Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Most politicians want more of it. Some eco-warriors think there’s too much of it. And according to the economist Daniel Susskind, too few people understand it. In Growth: A Reckoning, he claims to help with all three.The book starts with a canter through centuries of muddled thinking. Thomas Malthus and his contemporaries thought that growth was inherently unsustainable, as a growing population would eventually run out of resources. Later, development economists at the World Bank sustained a “‘fetish’ for investment”, relying on models that saw physical capital — stuff that people could touch — as key for generating development.Most recently, there are “degrowthers”, who include the likes of activist Greta Thunberg and anthropologist Jason Hickel. Although their views are (too) often vaguely defined, the basic fear is that more economic growth will gobble the Earth’s resources, and so policymakers should seek less of it to prevent environmental catastrophe. Susskind says the degrowthers are partly right in that there can be trade-offs between growth-maximising outcomes and environmental protections. “It falls to us to explicitly confront the tradeoffs presented by growth’s promise and its price,” he writes. Good policy is about minimising those trade-offs, and there is already evidence that it is possible to deliver higher growth alongside falling emissions. But ultimately in all three cases there is an underappreciation of the power of ideas. They are limitless in that they can be used again and again. And generating more of them means that society can do more with less. History showed that growth beyond Malthus’s wildest dreams was possible, as innovation allowed people to escape cycles of boom and bust. The Nobel laureate Robert Solow found that American growth over the first half of the 20th century came overwhelmingly neither from investment nor growth in the labour force, but from using what resources there were more productively, whether through inventions or new management practices.As for degrowthers, Susskind argues that they are abandoning the left’s tradition of imagination when they reject the possibility of unlimited growth. “The infinite universe of ideas allows us to sidestep the constraints imposed by a finite planet,” he writes. There are a vast number of ways ideas can be combined. And yes, many will be clangers like “fried chicken ice cream”, as noted by the economist George Akerlof. (Apparently this flavour does, in fact, exist.) But only a few need to be useful to matter.Having been generous in his criticisms, Susskind moves on to doling out advice. The emphasis of our leaders should shift their attention towards the balance of growth and away from its magnitude. For too long they have seen the pursuit of raw growth as a way to avoid tricky compromises about who gets what. But trade-offs are inevitable, and best acknowledged.For example, free trade might cause job losses, undermining “traditional sources of collective identity and shared purpose”. The spread of new digital technologies in social media platforms might be a boon for shareholders, but risks concentrating power in the hands of unelected tech bros. Dealing with the environmental costs associated with growth should involve carbon taxes — and before the degrowthers dismiss this as politically unfeasible because people don’t like things becoming more expensive, they should probably reflect on how unpopular their own proposal of a recession would be. Perhaps the cult of gross domestic product maximisation is so strong that it would help to redefine it, and align metrics of economic value and social value. One could argue for including childcare done at home, for example, which could increase its perceived value. Or one could argue for exclusions, as the economist Simon Kuznets did in the 1930s, when he called for “marketing, financial speculation and expensive housing” to be ditched. But since it is impossible to align economic and moral measurement, Susskind argues that it is better not to try. Instead he preaches “GDP minimalism”, which makes the measure as dull and as technocratic as possible, while promoting a dashboard of indicators that directly measure things we care about.His policy prescriptions centre on how to generate new ideas. They include enforcing the rule that patents can only be for “non-obvious” things, unlike the current regimes that have granted protection for “a circular transportation facilitation device” (a wheel) or “single-action ordering”. Policymakers should experiment with prize funds for scientific discoveries and revive stagnating research and development. The British government, for example, should not congratulate itself for planning annual research and development funding of a third of what Alphabet spends.But when it comes to other policies, he is relatively dismissive. He does not see current broadly cross-party favourites such as investments in education or planning reform as priorities, given diminishing returns to schooling and the declining relevance of place in a world of remote work. Expanding broadband coverage could be handy to help ideas spread, but as a source of long-run growth infrastructure won’t deliver the goods.Susskind is right that ideas matter most for pushing the frontier of economic development forward. But those trying to catch up will be left wanting. And overall he is more helpful for working out how to think about growth than what to do about it. The great growth puzzle remains. Growth: A Reckoning by Daniel Susskind Allen Lane £25, 368 pagesSoumaya Keynes is an FT economics columnistJoin our online book group on Facebook at FT Books Café and subscribe to our podcast Life & Art wherever you listen More

