Today’s top stories
Federal Reserve chief Jay Powell said US inflation was still too high in a hawkish speech at the Jackson Hole gathering of central bankers. Fed official Susan Collins said yesterday the economy was still running too hot and that interest rates needed to rise again.
The Kremlin said it did not have a hand in the presumed death of Yevgeny Prigozhin, the Wagner militia leader who launched the biggest challenge to president Vladimir Putin’s rule in decades. The US said the plane crash said to involve Prigozhin was not caused by a surface-to-air missile.
Donald Trump surrendered to authorities in Atlanta, Georgia, where he faces criminal charges over alleged attempts to subvert the results of the 2020 presidential election. Here’s a reminder of the cases against the former president.
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Good evening.
Could yesterday’s announcement of the supersizing of the Brics group of countries be the moment that turned the world upside down?
By some measures, the revamped group, expanding beyond Brazil, Russia, India, China and South Africa to include Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates, is far bigger than the G7 group of advanced economies.
The new Chinese-driven alliance would account for 47 per cent of the world’s population and 37 per cent of its gross domestic product, compared with 9.8 per cent of population and 29.8 per cent of GDP for the G7 (excluding the EU, a “non-enumerated” member of the group).
As global China editor James Kynge writes today, it would also possess the lion’s share of the world’s oil and gas reserves and a huge amount of other natural resources.
Beijing hopes the changes will give it the oomph it has long sought to reform international institutions, including the World Bank, the IMF and the UN and give more power to developing countries.
Even before this week’s announcement it was already clear that the existing world order was in the throes of a shake-up, as detailed in our series on the rise of the middle powers.
Fixed alliances are shifting to “à la carte” arrangements while Beijing is using its muscle to reduce the west’s influence and dethrone the dollar from its dominant position in international trade and finance. The development bank set up by Bric members is already planning to begin lending in South African and Brazilian currencies to cut reliance on the greenback.
There may be some wishful thinking at play. Although the enlarged group might be united in its response to the global sway of the G7, its members’ politics and economics are quite disparate: some are democracies, others autocracies, some favour non-alignment while others are outspokenly anti-west. There is also the risk that member nations become mere satellites of China.
Some are clearly in the ascendancy and others going in the opposite direction. We even had a neat metaphor this week in the shape of two rival attempts to land on the moon with spectacular success for India and disaster for Russia, adding to its international ostracisation over its war in Ukraine.
Nevertheless, Brics 2.0 represents the most influential bloc the developing world has ever produced, says Kynge. “There is a sense that after decades of accepting the west’s rules, the era of the ‘global south’ is dawning,” he concludes.
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Need to know: UK and Europe economy
UK household energy prices will still be around £600 higher than pre-crisis levels this winter, adding to concerns about inflation and the cost of living, after regulator Ofgem said its new price cap for October to December would be £1,923. A new survey showed UK consumer confidence had started to recover in August.
UK business secretary Kemi Badenoch is looking for funds for a new “advanced manufacturing plan” to help Britain compete in the fight for investment in green technology. The plan, focused on the automotive and aerospace industries, is a partial response to the $369bn package of subsidies on offer in US president Joe Biden’s Inflation Reduction Act.
German business confidence has fallen to a 10-month low, while revised GDP data confirmed that output stagnated in the second quarter.
The EU’s radical proposals to fix a “broken” intellectual property regime could have serious implications for western competitiveness, writes US financial editor Brooke Masters.
Turkey raised interest rates for the third time in as many months to try to curb inflation as it continued its move away from years of unorthodox economic policy.
Need to know: Global economy
Global fossil fuel subsidies last year hit a record $7tn — 7.1 per cent of global GDP — as governments shielded consumers from soaring energy prices, the IMF said. This was more than governments spent on education, and two-thirds of what was spent on healthcare.
Elections in Zimbabwe, where President Emmerson Mnangagwa is seeking a new five-year term, were marred by delays and accusations of vote-rigging. Results are not expected for another day or two.
Lebanon’s caretaker prime minister Najib Mikati said Monaco had ended its investigation into him and his family members over allegations of illicit enrichment and money laundering and cleared them of wrongdoing.
Chief data reporter John Burn-Murdoch illustrates how new infrastructure projects are much more costly in the UK and US than elsewhere.
Need to know: business
Revenues at Nvidia more than doubled, thanks to increased demand for the microchips needed to train the latest artificial intelligence models. The group’s soaring share price has been one of the main drivers of the recent AI-fuelled US tech rally.
China’s imports of semiconductor equipment hit record highs ahead of new export curbs by US allies. The European Commission put new restrictions on grants given to Chinese tech companies Huawei and ZTE but Huawei has managed to agree a long-term patent deal with Ericsson.
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The world’s biggest tech companies have been scrambling to alter their online operations ahead of the new EU Digital Services Act which comes into force today, covering everything from personalised advertising to hate speech.
Heineken has finally sold its Russian operations, at a loss of €300mn, after criticism of the time taken to quit since Russia’s full-scale invasion of Ukraine. Heineken will sell the business, which has seven breweries and 1,800 employees, to Russian manufacturer Arnest Group for €1.
Rising interest rates and an expensive battle for talent are taking their toll on the hedge fund industry. A Big Read investigates whether its pioneers are facing the end of a golden era that has brought years of exceptional returns.
UK construction companies have gone out of business at the highest rate in a decade thanks to rising costs, a slowdown in housebuilding and delays to government infrastructure projects. The competition watchdog is deepening its probe into the housebuilding sector, citing concerns about the country’s largest housebuilders control of land.
Science round-up
US researchers have developed brain implants that they say are much more effective than previous devices at giving a voice to people who cannot speak. Artificial intelligence programs turn thoughts into speech while a lifelike avatar speaks the decoded words.
An Indian spacecraft on Wednesday made a historic landing near the Moon’s unexplored South Pole, a milestone in the country’s efforts to become an international power in space exploration. Just a few days earlier, Russia’s first post-Soviet Moon mission ended in failure after its Luna-25 unmanned craft crashed into the surface.
Japan began releasing radioactive water from the failed Fukushima Daiichi nuclear plant, prompting China to warn it would take “all steps necessary” to protect food safety and Hong Kong to ban some Japanese seafood imports. Science editor Clive Cookson assesses the risks.
A new study found an MRI scan was better than a blood test at spotting prostate cancer, the most common male tumour, and could form the basis of a screening programme.
The World Health Organization’s new chief scientist Jeremy Farrar called for greater collaboration against dangerous pathogens and share work on vaccines, diagnostics and treatments to avoid the kind of “deep scars” formed during the pandemic.
US regulators approved the world’s first maternal vaccine to prevent RSV, a common respiratory illness and one of the biggest killers of infants under the age of one.
Something for the weekend
Try your hand at the range of FT Weekend and daily cryptic crosswords.
Some good news
A new study of coral reefs in part of the Pacific suggests they can become more tolerant of rising ocean temperatures and better resist the impact of bleaching.
Source: Economy - ft.com
