Aurelia Butler

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A high-profile mistake in the UK’s inflation data is prompting scrutiny of other weaknesses in the way the indicator is compiled, as the Office for National Statistics battles to restore faith in the quality of its output. The ONS admitted this month to an “error” in its regular consumer prices index report, which wrongly added 0.1 percentage points on to the headline rate of inflation.However, the mistake — which the ONS blamed on faulty data from the Department for Transport — comes as other aspects of its methodology come under greater focus, from hotel costs and live music tickets to the price of video games. Some analysts argue the ONS should widen the array of data it collects, while others criticise delays in the introduction of supermarket scanner data meant to make grocery prices more accurate. The issues add to a steady drip of wider problems in UK official statistics that is leading to a reduction of faith in the overall quality of the country’s economic data. CPI inflation, as the basis for the Bank of England’s primary mandated target, is one of the ONS’s most prominent and closely watched data series. “When I’m talking to hedge funds around the world, all they’re hearing is issue after issue after issue,” said Sanjay Raja, an economist at Deutsche Bank. “The more you hear, the more noise you have, the more you start to discredit a national statistics body like the ONS.”Some analysts criticised delays in the introduction of supermarket scanner data meant to make grocery prices more accurate.  More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The EU has refused to hold a flagship economic meeting with Beijing ahead of a leaders’ summit next month because of a lack of progress on numerous trade disputes, according to four people familiar with the matter.The bloc’s stonewalling of the talks, known as the EU-China High-Level Economic and Trade Dialogue, underlines the deep divisions between the sides despite Beijing’s efforts to court Europe as a counterweight to the US amid President Donald Trump’s tariff war.The economic dialogue often serves to lay groundwork for the EU-China leaders’ summit, which the people said was this year set for July 24-25 in Beijing. The leaders’ summit this year has particular diplomatic significance, marking 50 years of bilateral relations. “China would like to have it [the economic dialogue], but we are seeing no progress in all of our talks,” one of the people said.The bloc would hold the meeting only if there were agreements at the summit to implement, said a senior EU official who requested anonymity.The EU and China are locked into a growing number of trade disputes. Brussels last year imposed tariffs on Chinese electric vehicles after it found the industry benefited from huge state subsidies. In response, China imposed anti-dumping duties on EU brandy and opened anti-subsidy investigations into pork and some dairy products, which could lead to further tariffs.In recent weeks, the EU has banned Chinese medical devices from most public procurement contracts and placed anti-dumping duties on Chinese hardwood plywood, a construction material.Tensions had been exacerbated by Chinese restrictions on rare earths exports, which Beijing introduced in retaliation for US tariffs in April, the people said. China holds a near monopoly on production and processing of many rare earths, which are used in electronics, electric vehicle motors, wind turbines and defence applications. Beijing’s slow issuance of export licences has prompted some European producers to warn of shutdowns.The omission of the talks will lower expectations for any concrete gains at the leaders’ summit, though another EU official who asked not to be named noted that the economic dialogue was held irregularly and did not always precede the summit. China will be represented at the summit by premier Li Qiang, the country’s second-highest ranking official, rather than President Xi Jinping, despite the meeting taking place in Beijing and the historic half-century anniversary, which was seen as a snub in Brussels.The last EU-China leaders summit in December 2023 was preceded by talks between economy and trade commissioner Valdis Dombrovskis and Chinese vice-premier He Lifeng.At that meeting, Dombrovskis raised the issue of European businesses’ access to the Chinese market, particularly for agrifood exports, medical devices, cosmetics and infant formula.Most of these issues remain unresolved, according to Maria Martin-Prat, the EU’s top China trade official. “There’s a huge amount of work that needs to be done between now and the summit,” she told a conference in Brussels on June 5. She added that much of that work consisted of “issues which we have been discussing with them for a long time”.“We’re talking about the manner in which they apply some of their horizontal laws to the detriment of foreign players. Whether we’re talking about data regulation [or] . . . espionage laws.”A European Commission spokesperson said the bloc was focused on preparations for the summit. They added that Maroš Šefčovič, the EU’s trade commissioner, was in regular contact with Wang Wentao, China’s commerce minister, with technical discussions on areas including export controls, market access and trade.China’s commerce ministry did not immediately respond to request for comment. In a statement, China’s foreign ministry said that “deepening dialogue and co-operation between China and the EU benefits both sides” amid “increasingly turbulent” global relations, “rising unilateralism and economic bullying”.