FirstFT: Today’s daily briefing

Mike Pompeo, US secretary of state, has indicated Britain should choose a side as geopolitical tensions rise between western nations and China.

Accusing Beijing of “coercive bullying tactics”, the top US diplomat said that America “stands ready to assist our friends in the UK with any needs they have”, from building nuclear power plants to developing 5G technology free of Chinese influence.

Mr Pompeo’s intervention comes as China has faced international criticism for allegedly concealing the true scale of the coronavirus outbreak, and for seeking to impose a new security law in Hong Kong.

In his statement, Mr Pompeo accused the Chinese government of using HSBC’s business in China as “political leverage” against a possible revocation of the Huawei deal and warned that China’s “attempted coercion” of the UK showed the need to avoid over-reliance on the country.

British prime minister Boris Johnson should stick to his earlier compromise, limiting Huawei to non-core parts of the network and a 35 per cent overall share by 2023, our editorial board writes. But he should work closely with the US and EU partners to bolster alternative western suppliers. (FT)

Coronavirus digest

Here’s our guide to exiting lockdown safely and avoiding infection. Follow our live coverage.

In the news

Fed predicts no rate increases before the end of 2022 The dovish tone from the Fed, which is expecting the US economy to contract by 6.5 per cent this year, with unemployment falling to 9.3 per cent, followed an earlier than expected rebound in job creation last month, which raised hopes of a faster recovery. Nasdaq closed at a record high above 10,000 points even as the wider equities market pared gains. (FT)

China producer prices fall Producer prices fell 3.7 per cent in May compared with the same month last year, according to official statistics. The drop marks their fastest annual rate in four years as the pandemic undermines global demand for the country’s exports. (FT)

George Floyd’s brother pleads to Congress for police reform Philonise Floyd was one of a dozen witnesses to testify before lawmakers on police brutality and racial profiling on Wednesday. Meanwhile, Adidas was caught flat-footed in responding to anti-racism protests and the CEO of CrossFit quit over his comments regarding Floyd’s death. (FT, BBC)

Philonise Floyd, the younger brother of George Floyd, said on Capitol Hill that he was seeking to ‘make sure that he is more than another face on a T-shirt’ © REUTERS

EU states warn Brussels of hard Brexit risk Diplomats from Ireland and Belgium have said in recent discussions addressing the bloc’s budget and €750bn recovery fund that they could be doubly hit by the UK’s no-deal departure from the EU and the economic fallout from the pandemic. (FT)

OECD warns of deep economic scars Rich countries face a disappointing economic recovery from the historic downturn caused by the pandemic, which will leave deeper scars than any peacetime recession in the past 100 years, the OECD has warned. The UK’s economy is likely to face the deepest downturn among advanced nations. (FT)

India and China begin de-escalation along border Indian and Chinese troops agreed a partial “disengagement” effort in some areas in Eastern Ladakh. However, the simmering tensions have been inflamed by the pandemic as well as Donald Trump’s strategic embrace of Narendra Modi. (The Hindu, FT)

Just Eat Takeaway in deal talks with Grubhub Discussions between New York-based Grubhub and Amsterdam-headquartered Just Eat Takeaway for an all-stock deal that could create a new world leader in online food delivery have intensified in recent days as Uber cooled on the idea of a merger over regulatory concerns. (FT)

US primary elections Ballots are still being counted in Georgia and Nevada after voting problems plagued the states’ primary elections on Tuesday. Voters waited in hours-long lines even amid a massive swell of mail-in voting. (Politico)

The day ahead

NetEase to list in Hong Kong The Nasdaq listed gaming group could net up to $3bn but it is concerned that it could be caught in the crossfire as trade tensions between the US and China grow. (FT)

La Liga restarts Spain’s top flight football league will resume on Thursday when Sevilla takes on Real Betis. Supporters, however, will not be present — a requirement that national coach Luis Enrique has described as “sadder than dancing with your own sister”. (FT, Goal)

What else we’re reading

Salary pain? Not so much While chief executives sacrificed salaries during the pandemic crisis, larger share awards granted earlier more than made up for losses, report Andrew Edgecliffe-Johnson and Fan Fei. Plus, Aneeta Rattan wrote an open letter of advice to CEOs about building diverse companies. (FT)

The road ahead On a trip to Australia’s Hunter Valley vineyards, Jamie Smyth found that tourism is picking up but most vineyard owners acknowledged tougher economic times lie ahead. In Thailand and Vietnam, there’s hope that stimulus and a swift return to normal will lead to getting back to business faster than others. (FT)

How the US protests will change Biden’s campaign The race protests complicate the platform on which Democratic presidential nominee Joe Biden was expecting to stand. A safety-first campaign always fit this establishment stalwart like a dream, writes Janan Ganesh. From England to the Republic of Georgia, the US can learn lessons on policing from the rest of the world. (FT, Atlantic)

Spilling corporate secrets has never been easier There’s a long line of “pillow talk” cases in which unscrupulous traders capitalised on information stolen from their partners. And pandemic working patterns have made some compliance and security tools less effective, writes Brooke Masters. But what if working from home lasts forever? (FT, NYT Magazine)

© Ingram Pinn/Financial Times

Inside a Vatican scandal Banking records and financial documents seen by the FT, as well as first-hand accounts, reveal that a contentious 2018 property deal in London’s Chelsea district was signed off by some of the Catholic Church’s most senior officials, contradicting the official narrative. (FT)

China should not define US policy in Africa Under Donald Trump, the US has looked at Africa almost exclusively as the scene of a strategic and ideological battle with China. This is both offensive and self-defeating, writes Africa editor David Pilling. (FT)

A K-shaped recovery The haves are largely back to where they were before the outbreak, while, despite unprecedented fiscal and monetary policy action, the have-nots have even less, writes Peter Atwater. We must address this widening gap or it could lead to an L-shaped recovery for all. (FT)

AMC eyes a comeback The world’s largest cinema chain was hit hard by the pandemic — reporting a $2.2bn net loss in the first quarter. Chief executive Adam Aron said on Tuesday that he expects cinemas to open by July. Here are the revised 2020 summer movie release dates. (WSJ, Quartz)

Video of the day

Growth vs value stocks Robert Armstrong, US finance editor, looks at how investors have never had to pay more for growth stocks relative to value stocks — and what that says about the US economy.