Today’s top stories
The European Central Bank called on markets to ignore news wire stories based on leaks of sensitive information, which it said were unreliable indicators of future decisions and should be treated with caution.
The UK unveiled its long awaited semiconductor strategy, offering chip companies up to £1bn over the next decade. Although the amounts involved are tiny compared with $52bn in incentives in the US and €43bn of state aid in the EU, the UK says it is focusing on areas in which British companies have a “strategic advantage”.
An FT investigation found that a front company for the Russian mercenary group Wagner acquired tens of thousands of helmets from China, at the same time as the group’s chief Yevgeny Prigozhin was raising a vast prisoner army to attack Ukraine.
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Good evening.
The war in Ukraine and a new “common approach on China” are the dominant themes at the G7 summit which began today in Hiroshima, but the gathering will also discuss many other topics familiar to regular DT readers, from the state of the world economy and the energy crisis to relations with the global south, climate change and the rapid development of artificial intelligence.
The Ukrainian president Volodymyr Zelenskyy is making an in-person appearance on Sunday, fresh from his trip to the Arab League summit in Saudi Arabia, to garner support for his 10-point plan to end the war, as well as using the opportunity to lobby non-G7 attendees like India and Brazil.
G7 members yesterday announced a new package of sanctions, including proposals to hit Russia’s diamond business, one of Moscow’s few remaining export industries yet to be affected by western restrictions. They agreed to support Kyiv for “as long as it takes” although omitted to include last week’s pledge to block the restarting of Russian gas pipelines.
Tomorrow the bloc’s members — the US, UK, Japan, Canada, Germany, France and Italy — will seek to respond to what they term “economic coercion” from China. The tone is likely to be one of “de-risking” rather than decoupling, as they attempt to strike a balance between national security and economic interests.
The group will also discuss “heightened uncertainty” on the global economy and issues such as resilient supply chains. G7 finance ministers have already called for action to address regulatory gaps in banking following the recent sector turmoil.
On climate change, the host Japan is pushing for a “realistic” approach to cutting emissions, arguing that Asia’s circumstances require a different speed of energy transition, with its economies at an earlier stage of development than the US and Europe and its fossil fuel infrastructure closer to the start than the end of its life.
There were also calls for “guardrails” around the development of AI although there is little agreement on how to police it. Taro Kono, Japan’s digital minister, told the FT he was concerned in particular about elections being targeted by “malicious elements”.
The highly fragmented nature of regulation is also becoming a worry at a time of increased data flow across borders. Europe currently has the toughest regime, but the US, says Kono “is the wild, wild west”.
The wider political message from the summit, says chief foreign affairs commentator Gideon Rachman, is that of the US using the G7 to rally its democratic allies in Europe and Asia for a generational struggle in a new era of superpower rivalry.
Or as President Biden’s national security adviser Jake Sullivan puts it, in a none too subtle nod to cold war rhetoric, the G7 is now acting as “the steering committee of the free world”.
Read our new special report: G7 Japan
Need to know: UK and Europe economy
Another sign that the UK economic outlook is improving came with consumer confidence figures for May moving to their highest level in a year, albeit still in negative territory.
“Levelling up” however, one of the government’s key aims, looks as difficult a task as ever, with new data showing London still outperforming all other regions. The capital enjoyed growth of 0.9 per cent in the third quarter last year, compared with contractions of 0.1 per cent nationally, 2 per cent in Wales and 0.3 per cent in Scotland, with growth flat in Northern Ireland and England.
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Russia admitted “problems” with oil and gas revenues that have fallen to their lowest levels in years as western restrictions gnaw away at Moscow’s main source of income for funding its war in Ukraine. Russia is also having problems attracting western delegates to its flagship St Petersburg economic forum.
Need to know: Global economy
As the Bank of England holds its “Festival of Mistakes”, economics editor Chris Giles tackles the question: why are central bank forecasts so wrong?
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The boss of South Africa’s Eskom electricity monopoly said the country should prepare for the worst-ever blackouts over winter, with outages of up to 16 hours. Looting, lack of repairs and major coal and nuclear plants going offline have all brought the company to the brink.
Need to know: business
John Allan, chair of British supermarket chain Tesco, is to step down next month following misconduct claims.
Walmart, the world’s largest retailer, raised its profit forecasts after a better than expected first quarter, in contrast with the more wary tone on consumer discretionary spending from rivals Home Depot and Target.
Seven of the world’s largest semiconductor makers are expanding in Japan as western allies step up efforts to reshape the chip supply chain amid rising tensions with China.
UK water companies apologised for dumping billions of litres of sewage and pledged to invest £10bn to reduce waste outflows. Campaigners were not impressed: the money will come from higher customer bills while regional water monopolies have been paying out excessive dividends and rewarding bosses with hefty pay packages. Rapid infrastructure improvements meanwhile are being hindered by rising costs.
UK telecoms group BT said it would slash up to 42 per cent of its workforce by the end of the decade as part of a cost-cutting programme.
EasyJet became the latest airline to talk up the bounceback in customer demand, saying it expected to return to pre-Covid capacity this summer and reporting revenues surging by 80 per cent.
The US tech industry may be having a difficult time but in Latin America the sector is thriving as entrepreneurs used to political and economic turmoil show they can cope with funding downturns.
If you think you have a tough time at work, spare a thought for the hidden army of poorly paid social media moderators who have to wade through countless graphic images of violence to filter out toxic material for end users. Our Big Read details how they are fighting back.
Science round up
The World Meteorological Organization said global temperatures would likely exceed 1.5C above pre-industrial levels for the first time in the next five years, fuelled by the anticipated return of the El Niño weather phenomenon,
World leaders are expected to make their strongest pledges to tackle dementia for 10 years at the G7 summit, as degenerative brain diseases impose a growing burden on the global economy and effective treatments for Alzheimer’s begin to emerge.
The use of non-sugar sweeteners, the subject of a warning from the World Health Organization this week, is one of the issues tackled in Chris van Tulleken’s new book Ultra-Processed People. FT science commentator Anjana Ahuja’s review looks at how we have become hooked on ultra-processed food and modern diets in which many of our calories come from products with novel synthetic molecules, never found in nature.
An FT Big Read covers new quick blood tests to spot cancer. Some experts argue there is little proof the tests work and could lead to false positives, overdiagnosis and become a huge cost burden on the health service.
Some good news
Some welcome news for England’s rivers as an antidote to the sewage headlines. The diversity of insect and other invertebrate life is better than at any time over the past 30 years thanks to a reduction in copper and zinc levels in the water.
Something for the weekend
Try your hand at the range of FT Weekend and daily cryptic crosswords.
Source: Economy - ft.com
