Today’s top stories
The cost of a two-year fixed-rate mortgage in the UK rose above 6 per cent and two-year gilt yields rose to their highest level for 15 years. Mortgage costs have been rising sharply over the past week, ahead of an expected increase in interest rates from the Bank of England on Thursday.
China’s president Xi Jinping said he saw “progress” in China-US ties at a meeting with Antony Blinken, US secretary of state. German chancellor Olaf Scholz is welcoming a large Chinese delegation to Berlin.
Indian low-cost carrier IndiGo will buy a record 500 aircraft from Europe’s Airbus, as the country’s aviation market rebounds from the Covid pandemic. The order is the largest ever by number of aircraft.
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Good evening.
The Labour party’s “mission” to turn the UK into a clean energy leader by 2030, more details of which were unveiled today, is an early instance of a political battle increasingly being fought all over the world. In the words of columnist Martin Sandbu, it is the battle over whether today’s economic demands on governments require them to “go big” or move incrementally.
The party’s leader Sir Keir Starmer reiterated plans for a new publicly owned company, Great British Energy, based in Scotland, to fund infrastructure, cut bills, create jobs and provide energy security and a National Wealth Fund to funnel public and private money to projects such as battery gigafactories and clean steel plants.
The party will also forge ahead with wind power, reversing the current government’s de facto ban on onshore wind farms, forcing councils to “proactively identify” suitable areas.
Labour plans to stop issuing new North Sea oil or gas licences but allow planned developments, such as the huge Rosebank field, west of the Shetland islands, to continue, in order to provide certainty for investors. Critics include unions, which are worried about the effect on jobs, while environmentalists say projects such as Rosebank are inconsistent with the UK’s 2050 net zero emissions target.
The opposition party has made no secret of looking across the Atlantic for inspiration, although its plan to borrow £28bn a year to fund the green transition has now been delayed until halfway through the next five-year parliament.
Still, “go big or go home” seems to be Labour’s message, even as some experts warn that its clean energy targets are too much of a stretch. As Sandbu points out, Labour’s £28bn dwarfs America’s green measures, amounting to 1.1 per cent of British GDP — proportionately seven times bigger than the IRA’s 0.15 per cent of US GDP. It would also be nearly double the size of the EU’s post-pandemic recovery facility.
Tensions around the green transition are not confined to the UK.
EU energy ministers, meeting today to agree an overhaul of the bloc’s electricity market, hit out at Poland’s plans to extend subsidies for coal power plants for giving “contradictory signals to the market” although they did agree to France’s request for a greater role for nuclear.
In Norway, the government is caught up in a battle between combating climate and protecting nature, while in Switzerland, a fractious referendum on cutting carbon emissions has showed populist nimbyism is still alive and kicking.
Meanwhile oil majors such as Shell are determined to keep investing in new oil and gas production for years to come, even as their attempts to justify fossil fuel expansion with carbon capture technology are attacked by the UN.
Another point of tension is the knock-on effect of western green energy subsidies on developing countries where some see them as protectionist.
Raj Kumar Singh, India’s power minister, yesterday accused developed economies of hypocrisy for advocating the phasing out of coal, India’s primary energy source, more aggressively than other fossil fuels, including oil and gas.
“We’ve had the developed world lecturing the rest of the world on how important free trade is . . . And here they themselves are erecting barriers,” he said.
Need to know: UK and Europe economy
An FT Big Read details the UK’s economic malaise as inflation remains stubbornly high and Britons prepare for another rise in interest rates and possible long-term stagnation. One of the remedies, chancellor Jeremy Hunt has told ministers, is to quicken adoption of AI.
BlackRock and JPMorgan Chase are helping Ukraine set up a reconstruction bank for rebuilding projects that hope to attract hundreds of billions of dollars in private investment. UN officials are pressing the EU and other national governments to fund the effort to clean up debris and restore ecosystems destroyed by the war.
The FT editorial board said Germany needed to update its economic model as the basis of its past competitiveness and resilience is challenged. The OECD is now expecting its growth to be the lowest among major economies in 2023.
Need to know: Global economy
From technology to energy to capital markets and universities, the EU is falling further behind the US, writes chief foreign affairs commentator Gideon Rachman. In 2008, the EU and the US economies were roughly the same size, but since the global financial crisis, their economic fortunes have dramatically diverged, he says.
An FT Big Read examines President Xi Jinping’s efforts to promote “military-civil fusion”, harnessing new technologies from the private sector to modernise China’s military. Goldman Sachs has cut its forecasts for Chinese economic growth.
Asian emerging markets may have been hurt by risks associated with their giant neighbour China, but their resilient fundamentals are set to support long-term gains, writes the Bank of Singapore’s Eli Lee.
Need to know: business
Anglo-Swedish drugmaker AstraZeneca is drafting a plan to spin off its China business and list it separately in Hong Kong to shelter the company from geopolitical tensions. Asia business editor Leo Lewis says Hong Kong’s multinationals and global funds are preparing for the worst.
Western manufacturers will be able to de-risk their operations in China but will find it impossible to cut ties completely from the country, according to the head of Raytheon, one of America’s largest aerospace and defence companies.
The refusal of other UK business lobby groups to attend meetings with the CBI is complicating its attempts to relaunch after a misconduct scandal. The four other members of the “B5” are the British Chambers of Commerce, the Federation of Small Businesses, the Institute of Directors and Make UK.
The accounting firms PwC and KPMG have been drawn deeper into a scandal that has rocked corporate Brazil over collapsed retailer Americanas after internal correspondence showed how the company hid billions of dollars of debt.
Forget the doom-mongering around AI for a moment: one of the world’s biggest toymakers says ChatGPT-enabled teddy bears could befriend children and tell them personalised bedtime stories, instilling in them their parent’s values.
Join FT journalists and guests including Matthias Holweg, the director of Oxford business school’s AI programme at our subscriber webinar on Thursday https://ai-revolution.live.ft.com
The World of Work
FT reporters examine how artificial intelligence is shaking up work in three sectors: professional services, film-making and coding. The authors of ‘The Future of the Professions’ say sectors such as law and medicine will no longer be able to just rely on selling the time of their people.
Does AI in recruitment mean the end of the CV? An AI bot known as Prepper, offered by the job search engine Adzuna, can generate interview questions and answers for roles at a range of large companies.
Columnist Pilita Clark offers some advice on one of the more fraught moments in modern working life: a request to recommend someone you never rated.
The Working It newsletter poses the question: are we doing hybrid wrong?
Some good news
After years of preparations by the Saving Wildcats conservation project, 22 wildcats have been released into Scotland’s Cairngorms National Park as part of efforts to save the species from extinction.
Source: Economy - ft.com
