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IFS: 'Hit to economy is real and serious after Brexit vote'

The hit to the economy is "real and serious" following the Brexit vote, the director of the Institute for Fiscal Studies warned.

Paul Johnson told ITV News: "The economy will be hit - and it will be hit quite hard. There is complete unanimity about that among economists, the governor of the Bank of England, the Chancellor.

"We shouldn't pretend that there isn't something real and serious going to happen, because there is."

George Osborne has abandoned his plan to balance the books by 2020 - which Mr Johnson said would only have had a 50/50 chance of success anyway.

Chancellor abandons plan to balance books by 2020

Chancellor George Osborne has abandoned his plan to balance the UK's books by 2020 because of the economic impact of the country's decision to leave the European Union.

ITV News business editor Joel Hills reports:

In a speech to business leaders in Manchester Mr Osborne said: "We must be realistic about achieving a surplus by the end of the decade."

He added that the UK "needs to reduce uncertainty by moving as quickly as possible to forming a new relationship with the EU".

As the Bank of England said yesterday, the referendum result is as expected likely to lead to a significant negative shock for the British economy. How we respond will determine the impact on people's jobs and on economic growth.

The Bank of England can support demand, the Government must provide fiscal credibility so we will continue to be tough on the deficit but we must be realistic about achieving a surplus by the end of this decade and we need to reduce uncertainty by moving as quickly as possible to a new relationship with Europe and being super competitive...

The government must provide fiscal credibility, so we will continue to be tough on the deficit but we must be realistic about achieving a surplus by the end of this decade. This is precisely the flexibility that our rules provide for.

– Chancellor George Osborne

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Barack Obama fears for future growth of world economy

Barack Obama speaks during a press conference at the White House. Credit: PA

Barack Obama has said there are "longer-term concerns about growth", following the UK's vote to leave the EU.

The referendum result shook reactions in the market, stock prices and global currencies.

Speaking at the North American Leaders' Summit in Canada, the US president added they were "monitoring very carefully whether there is any systemic strains on the system."

I think the preparations that were done by central banks, and finance ministers, our treasury secretary - indicate the degree to which the global economy, in the short run, will hold steady.

I think there are some genuine longer-term concerns about global growth - if in fact Brexit goes through and that freezes the possibilities of investment in Great Britain or in Europe as a whole.

At a time when global growth rates were weak already, this does not help.

– Barack Obama

Consumer Price Index inflation rose 0.3% in May

The CPI inflation rate was unchanged from April. Credit: PA Wire

The rate of Consumer Price Index (CPI) inflation rose 0.3% in May, unchanged from April, the Office for National Statistics said.

Transport costs rose by 0.9% in May, while the price of diesel stepped up 3p per litre this year compared to 1.5p in 2015.

The cost of restaurants and hotel bookings also rose, climbing 0.5% in May compared with 0.2% in the same month a year ago, with overnight stays in hotels rising by more than they did in 2015.

UK economic growth slowed to 0.4% in the first three months of 2016, down from 0.6% in the fourth quarter of last year, following an industrial sector slump.

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G7 leaders: Brexit would pose serious risk to global growth

World leaders gather for the G7 summit in Ise-Shima, Japan. Credit: Reuters

Brexit would cause pose a serious risk to global growth, world leaders have warned at the G7 summit in Japan.

Leaders said in a declaration: "UK exit from EU would reverse trend toward greater global trade, investment and jobs. Brexit would be [a] serious risk to global growth."

The group of industrial powers expressed concern about the risks to the world economy amid a modest economic performance, and pledged to seek strong and sustainable growth.

In a statement ending the two-day summit, the G7 said: "Global growth remains moderate and below potential, while risks of weak growth persist. Global growth is our urgent priority."

German Chancellor Angela Merkel said that although G7 leaders did not specifically discuss the possibility of Britain leaving the EU at their summit meeting, there was a consensus that they wanted Britain to remain in the union.

"It was no subject here," she told reporters on the sidelines of the summit. "But there was the signal that all who sat here want Britain to stay part of the EU. The decision is up to the British voters."

ITV News Deputy Political Editor Chris Ship tweeted from Japan:

McCluskey calls on government to save steel industry

The leader of the Unite union, Len McCluskey, has called on the government to save the steel industry, as hundreds of steelworkers marched through Westminster to highlight the crisis.

The board of Tata Steel is meeting in Mumbai but has yet to draw up a shortlist of potential buyers for its UK assets.

Thousands of jobs are at risk, with the Port Talbot plant in south Wales facing closure if a buyer cannot be found.

The issue still has to be resolved. We want a secure, guaranteed future for a foundation industry that is vital for our nation.

The whole of our manufacturing depends on British steel and I'm pleased that the government appear to be getting that message, but we want to make certain that those warm words are turned into positive action.

– Len McCluskey, Unite

Corbyn joins steelworkers on march through London

The Labour leader Jeremy Corbyn has joined steelworkers on a march through Westminster to highlight the steel crisis in the UK.

The board of Tata Steel meet in Mumbai on Wednesday to discuss bids for the takeover of its UK assets.

Business Secretary Sajid Javid and Welsh First Minister Carwyn Jones have traveled to the India city for talks.

Mr Corbyn called on the government to save the industry.

It's the basis of manufacturing economy. It's got to be saved. The government has got to be prepared to intervene.

– Jeremy Corbyn, Labour leader
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