Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Researchers from the University of Warwick and London School of Economics recently came up with yet another stark illustration of the UK’s North-South divide. They found that residents of part of the west London neighbourhood of Notting Hill paid more in capital gains tax than the combined populations of Liverpool, Manchester and Newcastle.Presumably, one upside of this is that, if you’re a Notting Hill resident, you can easily find fellow high-net-worth individuals with whom to share your tales of CGT woe, down at the local pub. But it also raises an interesting question: is it a good thing that your neighbour is likely to be in the same gilded boat as you? If you’re rich, is it better to live with your financial peers — or should you try to rub along with those of lesser means who are more concerned about utility bills than CGT?This has become more of an issue in recent years. Wealth has become highly concentrated in certain cities. A 2023 Henley & Partners survey showed that New York had 775 centi-millionaires (people worth $100mn or more), while the Bay Area and Los Angeles had 692 and 504 respectively. London, in fourth place, has 388.It’s not just cities, either. Places such as the Hamptons, parts of the Cotswolds in the UK, and areas of the South of France have also been turned into billionaires’ playgrounds. Recently, it was reported that the municipal body for the exclusive ski town of Steamboat Springs, Colorado, could not attract a head of human resources despite offering a salary of $167,000 because it was not enough to purchase a property in the resort. Even doctors who could afford to pay £1mn for a home said they were being outbid by cash buyers.You don’t have to be a socialist to think that, perhaps, something has gone wrong when neither high-earning professionals nor workers on average salaries can afford to live near the place where they work. Steamboat Springs may trade on its image as a place of cowboys and ski bums but it’s an image that’s decades out of date.Of course, even in the 21st century, not everywhere is ultra-rich. The UK has only one city in Henley’s top 50 for millionaires. Germany, France, and Italy have only two apiece. Perfectly desirable cities — such as Lyon, Manchester and even Berlin — don’t make the list. It’s unusual that Warren Buffett still lives in Omaha, Nebraska — the Midwestern state only has three billionaires, compared with roughly 100 in New York.But, even if you’re a mere millionaire, should you live in a wealthy enclave at all? What are the pros and cons? One problem is that you wind up with a distorted idea of what constitutes wealth. You see this in cities such as London and San Francisco where a top 1 per cent income is routinely trotted out as ‘middle class’. This can become a problem if the cities’ rich go into government. Having been surrounded only by other rich people, they will tend to assume everyone is like them, and make policy for those on normal incomes having generalised from their own experience.It can also lead to a lack of empathy and is not a recipe for social cohesion. Surrounded by the rich, you not only believe six-figure incomes are the norm, you can end up believing that wealth is deserved, the poor are lazy, and taxes are theft. This echo chamber effect is at its most acute in Silicon Valley, where billionaire tech-bro libertarians blithely state that the world’s problems can be solved by the simple application of their genius.That said, there may be some upsides, too. Rich neighbourhoods tend to have better schools, good restaurants, lower crime, and so on. They also ensure that residents do not have to worry about standing out as the rich person in town. It’s tempting to believe, then, that living in a rich neighbourhood might be bad for society but good for the residents, personally. However, this is not necessarily true. In fact, the wealth surrounding you may make you less happy if it causes you to perceive your own status as lower. A 2021 study by researchers from Singapore Management University and Yale found that “when people consider their wealth relative to others, there is a stronger association between money and happiness”.This is neatly illustrated in Tom Bower’s 2006 biography of the disgraced former media baron Conrad Black and his wife Barbara Amiel when an observer quips, “I don’t understand why Conrad wants to be the poorest billionaire in America.” Black, although objectively fabulously rich, had surrounded himself with even richer people and, so, was constantly playing catch-up.Perhaps living in Omaha (or Manchester, Newcastle, or Liverpool), then, is the key to wealth and happiness. Unless, of course, you have the strength of character to not compare yourself to your Notting Hill neighbours. Speaking of the study she led, Jacinth Tan, assistant professor of psychology at Singapore Management University, used a quote often attributed to Mark Twain: “Comparison is the death of joy.”Rhymer is reading . . . In Ascension by Martin MacInnes. Set in the present and near future, it takes us from the deepest ocean trenches in the Pacific to the edges of interstellar space and is an epic about everything from family ties to microscopic life to the draw of the unknown.Follow Rhymer on X @rhymerrigbyThis article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment More

