Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Investors do not remember the UK’s disastrous ‘mini’ Budget of 2022 with much fondness. But former prime minister Liz Truss’s proposed abolition of the country’s“tourist tax” is one swiftly-ditched policy that spurs a sense of longing.The idea of reinstating VAT-free shopping for international visitors was reversed in the aftermath of the ill-fated Budget. But businesses are hoping for a change of heart. Chancellor Jeremy Hunt has ordered the country’s fiscal watchdog to examine whether the policy’s withdrawal at the turn of 2020/21 has boosted the exchequer’s coffers — or is costing the economy. Independent economic studies suggest the latter. Retail, hospitality and travel companies would all benefit from another volte-face. Under the original policy, shoppers from overseas were eligible to claim VAT refunds unless they were EU residents. Post-Brexit, the government judged it would have to be expanded to EU visitors. But tax-free shopping was scrapped in 2020. A Treasury analysis in 2022 suggested that the policy’s reinstatement would cost £2bn in 2025/26. Yet direct costs only tell half the story.Firstly, the average VAT refund would not be the same for EU and non-EU visitors. Global Blue, the Swiss payments company, has previously estimated the average refund for EU visitors in comparable markets can be up to 63 per cent lower. Fresh analysis must also take account of behavioural effects — the extent to which lower trip costs might encourage more visitors and spending. In 2022, the average tourist would have saved 4.2 per cent on their total spending in the UK had the scheme existed, according to the Centre for Economics and Business Research. It suggests that this could spur a 5.4 per cent increase in overseas tourist numbers. Applied to 2022 numbers, that would mean an additional 1.7mn visitors.Taking such effects, and other factors such as higher taxes from increased tourism employment, additional revenues would have outweighed the cost of VAT refunds by £2bn in 2022, the Cebr estimates.Official data shows that visitor numbers to the UK are recovering post-pandemic. Just under 11mn overseas residents visited the UK in the third quarter of 2023, up 10 per cent year over year. Collectively, they spent £10.1bn — up 11 per cent, although that figure does not factor in inflation.Yet Global Blue says data from retailers that operate across global markets suggests visitor spending in countries such as France — where tax-free shopping remains — recovered much faster than in the UK in 2022.Countries including Italy have a minimum spend before VAT can be reclaimed. That is one way of mitigating the direct impact, although there has been a trend of lowering thresholds. This policy is ripe for re-examination.Lex is the FT’s concise daily investment column. Expert writers in four global financial centres provide informed, timely opinions on capital trends and big businesses. Click to explore More

WASHINGTON (Reuters) – The U.S. Senate on Friday edged closer to passing a bill that includes $95.34 billion in aid for Ukraine, Israel and Taiwan, but faces an uncertain path to becoming law due to Republican opposition in both chambers of Congress.The Senate voted 64-19 to advance the legislation one step along a chain of preliminary votes that could stretch into next week, unless party leaders can reach agreement with rank-and-file lawmakers to fast-track the bill. Lawmakers expect to take the next procedural step in a rare Sunday session.In Friday’s vote, the bill cleared a simple majority threshold with 14 Republicans supporting the measure.Many Republicans want to make a deal with Senate Majority Leader Chuck Schumer, a Democrat, to allow amendments to the legislation in exchange for quicker action. But other Republicans, who reject the bill’s $61 billion in Ukraine aid, have vowed to delay consideration for as long as possible by forcing the Senate to comply with a labyrinth of time-consuming parliamentary rules.Republicans had insisted that Ukraine aid be accompanied by provisions to secure the U.S.-Mexico border, only to reject a bipartisan border agreement once former President Donald Trump, the party’s presidential frontrunner, came out against the deal. Some of those same lawmakers now hope to offer their own amendments to stem the flow of migrants into the United States, while others want to forgo humanitarian assistance provisions and restrict foreign aid to weapons and materiel. If the legislation ultimately passes the Senate, it will face an uncertain future in the Republican-controlled House of Representatives, where Speaker Mike Johnson has indicated he could split the aid into separate bills. “We’ll see what the Senate does,” Johnson told reporters this week. “I’ve made very clear that you have to address these issues on their own merits.”Johnson spoke a day after the House rejected a stand-alone aid bill for Israel. More

