EY’s US business is to embark on a $500mn cost-saving programme after its opposition torpedoed plans for a historic split of the Big Four firm.
US leaders outlined a new strategy in a memo to partners sent shortly after EY’s global executive committee said it was abandoning ambitions to spin off its consulting and tax advisory businesses into a new company.
The collapse of the plan, which would have marked the biggest shake-up to the accounting industry in more than two decades, has pitched the global firm into a new period of recrimination and uncertainty.
The plan to ditch the split, codenamed Project Everest, would allow EY to focus on freeing up capital for investment and to pursue governance reforms that had been put on hold, a memo said.
EY’s US firm accounts for 40 per cent of its global revenues, which were $45bn in the fiscal year ended June 2022. EY operates as a global network of member firms, and any split would have needed approval on a country-by-country basis.
Here’s what else I’m watching today:
US inflation: The closely watched consumer price index for March is released later today. A consensus forecast predicts a steep fall in the annual rate.
IMF spring meeting: The fund will release a report today focusing on public spending and fiscal policy. Here’s what the IMF said yesterday on the threats to the global economy.
Five more top stories
1. A debate is emerging among top Federal Reserve officials about whether to plough forward with another interest rate increase at next month’s meeting or pause following the collapse of two regional banks and signs the Fed’s anti-inflation policy is beginning to work.
2. The global finance system’s top regulator has urged officials to “learn lessons” from the recent banking turmoil, saying the latest stresses were a reminder that financial stability is “not merely an abstract concept”. Read more on the letter published by Klaas Knot, chair of the Financial Stability Board.
Related: HSBC has hired dozens of former Silicon Valley Bank investment bankers to start a practice targeting tech and healthcare companies.
3. Executives from some of Silicon Valley’s top investment groups are touring the Middle East as they seek to build strong ties with sovereign wealth funds in Saudi Arabia, United Arab Emirates and Qatar. Read more on the FT’s interviews with more than a dozen tech VCs.
Related: SoftBank chief Masayoshi Son will this week sign off on an agreement with Nasdaq to list chip designer Arm, the FT has been told.
4. China has backed down over plans to block some of the world’s busiest airspace near Taiwan for three days, causing confusion. Read more on how the U-turn is disrupting airspace near the self-governed island.
More on Taiwan: Close allies of Emmanuel Macron have defended the French president after he came under fire in the wake of a three-day state visit to China.
5. US environmental regulators have proposed tough new emissions limits that would force carmakers to make 67 per cent of their American models electric by 2032. Environmental Protection Agency administrator Michael Regan called it “the most ambitious pollution standards ever for cars and trucks”. Read more on the proposed rule change.
The Big Read
Governments have promised to plant 633mn hectares of trees — an area larger than the Amazon rainforest — to help save the planet. While the goal is laudable, is it remotely plausible? In this visual essay, the FT explores the idea of reforestation and its effects on the land and people.
We’re also reading. . .
Martin Wolf: The FT’s chief economics commentator looks at the future of Japanese monetary policy as the new governor of the country’s central bank takes up his post.
Women’s world: Global leaders must not let the decisions of a different time hold them back and should update our financial system for women, writes Melinda French Gates.
Chart of the day
The renminbi’s share of trade finance has more than doubled since Russia’s full-scale invasion of Ukraine, an FT analysis has found — a surge that analysts say reflects both greater use of China’s currency to facilitate trade with Russia and the rising cost of dollar financing.
Take a break from the news
Join Salman Rushdie, Jamie Lee Curtis, Ta-Nehisi Coates, Barbara Sturm and your favourite FT writers on May 20 in Washington, DC at the US edition of our FTWeekend Festival. Register now and as a newsletter subscriber, save $20 off using promo code NewslettersxFestival.
Additional contributions by Tee Zhuo and Emily Goldberg
Source: Economy - ft.com
