Aurelia Butler

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe euro is on track for its best week against the dollar since the global financial crisis, as investors bet that Germany’s historic fiscal stimulus will help power an economic recovery in the Eurozone. The single currency has climbed more than 4.5 per cent against the dollar this week, its biggest rise since 2009, on the prospects for a rebound in Europe just as Donald Trump’s aggressive trade policy raises concern over the health of the American economy. The lightning rally in the euro comes after Germany’s Chancellor-in-waiting Friedrich Merz announced a deal to fund investment in defence and infrastructure, as European leaders prepare to shoulder more of the burden for the region’s security and support Ukraine.The European Central Bank reduced interest rates to 2.5 per cent on Thursday, but signalled a possible slowdown in future cuts. Following the ECB move and Germany’s stimulus plan, traders are now fully pricing just one cut this year, down from two a week ago. “Trump has effectively pushed towards European co-operation which none of us had on our bingo cards,” said Adam Pickett, head of global macro strategy at Citigroup. “It’s a game-changer for interest rates going forward . . . the ECB might need to cut less.”Some content could not load. Check your internet connection or browser settings.The prospect of faster Eurozone expansion is supporting the single currency just as a string of disappointing US economic data and growing fears over the impact of Trump’s erratic tariff policies have hit the dollar.According to levels in swaps markets, traders now expect the Federal Reserve to make three quarter-point interest rate reductions this year compared with expectations at the start of the year for less than two.“There was the view that the US would almost be immune from tariffs . . . but instead there is now much more uncertainty,” said Pickett.The euro strengthened further after the monthly US jobs report, released on Friday, showed the economy added 151,000 positions in February, short of the 160,000 expected by economists, before giving up some of the gains. The single currency was up 0.7 per cent at $1.086 by late afternoon trading, its strongest level since early November.  Its resurgence marks a dramatic reversal from its weakness following Trump’s election victory in November, when the dollar rallied on hopes the US president’s programme for tax cuts and deregulation would boost the American economy. A number of investment banks have now ripped up previous predictions that the euro could fall to parity with the dollar.Until this week, economists had expected the German economy, the eurozone’s largest, to stagnate this year, weighing on the euro. Analysts at Goldman Sachs said the economy could expand by as much as 2 per cent next year if the fiscal package was swiftly implemented, up from a previous forecast of 0.8 per cent.In a sign of the broad weakness in the dollar, the US currency is close to giving up all the gains against other major currencies it had made since Trump’s election victory.“The street is turning quite bullish on the euro now . . . [it is] hard not to jump on the bandwagon,” said Brad Bechtel, an analyst at Jefferies. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump is confident that Chinese President Xi Jinping will not attack Taiwan during his time in the White House, according to US Treasury secretary Scott Bessent.Speaking on CNBC, Bessent said Trump was “confident that President Xi will not make that move during his presidency”. Bessent was responding to a question about whether he thought China would attack Taiwan. US intelligence officials said Xi had told the People’s Liberation Army to develop the capabilities to invade Taiwan by 2027, but they had also stressed this does not mean 2027 is a deadline for war.The White House did not respond to a question about whether Bessent’s assertion was based on any new intelligence.Tensions over Taiwan have risen significantly over the past few years, and particularly since Nancy Pelosi in 2022 became the first US House Speaker to visit Taiwan in 25 years.The PLA has rapidly expanded operations around Taiwan. Speaking at the Honolulu Defense Forum last month, Admiral Samuel Paparo, head of US Indo-Pacific command, said the exercises were no longer just training.