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Sir Keir Starmer will pursue an “ambitious” twin-track strategy to build closer UK trade and security ties with the EU if his Labour party wins the next general election, but his allies insist he will not cross his three Brexit “red lines”.The Labour leader will rule out Britain rejoining the EU single market, the customs union or adopting free movement in Labour’s manifesto, according to senior Labour figures, giving him political cover for a lower-profile pursuit of co-operation in a range of areas. “The red lines will be in the manifesto and won’t change,” said one senior Labour figure. “But are we ambitious behind those red lines? Of course we are. We want to deepen the relationship.”Senior Labour officials and Brussels diplomats believe a Starmer election victory will open the door for a twin-track approach to strengthening ties, with a debate now raging on what a new deal might look like.The first track would see Labour seek a defence and security pact with the EU, widening the standard definition to cover areas such as migration, linking emissions trading schemes to tackle climate change or joint agreements on critical raw materials.A second track would involve Starmer trying to build on the principle of a proposed veterinary deal with the EU — under which Britain would align with the bloc’s rules to facilitate trade in foodstuffs — to cover other areas of trade.“If you start to reduce trade barriers in the veterinary area, you start to build a closer trading relationship with the EU,” said a close ally of Starmer.European diplomats argue that regulatory alignment is desirable in areas such as data and pharmaceuticals. Mobility deals for students and young people could also be part of the mix, but only on a pan-EU basis.Speculation about Labour’s post-Brexit strategy has intensified in recent weeks, as the prospect of a sizeable Starmer majority after an election expected later this year has grown.The future shape of the UK-EU relationship under a Starmer government was discussed in early March at a two-day retreat for EU ambassadors at Stansted Park, an Edwardian stately home in West Sussex.The Financial Times has spoken to four people who were present at the meeting and who spoke on condition of anonymity because it was a private gathering. Lord Peter Mandelson, the former EU trade commissioner and Labour cabinet minister, outlined in a keynote speech the party’s approach to Europe if it was to win power. Former Labour party cabinet minister Peter Mandelson More

By Leika Kihara and Satoshi SugiyamaTOKYO (Reuters) -Japanese Finance Minister Shunichi Suzuki said authorities were analysing not just recent yen declines but factors that are driving the moves, and repeated that Tokyo stood ready to respond to any excessive currency swings.Suzuki said finance leaders from the Group of 20 major economies, who will meet in Washington D.C. next week on the sidelines of the spring International Monetary Fund (IMF) meetings, may discuss currency moves as part of topics for debate.While a weak yen brings some benefits and drawbacks to the economy, it can hurt consumers by pushing up inflation, he said.”I can’t comment specifically on recent currency moves. But it’s important for exchange rates to move stably reflecting fundamentals. Excessive volatility is undesirable,” Suzuki said. “If there are excessive moves, we will respond appropriately without ruling out any options,” he told a press conference on Friday.Suzuki said he was coordinating closely with top currency diplomat, Masato Kanda, to deal with yen moves, but declined to comment on whether they were preparing to intervene in the market to prop up the currency.Fading expectations of a near-term U.S. interest rate cut have accelerated the dollar’s ascent as markets focused on the starkly wide U.S.-Japan yield gap. The yen’s slide against the dollar has brought intervention fears back as authorities in Tokyo have repeatedly warned over recent weeks that they would not rule out any steps to deal with excessive swings.After hitting a fresh 34-year high of 153.32 yen overnight, the dollar stood at 153.18 yen in Asia on Friday.A weak yen has become a source of headache for Japanese policymakers because it inflates the cost of importing fuel and raw material, thereby hurting retailers and households.The yen’s renewed declines complicate the Bank of Japan’s deliberations on the timing of a next interest rate hike, which analysts expect to happen sometime later this year.Japan last intervened in the currency market in 2022, first in September and again in October, to prop up the yen. More

