Today’s top stories
Britishvolt, the collapsed UK battery start-up, has five potential buyers, including Australian peer Recharge Industries.
The core personal consumption expenditures index, the US Federal Reserve’s preferred measure of inflation, edged up from 0.2 per cent to 0.3 per cent, but the annual rate fell back from 4.7 per cent to 4.4 per cent. Consumer spending also fell. GDP figures yesterday showed economic growth slowed in the fourth quarter to 2.9 per cent from 3.2 per cent in the previous three months.
The sell-off of shares in the Adani Group has now passed $50bn since Hindenburg Research alleged on Wednesday that the group, run by Indian tycoon Gautam Adani, had engaged in stock price manipulation and accounting fraud.
For up-to-the-minute news updates, visit our live blog
Good evening.
UK chancellor Jeremy Hunt today defended the government’s handling of the economy after more signs that the mood was diverging from the sunnier outlook gaining ground in the EU and the US.
In a wide-ranging speech ahead of his March 15 Budget, Hunt hosed down talk of tax cuts and outlined his dream of turning Britain into “one of Europe’s most exciting, most innovative and most prosperous economies” via the four Es of enterprise, education, employment and “everywhere” (aka levelling up). Business groups however were not impressed, with one suggesting the speech was “E for empty”.
A run of FT stories this week highlight the scale of the challenge the government faces.
S&P Global’s PMI survey showed business activity in the UK at a two-year low of 47.8, where 50 marks the line between contraction and expansion. The eurozone showed a return to growth with a score of 50.2, while the US hit a three-month high of 46.6.
Businesses are also facing a growing risk of insolvency, while smaller companies fear a “brutal” year ahead as energy subsidies are scaled back. UK car manufacturing has fallen to its lowest level since 1956 and business confidence has hit a two-year low.
The chancellor admitted that the country had not returned to pre-pandemic employment levels but pointed out that unemployment was still at its lowest level for half a century.
He also acknowledged the need to address the UK’s productivity problem. New data yesterday showed that output per hour worked in the third quarter of 2022 was barely higher than in 2019 before the pandemic struck, meaning that despite huge changes to working practices there has been no change in the ultra-slow pace of growth since the global financial crisis.
Hunt said Brexit could be a catalyst for more nimble regulation, but a growing number of critics have pointed out that the plan to ditch every piece of EU-derived law within a year means not only business but legal experts, civil servants, trade unions and conservation groups do not know what the regulatory environment will look like by the end of the exercise.
The speech was also peppered with talk of the UK becoming a “technology superpower”, highlighting its prowess in industries such as offshore wind, yet recent signs are not good.
Britishvolt (see above), which was meant to spearhead Britain’s electric vehicle push, collapsed last week. The CBI employers’ group has urged the government to create a green energy strategy to counter the risk of UK companies decamping to the US or the EU to take up the offer of subsidies. And the debate over where chip designer Arm — one of the UK’s few genuine tech leaders — should list its shares has raised questions about whether London is a credible alternative to New York for such companies looking to go public.
FT economics editor Chris Giles this week called for new honesty about why the UK looked so sickly against its peers. He narrows it down to three essential factors. The first is Brexit. The second is the inability to finance acceptable public services. And thirdly — as illustrated by suggestions today that the HS2 high-speed rail line may be scaled back — the difficulty of getting anything built.
And we, the people of Britain, he concludes, are ultimately to blame because we voted for it.
Need to know: UK and Europe economy
The UK wasted nearly £15bn on PPE during the pandemic, according to the independent public spending watchdog. The taxpayer also faces losses from the state-backed Future Fund that was meant to protect promising tech and early-stage businesses at the height of the pandemic.
A group of European Commission chiefs warned in the FT of the dangers of a tit-for-tat war with the US over green energy subsidies. Here’s our explainer if you’re new to the debate.
Spain’s economy grew by a greater than expected 0.2 per cent at the end of last year even as inflation and borrowing costs rose. The country is still however a laggard in Europe, with the size of its economy remaining below its pre-pandemic level.