“Their aggressive manoeuvres around Taiwan right now are not ‘exercises’, as they call them, they are rehearsals . . . for the forced unification of Taiwan to the mainland,” Paparo said in response to a question from the Financial Times.Bessent’s comments on China and Taiwan come as Taipei has become nervous that Trump’s stance on Ukraine could herald a weakening of the US’s decades-long support for the Asian country.US-China tensions spiked during the Biden administration because the countries were at loggerheads over a range of security-related issues. Since Trump took office, tensions have centred on trade. The US president has imposed a 20 per cent tariff on imports from China.The White House said the tariffs were designed to pressure Beijing to crack down on the export of ingredients for the deadly opioid fentanyl.It added that they were also intended to end subsidies for groups that make the dual-use chemicals sold to cartels in Mexico and used to produce fentanyl that is smuggled into the US.Chinese foreign minister Wang Yi on Friday described Trump as “two-faced” and said Beijing would take “countermeasures in response to arbitrary pressure” from Washington.“No country should fantasise that it can suppress China and maintain good relations with China at the same time,” Wang said at a press conference. “Such two-faced acts are not good for the stability of bilateral relations, or for building mutual trust.”Earlier this week, the Chinese embassy in Washington said it was ready to respond to any fight with the US, including war. “If war is what the US wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end,” the embassy wrote on the social media platform X. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldIreland’s Taoiseach Micheál Martin heads to the White House next week to mark St Patrick’s Day, hoping to escape with only “a couple of kicks” from Donald Trump over his country’s huge trade surplus with the US.Martin is set to become the first head of state or government to visit the Oval Office since Trump’s bust-up with Ukrainian President Volodymyr Zelenskyy.His visit on March 12, five days before St Patrick’s Day itself, comes as the EU scrambles to boost defence spending to protect Ukraine after Trump cut off defence co-operation to the nation and as the bloc, which the president said last month was “formed to screw the United States”, braces for the prospect of trade tariffs.Ireland has deep cultural and business links with the US dating back to mass emigration during its 19th century famine. Trump on Thursday signed a proclamation declaring March Irish-American Heritage Month.He praised Irish-Americans as “great people — and they voted for me in heavy numbers, so I like them even more”.The proclamation referenced Trump’s plans to “correct trade imbalances with the European Union” saying “our historic relationship with Ireland presents an opportunity to advance fairer trade policies”.On that front, Ireland is hugely exposed. Exports of goods to the US rose 34 per cent to €72.6bn last year, compared with 2023, while imports of goods were €22.5bn, a 2 per cent fall on the previous year. US commerce secretary Howard Lutnick has blasted Ireland for running “a trade surplus at our expense”. Earlier this week, the US readout of a call between secretary of state Marco Rubio and Irish foreign minister Simon Harris said the pair discussed “the US priority to address the US-Ireland trade imbalance” — something Harris said was not mentioned directly.The US, however, exports €163bn in services to Ireland, meaning Dublin has an overall trade deficit of €93bn with the US. Martin will stress that Ireland is the sixth largest investor in the US, with the top 10 Irish companies in America employing 115,000 people.But “a couple of kicks” on trade in front of the cameras in the Oval Office were “inevitable,” said one senior government official.“I can’t see how we’d escape that. It’s the way Trump does business — flattery, kick, flattery, kick,” the official said.Ireland is home to major US tech and pharma companies, whose record corporation taxes have fuelled eye-popping surpluses — expected to hit some €24bn this year, boosted by back taxes from Apple that the European Court of Justice ordered Ireland to accept.Trump wants US companies to relocate home and has not ruled out tax incentives to encourage them — a policy that would hit Ireland hard. But Glenn Boehnlein, vice-president and CFO at US medical devices manufacturer Stryker, which has plants in Ireland, said that was not so simple.“You can’t turn anything on a dime — you really aren’t going to pick up manufacturing and move it instantaneously,” he told an EY CFO summit in Dublin this week held in partnership with the Financial Times.“The best-case scenario [for the St Patrick’s Day event] is all shamrocks and leprechauns,” said Ben Tonra, professor of international relations at University College Dublin. He hoped Martin would then “get to say the things he needs to say about Ukraine and Palestine” in private “and get out of that room as fast as possible”.Militarily-neutral Ireland has pledged its unwavering support for Ukraine and says it will “not be found wanting” on future peacekeeping. But Ireland has upset US ally Israel by recognising Palestine’s statehood. