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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Jay Powell moved to cool speculation that the Federal Reserve would begin cutting interest rates as soon as March, saying that was not the “base case” as the US central bank considers easing monetary policy this year. Falling inflation in recent months had fuelled market bets that the Fed could begin cutting rates from their 23-year high at its next meeting this spring. But the Fed chair said the central bank still needed “greater confidence” that inflation was “sustainably” lower.“I don’t think it’s likely that we’ll reach a level of confidence by the time of the March meeting . . . I don’t think that’s the base case,” Powell said in comments that prompted traders to slash their bets on a cut this spring and sent stocks sharply lower.Powell was speaking on Wednesday after Federal Open Market Committee rate-setters agreed unanimously for the fourth straight month to keep the benchmark federal funds rate at between 5.25 per cent and 5.5 per cent. The US economy and labour market have remained stronger than many economists predicted, defying forecasts that the Fed’s campaign to snuff out rampant inflation with steep rises in interest rates would eventually end in recession and job losses.That resilience and a steady fall in inflation over recent months have raised hopes that the Fed is close to engineering a so-called soft landing for the world’s biggest economy.Powell hailed the benign economic backdrop — but insisted that the Fed still needed more evidence that inflation would keep falling. “We’re not declaring victory,” he said.The US economy had surprised forecasters since the coronavirus pandemic, Powell added — but the economic outlook remained “uncertain” and bringing inflation back to the central bank’s 2 per cent target was “not assured”. “We are prepared to maintain the current target range for the federal funds rate for longer if appropriate,” the Fed chair added.Stocks fell after Powell’s comments, with the S&P 500 ending the day down 1.6 per cent, its worst day in four months, and the Nasdaq Composite down 2.2 per cent, its worst day in three months. Traders in the futures market reduced bets on a rate cut in March, slashing the odds from 60 per cent before the Fed released its statement to 37 per cent after Powell’s comments.“Powell made it abundantly clear that the Fed will not cut in March unless there is a scary crack in the labour market,” said Krishna Guha of Evercore ISI. “Strong growth and a strong labour market allow the Fed the luxury of making sure that inflation is properly nailed down.”While Powell’s comments stressed the central bank’s caution on inflation, a change in the language in the committee’s statement removed a bias towards further rate rises. “The committee judges the risks to achieving its employment and inflation goals are moving into better balance,” it said. Stephen Stanley, chief US economist at Santander, described the Fed’s statement as a “nice balance between getting rid of the hiking bias but adding that they are not close to easing yet”.Wednesday’s FOMC decision to hold rates steady was expected by traders, who have been more focused in recent weeks on when the Fed would begin making the 75 basis points worth of cuts its officials had predicted for this year. The decision comes after data published earlier on Wednesday indicated wage growth was moderating.Workers received an extra 4.2 per cent in their pay packets over the course of 2023, according to figures from the US Bureau of Labor Statistics, down from 4.4 per cent in the 12 months to September.The 4.2 per cent figure was higher than the latest readings of inflation in the consumer price index and as measured by personal consumption expenditures, which were 3.4 per cent and 2.9 per cent, respectively.The Employment Cost index also showed salaries were up by 0.9 per cent between September and December, compared with a rise of 1.1 per cent over the previous quarter. Powell said that the latest readings showed low unemployment was posing less of a threat to the Fed’s 2 per cent inflation goal. “It’s still a good labour market, but it’s getting back into balance,” he said.“The further slowdown in wage growth evident in the fourth quarter employment cost index illustrates that easing labour market conditions are helping to push inflation down,” said Andrew Hunter, deputy chief US economist at research firm Capital Economics, adding that the latest data was likely to “reassure” Fed officials that they were on course to hit 2 per cent. More