Here is a rundown of layoffs announced so far in 2024: TECHNOLOGY* Amazon (NASDAQ:AMZN)’s job cuts include less than 5% of employees at Buy with Prime unit, 5% at audiobook and podcast division Audible, several hundred in streaming and studio operations, 35% at streaming unit Twitch and a few hundred at healthcare units One Medical and Amazon Pharmacy.* Layoffs at Alphabet (NASDAQ:GOOGL) include dozens at division for developing new technology X Lab, hundreds in advertising sales team, hundreds across teams, including hardware team responsible for Pixel, Nest and Fitbit (NYSE:FIT), and a majority in augmented reality team.* Microsoft (NASDAQ:MSFT) is cutting around 1,900 jobs at gaming divisions Activision Blizzard (NASDAQ:ATVI) and Xbox. * IBM (NYSE:IBM) plans to lay off some employees in 2024, but will hire more for AI-centered roles.* E-commerce firm eBay (NASDAQ:EBAY) plans to cut about 1,000 roles, or around 9% of its current workforce. * Videogame software provider Unity Software to cut about 25% of workforce, or 1,800 jobs.* DocuSign (NASDAQ:DOCU) plans to reduce its current workforce by about 6%, or 400 employees, with majority of layoffs in its sales and marketing organizations.* Snap plans to cut around 528 jobs, or 10% of its global workforce. * Salesforce (NYSE:CRM) is laying off about 700 employees, or roughly 1% of its global workforce. * Network giant Cisco (NASDAQ:CSCO) is planning to restructure its business which will include laying off thousands of employees. * Autonomous vehicle technology company Aurora Innovation lays off 3% of its workforce. MEDIA* Walt Disney (NYSE:DIS)’s Pixar Animation Studios is set to cut jobs as the studio has completed production on some shows and has more staff than it needs.* Comcast-owned British media group Sky plans to cut about 1,000 jobs across its businesses this year.* The Los Angeles Times plans to lay off 94 journalists who belong to the newspaper’s union.* Paramount Global is planning to conduct unspecified number of layoffs.* Business Insider plans to lay off around 8% of its staff. * Bell Canada plans to slash 4,800 jobs. FINANCIAL SERVICES* PayPal (NASDAQ:PYPL) Holdings is planning to cut about 2,500 jobs, or 9% of its global workforce this year. pau* Payments firm Block Inc has started to cut unspecified jobs as part of its previously disclosed plans.* Citigroup is planning to reduce its headcount by 20,000 people over the next two years. * Exchange operator Nasdaq plans to slash hundreds of jobs as it integrates fintech firm Adenza into its business. * World’s largest asset manager BlackRock (NYSE:BLK) is set to cut about 3% of its current workforce, though it expects to have a larger headcount by the end of 2024.CONSUMER AND RETAIL* Cosmetics giant Estee Lauder (NYSE:EL) plans to cut 3% to 5% of its global workforce.* Wayfair (NYSE:W) plans to lay off 1,650 employees, or about 13% of its workforce.* U.S. department store chain Macy’s (NYSE:M) is cutting 2,350 jobs and closing five stores.* Levi Strauss & Co (NYSE:LEVI) is planning to slash 10% to 15% of global corporate jobs.* Hershey is planning a restructuring plan that will impact less than 5% of its workforce. HEALTH* Novavax (NASDAQ:NVAX) is cutting about 12% of total workforce.MANUFACTURING* Defense contractor Lockheed Martin (NYSE:LMT) is planning to cut 1% of its jobs. * United Parcel Service (NYSE:UPS) plans to cut 12,000 jobs in a bid to cut $1 billion costs after a bumpy year. NATURAL RESOURCES* U.S. miner Piedmont Lithium cuts 27% of its workforce as part of a cost-cutting plan. More

The decision clarifies last week’s ruling: since Novonor made two leniency agreements in Brazil, it was murky which fines the firm could stop paying and which it could not.A 2.7 billion-real ($545.27 million) fine, agreed in 2018 in a leniency agreement with comptroller general’s office, must continue to be paid, according to the decision. It was not clear how much of the amount Novonor had already paid. The conglomerate, previously known as Odebrecht, has signed separate leniency agreements with Brazil’s federal prosecutors and the comptroller general’s office over corruption scandals in which the construction company paid bribes to politicians in return for lucrative contracts.Supreme Court Judge Dias Toffoli ordered suspension of the payments due to alleged abuses committed