Today’s top stories
Russia and China vowed to strengthen ties despite “pressure from the international community” ahead of the first anniversary of Russia’s invasion of Ukraine.
Tobacco group Philip Morris said it would “rather keep” its business in Russia than sell on stringent Kremlin terms, highlighting the challenges facing companies trying to leave the country without taking a huge financial hit.
Citigroup forecast that UK inflation could return to 2 per cent by the autumn as gas prices fall. Prime minister Rishi Sunak is considering a 5 per cent pay offer to end public sector strikes after the Treasury received an unexpected boost to the public finances from January’s tax receipts.
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Good evening.
Today’s announcement by Bentley that it is ending production of its 12-cylinder engine could be a significant milestone on the road to electrification.
The carmaker is the first of the luxury brands to ditch what was once considered the pinnacle of engineering in the era of the combustion engine. Bentley’s rivals, including Rolls-Royce and Ferrari, still intend to use the technology for several years while developing their electric models.
The shift to greener vehicles, together with a focus on selling fewer but more expensive models to make up for damage from the global chip shortage, is now common across the industry.
Stellantis, the owner of Jeep and Peugeot, is the latest example, announcing that it had increased profits by a quarter last year and reached margin targets it had set for 2030, despite an overall drop in sales. Sales of electric cars rose by 41 per cent and the company will launch its first electric pick-up truck next year.
Renault told a similar tale last week. It is now the third-largest electric car brand in Europe, and second for hybrids behind Toyota. Volvo’s electric sales have tripled. And for US motorists, the age of gas-guzzling looks to be over.
The move towards more environmentally friendly vehicles is likely to accelerate as legislation limiting emissions comes into force. Last week the EU said trucks and coaches would need to cut emissions to “near zero” by 2040, while city buses will have to be emission-free by 2030.
However, the targets were criticised by environmental campaigners for not being ambitious enough as well as out of step with plans for combustion engines in cars to be banned by 2025. Heavy duty vehicles are responsible for 28 per cent of CO₂ emissions from road transport in the EU, although they only make up 2 per cent of the total.
Some carmakers, such as Toyota and Hyundai, are increasing their bets on hydrogen-powered cars as an alternative. But while the vehicles appear to be environmentally sound — emitting just water vapour as a byproduct — there is still much work to be done to make the production of hydrogen fuel greener and less costly.
Green hydrogen should get a significant boost from the subsidies on offer in US president Joe Biden’s Inflation Reduction Act, which sets the country on track to becoming a cleantech superpower. Biden’s plans, however, have attracted flak from the EU, particularly its support for American-made electric vehicle chargers.
Manufacturers also looking at ways of producing greener batteries and making them easier to recycle and re-use.
Questions remain over the long-term supply of lithium, the key component in batteries, not for nothing nicknamed “white gold”. Although prices in China, the world’s biggest electric vehicle market, have fallen back on recent weaker demand, they remain eight times the level of a year ago.
Need to know: UK and Europe economy
“The sun broke through in February after six months of gloom” was one economist’s reaction to PMI data showing British business activity bouncing back. The better than expected reading of 53 — where 50 marks the divide between expansion and shrinking — is the highest level in eight months.
The eurozone PMI was also better than forecast, rising to 52.3 and reinforcing calls for the European Central Bank to keep raising interest rates to tackle high inflation, depressing stocks in the process.
The UK government is exploring changes to plans for an American-style register of “foreign influence” after concerns were raised that it could harm inward investment. The US and EU member states have expressed surprise that businesses and civil society groups from their countries are being grouped with those from nations like Iran, Syria and Russia.
Need to know: Global economy
Relative newcomer Peter Obi has rattled his two established rivals in the race to become president of Nigeria, the biggest economy in Africa and on track to become the world’s third most populated country. David Pilling and Aanu Adeoye set the scene.
Soaring rents in Singapore are undermining its campaign to replace Hong Kong as the top Asian financial hub. Meanwhile, Hong Kong is trying to accelerate its recovery with a new round of spending voucher handouts.
Our Big Read looks at the role of the World Bank and its efforts to refocus on climate change.
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Need to know: business
Rio Tinto, the world’s second-largest miner, said it expected the global economy to stabilise in 2023 and was optimistic about the prospects for China, on which the company relies for iron ore exports, now that Beijing has relaxed its pandemic restrictions.
InterContinental Hotels Group, owner of the Holiday Inn and Crowne Plaza chains, predicted a full recovery for global travel by 2024, led by a strong US economy and the end of Covid restrictions in China.
Walmart, the world’s largest retailer, warned sales growth would moderate this year because of the impact of interest rate rises on consumers, despite a solid fourth quarter. Home Depot was similarly gloomy, as was discount chain TJX.
Zalando, Europe’s largest online fashion retailer, is cutting 5 per cent of its 17,000 workers as the “pandemic tailwinds” that created a sales boom fade away.
The head of Japan’s Kyocera, one of the world’s largest makers of chip components, said China was no longer viable as the world’s factory after the US imposed curbs on access to advanced technology. Smith & Nephew warned that chip shortages were still affecting the medical industry.
Cineworld said it was yet to receive any offers to buy the whole company out of bankruptcy following a deadline for interested parties to declare their intention to bid. The world’s second-biggest cinema chain entered into bankruptcy protection last September.
The World of Work
More than nine out of 10 companies that adopted a four-day working week in a UK experiment said they would continue because of evidence of permanent benefits.
US office space will drop to 55 per cent of pre-pandemic levels by 2030 as hybrid working takes hold, according to a new report. A quarter was already undesirable and another 60 per cent was at risk of obsolescence and might require “significant investment,” the study said.
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Some good news
A third person — Germany’s “Düsseldorf patient” — is said to have been cured of HIV after a stem-cell transplant, following individuals in Berlin and London.
Source: Economy - ft.com
