Labour councils have borne the brunt of local government cuts over a decade of austerity, according to a new analysis by the Guardian. It highlights for the first time the extent to which poorer, largely Labour-held areas of the country had their funding slashed on average by more than a third, while more affluent, largely Conservative areas were more protected. The analysis, published on Monday and carried out with Sigoma, a special interest group for councils in metropolitan areas, comes exactly 10 years since the then Conservative chancellor, George Osborne, announced the deepest period of cuts to public service spending since the second world war. In his budget speech on 22 June, 2010, Osborne said his plans would be fair and would protect “the most vulnerable in society” while eliminating the government’s budget deficit. But the new analysis reveals that, on average, Labour councils saw their spending power reduced by 34%, while the average Conservative council saw an equivalent decline of less than a quarter (24%). Of the 50 councils which saw the deepest budget …

At a top regional security forum on Saturday, US Defence Secretary Jim Mattis said China’s recent militarisation efforts in the disputed South China Sea were intended to intimidate and coerce regional countries. Mattis told the Shangri-La Dialogue that China’s actions stood in “stark contrast with the openness of [the US] strategy,” and warned of “much larger consequences” if China continued its current approach. As an “initial response”, China’s navy has been disinvited by the US from the upcoming 2018 Rim of the Pacific Exercise, the world’s largest international naval exercise. It is important to understand the context of the current tensions, and the strategic stakes for both China and the US. In recent years, China has sought to bolster its control over the South China Sea, where a number of claimants have overlapping territorial claims with China, including Vietnam, the Philippines and Taiwan. China’s efforts have continued unabated, despite rising tensions and international protests. Just recently, China landed a long-range heavy bomber for the first time on an island in the disputed Paracels, and deployed anti-ship and anti-air missile systems  to its outposts …

Immigration is at the heart of the Brexit debate. It’s a large reason why economic arguments have failed to sway voters. Despite warnings of the high economic costs of leaving the EU (warnings supported by a majority of economists), immigration has continued to have a powerful influence – and is perhaps the major reason why the opinion polls have become so close in recent weeks. The immigration debate is quite polarised. On one side, the Remain campaign either ducks the issue or focuses on the benefits that immigration brings to the economy as a whole. On the other side, the Leave camp focuses on its costs and plays into fears (often in a cruel and cynical way) that migrants are putting pressure on public services that are already at breaking point. At least among Labour supporters intending to vote leave, immigration also appears to be a key issue. The need for a more even-handed assessment of the costs and benefits of immigration is sorely needed. While immigration brings undoubted benefits, it also places pressures on particular communities. It also feeds a sense of …

Emerging markets have come under a bit of pressure recently, with the combination of the dollar’s rise and higher U.S. ten year rates serving as the trigger. The Governor of the Reserve Bank of India has—rather remarkably—even called on the U.S. Federal Reserve to slow the pace of its quantitative tightening to give emerging economies a bit of a break. (He could have equally called on the Administration to change its fiscal policy so as to reduce issuance, but the Fed is presumably a softer target.) Yet the pressure on emerging economies hasn’t been uniform (the exchange rate moves in the chart are through Wednesday, June 13th; they don’t reflect Thursday’s selloff). That really shouldn’t be a surprise. Emerging economies are more different than they are the same. With the help of Benjamin Della Rocca, a research analyst at the Council on Foreign Relations, I split emerging economies into three main groupings: Oil importing economies with current account deficits Oil importing economies with significant current account surpluses (a group consisting of emerging Asian economies) And …

I increasingly suspect my view on Chinese “rebalancing” is at odds with the current consensus (or perhaps just with a plurality of the investment bank analysts and financial journalists who watch China). In two significant ways. One. I think China’s balance of payments position is fairly robust. In both a “flow” and a “stock” sense. The current account isn’t that close to falling into a deficit (and it wouldn’t be that big a deal if China did have a modest deficit). And China’s state is back to adding to its foreign assets in a significant way. The days of “China selling reserves” are long past. And two, I think the rebalancing that has lowered the measured current account surplus is more fragile than most think. It is a function of policies—call it a large off-budget “augmented” fiscal deficit or excessive credit growth—that some believe to be unsustainable, and many think are unwise. The IMF, for example, wants China to bring down its fiscal deficit and slow the pace of credit growth, policies that directionally would …