by prosecutors when the terms of the deal were signed. On Friday, the same judge issued another decision saying the payments suspension includes only the leniency agreement signed with prosecutors, which was valued at a total of 3.8 billion reais in 2016. The amount has likely grown since then, and it was also not clear how much the firm has already paid.The agreement that remains valid, with comptroller general’s office, was originally valued at 2.7 billion reais. But it too has likely grown due to a currency adjustment mechanism that is part of the deal.Novonor is evaluating the judge’s decision, it said in a statement.Toffoli noted he will reassess some leniency agreements, including Novonor’s, over the next 60 days.($1 = 4.9517 reais) More

Hurst, Texas (Reuters) – Dallas Federal Reserve Bank President Lorie Logan on Friday said she is in no rush to cut interest rates, and while there has been “tremendous progress” on bringing down inflation, she wants more data to confirm the progress is durable.    “The risks that I’m seeing in the economy are becoming more in balance, but I do think we need to take time here to continue to look at the data,” she said at the Tarrant Transportation Summit in Hurst, Texas.She said she supported the Fed’s decision last month to leave the policy rate on hold in the 5.25%-5.5% range, even as Fed Chair Jerome Powell signaled that rate cuts are likely later this year. “I’m really not seeing any urgency to make any additional adjustments at this time,” she said, adding that the labor market is still tight and she wants to “build our confidence whether the progress that we’ve seen on inflation will be sustained over the medium term.”It’s a refrain that many of Logan’s colleagues – including fellow hawks like Richmond Fed President Thomas Barkin as well as the more dovish-leaning Atlanta Fed President Raphael Bostic – have voiced of late: that there is still more work to do on bringing down inflation, and the economy’s strength means the Fed can hold rates where they are to maintain that downward pressure on prices. Inflation is at the Fed’s 2% goal as measured on a six-month annualized basis, she noted, and even on a year-over-year basis it is below 3%. “I think we are in a good place,” she said, with a “fairly benign outlook, with inflation continuing to be sustained near our target, with healthy growth and a labor market that’s loosening but still robust.” But there are risks, Logan said, including the potential for geopolitical stresses or renewed supply chain problems to stall or reverse progress on inflation.Logan said the Fed’s ongoing shrinking of its balance sheet has been “going well,” though she did not offer any details or provide her views on the outlook for when the Fed may slow or end that process. More

QUITO (Reuters) – Ecuadorean President Daniel Noboa snatched a legislative victory on Friday after his bid to raise value added tax (VAT) was able to proceed as lawmakers hit an impasse while trying to decide whether or not to allow the measure.Noboa has argued that raising VAT – alongside other tax increases such as a levy on banks’ profits in 2023 – will help finance his security offensive on criminal gangs he has designated as terrorists amid spiraling violence in the Andean country. On Tuesday, a majority of 83 lawmakers in Ecuador’s National Assembly voted against raising VAT to 15% from 12% until 2026, which was then to stay at 13% thereafter. Noboa presented a so-called partial objection the same day to push for a permanent increase to 13% and provide a mechanism allowing the president to raise it to 15% when the country’s economic needs demand it. Under Ecuadorean law, legislators’ inability to vote against Noboa’s partial objection or approve the VAT measures it sought means that the legislation will go ahead anyway. The government did not immediately comment.Noboa eyed taking an extra $1.1 billion per year by hiking VAT to 15%, according to the bill debated by lawmakers earlier this week.The president wants to use resources with his VAT hike to strengthen the military, police and intelligence services to combat organized crime. More