Need to know: Global economy
New data showed exports from Hong Kong shrank 29 per cent in December, the biggest fall since 1953. Senior trade writer Alan Beattie outlines the huge boost for world trade and globalisation that will flow from the end of Beijing’s zero-Covid policy, more than making up for any demand-led congestion.
Investors are pouring money into emerging market stocks and bonds at a near-record rate, as falling inflation and China’s reopening help reverse last year’s slide. Many are betting that the Fed and other big central banks will soon stop increasing interest rates, removing one of the markets’ major sources of pain.
The Philippines reported its strongest economic growth in 45 years in the fourth quarter after it lifted all pandemic restrictions. The country, which relies largely on remittances from overseas workers and outsourcing activities such as call centres, alongside farming and fishing, suffered one of Asia’s sharpest contractions during the crisis.
Pakistan’s rupee dived as authorities gave up controls on exchange rates to revive an IMF bailout. The country’s economic crisis has worsened in recent days as foreign reserves run low, leaving businesses struggling to survive and unable to secure dollars to pay for imported goods piling up at ports.
Need to know: business
New Rolls-Royce chief Tufan Erginbilgic gave a bleak assessment of the UK engineering company’s future, warning it was a “burning platform”. A “transformation” programme for greater efficiency has been interpreted as another round of job cuts.
H&M reported an 87 per cent collapse in earnings to SKr820mn ($80mn) in the quarter to the end of November from a year earlier. The world’s second-largest clothes retailer cited high prices, its exit from Russia and a cost-cutting programme.
Oil company Chevron announced record earnings of $35.5bn for 2022 but a slip in the fourth quarter shows how the supermajors are being hit by fossil fuel prices falling from their highs after Russia’s invasion of Ukraine.
In case you’ve missed him, Donald Trump is likely to be back soon on Facebook and Instagram after Meta reinstated his accounts. President of global affairs Nick Clegg said the platforms had put “new guardrails in place to deter repeat offences” after Trump, who has just started his 2024 presidential campaign, was kicked off after praising his supporters who stormed the US Capitol in 2021.
Companies editor Tom Braithwaite says Big Tech — aside from Apple — got the pandemic wrong, as evidenced by the flurry of recent job cuts. Or in the words of Meta’s Mark Zuckerberg: “At the start of Covid, the world rapidly moved online and the surge of ecommerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended.” But, he concluded, “I got this wrong.”
Science round up
Government experts said the UK should prepare an autumn Covid-19 vaccination campaign, highlighting concerns that the virus will still pose a threat, especially if new variants emerge. In the meantime, the signs are positive: weekly Covid infections in England have fallen to a 7-week low of below 1mn.
Kate Bingham, the former head of the UK vaccines task force, wrote in the FT that the country was losing its chance to become a life sciences superpower thanks to short-termism and suspicion. A lack of clinical academics is also threatening NHS research, a parliamentary report warned.
New “generative” AI systems that can produce content to order are raising concerns about its effects, including the ability to produce large volumes of misinformation as well as making jobs disappear, as our Big Read explains. A landmark legal dispute marked the start of a battle between human artists and artificial intelligence companies over the value of human creativity.
Commentator Anjana Ahuja uses the example of ExxonMobil’s downplaying of climate change problems to remind us that corporate science can often be truer to the profit motive than to science itself.
Ahuja also presents our new video on how virologists are dealing with the latest H5N1 avian flu strain, a serious disease threatening farmed poultry and wild birds across the US and Europe.
Some good news
US researchers have developed a wearable ultrasonic device that can provide continuous, real time information on how the heart is pumping, even during exercise. The technology could ultimately also be utilised to image other deep tissues such as the spine and liver.
Something for the weekend
The FT Weekend interactive crossword will be published here on Saturday, but in the meantime why not try today’s cryptic crossword?
Source: Economy - ft.com