The UK government on Wednesday published its plan to convince Northern Ireland’s biggest unionist party to return to the Stormont power-sharing executive following a bitter two-year stand-off over the trade border in the Irish Sea created by Brexit. The package will be enacted via legislation due to be voted on at Westminster on Thursday. It is designed to build on the Windsor framework agreed by the UK and EU last year. This eased many post-Brexit problems but many unionists demanded further changes, arguing that it treated Northern Ireland differently to the rest of the UK by leaving unacceptable trade barriers between the region and Great Britain. Nearly 12 months later, Democratic Unionist Party leader Sir Jeffrey Donaldson now says his party will return to the executive that it has been boycotting since 2022, having secured supplementary assurances set out in Wednesday’s 76-page Command Paper entitled “Safeguarding the Union”. The main points are below. Guaranteeing N Ireland’s place in the Union Brexit created a trade border in the Irish Sea to avoid the return of a north-south border on the island of Ireland, which would have destabilised the 1998 Good Friday Agreement, the peace deal that ended three decades of conflict in Northern Ireland known as the Troubles.As a result, Northern Ireland remains part of the United Kingdom internal market but must also follow EU rules for goods trade when any article is at risk of going over the border to Ireland and on into the EU single market.The DUP argued that this hybrid arrangement diminished Northern Ireland’s place in the United Kingdom by creating red tape for companies in Great Britain that send goods to Northern Ireland, deterring them from trading with the region.The new proposals, which include reducing checks on the Irish Sea border, passing new laws and creating new bodies to boost ties between the region and the rest of the UK would collectively “affirm Northern Ireland’s place in the Union”. The command paper also promised new laws to prohibit future UK governments from signing international treaties that exclude Northern Ireland, as well as legislative commitments that would “copper-fasten” the region’s place in the Union.Reaction to the proposals was mixed. One senior former UK official said the measures amounted to a “rhetorical repetition” of assurances already in place in the Windsor framework.However Lisa Claire Whitten, a research fellow at Queen’s University in Belfast described the proposals as “quite a significant reframing” of the post-Brexit constitutional arrangement for Northern Ireland.Reducing friction in the Irish SeaUnder the Windsor framework the paperwork required to send goods to Northern Ireland from Great Britain was simplified, with companies that joined a UK trusted trader scheme able to use a “green lane” that required minimal paperwork. Goods destined for Ireland and the EU were required to use a “red lane” that required full EU customs paperwork and other regulatory documents.Under the new proposals, the UK will now replace the narrow “green lane” with a broader internal market system that the government says will mean that 80 per cent of goods travelling from Great Britain to Northern Ireland will require minimal paperwork. This means that companies wanting to send goods to Belfast will still need more paperwork than when sending them to, say, Birmingham, because they will still be required to join the UK trusted trade scheme. But UK government officials say that since some 7,000 companies have already signed up to the scheme, the border will in practice now be negligible. “It’s true it’s not exactly the same as sending goods inside Britain, but the reality is the work has already been done,” a UK official added.A new independent monitoring panel will be established to check whether the 80 per cent target is being achieved.The Command Paper is also explicit that since the UK is now phasing in full border checks on imports from the EU, Irish businesses will face the full panoply of checks and paperwork when sending goods to the UK. By contrast, Northern Ireland’s businesses will face no such checks and continue to have “unfettered access” to the rest of the UK, as set out in the original Windsor framework.Ensuring equality in the internal marketThe document contains a number of measures that are designed to cement Northern Ireland’s place in the UK internal market.These include insisting that UK food producers label all products that are not destined for the EU single market as “Not for EU” — even if they are being sold in Great Britain.The food industry has lobbied hard against this measure, with trade body the Food and Drink Federation warning the costs could run into “hundreds of millions of pounds”. However the government argues it is necessary to ensure that “no incentive arises” for British businesses to stop trading with Northern Ireland.Other proposals include the establishment of a new body, the UK East-West Council to boost trade, transport, education and cultural links between Northern Ireland and the rest of the UK, with a specific body, Intertrade UK, to focus on trade ties.The government will also require any public body introducing new regulations in the UK to assess whether they will have any negative impact on Northern Ireland’s place in the UK internal market.Unfinished businessThe Command Paper sets out measures that build on the foundations laid in the Windsor framework in order to cement Northern Ireland’s place in the UK, both economically and politically.However officials said the deal does not completely resolve the challenges created by Northern Ireland existing in a dual regulatory environment.Future bones of contention identified in the paper include resolving a disagreement over whether veterinary medicines used in Northern Ireland must be tested in the EU, and whether the EU’s new carbon border taxes will apply to the region. More