WASHINGTON (Reuters) – U.S. monthly consumer prices rose less than initially thought in December, but the overall inflation revisions were mixed, and did not shift expectations on the timing of an anticipated interest rate cut from the Federal Reserve this year.The annual revisions published by the Labor Department on Friday also showed the consumer price index increasing slightly more than previously reported in October and November. Prices excluding the volatile food and energy components were unrevised, after rounding, from October through December. All told, the revisions did not materially alter the path of inflation, which is moderating after surging in 2022.The revised CPI data had been eagerly awaited by financial markets and economists after Federal Reserve Governor Christopher Waller last month flagged them as among the key data pieces he would be watching as policymakers try to gauge progress in their fight against inflation.”The revisions were much ado about nothing,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin. “This is becoming a trend where a Fed official mentions a data release once and then everyone waits with bated breath only to find out that it’s a bunch of noise.” The consumer price index rose 0.2% in December instead of 0.3% as reported last month, the revisions of the CPI data published by the Labor Department’s Bureau of Labor Statistics (BLS) showed. But data for November was revised up to show the CPI increasing 0.2% rather than 0.1% as previously estimated.The CPI gained 0.1% in October. Prices were previously reported to have been unchanged in October. The 3-month annualized increase in the CPI was revised up to a 1.9% rate from a 1.8% pace.The revisions emanated from the recalculation of seasonal adjustment factors, the model used by the government to strip out seasonal fluctuations from the data. This routine procedure, which the BLS undertakes every year, covered data from January 2019 through December 2023. The year-on-year data, which is not seasonally adjusted, was unrevised.Excluding food and energy, the CPI advanced by 0.275% in December, which was rounded up to 0.3%. That was revised down from 0.309%, rounded to 0.3%. The so-called core CPI was revised up to 0.308% in November, rounded to 0.3%.It was previously reported to have increased 0.285% in November, rounded up to 0.3%. The 3-month increase in the core CPI inflation rate was unchanged at 3.3%.Core goods prices fell in the first half, but not as steeply as had been previously estimated, while the increase in the cost of services was revised down for November and December. The increase in services excluding rents was revised lower in November and December.”This should give more support to the Fed that strong growth and jobs are not causing an acceleration in inflationary pressures,” said Ellen Zentner, chief economist at Morgan Stanley in New York.Stocks on Wall Street were trading higher. The dollar was steady versus a basket of currencies. U.S. Treasury prices fell.UPDATED WEIGHTSFinancial markets expect the U.S. central bank will start cutting interest rates sometime in the first half of the year. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25% to 5.50% range.The 2023 data was of interest after revisions last year showed inflation a bit warmer in the second half of 2022 than previously thought. Economists saw a minor impact from the CPI revisions on the personal consumption expenditures (PCE) price indexes data for the fourth quarter, the inflation measures tracked by the U.S. central bank for its 2% inflation target.”On the whole for October-December … we look for basically no revision to the monthly changes to the core PCE data on net, with the December change revised down by 0.02 percentage point but offsetting upward revisions to the earlier months,” said Daniel Silver, an economist at JPMorgan.The core PCE price index gained 0.2% on the month in December and rose 2.9% year-on-year. The BLS also updated spending weights used to calculate the CPI, effective with January’s report due next Tuesday. Housing now has a higher weighting, centered on rents. Transportation’s share was lowered, with downgrades to new and used motor vehicles. Changes to the methodology in the calculating of used cars and trucks prices will also be introduced. Used cars and trucks have been the primary drivers of goods deflation. Rents, which have accounted for much of the elevation in inflation, are expected to subside substantially this year. That suggests the anticipated diminished drag on core inflation from motor vehicles could be offset by rents.According to a Reuters survey of economists, the CPI likely increased 0.2% in January. That would lower the annual increase in prices to 3.0% from 3.4% in December. The core CPI was forecast advancing 0.3%, with the year-on-year increase slowing to 3.8% from 3.9% in December. Economists expect inflation to cool considerably this year.”These weight shifts are likely to tilt risks to the upside for core price pressures in the near term, just mechanically, but on balance, we don’t foresee this as having a material effect on our baseline forecast,” said Pooja Sriram, an economist at Barclays in New York. More