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Brazil is to slash import duties on foodstuffs ranging from sugar to sardines in a bid to control rapidly rising prices, running counter to Donald Trump’s protectionist onslaught and the spectre of trade wars it has invoked.Latin America’s largest economy said it would eliminate border levies on nine “essential” items as increasing supermarket bills eat into the popularity of leftwing president Luiz Inácio Lula da Silva.Vice-president Geraldo Alckmin, also minister for industry and trade, said the changes would take effect within days. “The government is waiving taxes in favour of price reductions,” he added on Thursday evening. “It won’t harm the producer but it will benefit consumers.”Duties will be reduced to zero for meat, which is currently subject to a 10.8 per cent border tax; coffee, currently at 9 per cent; sugar, now at 14 per cent; corn, now at 7.2 per cent; sunflower oil, from 9 per cent; olive oil, from 9 per cent; sardines, from 32 per cent; biscuits, from 16.2 per cent and pasta, from 14.4 per cent. An import quota for palm oil will more than double.Economists were sceptical about the impact because of Brazil’s position as a top global producer and exporter of agricultural commodities such as coffee, beef and sugar, but also because extreme weather events had affected some domestic production.“Most of these items are produced and supplied nationally, save a few exceptions like olive and palm oil,” said Felipe Camargo, economist at Oxford Economics, who calculated the total import value of the targeted foodstuffs at $15bn. “[It is] a political ruse to convince the electorate the government is trying to address rising grocery prices.”William Jackson, chief emerging markets economist at Capital Economics, said an import surge was unlikely.“We might see a bit of a decline [in] food inflation as a result. But there are more fundamental drivers of this spike in prices, particularly in beef and coffee, [such as] drought and fires,” he added.The move forms part of a wider package by Brasília aiming to make food cheaper for the population of 213mn. It underlines pressure on Lula, a former trade unionist who previously governed between 2003 and 2011, halfway through his four-year term. Despite robust GDP growth and low unemployment, pollsters say the 79-year-old’s ratings have suffered from stubborn inflation, which at an estimated annual 4.96 per cent in February was above an official target ceiling of 4.5 per cent. Food and drink prices rose an estimated 7.12 per cent in the year to February.Jackson said there were signs that grocery trips may become even more expensive in Brazil: “If you look at agricultural commodity prices and take account of usual lags, they point to food inflation of as much as 15 per cent in the next six months or so.”The loosening of certain import barriers by Brazil, a traditionally closed and protectionist economy, comes as US President Trump’s border duties on imports from China and threats of widespread tariffs on goods from Mexico and Canada — and the retaliatory tariffs that China and Canada have imposed — raise fears of a full-blown trade war. Trump specifically mentioned Brazil as a country charging tariffs on US goods this week, so Brasília’s levy reductions may help future negotiations with the Trump administration, some analysts argued. “The food inflation problem is global, and in our opinion it will become more relevant in some emerging markets and in the US due to Trump’s trade policy and tariffs in the coming months,” said Cristiano Oliveira, chief economist at Banco Pine.Additional reporting by Beatriz Langella More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe threat of a trade war and rising security tensions alongside the US withdrawal from the Paris climate accord will “drain” resources away from efforts to curb global warming, leading to “civilisation doom”, Brazil’s environment minister warned. “It is clear that the withdrawal of the Paris agreement of the world’s second-largest emitter, the world’s largest economic and technological power, is a loss. We cannot be deniers — it is a loss,” Marina Silva said.The confluence of the US withdrawal, new trade tariffs and the resurgence of geopolitical conflicts would have a “triple negative effect” on climate action.