Today’s top stories
Thousands of residents of southern Ukraine were struggling to escape from flooded homes and towns after the destruction of the Kakhovka Dam sent a torrent of water along the war zone’s southern frontline. Here’s our military briefing on who has most to gain from the dam breach.
The Telegraph newspaper and the Spectator magazine are set to be sold after the Lloyds Banking Group pushed their parent group into receivership over debts owed by the Barclays, the family that owns the UK titles.
New York is suing Hyundai Motor and Kia over a “virtual explosion” of car thefts after the companies failed to install immobilising devices on vehicles. Thefts surged at the end of last year after video tips for thieves went viral on TikTok.
For up-to-the-minute news updates, visit our live blog
Good evening.
New forecasts show the global economy has weathered a turbulent period earlier this year when banks were collapsing on both sides of the Atlantic, but fresh data from China and the eurozone suggest it’s not yet time to bust out the champagne.
The OECD said the world economy would expand by 2.7 per cent in 2023 and 2.9 per cent in 2024, while the US would avoid recession, India would grow strongly and China would meet its target for this year of 5 per cent growth.
“The global economy is growing and unwinding from the shocks we’ve seen over the past couple of years,” the group’s new chief economist Clare Lombardelli said, while pointing out that this year was still expected to be weak by historical standards.
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The World Bank yesterday also said 2023 growth would be better than expected at 2.1 per cent but cut its forecast for 2024 to 2.7 per cent, warning of the lingering effects of the war in Ukraine and tight monetary policy.
In Europe, markets took a knock after data showed industrial production in Germany bounced back less than expected in April. Tomorrow could be a symbolically important day for the wider eurozone when economists expect official growth figures to be revised down to show output shrank in the past two quarters, denting some of the optimism of recent months over the bloc’s bounceback.
The data, including yesterday’s flat retail sales figures, will be closely watched by policymakers at the European Central Bank ahead of their interest rate decision next week.
Although the OECD is confident China will eventually get back on track, new trade data this morning showed the world’s second-largest economy was still struggling to revive growth, with exports shrinking more than expected in May. Other indicators in recent weeks have also pointed to an uneven and slowing recovery.
Still, as the effects of the pandemic and the energy crisis begin to fade, it was time for governments to get their public finances into shape, withdraw blanket fiscal support and target help on those who really need it, the OECD’s Lombardelli told the FT.
Rebuilding these fiscal buffers, she argued, would help countries fight high inflation and put them in a better position to deal with the costs of an ageing population.
Need to know: UK and Europe economy
UK hopes for a digital trade deal with the US have encountered resistance in Washington just as prime minister Rishi Sunak arrives in DC for talks with president Joe Biden on a new economic alliance.
UK house prices shrank for the first time on an annual basis for more than a decade last month, according to mortgage provider Halifax. Financial institutions fear being swamped by applications from borrowers rushing to refinance as mortgage rates rise.
New sector data showed UK grocery spending soared last month as food prices remained at elevated levels. In the eurozone hopes are rising that prices are on the way down, exemplified by the slide in German butter.
And if you’re a Brit looking for some relief in the sun, think again: new airport strikes are set to cause a “summer of strife”.
The UK’s Labour party would win with a majority of 140 seats if an election was held this week, a poll of 10,000 voters found. But the survey showed there was still a lot to play for ahead of the actual vote, expected next year, with a large bloc of undecided voters more likely to lean towards Rishi Sunak’s Conservatives. A Big Read series examines the political and (surprisingly bold) economic agenda of Labour under Sir Keir Starmer’s leadership.
The Turkish lira plunged today by the most since late 2021 as Pesident Recep Tayyip Erdoğan’s new economic team began its pivot towards a more “rational” economic policy.
Need to know: Global economy
US secretary of state Antony Blinken will visit China this month in a sign that Beijing and Washington hope to stabilise their current turbulent relationship.
The US Treasury’s $1tn borrowing drive is set to increase the strain on the country’s banking systems as it returns to the markets after the drama of the debt ceiling battle.
Chief economics commentator Martin Wolf tackles the “myth of the Asian century”. What is really happening, he writes, is a world rebalancing as European and American dominance starts to fade.
Australia warned the EU it would not sign off on a trade deal unless the bloc opened up to more of its farm products. Canberra meanwhile has extended an “olive branch” to China on its trade disputes.
Need to know: business
Venture capital giant Sequoia Capital, which made bets on tech companies such as TikTok parent ByteDance, is splitting its China business into a separate entity.
The EU is considering a mandatory ban on companies deemed to present a security risk in their 5G networks such as China’s Huawei. The UK is removing all surveillance cameras made from Chinese companies from sensitive government sites.
The latest beneficiary of the energy crisis is commodity trader Trafigura, which reported record net profits of $5.2bn in the first half of the year as well as giving shareholders a record $3bn dividend.
As we highlighted in Monday’s DT, warnings are proliferating about the rapid growth of AI and the need for regulation. The IMF’s Gita Gopinath said automation in manufacturing served as a cautionary tale, after economists incorrectly predicted large numbers of laid-off car workers would find better opportunities in other industries.
Consumer groups are turning to rail to transport goods across the UK amid concerns over road congestion, lorry driver shortages and the environmental impact of trucking. The rail network currently transports only about 10 per cent of freight.
Smaller boutiques and brokers are being picked off by bigger players as global dealmaking slows. Higher interest rates and a transatlantic banking crisis choked off M&A in the first quarter, almost halving the value of transactions.
The World of Work
Fake recruiters are increasingly targeting jobseekers as they benefit from companies moving hiring processes online during the pandemic.
The digital nomad has gone corporate. The dream of working from anywhere that took off during the pandemic has collided with the realities of tax, immigration, cyber security and labour laws, writes columnist Sarah O’Connor.
About half of large multinationals are planning to cut office space in the next three years as they adapt to the rise of homeworking, according to a new survey.
Some fear that Generative AI could make many jobs redundant, but could it also rid us of some of the more mundane parts of our daily toil? Listen to the new Working It podcast.
Some good news
A Ukrainian start-up is making a biodegradable alternative to polystyrene — out of mushrooms.
Source: Economy - ft.com