This article is an on-site version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesCandidates loyal to imprisoned former prime minister Imran Khan stormed to a shock lead in Pakistan’s election results count, despite a military-backed campaign of arrests and harassment. Here’s our recent Big Read on the country’s political tensions.US President Joe Biden hit back at a US Department of Justice report that cast him as a “well-meaning, elderly man with a poor memory”. The report had spared him of criminal charges in a probe into handling of sensitive material.The FT revealed that revenue growth at OpenAI was surging thanks to its flagship AI product ChatGPT. The business is likely to become one of the handful of Silicon Valley companies, including Google and Meta, to have revenues of $1bn within a decade of being founded. For up-to-the-minute news updates, visit our live blogGood evening.The UK Labour party’s decision to drop its £28bn a year green spending plans highlights the challenges facing western politicians as they confront the destructiveness of a warming climate already breaching critical temperature benchmarks and a backlash from voters and parts of business.Labour blamed the move to water down its target, which some had viewed as an “albatross” around its neck, on the government’s mishandling of the economy, which looks set to leave Sir Keir Starmer’s party with a dire inheritance should it win the forthcoming general election.The green transition is also convulsing the business world, particularly in the oil and gas sector where fossil fuels are driving record returns in the face of calls from investors and consumers to transition faster to renewable energy. This week has seen BP follow ExxonMobil and Chevron in reporting the second-highest annual profits in more than a decade, as has ConocoPhillips, the world’s biggest independent oil producer.  The slow pace of oil companies’ transition to clean energy — encapsulated by the head of Brazil’s Petrobras who told the FT his business intended to be one of the last remaining producers on the planet — has caused dismay among some investors. PFZW, Europe’s third-largest pension fund, this week sold €2.8bn in oil holdings and abandoned efforts to persuade oil and gas companies to produce “verifiable” transition plans to support the Paris climate agreement. PFZW’s decision follows a similar move by the Church of England last year and comes after countries around the world agreed to transition away from fossil fuels by 2050 at the UN COP28 climate summit in December.The head of Norway’s $1.5tn oil fund, the world’s largest sovereign wealth fund, this week hit out at ExxonMobil’s decision to sue shareholders who had submitted a motion at the company’s annual meeting calling on the company to set more ambitious emissions targets, even after the proposal was withdrawn. As today’s Moral Money newsletter (for Premium subscribers) explains, the case could have a chilling effect on shareholders agitating for change. But even as the evidence stacks up on the urgent need to tackle the climate emergency (see Science section below), in the political world at least, forces seem to be pushing in the opposite direction as a global backlash against climate action gathers pace, making the task of enacting green policies even tougher. And where governments have pushed through climate-friendly measures — such as the US freezing approvals for liquefied natural gas plants — pushback from industry has been fierce.In that context, says FT columnist Stephen Bush, Labour’s retreat (which follows the watering down of the government’s own green policies) means the UK, which for a long time has been a global outlier on climate policy, “now looks rather more like a normal European country as far as green politics are concerned”.Need to know: UK and Europe economyA long-awaited report showed UK pension funds lost £425bn in a year of bond market crisis sparked by Liz Truss’s “mini” Budget that led to forced asset selling by retirement schemes.Global investors warned that an overhaul of UK stock market listing rules aimed at attracting more growth companies would erode shareholder rights and undermine the country’s reputation for good governance and its attractiveness as a financial centre.John Burn-Murdoch examines why young people in Britain are turning away from conservatism, unlike many of their peers in the rest of the world. The reason, he suggests, is that economic shocks thought to be worldwide have hit Britain’s young adults harder than most, with Brexit fuelling their distaste for