“They may drain resources and they also may hamper the environment of confidence and trust among parties. We have a triple negative effect because the less action we see, the less money we see, resulting in less co-operation across countries,” she said.This increased the responsibility of countries like Brazil, South Africa, India, China, the EU and the UK, said Silva, who was born in the Amazon. “We will all have to continue climate action.” Brazil will host the UN COP 30, the world’s most important climate talks in November this year in the Amazon port of Belém. Countries are now expected to submit updated climate plans for 2035 by the time of the Belém summit, after only a handful met the February deadline set under the Paris agreement, including the UK, Japan and Brazil.On his first day in office US President Donald Trump pulled the US out of what he described as an “unfair, one-sided Paris climate accord rip-off”. The US also withdrew during his first term as president in 2017, a move reversed by Joe Biden in 2021. Silva noted that the US also did not ratify the groundbreaking 1997 UN climate conference in Japan, the Kyoto protocol. However, she warned that while the situation may be “similar, it is a very different context, because in the Kyoto protocol the problems were still in the realm of projections, in most cases while now we are already living the reality of the Earth’s temperature changing by 1.5C compared to pre-industrial levels”. Some scientists already calculate that the world will not meet the ideal Paris accord goal of limiting the global average temperature rise to no more than 1.5C from pre-industrial times. The UN has forecast the rise will reach 2.9C this century unless action is taken to cut greenhouse gas emissions.Silva said the almost 200 countries that were signatories would need to either “implement” their climate pledges or “will face an unthinkable, civilisational doom”.She was speaking on the sidelines of the World Sustainable Development Summit in New Delhi, where India’s environment minister Bhupender Yadav reiterated the goal of the world’s third-largest polluter for net zero emissions by 2070.India is among those countries that have not upgraded their targets, as required by the Paris agreement process. Developing countries such as India and Brazil face a daunting task in finding ways to plug what is estimated by an independent group of economists to be a $1tn gap in international climate change fundingAt the UN COP29 in Baku in November, almost 200 countries agreed that wealthy nations would take the lead in providing at least $300bn in climate finance by 2035 to help developing countries shift to green energy and cope with climate change. But Silva said that may now be in jeopardy. “This is very serious, because we need $1.3tn to be able to make the necessary efforts for this transition. We are starting from $300bn, but even that is not guaranteed,” she said.Climate CapitalWhere climate change meets business, markets and politics. Explore the FT’s coverage here.Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is the author of ‘Growth: A Reckoning’ and an economist at Oxford university and King’s College LondonIn normal times, forecasts on the UK public finances from the Office for Budget Responsibility, expected this month alongside the chancellor’s Spring Statement, would be a significant moment. This time, it is a seismic one. An institution that was established to reduce bias in public finance forecasting now finds itself with a far grander role: the ultimate arbiter of whether the government’s plan to achieve its central mission — more economic growth — is the right one. This was never meant to be the OBR’s purpose. Set up in 2010 by George Osborne, then chancellor, it was designed to solve a different problem: that the official UK public finance forecasts were not credible. The Treasury had a strong incentive to massage these numbers into better shape, whatever the political make-up of the government. And the belief was that an independent statistical authority would be free of that temptation. To that extent, the OBR is a success story: its forecasts do appear to be less biased.However, forecasts about the UK public finances also require forecasts about the UK economy — among them, what is expected to happen to growth. If the economy were happily trundling along, these numbers would be playing only a supporting role. But this economy is stagnant, the government has made changing that its main priority and His Majesty’s Treasury no longer produces its own official growth forecasts. So the OBR’s numbers have been thrust into the spotlight.Here, though, is the complication: the OBR does not actually know what causes growth. In fact, no one does. The true causes of growth are one of the great mysteries of economic thought. Hundreds of possible causes have been identified: everything from tax cuts to infrastructure spending, the number of frost days to the level of newspaper readership. And