Today’s top stories
Russian warlord Yevgeny Prigozhin is still facing prosecution for his armed insurrection at the weekend, despite the Kremlin promising that charges against him would be dropped, according to Russia’s main state news service. Moscow also released images of defence minister Sergei Shoigu visiting troops, the first time he has been pictured in public since Prigozhin’s move against the country’s military leadership. Prigozhin today denied trying to overthrow the government, saying he had wanted to object to a decision to disband his militia as well as demonstrate the weakness of Russia’s domestic defences.
HSBC is to move its global HQ from Canary Wharf to central London in a blow to the business district that highlights the trend of companies cutting office space as they adapt to homeworking. The Lex column says the bank could be the canary in the coal mine for the Docklands area.
One of the first mid-stage human trials of a drug designed by artificial intelligence has begun. Insilico Medicine’s therapy aims to treat the chronic lung disease idiopathic pulmonary fibrosis.
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Good evening.
The weekend’s failed putsch in Russia may have ended abruptly, but it has still highlighted deep problems within Vladimir Putin’s regime, raising the spectre of state collapse and putting new urgency into debates about sanctions and disinvestment from the west.
As well as western contingency planning for potential chaos in Russia, the issue of how to make Russia pay for its destruction in Ukraine is also likely to be a hot topic at a meeting of EU foreign ministers today.
Brussels wants to raid Russian assets to pay for reconstruction but Germany has warned that any hasty move could bring legal or financial risks. One of the objections to the plan is that it could set a precedent for others to follow, such as Poland’s reparation claims against Berlin for damage during the second world war.
The EU and its allies immobilised hundreds of billions of euros of Russian central bank assets after the invasion but have backed away from the idea of confiscating them outright, instead looking for a way to harvest some of the proceeds for Kyiv.
Brussels agreed an 11th package of sanctions last week, including unprecedented new powers to punish countries suspected of helping Moscow evade existing restrictions. Overall support for Ukraine’s reconstruction also remains solid.
It is still unclear what effect the weekend’s events will have on investors and markets. European stocks slipped this morning, led by a sell-off in defence shares as hopes rose of an early end to the war in Ukraine, while oil prices were unsteady as analysts tried to price in the impact on energy supplies.
As FT Alphaville reports, some argue there will be no big energy dislocation given that few investors remain exposed to Russia and there is no reason to expect any short-term problems, although in the longer term any major domestic civil conflict poses risks to oil infrastructure.
“There’s a possibility of supply disruption any time you get a serious geopolitical event in a major oil supplier,” said one asset manager. “It opens up a can of worms and we’re going to have to see how that plays out.”
As JPMorgan argues, the investor mood depends on whether you believe in a status quo scenario or one where the war is moving to a conclusion. In the latter case, stocks in the Czech Republic, Hungary and Poland would be likely to rise at the prospect of work from Ukraine’s reconstruction. Existing exposure to Russia among big European companies is mostly among the banks.
Domestic unrest also bodes ill for Russia’s domestic economy: the weekend’s events sparked a surge in demand for cash at bank branches as well as long queues at grocery stores and petrol stations.
Need to know: UK and Europe economy
Chief economics commentator Martin Wolf urged the Bank of England to stick with its plan to get inflation back to its 2 per cent target and avoid a repeat of the mistakes of the 1970s.
The Bundesbank may need a bailout to cover losses from the European Central Bank’s bond-buying scheme, potentially affecting the ECB’s plans for similar programmes in the future.
Greek prime minister Kyriakos Mitsotakis pledged to continue to steer the country away from economic turmoil during his second term in office after securing a landslide election victory at the weekend.
Need to know: global economy
FT columnist and former Bank of England policymaker Andy Haldane welcomed the revival of global manufacturing after a long period of decline, underpinned by green technologies, remilitarisation and the race to reshore or onshore supply chains. “It may be just the impetus the world needs to break free of its economic and environmental torpor,” he writes.
Governments need to cut spending or lift taxes to help central banks restrain inflation and minimise the risks of a financial crisis, according to the Bank for International Settlements, the central bankers’ bank. BIS also warned that in the long term, policymakers should avoid trying to solve all of society’s problems with economic stimulus.
Two centre-left candidates will battle for Guatemala’s presidency in an August runoff after an election tainted by the exclusion of four candidates and high levels of spoilt ballots.
Vietnam, one of Asia’s fastest-growing economies last year, is experiencing a slowdown as demand wanes for its exports. The rise in petrol and consumer prices has put pressure on manufacturing input and trade costs and depressed buyers’ appetites.
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Need to know: business
Cornish Lithium, one of the few British groups aiming to produce the metal essential for electric car batteries, said it could go bust without a £10mn cash injection. The UK produces none of its own lithium, with most of the world’s supply coming from Australia and Chile. Oil and gas majors are stepping up their efforts to produce the metal.
Big western banks have spent months lobbying to work on Syngenta’s planned $9bn initial public offering — one of China’s biggest-ever stock market listings — but could yet be locked out as geopolitical tensions with the US continue to rise.
Primark owner Associated British Foods raised its profit forecast after strong demand for summer clothes and higher prices following similar news from rival UK retailer Next.
A South Korean “master” of chips has been accused of sharing Samsung secrets with China, underlining how the country is torn between geopolitical rivals.
Several Italian fashion houses are facing succession dilemmas as their visionary founders start to leave the scene. A Big Read has all the drama.
UK motor insurers had their worst underwriting performance in a decade last year as surging claims and other costs far exceeded premiums, with further losses expected in 2023.
The world of work
A new survey suggests most workers are “quiet quitting”, putting in a minimum effort while feeling disconnected from their work. Lost productivity owing to low employee engagement has been estimated at $8.8tn or 9.9 per cent of global gross domestic product.
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To celebrate Pride month, business leaders talk to the Financial Times about their experiences of coming out at work.
The battle over rights for gig economy workers in Europe is about to intensify, writes EU correspondent Javier Espinoza. Companies such as Uber and Deliveroo are pushing back, arguing that workers actually want more freedom instead of more rights.
Employees need better support at work to help cope with personal problems in this difficult post-pandemic era, especially with the onslaught of issues that come with late middle age, writes Miranda Green.
Some good news
The first minke whales in more than a decade have been spotted off Cardigan Bay in Wales. The Sea Watch Foundation said it was a significant event, highlighting the importance of this vital marine environment. “Minke whales are an indicator species, meaning that their presence indicates that the ecosystem is healthy,” it said.
Source: Economy - ft.com