This article is an onsite version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesFor up-to-the-minute news updates, visit our live blogGood evening.Falling inflation in the eurozone’s two biggest economies has prompted investors to up their bets on early interest rate cuts from the European Central Bank and raises hopes that the bloc can escape from what the IMF views as its laggard status on growth.Today’s data showed the rate of price increases in Germany falling faster than expected to 3.1 per cent from 3.8 per cent in December while in France it fell to a near two-year low of 3.4 per cent. Joachim Nagel, president of Germany’s central bank and one of the ECB’s more hawkish policymakers, said he was “convinced that we have tamed the greedy beast [of inflation]”.European bonds rallied on the news, sending yields down and indicating investors think the ECB, which has a target inflation rate of 2 per cent, is now more likely to start cutting rates by April.  Crucial to ECB thinking will be tomorrow’s EU-wide data, which is expected to show inflation falling from December’s 2.9 per cent. Another crucial piece of information in determining when rates should be cut will be on wage growth, a point reiterated yesterday by ECB president Christine Lagarde.Today’s figures follow GDP data yesterday showing the eurozone flatlined in the final three months of last year, held back by shrinking German output and stalled French growth, offsetting a stronger than expected rebound in Spain and Italy and bringing the total for 2023 growth to 0.5 per cent. This leaves the bloc trailing the US, which last week was confirmed as the world’s fastest-growing advanced economy in 2023 with growth of 2.5 per cent. China has estimated its economy grew 5.2 per cent. “Europe is still recovering from a lingering energy shock and has not experienced the same degree of fiscal stimulus as the more resilient US economy in recent years,” was how one analyst described it.As for the year ahead, the IMF is pessimistic, cutting its forecast for eurozone growth from 1.2 per cent to 0.9 per cent yesterday in its twice-yearly World Economic Update.The new data comes as Brussels shifts its spending focus from the green transition to defence as it faces a backlash over climate regulation and grapples with Russia’s war in Ukraine. That shift is being complicated by Hungarian prime minister Viktor Orbán, who in his role as the “EU’s chief antagonist”, as the FT editorial board describes him, has been blocking a package of aid for Kyiv.Brussels is hoping that a last-minute offer, revealed this morning by the FT, will resolve the impasse ahead of tomorrow’s EU leaders’ summit.Need to know: UK and Europe economyThe IMF warned UK Chancellor Jeremy Hunt against tax cuts in his forthcoming Budget and urged him to focus on cutting borrowing and boosting spending in areas such as health, education and tackling climate change. The government has set up a new business council as it seeks to win back corporate confidence.Hunt’s wannabe successor, Labour’s Rachel Reeves, said her party would “unashamedly champion” the City if it came to power and now had no plan to reinstate the cap on bankers’ bonuses.A referendum in Paris on raising parking fees for SUVs could inspire cities across Europe to follow suit if passed. The fuel-hungry cars emit more air pollution and carbon emissions than regular vehicles, take up more road space and pose a higher risk to pedestrians and cyclists in crashes.The Russian economy has been boosted by its war in Ukraine. The IMF doubled its previous forecast for 2024 growth to 2.6 per cent, prompting questions over the effectiveness of sanctions against Moscow. The EU has agreed to set aside profits from frozen Russian assets, potentially handing over billions of euros to Ukraine.Need to know: global economyThe IMF upgraded its forecast for global growth this year by 0.2 percentage points to 3.1 per cent, followed by 3.2 per cent in 2025. It also predicted global inflation would fall to 5.8 per cent in 2024 and 4.4 per cent in 2025.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Chinese manufacturing activity shrank in January for the fourth month in a row, highlighting the sluggish momentum in the world’s second-largest economy, despite policymakers’ efforts to boost confidence. New data showed the Hong Kong economy grew less than expected last year. Meanwhile Chinese investors are piling into gold as property and stock markets fall and the country’s major airlines forecast a fourth consecutive year of losses.On a more positive note for China’s economy, rapid growth is continuing in electric cars, batteries, and wind/solar power. As our Big Read explains, the west is fretting over the forthcoming wave of low-cost imports.The latest Houthi attack in the Gulf of Aden has pushed up fuel tanker rates and diesel prices, with further rises expected. Companies trading commodities such as iron ore and grain are putting pressure on shipowners to use the Suez Canal route, which is more dangerous, but also cheaper and faster. However, FT commentator Chris Giles says it’s no time to panic.Saudi Arabia, the world’s biggest oil exporter, ditched its plan to raise production in a major policy reversal.Indonesia is flooding the global nickel market with low-cost supplies, forcing rivals to shut unprofitable mines and creating