today they remain hotly contested among various schools of thought, divided along deeply political lines and duelling with one another. With that in mind, the idea that the OBR somehow knows enough to take each UK government policy and state its impact on growth to a single decimal point is fanciful. Yet that is what it will attempt to do at the end of the month, with immense practical consequence. A reduction of 0.1 percentage point in the OBR’s potential productivity growth forecast, for instance, is estimated to create a hole of £7bn-£8bn in the public finances — that is the equivalent of the entire budget of Defra.But do other countries not also have independent “fiscal watchdogs”, like the OBR? Yes, many do but their role tends to be different. Most simply assess the official government forecast or provide an alternative to sit alongside it. The OBR actually produces it. And chancellor Rachel Reeves has gone further, explicitly baking the OBR numbers into her new fiscal rules, making their forecasts definitive. So we find ourselves in a strange world, where Reeves is best advised not to do what she believes will drive growth, but to look instead at what the OBR assumes drives growth. Then she must simply do as much of that as she can, given her fiscal constraints, so the forecasts are better. In the old world, HMT was incentivised to fiddle the numbers; in the new one, HMT is incentivised to fiddle the policy. What’s more, if Reeves decided to challenge the OBR forecasts in public when they are published — perhaps saying she felt their internal model did not properly capture the promise of her growth strategy — that would not look like a legitimate intellectual disagreement about the true causes of growth. It would risk being seen as a shameful attempt to dodge the very rules she set up to bring an end to fiscal profligacy. The OBR was established with good intentions. But it has been a victim of its own success. A difficult political judgment about one of the most contested economic questions — what actually causes growth — has been reduced to a technocratic calculation performed largely out of sight of the public. What should we do? To begin with, the uncertainty in the OBR’s growth forecasts must be more explicitly recognised: independence might reduce their bias, but it does not make them correct. Politicians must be bold enough to say it; the OBR must be modest enough to agree.In turn, the Treasury must consider reintroducing its own growth forecasts. This is not because they are likely to be more accurate than the OBR’s, but because we need more public debate and disagreement in policymaking, not less of it, if we are to find creative ways out of our current economic malaise. Finally, Reeves ought to revisit her fiscal rules, maintaining their original spirit — current budget in balance, debt falling as a share of the economy — while tweaking the substance so they are not so tightly tethered to a set of calculations that, like all forecasts, will probably turn out to be wrong. More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning. As executives prepare to gather at the White House today for a cryptocurrency summit, we look at Donald Trump’s controversial memecoin scheme. We’re also covering: A fresh push for peace in UkraineThe hidden dangers of family offices And Tim Harford pays tribute to economist Donald ‘Shoup Dogg’ Donald Trump’s crypto project made at least $350mn, according to Financial Times calculations, a windfall that is likely to fuel concerns over conflicts of interest arising from the launch of the $TRUMP token.In addition to the $350mn earned through selling the token directly on the Solana blockchain — the digital ledger that underpins most memecoins — more money is likely to have been made from a smaller number of tokens that were distributed for sale on cryptocurrency exchanges such as Binance, experts say. Trump has faced a fierce backlash since he and his wife Melania launched memecoins, tokens with no practical use whose value is entirely based on speculation, just days before his return to the White House.The value of $TRUMP soared to $75 shortly after its launch before plunging to its current value of a little over $13 a coin. However, the FT analysis shows the first 100mn tokens were sold before the price reached $1.05. The stock of 831mn $TRUMP coins held by Trump-linked accounts has a current notional value of $10.8bn.Trump, who has positioned himself as a pro-crypto president, will host many of the industry’s leading executives and investors at the White House later today. The meeting marks a dramatic change of fortunes for the industry which, under the Biden administration, had seen some of its leading protagonists jailed or fined.On the