed up inflation and dampened purchasing power, says forecast

Italy, France and Germany will grow faster than Britain next year as Brexit uncertainty continues to weigh on consumer confidence and deter much-needed business investment, according to the latest economic forecasts by the Organisation for Economic Cooperation and Development.

The UK’s GDP growth will drop from 1.6% this year to 1% next year, in line with the OECD’s previous forecast, but Italy’s national income will grow by 1.2% next year, up 0.4 percentage points from the forecast in the June.

Related: Lloyd’s of London firm moves European base to Dublin over Brexit

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IMF and World Bank members must stop rise of economic non-order | Mohamed El-Erian

Forthcoming meetings offer critical opportunity to start serious discussion on rebuilding global consensus

Next month, when finance ministers and central bank governors from more than 180 countries gather in Washington DC for the annual meetings of the International Monetary Fund and the World Bank, they will confront a global economic order under increasing strain. Having failed to deliver the inclusive economic prosperity of which it is capable, that order is subject to growing doubts – and mounting challenges. Barring a course correction, the risks that today’s order will yield to a world economic non-order will only intensify.

The current international economic order, spearheaded by the United States and its allies after the second world war, is underpinned by multilateral institutions, including the IMF and the World Bank. These institutions were designed to crystallise member countries’ obligations, and they embodied a set of best economic-policy practices that evolved into what became known as the “Washington consensus.”

Related: Five reasons why global stock markets are surging | Nick Fletcher

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Why central banks are not hitting their 2% inflation target

Growth and inflation are out of sync in most developed nations, forcing them to carry on with relaxed monetary policies, but this may cause bubbles and crises

Since the summer of 2016, the global economy has been in a period of moderate expansion, with the growth rate accelerating gradually. What has not picked up, at least in the advanced economies, is inflation. The question is why.

In the United States, Europe, Japan, and other developed economies, the recent growth acceleration has been driven by an increase in aggregate demand, a result of continued expansionary monetary and fiscal policies, as well as higher business and consumer confidence. That confidence has been driven by a decline in financial and economic risk, together with the containment of geopolitical risks, which, as a result, have so far had little impact on economies and markets.

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Five reasons why global stock markets are surging | Nick Fletcher

Investors are picking up on the positive signals coming from US, China and Europe, and easing tensions over North Korea

Global stock markets are at record highs, with the MSCI All Country World Index reaching a new peak on Monday and both the Dow Jones Industrial Average and the S&P 500 in uncharted territory. European and UK markets are also attracting investors again, although they are below their best levels due to the strength of the euro and the pound making exports pricier. Here are five reasons why investors are buying into shares.

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