concerns in western capitals that the upheaval will give China more control over the strategic resource. Indonesia is the world’s largest producer with a 55 per cent market share.A new FT visual investigation highlights the hidden cost of supermarket salmon and how fish sold by big retailers in Europe is harming food security in west Africa.Need to know: businessBig Tech investors were downbeat after Microsoft and Google warned of more large costs ahead in the race to develop cutting-edge artificial intelligence products, despite strong quarterly results. Google owner Alphabet missed its advertising forecasts, sending its shares downwards.Novo Nordisk shares hit a record high as sales and profits surged from the Danish pharma’s weight-loss drugs, cementing its position as Europe’s most valuable company.Corporate insolvencies in England and Wales hit their highest level since 1993 last year, highlighting the challenges facing companies amid slowing demand and high production costs. However, charges brought against company directors fell by nearly half, despite a surge in fraud during the pandemic, thought to be because of resource constraints.It’s a depressing week to be working in UK broadcasting. Sky is cutting 1,000 jobs as it shifts from satellite dish services towards digital streaming. It follows Channel 4’s announcement of 200 job cuts, with staff reductions also soon likely at the BBC and ITV.Wuhan in China is emerging as a key testing centre for self-driving cars. The city’s 500 robotaxis, mostly run by Baidu, China’s rival to Google, recorded more than 730,000 ride-hailing trips last year compared with a combined 700,000 in Phoenix, San Francisco and Los Angeles. You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.The World of WorkOur careers expert Jonathan Black proffers some tips on how to prepare for the unpredictable changes coming to the jobs market. After more than 50 years of evidence highlighting its disruptive powers, Pilita Clark asks why we’re still no closer to solving the problems of jet lag.The latest in our Economists Exchange series features Stanford professor Erik Brynjolfsson on what generative AI will mean for productivity, jobs and the society of the future.The Working It podcast discusses how managers can support workers who are struggling with grief.Some good newsHoliday travel can be daunting for visually impaired and neurodiverse visitors. Here are some examples of how tour companies are adapting. Thanks 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

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Many times I have heard policymakers pause, lower their voices, furrow their brows and say: “Now is not the time to be complacent.” These are always well-intentioned words of caution. But for them to have any meaning, officials should also identify moments when risks are lower than usual and a little complacency would lighten the mood. Now might be that time. Houthi rebels have threatened ships they link to supporters of Israel, prompting a sharp drop in container shipping using the Red Sea since early December. Shipping lines prefer the longer route around Africa to the risks of sailing close to Yemen’s coastline — with the latest attack coming last week on a commodities vessel registered to a UK company. This adds significant costs in time and fuel. According to Drewry, the supply chain advisers, the price of shipping a standard size container from Shanghai to Rotterdam has more than trebled from $1,442 in mid-December to $4,984 in late January. This will have an effect on inflation. But it is important to put things into context. This is nothing like the supply chain nightmares of 2021 and 2022 that fuelled the worst inflationary episode in the past 40 years. Some Chinese shipping lines are still happily using the Red Sea route.In 2021 the equivalent container shipping price exceeded $14,000 and that had little to do with the six days the Ever Given was stuck in the Suez Canal after running aground. Rampant goods demand as economies opened up after a wave of Covid-19 and consumers avoiding face-to-face services was the main culprit. It was not just the shipping price — approximately 1.5 per cent of the final price of consumption goods according to Goldman Sachs — but the products themselves that jumped in price. You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Joseph Briggs and Giovanni Pierdomenico at Goldman Sachs estimate the rise in transportation costs caused by the Houthi attacks will raise global inflation at the end of 2024 by 0.1 percentage points, with a slightly higher increase of just over 0.2 percentage points in Europe. This is, frankly, little more than a rounding error in inflation measurement. Recent UK, European and US measures of price increases have undershot forecasts by more than that. The other key driver of European inflation was the 2022 supply shock in natural gas as Russia exploited its position after the full-scale invasion of Ukraine. With supply dwindling through the European summer, wholesale gas prices rose from around €28 a megawatt hour in June 2021 to a peak of more than €330 per MWh in August 2022. The spot price is now down below €30 again, with shipments of future natural gas for Europe on offer next winter at €34.6 a MWh. These rates are