eve of today’s meeting, Trump signed a long-awaited executive order creating a strategic Bitcoin reserve and an additional stockpile of other digital assets. But the government indicated it would not use taxpayer money to fund the reserve, prompting falls for Bitcoin and other digital currencies. Read more on how the FT calculated the earnings of Trump’s memecoin project.Here’s what else we’re keeping tabs on today and over the weekend:Markets: The S&P 500 is on course for its worst week since September after falling another 1.8 per cent yesterday. The tech-heavy Nasdaq Composite fell 2.6 per cent. Central banks: Federal Reserve chair Jay Powell speaks at a monetary policy conference in New York. European Central Bank president Christine Lagarde gives the keynote speech at the ECB’s International Women’s Day conference in Frankfurt. Economic data: The US government publishes monthly employment data for February. Brazil and the EU issue fourth-quarter GDP estimates. Canada: On Sunday, the Liberal party chooses its successor to Justin Trudeau who will also become the country’s next prime minister.How well did you keep up with the news this week? Take our quiz.Five more top stories1. Donald Trump’s administration has backtracked further from its threat to impose sweeping 25 per cent tariffs on Mexico and Canada, in a major climbdown from its aggressive trade agenda, capping a tumultuous week that has roiled markets and frayed diplomatic relations between Washington and its largest trading partners. More on the US president’s executive order.‘It’s like a whipsaw’: Dizzying policy changes have sparked an equity market sell-off, concern from businesses and panic in foreign capitals.2. Ukraine is to begin negotiations with the US next week in Saudi Arabia over ending the war set off by Russia’s 2022 invasion, after days of tension between Kyiv and Washington. Donald Trump’s special envoy, Steve Witkoff, said the meeting with Ukraine would seek to agree a framework for “a peace agreement and an initial ceasefire”. 3. SpaceX’s massive Starship rocket exploded eight minutes after launch in another setback for Elon Musk’s company as it seeks to build a vessel capable of reaching Mars. SpaceX said the vehicle experienced a “rapid unscheduled disassembly”. Stephen Morris and Rafe Uddin have more. 4. Walgreens Boots Alliance has struck a deal worth up to $23.7bn with private equity group Sycamore Partners that will bring the struggling pharmacy chain’s 97-year run as a public company to an end. Walgreens’ market value peaked at more than $100bn soon after the 2014 merger closed, but has since dwindled. Read more on what Sycamore plans to do with the business.5. Parents having fewer children are buying more expensive baby food, according to the head of Nestlé’s nutrition business, as the world’s largest food company shifts its strategy to offset the impact of falling birth rates. The Swiss group said that smaller families had driven “premiumisation”.Today’s big read© FT montage/DreamstimePrivate wealth management companies for the super-rich now manage trillions of dollars globally and are one of the fastest growing areas of finance. They are also one of the least under­stood — or reg­u­lated. Read more on the hidden dangers of family offices.We’re also reading . . . Mar-a-Lago accord: The idea of a new Plaza Accord to weaken the dollar is sparking endless gossip among financiers, writes Gillian Tett.Venezuela: Opposition leader María Corina Machado welcomed the Trump administration’s abrupt decision to stop Chevron drilling in her country.Syria’s new leader: Is Ahmed al-Sharaa a conquering hero with intentions of moderating or a brutal strongman with a flair for PR? Chart of the daySoaring property values in Dubai are underpinned by a robust economy which benefited from the city’s decision to open up to visitors during the pandemic while other hubs still restricted travel. The UAE also liberalised its visa system in 2022. But some question how long the meteoric price rises can continue.Take a break from the news . . . Donald Shoup revolutionised the way urban planners thought about parking. How he did it should be an example to economists everywhere, writes Tim Harford. His genius was to take a problem that seemed boring and trivial and show that it was neither.© Guillem CasasúsThank you for reading and remember you can add FirstFT to myFT. You can also elect to receive a FirstFT push notification every morning on the app. Send your recommendations and feedback to firstft@ft.comRecommended newsletters for youOne Must-Read — Remarkable journalism you won’t want to miss. Sign up hereNewswrap — Our business and economics round-up. Sign up here More

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