Today’s top stories
Nicola Sturgeon resigned as Scotland’s first minister and leader of the Scottish National party.
The EU will hit Russia with trade bans and tech export controls worth €11bn as part of its 10th package of sanctions ahead of the first anniversary of the Russian invasion of Ukraine on February 24.
Iranian-American billionaire Jahm Najafi is preparing a blockbuster $3.75bn takeover bid for Tottenham Hotspur, the Premier League football club. A consortium of investors will put in 70 per cent and backers from the Gulf, mainly from Abu Dhabi, will contribute the rest.
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Good evening.
Today’s UK data shows inflation falling in January, hot on the heels of fresh numbers from the US, and adds to growing evidence that price pressures in the global economy have peaked.
Consumer price inflation fell more than expected to 10.1 per cent from 10.5 per cent in December. Core inflation, which strips out volatile items such as food and energy costs, also declined more than forecast, dropping from 6.3 per cent to 5.8 per cent.
The new data boosted expectations that the Bank of England will pause its monetary tightening programme in the next few months. Earlier this month the BoE forecast that headline inflation will fall sharply for the rest of the year as energy prices drop, but it was pessimistic about the outlook for growth.
The fall in inflation is little solace to British workers, whose wages are still far behind. Data yesterday showed that regular pay, excluding bonuses, rose at a rate of 6.7 per cent in the last quarter of 2022. Public sector workers are still faring the worst — their wages grew at just 4.2 per cent compared with 7.3 per cent for the private sector — explaining some of the anger behind the current wave of industrial unrest. The overall labour market remains tight, with the unemployment rate unchanged at 3.7 per cent.
On the positive side, the cost of some fixed-rate mortgages is set to drop after the BoE suggested inflation may come under control sooner than expected.
The picture across the Atlantic is also one of falling inflation and a still-strong jobs market. New data yesterday showed consumer prices rose 6.4 per cent in January, a slight slowdown from the previous month but higher than economists had expected. It follows unexpectedly strong jobs numbers, which have fuelled expectations that the Fed might have to keep tightening monetary policy for longer, a view reinforced today by strong retail sales figures.
Optimism on the economy also remains strong among executives at Wall Street’s biggest banks, as belief grows that the Fed can engineer a “soft landing”.
In the eurozone, the first estimate for inflation in January was 8.5 per cent, but this could be revised upwards following the addition of delayed data from Germany, the bloc’s dominant economy.
The region’s labour market also remains strong, with the unemployment rate in December at its lowest since records began in 1995.
Browse our global inflation tracker to see how countries compare on rising prices.
Need to know: UK and Europe economy
BoE policymaker Jonathan Haskel said Brexit had cost the UK £29bn in business investment and worsened the country’s productivity problem. Our Big Read examines whether “Big Bang 2.0” financial reforms can revive the City of London in the post-Brexit era. London and Brussels are edging towards a deal on Northern Ireland’s trading arrangements.
Brussels has urged EU capitals to unblock talks over reforming the union’s budget rules as it tries to focus on policies such as the green transition.
Need to know: Global economy
Pakistan is raising taxes on luxury imports and cigarettes to secure approval for a $6.5bn IMF loan and stave off a foreign debt crisis.
Latin American leaders have snubbed pleas from US and Europe to send weapons to Ukraine even though Washington had offered to replace their ageing Russian-made kit with superior American systems.
Container shipping costs on important global trade routes have fallen 85 per cent since their pandemic peak and widespread bottlenecks have subsided. Behind the drop is a decline in demand for goods — 90 per cent of which reach retailers by ship. However, chief economics commentator Martin Wolf says that global trade has another hurdle to overcome: the threat of government interventionism.
Another Big Read examines a topic often billed as a post-pandemic solution for the real estate sector in the US: Is it feasible for New York City to turn empty offices into condos?
Need to know: business
Ford is cutting 3,800 jobs across Europe as it pares back its range of models ahead of the switch to electric vehicles. The EU said trucks and coaches would have to cut emissions to near zero by 2040 but was criticised by green campaigners who argue the target is not ambitious enough.
There were more encouraging signs regarding the recovery in the travel industry. TripAdvisor and Airbnb both reported strong results, while Air India is buying 250 planes from Airbus in one of the world’s biggest aviation deals, boosting hopes that India could become an international hub.
Amazon is to double down on its move into physical grocery stores, despite recently announcing that its growth plans were on hold. Five years since buying Whole Foods for $13.7bn, the company has yet to disrupt the $1.6tn US grocery sector. The EU, meanwhile, is investigating Amazon’s purchase of Roomba-maker iRobot over the autonomous vacuum cleaner’s ability to take pictures as it moves around a home.
It has been revealed that LockBit, the hacking group that targeted Royal Mail, demanded a ransom of £65.7mn that the company has refused. The hackers are threatening to release large amounts of Royal Mail data.
Apple is having problems increasing production in India as it attempts to reduce its reliance on China. The rewards could be substantial: consultancy Bain estimates manufacturing exports from India could more than double from $418bn in 2022 to more than $1tn in 2028, with electronics exports alone growing at an annual rate of up to 40 per cent.
Miner and commodity trader Glencore reported record earnings of $34bn, highlighting how trading houses have been among the biggest beneficiaries of the energy crisis.
The World of Work
Allen & Overy is introducing a chatbot powered by the same AI behind ChatGPT to “support” its lawyers in creating contracts. It’s an early indication of how the AI revolution could hit certain professions.
With hybrid working set to stay, many UK workers are being caught up in “complicated and inconsistent” tax rules. Experts have urged the government to reform the laws, especially around topics such as the tax treatment of office equipment to be used at home.
It’s possible to hate your job but still love your work, writes columnist Sarah O’Connor, or as one health worker puts it: “We absolutely love what we do but have been broken by the lack of infrastructure, investment and decades of ‘do more with less’.”
The latest Working It podcast discusses the pros and cons of pay transparency.
Some good news
A UK toddler with a rare medical condition called MLD has become the first child to be treated by the NHS with a new life-saving gene therapy called Libmeldy. The one-off treatment costs £2.75mn and is the most expensive medicine ever approved by the NHS. UK readers can watch a film about the cutting-edge treatment on BBC iPlayer.
Source: Economy - ft.com
