Economic momentum slows to weakest levels since lockdown 

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• Israel ordered a “complete siege” of Gaza as it mobilised 300,000 reservists two days after an unprecedented attack by Hamas. More than 700 people have been killed in Israel and at least 100 taken hostage, while more than 500 have been killed in Gaza by Israeli counterstrikes. Read our full coverage here.

• Former Bank of England governor Mark Carney endorsed Labour’s shadow chancellor Rachel Reeves. The party said it would reinstate the 2030 ban on the sale of new petrol and diesel cars if elected, ban bonuses for bosses of polluting water companies and speed up infrastructure projects.

• The UK’s Metro Bank struck a financing deal with investors after a weekend of negotiations that should give it some breathing space and fill a capital hole that had prompted talks with regulators. Colombian billionaire Jaime Gilinski Bacal is set to become the majority shareholder at the challenger bank, which was launched in 2010 and has 2.8mn customers.

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Good evening.

As policymakers gather in Marrakech for the World Bank/IMF annual meetings, exclusive research for the Financial Times and the Brookings Institution highlights how momentum in the global economy is slowing towards its weakest levels since the end of pandemic lockdowns.

The twice-yearly Brookings-FT Tracking Index for the Global Economic Recovery (or Tiger for short) shows how, with the notable exception of the US, rising interest rates have hit confidence levels in advanced economies.

The IMF is a tad more positive, arguing that the strong recent performance from the US has reduced the odds of a “hard landing” for the world economy. As fund chief Kristalina Georgieva told the FT last week, it does however remain concerned at the “deepening divergence in economic fortunes between and within different country groups”.

This divide was also evident in the latest updates from the World Bank. It warned that east Asia faced one of the worst outlooks in half a century thanks to the slowdown in China, US protectionism and rising levels of debt. South Asia, on the other hand, led by India, was “the polar opposite” with strong growth predicted, although with still a long way to go to meet countries’ development goals.

The impact of geopolitical tensions on the global economy could also be exacerbated by events in the Middle East. Oil prices have already jumped, prompting new concerns over global inflation. The Lex column however argues such fears are overblown, and in any case, prices still remain well below the highs of $97 a barrel caused by supply cuts from Saudi Arabia and Russia last month.

Surging US bond yields — which soared higher after Friday’s stronger-than-expected payrolls report — present a further challenge, although Treasury secretary Janet Yellen said today that businesses and households were coping well with higher borrowing costs. 

Yellen is expected to focus on shoring up the financial firepower of the World Bank and the IMF at the Marrakech meetings, increasing support to developing economies to counter China’s growing international influence. Beijing however can argue that it has much less voting power at these multilateral institutions than its economic standing might suggest, an issue acknowledged by the IMF’s Georgieva who has backed reforms to address the imbalance.

As Alan Beattie notes in today’s Trade Secrets newsletter (for Premium subscribers), there is also discussion about the IMF’s crisis management role and its approach to debt restructuring. Although its crisis funding is cheaper than countries can get from private capital markets, its cost is increasing, leading some to argue for a cap on its lending rates.

That might be a tricky sell to IMF creditor shareholders, Beattie writes, especially the US. “It’s not the way anyone would wish it, but there’s a solid reason for preserving heavy American influence over the IMF and the World Bank,” he concludes. “It makes it that much easier to get funding for them voted through the US Congress”.

Need to know: UK and Europe economy

German industrial production fell for the fourth consecutive month in August, making a third-quarter contraction in Europe’s largest economy look increasingly likely. Government parties got a drubbing in state elections at the weekend.

Brussels is to postpone tariffs on electric vehicle sales between the UK and EU for a year to defuse a row with the industry.

Turkish president Recep Tayyip Erdoğan appears to have reined in some of his more unconventional economic theories since being re-elected, but investors remain cautious. A Big Read explains.

Need to know: Global economy

The Bank of Israel said it planned to sell up to $30bn of foreign reserves to support the shekel after the currency fell to a seven-year low against the dollar following the weekend’s events. The dollar and gold both benefited from a flight from traders to havens. Shares in US and European defence companies also rose.

Copper producers warned there were not enough mines under development to satisfy demands from the clean energy transition. Nickel mining has been linked to the devastation of forests in Indonesia.

Western gift shoppers could bag a bargain this Christmas as China’s manufacturers cut prices in a battle to retain business, helped by a reduction in input costs and a depreciation in the renminbi.

India must not let a handful of conglomerates “define its destiny”, the billionaire who founded one of the nation’s largest banks has warned. The comments from Uday Kotak reflect concerns that a small group of tycoons and business groups have come to dominate the country’s economy.

Need to know: business

Rising interest rates have likely dented lending at the big US banks which begin reporting earnings this week. Analysts predict net interest income — the difference between what banks pay on deposits and what they earn from loans and other assets — took a hit in the third quarter.

Concern about climate change is still the most common reason (40 per cent) for companies to be excluded from investment portfolios, despite recent pushbacks against “woke” capitalism, according to new research. The next most common concerns are weapons manufacturing (17 per cent) and tobacco (12 per cent).

A Big Read looks at the bitter court battle within Brazil’s Safra empire over the inheritance of Joseph Safra, the world’s richest banker, who had built a $25bn business of banks, property and agribusiness.

US antitrust has reached a turning point with big cases against the likes of Amazon and Google, argues columnist Rana Foroohar. Companies were once assumed to be acting mostly in good faith but now there is much more pressure to be transparent, she says, especially when it comes to Big Tech.

Join us on Wednesday from 14:00 — 15:05 BST for an exclusive Financial Times/Nikkei webinar on Japan’s economy and the revival of the country’s stock market. Register here today.

The World of Work

Harvard professor Claudia Goldin was awarded the Nobel Prize for economics for her work on women and the labour market including causes of the gender pay gap.

A growing number of companies are now offering egg freezing as part of a suite of reproductive benefits for staff. The trend took off among Big Tech companies in 2014, when the likes of Apple and Facebook were criticised for dystopian perks encouraging women to put babies on hold so they could devote their most fertile years to their careers.

For some businesses, adapting to hybrid work patterns has been a chance to downsize space and cut costs. But it has also laid the ground for a more fundamental rethink of what the modern workplace should be: greener, better equipped and more central.

A failed four-day week trial at UK web-hosting company Krystal has highlighted difficulties for customer-facing businesses, says the FT’s Lex column. International comparisons are difficult but a real four-day week is likely to remain an exceptional perk rather than the norm for most workers, it argues.

Some good news

Virtual reality simulations are enabling inmates in prisons to learn how to fight fires, fix cars and work in hospitals and improve their chances of being hired when they gain their freedom.