SINGAPORE (Reuters) -Singapore’s central bank left its monetary policy unchanged on Friday, in line with expectations, as authorities looked for signs inflation in the city-state was moderating before they consider loosening settings.The Monetary Authority of Singapore (MAS) said it will maintain the prevailing rate of appreciation of its exchange rate-based policy band known as the Nominal Effective Exchange Rate, or S$NEER.The width and the level at which the band is centred did not change.MAS said in a statement that current monetary policy settings remain appropriate.”The prevailing rate of appreciation of the policy band is needed to keep a restraining effect on imported inflation as well as domestic cost pressures, and is sufficient to ensure medium-term price stability.”While central banks globally are broadly seen having completed their aggressive policy tightening, there is less certainty about when they will start easing monetary settings and by how much.OCBC economist Selena Ling said central banks may be hesitant to loosen monetary policy with recent inflation prints buoyant and crude oil prices ticking up.”It is too premature to pull the trigger on easing when the view that core CPI will step down in 4Q24 into 2025 remains intact,” said Ling of Singapore.Also on Friday, South Korea’s central bank left interest rates at a 15-year high as stubborn inflation and strong export growth gave policymakers reasons to hold off easing policy.Gross domestic product (GDP) in Singapore rose 2.7% year-on-year in the first quarter of this year, according to advance estimates published by the trade ministry on Friday. A Reuters poll had estimated first quarter GDP growth at 2.9%.The MAS said it expects the economy to strengthen over 2024 and for inflation to “stay on its broadly moderating path and step down in Q4, before falling further into 2025″.The trade ministry projects growth of 1% to 3% in 2024.Meanwhile, core inflation remains sticky after tapering from its peak of 5.5% in January and February last year. Inflation cooled to 3.1% in January then rose to a 7-month high of 3.6% in February as seasonal effects from the Lunar New Year drove services and food prices higher.”The economy is cruising once again, while core inflation remains sticky,” Maybank economist Chua Hak Bin said. “We see low odds of a move at the next MAS meeting in July. We expect the MAS to ease only in October, at the earliest.”As a heavily trade-reliant economy, Singapore uses a unique method of managing monetary policy, tweaking the exchange rate of its dollar against a basket of currencies instead of domestic interest rates like most other countries.MAS has tightened monetary policy five times since October 2021, including in two off-cycle moves, to tame inflation during the pandemic and amid global geopolitical instability.But in April, October and January, it held its stance when concerns over economic growth trumped inflation.This is the second policy review since the central bank shifted to a quarterly schedule from its previous semi-annual routine.The Singapore dollar was a tad weaker at 1.3530 per U.S. dollar after MAS left monetary policy settings unchanged. More

SEOUL (Reuters) – South Korea’s central bank left interest rates at a 15-year high on Friday as stubborn inflation and strong export growth gave policymakers reasons to hold off easing policy.The Bank of Korea (BOK) held its key rate at 3.50% at a policy review in Seoul, keeping it unchanged for a 10th straight meeting, as expected by all 39 analysts polled by Reuters.The bank has argued it needs to see more progress on prices to gain confidence that they are moving towards the bank’s 2% target before lowering borrowing costs.However, departing board member Suh Young-kyung, an inflation hawk, on March 26 signaled it may be time to “normalise” interest rates.The consumer price index (CPI) advanced 3.1% in March year on year, the same pace as February after three months of easing, stoking views that it’s still too early for the BOK to consider easing. Exports rose