Janet Yellen has vowed to “keep at it” and carry on building closer ties between the world’s two economic superpowers, despite the US Treasury secretary’s nearly week-long trip to China yielding little progress on disagreements over how Beijing should counter its slowdown.Yellen flew back to the US on Tuesday after visiting the southern manufacturing and export hub of Guangzhou and then Beijing. China rolled out the red carpet — including a private visit to the Forbidden City — for Yellen, who said the bond between the world’s two largest economies had strengthened since her shorter visit in July.Yet Chinese officials later pushed back at many of Yellen’s main talking points, especially US complaints of Chinese excess capacity and dumping. There were few signs of progress on the sticking point of China’s subsidies for its green-tech industry, which Treasury officials said risked flooding global markets with cheap goods.Yellen refused to be drawn on how the US could retaliate but said the Biden administration would move to stop any repeat of 10 years ago, when China dumped cheap steel on to global markets, hurting foreign competitors and costing its trading partners jobs.“President Biden and I will not accept that reality again,” she said in Beijing, adding that since China joined the World Trade Organization in 2001 the US had lost 2mn manufacturing jobs.Yellen’s visit seemed “like the best indicator yet that new tariffs on China will be coming, no matter who wins” the US presidential election, said Mary Lovely, a senior fellow at the Peterson Institute think-tank. “That is a sad prospect for further rupture of the economic relationship and more destabilisation of global supply chains.”The US criticism follows long-standing tensions between China and the EU on overcapacity. Brussels launched probes into two Chinese solar panel manufacturers last week. Other countries, including Mexico and Brazil, have made similar complaints.Chinese state media reports countered that the US was subsidising its own green-tech industry, largely through Biden’s landmark Inflation Reduction Act, though senior Treasury officials said China’s subsidies dwarfed those of the US and that America wanted to meet domestic demand rather than boost exports.State-run news agency Xinhua also flagged that the US had already imposed substantial tariffs on Chinese electric vehicles.Cars and parts imported directly from China pay an additional 25 per cent levy under a regime introduced by former US president Donald Trump, though data suggests that Chinese companies are circumventing this by shipping parts through countries such as Mexico and Vietnam.Janet Yellen’s Treasury department has sought to convince China to follow the western playbook for addressing economic weakness More

HONG KONG (Reuters) – Chinese video games giant NetEase (NASDAQ:NTES) said it is working with Microsoft (NASDAQ:MSFT) to bring popular games including “World of Warcraft” back to the country after a public fallout that ended a decade-long partnership in 2023.The two companies said in press release on Wednesday that they are working to bring games developed by Blizzard Entertainment, a subsidiary of U.S. gaming giant Activision Blizzard (NASDAQ:ATVI) which Microsoft acquired last year, back to the world’s second-largest economy, starting this summer. NetEase was the publisher of Blizzard’s games in China from 2008 to 2023. “We at Blizzard are thrilled to reestablish our partnership with NetEase and to work together, with deep appreciation for the collaboration between our teams, to deliver legendary gaming experiences to players in China,” said Johanna Faries, president of Blizzard Entertainment.Additionally, Microsoft and NetEase said they have also entered into an agreement to explore bringing new NetEase titles to Microsoft’s Xbox gaming consoles and its other gaming platforms.A number of popular online games developed by Blizzard were taken offline in China last year after the company terminated its lucrative, 14-year-long partnership with NetEase, citing disagreement over intellectual property control.The incident escalated into an open feud that saw the two companies sue each other. Tension eased after Microsoft acquired Activision Blizzard in October, which was followed by changes to the latter’s management.Local Chinese media reported late last year that NetEase and Microsoft were seeking ways to bury the hatchet and re-launch the games in China.The exit of Blizzard games was closely watched because Blizzard’s games were highly popular in China. Chinese media said “World of Warcraft” alone had five million Chinese gamers in 2009 after NetEase became the publisher. The press release on Wednesday showed the renewed publishing agreement covers Blizzard’s flagship games “World of Warcraft” and “Hearthstone” as well as other titles in the “Warcraft”, “Overwatch”, “Diablo” and “StarCraft” franchises. The earlier breakup sparked outcry with millions of Chinese netizens complaining online that they would lose access to their favourite games.In February 2023, before the games were taken offline, over a million of Chinese gamers requested refunds for unspent services in Blizzard’s games, NetEase customer service said at the time.Netease is China’s second-largest video games company by revenue after Tencent. More

