Today’s top stories
US prosecutors charged Donald Trump in connection with his attempts to overturn the results of the 2020 election, the second federal indictment against the former president in as many months. FT commentator Gideon Rachman says Trump’s trials will be crucial to the future of democracy in America. Trump’s legal team said the push for a speedy trial was “absurd”.
Fitch Ratings unexpectedly stripped the US of its triple A sovereign debt rating, citing a mounting government debt burden and the debt ceiling stand-off that brought the country close to a default two months ago. New survey data showed manufacturing activity shrank for the ninth consecutive month in July.
China unveiled new restrictions on children’s device usage and web content, posing a fresh challenge to tech groups already tightly policed by the state.
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Good evening.
This morning’s Russian attacks on port facilities and a grain silo in Ukraine have heightened concerns about food security, particularly in the global south, and threaten to halt the recent easing in food prices in Europe.
The strikes caused wheat, maize and soyabean oil prices to jump, further fuelling increases started by Moscow’s scrapping of a UN-brokered deal which since last August had allowed Ukrainian grain to be exported across the Black Sea.
Russia has been increasing bomb and missile attacks on Ukraine’s ports since withdrawing from the accord. It has warned that it would attack civilian merchant ships in what western officials say is an attempt to cripple the country’s agricultural industry and disrupt global food markets.
Ukraine, along with Russia, is one of the world’s biggest exporters of grain, a point emphasised by Kyiv as it attempts to rally further support from the west. Andriy Yermak, Ukrainian president Volodymyr Zelenskyy’s chief of staff, has said the attacks are “an attempt to destroy the ability to supply food to the countries of the global south”.
The effects are likely to be felt in richer countries too. The British Retail Consortium said the end of the grain deal and the targeting of facilities were “dark clouds on the horizon” that threatened to end the recent moderation in food prices.
The trade body said yesterday that food price inflation had slowed for a third consecutive month, with the annual rate easing from 14.6 per cent in June to 13.4 per cent in July, the lowest since December 2022, concurring with data from research group Kantar and recent updates from retailers such as Ocado and Sainsbury’s. The UK competition watchdog may also have helped by warning supermarkets against profiteering.
Another driver of food prices flagged by the BRC is rice export restrictions from India. Its government banned exports of several varieties after intense public anger over high prices. The move, announced in the same week as Russia began targeting Ukrainian grain, has sent shocks around the globe: India is the world’s largest rice exporter, and many countries depend on it for shipments.
If all that were not enough, extreme weather brought on by the El Niño phenomenon threatens serious economic damage across South America, a region dependent on agricultural exports. Effects range from damaging crop yields to causing fish to migrate away from what are normally some of the world’s most productive fisheries.
“Countries are already dealing with back-breaking food inflation, particularly poor countries,” said Arif Husain, chief economist at the UN World Food Programme. “When you’re especially dependent on food imports and your debt burden is severe, your currency is depreciating and interest rates are rising . . . if you’re a poor country who imports your food or fertiliser, you’re in trouble.”
Need to know: UK and Europe economy
The UK ditched plans to introduce a native version of the EU’s CE product mark. The “indefinite” postponement was widely welcomed by industry and came after more than two years of intense lobbying to abandon the proposals.
Nationwide reported the biggest annual drop in UK house prices since 2009, bringing the average cost of a home in July to £260,828, 3.8 per cent lower than last year. NatWest, Halifax and Virgin Money yesterday became the latest UK lenders to cut mortgage rates. Builder Taylor Wimpey said buyers were taking on longer-term mortgages.
Eurozone unemployment hit an all-time low of 6.4 per cent but economists pointed to falling job vacancies in Germany and France as a sign that the bloc’s labour market might start to weaken due to an expected economic downturn later this year.
The FT revealed that the Ukraine war and the green transition have kept EU state aid at near record levels. Brussels has approved support for business of €733bn since March 2022, an amount surpassed in recent years only by subsidies approved during the pandemic, with Germany accounting for almost half of the total.
Italian prime minister Giorgia Meloni is under pressure after new data showed the country’s post-pandemic recovery was much weaker than expected. The economy shrank by 0.3 per cent in the second quarter, while the eurozone as a whole grew 0.3 per cent.
Need to know: Global economy
China’s metals and mining investments overseas are set to hit a record this year as the country races to secure resources to keep its position as the world’s biggest producer of electric vehicles, batteries, solar panels and wind turbines. In the first half of the year the total has already topped $10bn.
A new Big Read explains the decoupling from China of South Korea, which is more connected with Beijing than almost any other country.
Another Big Read tells the story of the militarisation of Mexico’s economy. The army and navy are now managing airports, customs, ports, train lines and potentially a passenger airline, with hotels and nature reserves to follow.
Latin America is ahead of much of the rest of the world when it comes to combating inflation. The region’s central banks have acted fast when costs soared, drawing on hard-fought battles in the 1980s and 1990s.
Pressure is increasing on businesses in Iran to compel female workers to wear the hijab. The issue became a central theme in recent protests, prompting the return of patrols from the morality police to contain the anti-hijab trend.
Need to know: business
The number of companies listing on European stock exchanges has slumped to the lowest level since the global financial crisis, highlighting the dire state of the region’s market for initial public offerings and the attraction of going public in the US.
Facebook owner Meta is set to launch artificial intelligence-powered chatbots with different personalities as it tries to boost engagement with its social media platforms. One might speak like Abraham Lincoln while another might advise on travel options in the style of a surfer.
In the concluding episode of the Tech Tonic podcast series, FT specialists discuss what the future of social media will look like.
China’s manufacturers are suffering from slowing global demand and a tentative post-Covid recovery. This tale of three factories — spanning footwear and electronics — illustrates how manufacturers are experiencing a slowdown in the world’s second-biggest economy. Asia editor Robin Harding says Beijing has ample scope to transfer cash to households, boost consumption and get the economy moving.
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Uber recorded its first operating profit after stacking up $31.5bn in losses in an ambitious global expansion. The ride-hailing company has proved to be more resilient to economic uncertainty compared with rivals such as Lyft.
HSBC announced a $2bn share buyback after rising interest rates helped the bank to bumper quarterly profits of $8.8bn.
A shortage of air traffic controllers on both sides of the Atlantic could hit airlines’ post-lockdown recovery. The problem has been compounded by the closure of a fifth of Europe’s skies because of the war in Ukraine.
The World of Work
How should CEOs approach retirement? A small but growing network of specialist coaches are stepping in to help executives figure out what to do once the pension kicks in.
Why do we love to hate middle managers? Listen to the Working It podcast.
Some good news
The first randomised trial of AI-supported mammography screening showed the process is safe and almost halved the workload of radiologists.
Source: Economy - ft.com