Tories.Theodor Weimer, head of the German stock exchange, said he was “deeply concerned” about the rise of far-right politics in the country. “If they were successful that would be fatal, not only for our democracies but also for Germany and Europe as key financial centres,” he argued. German chancellor Olaf Scholz said last week that leaving the EU, as proposed by the far-right Alternative for Germany party, would destroy the country’s wealth.Need to know: Global economyXi Jinping and Vladimir Putin rejected US “interference” in their affairs as the Chinese and Russian leaders announced their determination to “cultivate new momentum for co-operation”. US Democrats are putting together a “Plan B” to keep funding for Ukraine after Senate Republicans, encouraged by former president Donald Trump, voted down a bipartisan $118bn deal that had tied support for Kyiv to a crackdown on immigration at the US-Mexico border. Ukraine meanwhile is running short of ammunition.Chinese consumer prices fell at the fastest annual rate in 15 years in January, underlining the challenges facing policymakers as they try to restore investor confidence in the world’s second-largest economy. The bigger than forecast drop of 0.8 per cent was the fourth consecutive month of decline.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Need to know: businessGoogle released Gemini, its latest generative AI system, as a free Apple and Android app. A more advanced subscription-based model will be integrated into its suite of productivity tools including Gmail and Google Docs. Shares in Maersk, the world’s second-largest container shipping line, plunged after it warned of a “difficult patch” for the industry, suspended its share buyback programme and slashed its dividend. Barclays is buying the bulk of Tesco’s banking business for £600mn in a deal that highlights the retreat of UK supermarket chains from their ill-fated expansion into financial services. Starbucks and McDonald’s have been hit by global protests and boycotts related to Israel’s military offensive in Gaza. Economists say such campaigns could have lasting consequences if they went on long enough to cause consumers to shift buying patterns.“Enshittification” is coming for absolutely everything. Academic and author Cory Doctorow describes the slow decay of online platforms and why we need a digital nervous system “fit to co-ordinate the mass movements we will need to fight fascism, end genocide, save our planet and our species”.Science round-upThe average global temperature has for the first time breached the critical yardstick of 1.5C above pre-industrial levels over a 12-month period, according to the European earth observation agency, after the hottest January on record.Faster than expected global warming also appeared to be confirmed by research on Caribbean Sea sponges, although some scientists questioned whether world trends could be extrapolated from data from a single species and region.European scientists set a new record for the amount of energy generated from nuclear fusion. The output (enough to boil about 70 kettles) remains far from commercially viable levels but the UK government hopes a new project in Nottingham — Spherical Tokamak for Energy Production (STEP) — will become one of the first fusion machines in the world to supply power to the grid by the early 2040s.The FT editorial board lauded the €16bn European bid to build the world’s costliest instrument dedicated purely to scientific inquiry: a giant particle accelerator beneath the Swiss-French borderland. “It should be seen as a global collaboration, much needed in a time of geopolitical turmoil, to understand better the universe in which we all live,” the FT said.   Elon Musk’s hyping of his Neuralink project on brain-computer interfaces may be a little overdone but it has shone a light on a technology that strikes many as far-fetched, but which has recently started to return promising results. “Children are the R&D department of the human species — the blue-sky guys, the brainstormers. Adults are production and marketing.” Innovation editor John Thornhill discusses the study of babies’ extraordinary processing powers to develop artificial intelligence models.Some good newsNew research suggests men prescribed erectile dysfunction drugs are also less likely to develop Alzheimer’s disease years later.Recommended newslettersWorking it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up hereThe Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up hereThanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. And please share your feedback with us at [email protected]. Thank you More