TOKYO (Reuters) – The dollar consolidated on Wednesday as investor attention fixed on a key inflation report due out of the U.S. later in the day, while the yen remained pinned a whisker away from what markets believe to be the line in the sand for Japanese authorities to intervene.The main market focus on Wednesday is U.S. consumer price inflation for March, which traders have been eagerly awaiting for hints on the Fed’s policy outlook. The inflation data follows a strong jobs report last Friday that blew past forecasts, stirring more questions on how soon and how much the central bank will cut rates this year.Futures traders reduced bets to the lowest level since October, around 60 basis points in rate cuts this year, LSEG data showed on Monday, amid evidence of continued strength in the U.S. economy.Ahead of the data, U.S. interest rate futures set the odds of the first cut occurring in June at about 60%, up from 51% on Monday, according to CME Group’s (NASDAQ:CME) FedWatch tool, although the possibility of a hold has bumped up to 40%.A solid CPI number will likely have markets pricing out a June cut, which could see the dollar rising sharply, said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY).”A strong core CPI of 0.3% (month-to-month) or above will likely break the case for a June rate cut because there are two more CPI readings ahead of the meeting which are likely not sufficient to show a pattern of slowing inflation.”On the other hand, even if the data comes in below expectations, June bets will probably remain little changed as hurdles remain, meaning the dollar may only dip modestly, she said.”The U.S. CPI will be a big test for Japanese authorities,” Kong added.  The U.S. dollar index, which measures the greenback against six rivals, held firm at 104.10.The yen remained close to its 34-year low versus the dollar ahead of the data, after it received some support as the Bank of Japan Governor Kazuo Ueda on Tuesday signalled the chance of another interest rate hike later this year in line with market bets. The Japanese currency strengthened 0.06% to 151.70 per dollar as the BOJ chief spoke again in the Asian morning.Elsewhere, the euro was steady at $1.085575, as the European Central Bank meeting on Thursday fast approaches. The ECB is expected to hold rates this week, although traders betting the central bank will start cutting in June will be looking for signals from policymakers.Sterling was mostly flat at $1.26760.Ahead of the U.S. CPI, the Reserve Bank of New Zealand is expected to leave rates at 5.5% at its monetary policy meeting on Wednesday. Focus will be on the tone of the RBNZ’s statement for clues on the outlook.The kiwi rose 0.07% versus the greenback to $0.60655.The Australian dollar ticked up 0.05% to $0.6630. More

The BOJ ended eight years of negative interest rates and other remnants of its massive stimulus programme last month on the view that sustained achievement of its 2% inflation target has come into sight.”If we waited until trend inflation actually hit 2%, inflation could have gained momentum and sharply exceeded 2%. That would require raising rates aggressively. We wanted to reduce such risk,” Ueda said, explaining why the BOJ exited its stimulus programme in March. More

LONDON (Reuters) – Britain’s cost of living crisis is showing signs of easing, an FCA survey showed on Wednesday, with a year-on-year fall in the number of people struggling to pay bills and credit repayments in January and a rise in those coping well or very well.The Financial Conduct Authority’s latest financial lives survey estimated that 7.4 million Britons were struggling to pay bills and credit repayments, from 10.9 million in January 2023.The figure is still higher than 5.8 million in February 2020, before the beginning of Britain’s cost of living crisis, which was fuelled by high inflation and energy prices.This squeeze prompted the financial watchdog to require banks to offer customers payment holidays and other help.”Our research shows many people are still struggling with their bills, though it is encouraging to see some benefitting from the help that’s available,” said Sheldon Mills, FCA executive director of consumers and competition.The survey showed that 72% of adults were coping fairly well or very well, up from 64% in January 2023.January’s figures are worse than FCA historic data, with utility and credit card payments most commonly missed, prompting people to cut back on insurance, skip meals out and holidays.Renters, single adults with children and the unemployed were among the hardest hit, as well as those living in the North of England and in the most deprived areas of Britain, the impact hitting some people’s mental health, the FCA said.Cost of living pressures should ease further this year as inflation is expected to drop below the Bank of England’s 2% target in coming months, raising hopes it will begin cutting interest rates, which currently stand at 5.25%.Interest rates were raised by the central bank from a record low of nearly zero percent to combat inflation.Wages are also rising at a faster pace than inflation, putting more cash in people’s pockets in real terms while energy prices stabilise. More

