Today’s top stories
The UK economy bounced back a better than expected 0.3 per cent in January, fuelled by growth in the services sector. The UK is still the only G7 economy that has not yet recovered to pre-pandemic levels but Prime Minister Rishi Sunak said confidence was returning.
European Commission chief Ursula von der Leyen and US president Joe Biden are meeting today for talks on the critical minerals used in electric batteries. Brussels yesterday cleared the way for a subsidy race with the US over crucial technologies, allowing EU member states to “match” its multibillion-dollar incentives. US energy secretary Jennifer Granholm used an FT interview to try to ease tensions.
A sell-off in US bank shares spread to Europe, with Deutsche Bank, Société Générale and HSBC all falling. Investors dumped shares in the biggest US banks on Thursday as investors fretted about the value of banks’ bond portfolios and falling deposits after difficulties were highlighted at Silicon Valley Bank, a small, technology-focused lender.
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Good evening.
US jobs growth in February was higher than expected, even as wage growth cooled, complicating the way forward for the Federal Reserve and its programme of interest rate rises.
The 311,000 new posts were fewer than January’s 504,000 but higher than the anticipated 220,000, while the unemployment rate of 3.6 per cent remains close to a multi-decade low. Wage growth was up 0.2 per cent from January and on a year-by-year basis by 4.6 per cent.
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Fed chief Jay Powell suggested this week bigger rate rises might be necessary to cool the economy, telling Congress he would be watching today’s jobs figures closely, alongside inflation and retail sales figures due next week.
Today’s data follows President Joe Biden’s unveiling of budget proposals yesterday, outlining tax increases to fund Democratic priorities such as healthcare spending, with a goal of shaving $3tn off the US deficit.
Biden’s wishlist includes a 25 per cent minimum tax on billionaires, a 28 per cent corporate tax rate, and a doubling of the tax rate on US multinationals’ foreign earnings, as well as a quadrupling of the tax rate on corporate share buybacks.
Republicans are likely to block the plans, calling instead for cuts in government spending ahead of a looming battle over the debt ceiling. The Congressional Budget Office warned last month that the government risked defaulting on its debt as soon as July.
The budget hoo-ha comes at a critical point for the US economy as it struggles to contain the surge in inflation.
Biden and the White House increasingly see the battle of economic ideologies as central to the 2025 presidential race but, as inflation proves harder to root out than expected, polls showing Americans disapprove of his handling of the economy are only likely to get worse.
Need to know: UK and Europe economy
The UK is planning to fill some of the country’s 1.2mn vacancies by opening the doors to more foreign workers, starting with the construction industry.
A new survey found the UK’s estate agents at their most gloomy since 2009, with many houses being sold for below their asking price.
The head of L&G, one of Britain’s largest insurers, bemoaned the “perpetual drift” of companies away from London’s stock market and described the country as a “low-productivity, low-growth, low-wage economy fraught by political infighting”. Higher CEO pay is one reason companies are opting to list in New York, notes the Lex column.
The European Central Bank told major lenders in the eurozone to run cyber stress tests after a “significant increase” in hacker attacks since the outbreak of the war in Ukraine. German states are rethinking their use of software from US data group Palantir over privacy concerns.
Need to know: Global economy
Xi Jinping was confirmed for an unprecedented third time as China’s president. The announcement of a third term completes a process Xi started in 2018 by abolishing two-term limits, allowing him to rule for life if he chooses.
Saudi Arabia and Iran ended their seven-year rift and restored diplomatic ties as part of a Chinese-mediated deal to ease tensions in the oil-rich region.
The war in Ukraine and the pandemic have together achieved what decades of Japanese central bankers have struggled to do: boost prices in a stagnant economy. Here’s Japan’s inflation story characterised by the price growth of three everyday items.
Tunisian president Kais Saied said he would dissolve local authorities in a new power grab, just as doubts over a critical $1.9bn IMF loan deal deepened its economic crisis.
Need to know: business
Apple and its manufacturing partner Foxconn were among the companies behind an important liberalisation of labour laws in the Indian state of Karnataka last month. The reforms enable two-shift production, similar to the two companies’ practices in China.
TikTok and Meta content moderators in Germany have joined forces to demand better working rights through a set of conditions to be presented to social media networks next week. The partnership is the first of its kind on the continent and could lead to other social media tie-ups.
The US has privately reassured some of the world’s largest commodity traders that they are OK to ship price-capped Russian oil to keep supplies stable and regain some oversight of Moscow’s exports.
Chinese AI groups are skirting export controls to access high-end US chips through intermediaries, revealing potential loopholes in Washington’s blockade of cutting-edge technology to the country.
Gamblers are returning to Macau, the only part of China where punters can bet in casinos, now Beijing has ditched its zero-Covid policy. Exhibition group Informa warned that events in China would not recover until 2024.
Science round-up
Scientists warned a global conference on human genome editing that urgent action was needed to cut the cost of gene treatments for once incurable diseases.
Biotechnology has quietly become Americans’ latest national security concern, writes Chris Miller, author of Chip War, as the ability to apply huge computing power to DNA raises fears of biological warfare. Science commentator Anjana Ahuja says changing human DNA brings hope for treating diseases but raises concerns such as equitable access.
Leading medical and scientific bodies in the US have joined together to fight “an infodemic of misinformation and disinformation” on health, spread mainly through social media and worsened by the coronavirus pandemic.
Lengthy security checks for international students and staff are dissuading top scientific talent from coming to the UK and jeopardising research projects, universities warned.
Investment is pouring into “neurotechnology”, which can record and analyse electrical impulses from the nervous system. But who has access to our brain data, and what they’re doing with it, should concern us all, writes columnist Camilla Cavendish.
Our Tech Tonic podcast discusses Q-Day, when a quantum computer will be built that can break the encryption of the internet.
Some good news
Some timely research in the week of International Women’s Day. A new study adds to existing evidence that advances in women’s rights benefit everyone.
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