far below the levels used in the European Central Bank’s inflation projections as recently as December last year. Two reasons explain the quiescent future European gas price. First, a continued fall in gas demand across the continent and second a massive increase in supply, particularly from the US. The EU imported 45mn metric tonnes of natural gas from the US in 2023, up from 15.8mn in 2021, according to S&P Global, with the trade so profitable that a glut rather than shortage is more likely this decade. President Joe Biden’s decision to pause approval of new US LNG export terminals last week is unlikely to change the picture. Houthi action has therefore caused a small rise in shipping costs compared with the past three years. That comes at a time of subdued global goods demand. There is a coming glut in options for shipping goods, oil and gas. There is, of course, the possibility of a major war in the Middle East shutting passage through the Gulf of Oman, but this has been a risk for the past 50 years. So I can warn about genuine dangers in future: now is a time to be complacent about the economic risks from the [email protected] More

KYIV (Reuters) – European Union countries are due to meet on Thursday to try to agree on extending billions of euros in economic aid to Ukraine, as well as replenishing a military fund to arm Kyiv as it fights Russia’s almost two-year-old full-scale invasion.Here are some facts and figures about the assistance Ukraine hopes to receive.WHAT SUPPORT HAS UKRAINE RECEIVED AND HOW IS IT SPENT?Ukraine relies heavily on economic assistance from the West and has received more than $73.6 billion in budgetary support since Russia’s February 2022 invasion, finance ministry data shows.Ukraine spends nearly all of its domestic revenues on the defence sector and army, while budget sector overheads have been largely covered by Western aid. A single day of fighting costs about $136 million, Finance Minister Serhiy Marchenko has said.This year the government will again need massive injections of financial support to disburse social payments, wages for budget workers, and pensions for millions of Ukrainians.The government expects a budget deficit of about $43 billion in 2024 and plans to cover it with domestic borrowing and financial aid from its Western partners.Finance ministry officials have previously said they expect to receive about $41 billion in international aid in 2024.The government is worried by uncertainty over the financing. Ukraine has yet to receive aid this year from its biggest financial backers, the European Union and the United States.WHAT IS EUROPE’S UKRAINE FACILITY?Last summer, the European Commission announced a 50 billion euro ($54 billion) multi-year support package named the Ukraine Facility that would be delivered through 2027.Kyiv officials have said they hope to receive 18 billion euros of budgetary support from the facility in 2024, financing that would be crucial for covering the budget gap this year.But there is still no agreement on granting the aid among the bloc’s members, with Hungary voicing persistent opposition. Hungary vetoed the package in December and EU leaders will try again to reach agreement at their summit on Thursday.WHAT ABOUT U.S. ASSISTANCE?Ukraine is in talks with the U.S. government to receive economic assistance this year. Kyiv is seeking $8.5 billion in aid to help cover its budget deficit, senior lawmaker Yaroslav Zheleznyak said.U.S. President Joe Biden’s administration asked Congress in October for nearly $106 billion to fund plans for Ukraine, Israel and U.S. border security, but Republicans who control the House with a slim majority rejected the package.WHAT SUPPORT FROM INTERNATIONAL LENDERS? Ukraine’s cooperation with the International Monetary Fund is important for its macroeconomic and financial stability. In 2023 the IMF approved a new 48-month lending programme worth some $15.6 billion.Ukraine received about $4.5 billion last year. In 2024 the government hopes to receive another $5.4 billion but each tranche is linked to a series of reform targets and economic indicators.Ukraine also expects about $1.5 billion from other international financial institutions, including the World Bank.ANY OTHER AID? Ukraine has agreed on financial support packages from Britain and Japan for 2024. It is also in talks with the governments of Canada, Norway, South Korea and others to secure other funds. More

The API unit, which brought in revenue of $1.05 billion in 2022, makes pharmaceutical ingredients that are used in both generic and branded medicines, and serves over 1,000 clients globally.U.S.-listed shares of the Israel-based drugmaker rose 2.3% in premarket trading. Teva is expected to report earnings later on Wednesday. Teva has been focused on cutting its $35 billion of debt as it fought a spate of lawsuits alleging it helped fuel the U.S. opioid epidemic, and is recovering from the loss of exclusivity for its multiple sclerosis drug Copaxone.The company has been betting on a trio of branded drugs – Huntington’s disease treatment Austedo, migraine product Ajovy and schizophrenia drug Uzedy – to drive growth. It also has a number of biosimilar therapies in its pipeline. The company expects the API divestiture to be completed in the first half of 2025. More