WASHINGTON (Reuters) – The World Bank Group unveiled a framework on Tuesday for measuring the results of its development work with 22 indicators in what a top official called an important advance in the bank’s push to increase transparency and accountability.Anna Bjerde, the World Bank’s managing director of operations, said the scorecard would allow its shareholders and the people it serves to better see, measure and track the impact of the bank’s lending and grants. “A vision and mission are really great, but unless you can translate it into actions and measure it, then it’s quite aspirational, and we also want it to be operational,” Bjerde told Reuters.The U.S. and other major shareholders have pushed the World Bank to improve how it helps countries address issues such as climate change and pandemic preparedness.It has already added the phrase “livable planet” to its mission statement and reduced the number of its projects to focus on more programmatic and transformational projects.The scorecard includes 22 global indicators – down from 150 on a previous instrument – for poverty, prosperity and a livable planet, as well as themes such as gender equality, inclusion of youth, and how people live in fragile, conflict-affected areas.It will enable a closer look at development outcomes by adopting a more “people-centric” approach, Bjerde said.For the first time, the work of all World Bank institutions – including the International Finance Corp and the International Bank for Reconstruction and Development – will be tracked through the same set of indicators. “It’s a real game changer, providing a new guidepost that our teams can rally around, and provides full visibility on how well we are tackling the most difficult challenges like poverty, climate change, fragility and food insecurity,” Bjerde said.The bank sees the scorecard as part of its push to focus on outcomes, not inputs, for instance by measuring the number of people that actually use financial services, not just how many have access.The bank is still working out the detailed methodologies to calculate the scores in each of the 22 indicators, she said, with half to be released in June and the rest in October.The first batch will include data on how many people have access to electricity worldwide, and social safety net programs.The data will include transparent data broken down by gender, regions, age and whether people are in fragile and conflicted-affected countries.Drilling in like that will allow the bank, its shareholders and clients to “see how we’re doing but also where we need to double down,” she said. More

BUENOS AIRES (Reuters) – Argentina’s Banco Galicia, buying HSBC’s local assets in a near $500 million deal, is betting that new libertarian President Javier Milei will bring down soaring inflation and ease rates to boost lending in the South American nation.The local financial group’s chief executive Fabian Kon told Reuters after the HSBC deal was confirmed that Milei’s pro-market approach and tough fiscal policies should benefit the banking sector and help bring down inflation running over 275%.”As Argentina converges to lower inflation rates and lower interest rates you will see an explosive increase in credit,” he said in a phone interview.Monthly inflation is expected to cool to near 10% in March, which is likely to prompt a cut to the benchmark rate.Milei, who took office in December, has moved to slash state spending to overturn a deep fiscal deficit, with surpluses at the start of the year boosting investors and propelling bonds to years-long highs. The peso currency has also gained.The country, however, is experiencing sharply rising poverty levels and a slide in economic activity amid the tighter conditions, with the latest warning light being industrial output, which slumped around 10% in February year-on-year.Kon said, however, that the tighter fiscal regime was essential to restoring macroeconomic stability in the country that has gone through damaging cycles of economic crisis for years, with regular defaults on its sovereign debt.”Argentina is a country that has been historically undisciplined, so it needs fiscal discipline and with fiscal discipline, inflation is a mathematical impossibility,” he said. “We see a downward path for inflation.”He added that right-wing economist and former pundit Milei’s focus on markets and deregulation would eventually spur investment – and with it the economy.”The freedom of the markets helps investments,” he said. The bank, part of Grupo Financiero Galicia, is hoping the HSBC deal – part of the global bank’s broader pivot towards Asia – would strengthen its own position domestically. “What we are looking for is growth in an increasingly competitive environment where a bank’s investment is basically technology,” he said. More