Today’s top stories
Turkish president Recep Tayyip Erdoğan tied Ankara’s approval of Sweden’s Nato bid to his country’s efforts to enter the EU, in a fresh blow to Stockholm’s attempt to join the military alliance.
The EU said a new transatlantic data-sharing agreement would come into force today, providing assurance to companies over the transfer of personal information between Europe and the US.
Thames Water, the troubled UK water utility, fell short of its £1bn funding goal, getting agreement from its investors for £750mn of new equity. It also warned that it would need a further £2.5bn from investors by 2030.
For up-to-the-minute news updates, visit our live blog
Good evening.
New data showing China on the edge of deflation has fuelled calls for a stronger stimulus package for the world’s second-biggest economy as its post-pandemic recovery continues to stutter.
Consumer price growth in June was flat year on year and down 0.2 per cent from the previous month, while factory gate prices fell at the fastest rate since 2016 as demand for goods weakened, exacerbated by slowing global economic growth. The CPI figures follow data showing manufacturing activity shrinking for the third consecutive month.
The situation stands in stark contrast to the US and Europe, where stubbornly high inflation means interest rates are likely to rise further over the summer.
You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.
China’s faltering recovery is taking a heavy toll on the country’s youth: more than a fifth of 16 to 24-year-olds were unemployed in May, the largest proportion since records began in 2018 and higher than in European countries such as France and Italy.
Although jobs are still being created, many are unskilled positions unpopular with university graduates. Crackdowns on the tech, finance and gaming sectors have limited what were once sought-after opportunities among young people.
Some blame the skills mismatch on the government as it tries to tilt the economy towards high-tech manufacturing. But with the sector not yet ready to absorb all the engineering students coming out of universities, there are insufficient graduate-level jobs. Others say the causes go deeper, with domestic consumption not growing enough to create jobs. “When you build your manufacturing competitiveness based on low wages, once low wages become a problem because of weak domestic demand, you’re sort of stuck,” said one analyst.
In response, Beijing recently urged jobless graduates to “roll up their sleeves” and try manual work, publishing profiles of those who had allegedly made a fortune in low-skilled jobs such as selling street food or growing fruit, rather than pursuing a career in their chosen field. Perhaps unsurprisingly, the message drew much scorn on social media.
The slower than expected economic recovery in China has led the government in Beijing to seek more foreign investment but recent tit-for-tat trade sanctions with the US have taken their toll on sentiment. In that regard, there was progress over the weekend after the visit of US Treasury secretary Janet Yellen appeared to calm some of the political tensions between the two countries as she talked up the potential for trade and economic co-operation.
Try our global inflation tracker to see how your country compares on rising prices
Need to know: UK and Europe economy
Chancellor Jeremy Hunt ruled out big pre-election tax cuts this autumn and told the Financial Times ahead of a set-piece speech this evening that he was looking to the City of London to bolster UK growth by changing rules that are holding back investment. Bank of England governor Andrew Bailey said the UK economy had shown “unexpected resilience” in the face of a range of external shocks.
Fears of more UK interest rate rises have led to a rush of homeowners signing new mortgage deals. “There’s been a real shift in borrower behaviour over this last month,” said one finance company. “It’s changed to: ‘Oh my goodness, I’ve got to get one of these deals before they go, even though I don’t like the rate’.”
Proposals to make the UK electricity network more efficient could lead to large variations in price depending on communities’ proximity to where power is generated. “Locational pricing” is just one option being considered by regulator Ofgem and the government as part of a plan to decarbonise the grid by 2035.
Chief economics commentator Martin Wolf said green energy proposals from the UK’s opposition Labour party were unlikely to enable the country to exit a long, painful period of economic stagnation.
Representatives of 168 member states of the International Seabed Authority met today to begin talks about large-scale mining in the deep seas. France and Germany are concerned that a China-supported push to harvest battery metals from the seabed could do lasting harm.
Need to know: global economy
Talks between the US and Mexico on trade problems involving energy and the motor industry have ended with little progress, frustrating business leaders who say neither government is abiding by regional dispute procedures.
Central banks are bringing their physical gold reserves back home to avoid any Russian-style sanctions on their foreign assets. Gold is increasingly in demand as a haven from high inflation and volatile bond prices.
Mozambique’s former finance minister is set for extradition and trial in the US over a $2bn “tuna bonds” scandal, relating to the looting of money from loans for maritime projects, including a state tuna fishing fleet, which directly led to the southern African nation defaulting on its debt.
Vietnam’s economic moment has arrived, says the FT editorial board, as it becomes a key beneficiary of manufacturers’ efforts to “de-risk” exposure to China. Vietnam was the fastest-growing economy in Asia last year and one of only a handful globally to achieve two consecutive years of growth since the pandemic.
Need to know: business
The biggest US banks this week are set to report the biggest jump in loan losses since the start of the Covid-19 pandemic as rising interest rates pile pressure on borrowers. The top US banking regulator announced sweeping changes to capital rules for midsized lenders as part of an effort to shore up a financial system rattled earlier this year by a string of bank failures.
Soaring interest rates have also had a profound effect on the UK’s pensions industry. A new Big Read explains.
EasyJet cancelled 1,700 summer flights, mostly from Gatwick airport, because of air traffic control problems. Congestion caused by the closure of Ukrainian and Russian airspace means only about 80 per cent of normal airspace is available, just as passenger demand bounces back from the pandemic.
The hype around “additive manufacturing” enabled by 3D printing has begun to wear off. Leading manufacturers are in the middle of merger talks as they face stubborn barriers to using the technology for mass-produced goods.
A new FT film details the story of Gautam Adani, the billionaire Indian businessman who saw the value of his listed companies plummet after being targeted by a short seller. The fallout has spread into politics: Adani had become inextricably linked to Prime Minister Narendra Modi’s vision of a new India.
The world of work
Employers are warming to the idea of staff naps, reinforced by recent research showing regular napping might slow the pace the brain shrinks as we age, lowering the risk of dementia and other diseases.
We’ve all been there. Columnist Pilita Clark discusses one of the biggest horrors of office life: writing an email to a friend to moan about a detested work colleague and sending it straight to the detested colleague instead of the friend.
Some good news
Deforestation in Brazil’s Amazon fell by a third in the first six months of 2023 compared with last year, according to (yet to be independently verified) government satellite data. President Luiz Inácio Lula da Silva has pledged to end forest clearance by 2030.
Source: Economy - ft.com