for a sixth straight month led by robust sales of chips, adding to the case for the BOK to keep rates high.”Rising exports and stabilising consumer sentiment have given policymakers scope to wait. Risks stemming from the prospect of the Fed’s easing cycle being delayed also indicate that the BOK is likely to be patient,” said Kim Jin-wook, an economist at Citigroup. Analysts expect the BOK to deliver a 25 basis-point cut in both the third and fourth quarters, taking the benchmark rate down to 3.00% by the end of this year from 3.50%, currently.Investors are waiting to see who replaces two departing voting board members, Cho Yoon-Je and Suh, whose four-year terms finish April 20.Governor Rhee Chang-yong holds a news conference at around 0210 GMT, which will be livestreamed via YouTube. More

SINGAPORE (Reuters) – The yen struggled to break away from a 34-year low on Friday and was headed for a weekly decline, while the dollar hovered near a five-month high alongside U.S. Treasury yields as traders heavily scaled back bets for a slew of U.S. rate cuts this year.The euro was eyeing its sharpest weekly fall in about four months, pressured in part by a resurgent greenback and expectations that the European Central Bank (ECB) could begin easing rates in June, likely ahead of the Federal Reserve.The yen was last marginally higher at 153.17 per dollar, languishing near a 34-year trough of 153.32 per dollar hit in the previous session on the back of a surge in U.S. Treasury yields, which the dollar/yen pair tends to closely track.While the 152 yen level initially proved a strong resistance for the dollar due to fear of an intervention from Japanese authorities, a hot inflation reading out of the United States on Wednesday spurred a broad rally in the greenback, which eventually broke past the key threshold.”The break of 152 wasn’t really a break, it was more like a blast,” Tony Sycamore, a market analyst at IG. “It’s been pretty impressive.””They have to support the yen, it’s in freefall. So there has to be some measures soon. The question is at what level and at what time do they decide to put some money down,” he said, referring to an intervention from Tokyo to shore up the currency.Japanese Finance Minister Shunichi Suzuki said on Friday authorities were analysing not just recent yen levels but factors that are driving the currency’s moves, adding to the slew of verbal intervention from authorities in recent weeks in a bid to stem the yen’s decline.Elsewhere, sterling dipped 0.01% to $1.2553 while the euro last bought $1.0726, pushing some distance away from a two-month low hit in the previous session.The single currency was on track for a weekly loss of more than 1%, after the ECB on Thursday held interest rates at a record high, as expected, but signalled it could start lowering them as soon as June.”I think the ECB now are going to be the front runners in terms of rate cuts,” said IG’s Sycamore.A June cut from the ECB would likely come ahead of the Fed, which is now only widely expected to begin easing rates by September, after a stronger-than-expected reading on U.S. consumer prices sent prospects for a first Fed cut before the end of summer down the drain.Futures now point to just about 40 basis points worth of easing from the Fed this year, down from roughly 60 bps at the start of the week.While data on Thursday showed U.S. producer prices increased moderately in March, calming fears of a resurgence in inflation, that did little to stop U.S. Treasury yields from scaling new highs amid a sea change in U.S. rate expectations.The benchmark 10-year yield was last at 4.5784%, flirting with a five-month peak of 4.5930% hit in the previous session.The two-year yield, which typically reflects near-term rate expectations, eased slightly to 4.9482%, after pushing above 5% for the first time since November on Thursday. [US/]The renewed dollar strength also weighed on the Australian and New Zealand dollars, which each fell 0.02%.The Aussie was headed for a weekly decline of about 0.6%, while the kiwi was on track to lose nearly 0.3% for the week.Against a basket of currencies, the greenback rose 0.01% to 105.28, holding near a five-month top of 105.53 hit in the previous session.”In our view, it was already difficult to justify near-term policy easing in the context of a U.S. economy that had strong jobs and real GDP growth alongside unemployment below 4%,” said David Doyle, head of economics at Macquarie.”While FOMC participants had downplayed the upturn in core inflation in January and February, we suspect a third consecutive firm month will cause them to revisit their confidence in its trajectory.”We now only expect one 25 bps cut in 2024.” More