Today’s top stories
Goldman Sachs reported its lowest quarterly profit in three years, hit by falling trading and investment banking and losses from its push into consumer banking. Net income plunged by almost two-thirds to $1.1bn. Morgan Stanley also reported a drop in profits as trading slowed.
The head of MI6 appealed to Russians that are appalled by the killing in Ukraine to join forces with the UK’s foreign spy agency. Sir Richard Moore in a rare public speech likened the situation in Ukraine to the 1968 Prague Spring when the Soviet Union quashed liberalising reforms.
The FT revealed that Vladimir Putin ordered the seizure of Danone and Carlsberg’s Russian operations after businessmen close to the Kremlin expressed an interest in the assets.
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Good evening.
There was a double dose of much-needed good news for British prime minister Rishi Sunak today as new data showed inflation had fallen more than expected and Tata announced plans to build a landmark $4bn battery factory in the UK.
The headline CPI figure fell from 8.7 per cent to 7.9 per cent in June, driven by lower petrol costs and in line with Bank of England forecasts. It marks progress in Sunak’s promise to halve inflation to 5.4 per cent this year ahead of a general election. The news also makes the UK less of an international outlier.
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Markets firmed up expectations of a quarter point interest rate rise from the BoE next month after the data was published. Traders now expect rates to peak just below 6 per cent early next year. The data sent shares in UK property groups and housebuilders upwards.
There was encouraging news too on the “core” measure — which strips out volatile items such as food and energy — which fell to 6.9 per cent from a 31-year high of 7.1 per cent. Separate industry data yesterday showed the growth in grocery prices falling for a fourth consecutive month while the head of online grocer Ocado said the UK was “over the worst” when it came to food price inflation.
Other cost of living pressures remain. New data today showed property rental prices and car insurance costs hitting record levels.
Ahead of today’s CPI numbers, big investors said they were steering clear of UK government bonds, fearing that the country’s inflation problem would continue to push borrowing costs higher. Their reluctance to dive into the market has pushed gilt yields well above those in other major bond markets, putting more pressure on the government’s finances as it tries to find buyers for record quantities of gilts.
But back to the good news. Sunak said Tata’s battery plant would “not only create thousands of skilled jobs for Britons around the country, but it would also strengthen our lead in the global transition to electric vehicles, helping to grow our economy in clean industries of the future”. The government said the decision was the “biggest investment ever” in the UK industry and the most significant since Japanese car companies moved to Britain in the 1980s. There was a note of scepticism however from the FT’s Lex column which said the project looked expensive and hard to pull off.
In any case, Sunak’s buoyant mood could be shortlived. As we’ve experienced so many times in the past few years, fresh political turmoil is always just around the corner: the PM’s party faces potential defeat in three by-elections tomorrow.
The polls coincide with the end of the parliamentary term, meaning Tory MPs will have to wait until September to air their grievances in Westminster. Before then, a long hot summer of discontent awaits.
Need to know: UK and Europe economy
A new survey showed the UK lagging behind its G7 peers on productivity, due to a lack of investment and improvement in areas such as management and leadership, technology adoption and innovation.
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The International Energy Agency warned that Europe could face a winter gas crisis if Russia halted supplies. “Our simulations show that a cold winter, together with a full halt of Russian piped gas supplies to the European Union . . . could easily renew price volatility,” it said. Energy editor David Sheppard said the west must prepare for further disruption, including attempts to weaponise oil supplies for the first time.
Armenia has become a key stop on a new “silk road” for goods heading for sanctions-hit Russia. The booming trade, especially in used cars, is infuriating the US and the EU.
Need to know: Global economy
Zhejiang, one of China’s most populous provinces, has deleted Covid-19 mortality data that might have given an insight into death tolls after Beijing relaxed its controls at the end of last year. Cremations jumped 73 per cent in the first quarter to 171,000, well above the number of deaths reported in 2022 and 2021.
Colombia’s president Gustavo Petro defended his reform agenda, including a pledge to end investment in fossil fuels. “The Colombian economy has got potential aside from just oil: the development of a productive agriculture industry . . . tourism, taking advantage of the country’s beauty, and the possible export of clean energies,” he said.
Is Dubai the new Geneva? A new Big Read explains how the UAE has become the place where Russian oil gets traded, much to the frustration of the US, which fears some of this business could end up as sanctions busting.
Fresh protests are expected in Kenya against new tax laws, the latest in a series of violent demonstrations that have left many dead. The protests have been organised by the opposition, led by former prime minister Raila Odinga.
India’s fragmented opposition parties have created an alliance in order to unseat Narendra Modi’s party, the BJP, at next year’s election. Modi will be seeking a third term as prime minister. Previous attempts to unite against the BJP have failed.
Need to know: business
Microsoft is to charge $30 a month for generative AI features in its popular Office software, a bigger premium than expected on a technology that many in the industry hope will bring a powerful boost to revenues.
The fight between Chinese fast-fashion rivals Temu and Shein will continue inside a US courthouse. The smaller Temu — started last year by ecommerce platform Pinduodou — accuses Shein of conducting anti-competitive practices to maintain its market dominance.
Pret A Manger has turned an annual profit for the first time since 2018: £50.6mn in 2022 compared with losses of £226mn in the previous year, during the pandemic. Its success is due to coffee subscriptions and international expansion.
Our Tech Tonic podcast series on social media continues with a discussion of how the “creator economy” is shaping the platforms’ future.
The World of Work
Six years after #MeToo began, sexual harassment at work continues. This week, the Working It podcast seeks to understand why, in the wake of the FT’s recent investigations into hedge fund manager Crispin Odey and star architect David Adjaye. FT journalists and an NYU professor weigh in on why it is so difficult to report, changes in corporate culture and avoiding unwanted advances.
FT Columnist Simon Kuper chronicles the creation of a perfect place for writing — in a tiny Parisian flat. Purchased two decades ago when property prices allowed a journalist to do so, it was in need of a little renovation.
Some good news
Deforestation in Colombia fell by 29 per cent to its lowest level in 10 years, according to new figures released by the government. Particular gains were made in the Amazon region. Environmental protection and deforestation have been a priority for the current government.
Source: Economy - ft.com