“We are willing to work together with the EU side to . . . promote the stable and long-term development of China-EU relations,” the ministry added. More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldDonald Trump has signed an executive order to implement his US trade deal with the UK, but while British carmakers and aerospace manufacturers are set to secure quick benefits, steel producers could have to wait longer.The president’s order will “operationalise” the US-UK agreement, under which Trump agreed to cut a 27.5 per cent American tariff on cars to 10 per cent for the first 100,000 vehicles shipped from the UK each year. The deal will also ensure UK exports of jet engines and other aerospace components to the US are spared from American tariffs.The waiving of aerospace tariffs is confirmation the UK will be exempted from any levies that emerge from a US national security probe that Trump has launched into the industry.In the US-UK trade deal unveiled by Trump on May 8 in the Oval Office, there was a promise that Britain would be spared from some national security tariffs if it met Washington’s requirements to exclude China from critical supply chains. The UK is the only country to have struck a trade agreement with the US since Trump launched his sweeping “liberation day” tariffs in April, threatening America’s trading partners with levies of up to 50 per cent. He subsequently paused the tariffs for 90 days. UK Prime Minister Keir Starmer has come under political pressure at home to implement the trade deal quickly, notably from industries affected by the tariffs.Trump and Starmer met briefly on Monday on the margins of a G7 summit in Kananaskis, Canada, to discuss the accord.“We just signed it and it’s done,” Trump told reporters shortly after the meeting. White House officials said Trump had signed the executive order that would implement the trade deal.“This is a very good day for both of our countries, a real sign of strength,” Starmer said.In return for cuts to Trump’s tariffs, the UK granted the US greater market access for beef, ethanol and industrial products.The UK government said it expected the trade deal’s provisions affecting the British car and aerospace industries to take effect by the end of the month.The text of Trump’s executive order directs US commerce secretary Howard Lutnick to formally change tariffs on UK goods within seven days of the document being officially filed.The order also said the US would in future negotiate with the UK over any potential American pharmaceutical tariffs that it might apply. The US-UK trade deal is meant to lower American tariffs on British steel and aluminium exports to zero, but there have been drawn-out negotiations over implementation of the plan.UK officials said “technical and legal” issues were continuing to delay the confirmation of a quota that would enable British exporters to avoid a 25 per cent steel global tariff imposed by Trump on national security grounds.Steel producers in the rest of the world are contending with a 50 per cent levy on their exports to the US after Trump doubled the existing 25 per cent tariff this month, but he offered the UK an exemption to allow time for implementation of the trade deal.The negotiations have been complicated by how a significant proportion of UK steel is reprocessed from imported material and does not meet an American requirement that it is “melted and poured” in the country of origin to qualify for tariff exemptions.UK steel industry bodies have said they do not expect arrangements consistent with the trade deal to be finalised until the end of the month at the earliest, and putting them into effect could take longer still.A Downing Street spokesperson said talks between the UK and the US were continuing on steel. “As the prime minister and President Trump have again confirmed, we will continue to go further and make progress towards zero per cent tariffs on core steel products as agreed,” they added.The Society of Motor Manufacturers and Traders, the British automobile industry trade body, described the latest development on the US-UK trade deal as “great news”.However, the decision to grant US ethanol producers a 1.4bn litre tariff-free quota, equivalent to the entire UK annual demand, has been attacked. Britain’s bioethanol industry has warned the trade accord will destroy domestic producers. More

This article is an on-site version of our Trade Secrets newsletter. Premium subscribers can sign up here to get the newsletter delivered every Monday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersIt’s been a rare weekend without a shock-and-awe Donald Trump news announcement on trade, the main fare from the administration these days being an endless stream of wrong predictions that deals over the bogus “reciprocal tariffs” are going to happen at any minute. So let’s talk about something else. Today’s newsletter is on a topic that’s been brewing for a while, if that’s the right metaphor — the EU retreating from (“rationalising”, if you prefer) its various wheezes to impose more environmental and human rights standards on imports. Charted Waters, where we look at the data behind world trade, is on global oil prices. Get in touch. Email me at [email protected] takes on a lighter shade of greenThe EU loves, I mean loves, the idea that trade isn’t just about grubby mercantile gain but is also about exporting European values. Over the past decade, pressure from campaigners, sometimes bolstered by sneaky protectionism, has given European importers and hence foreign exporters a bunch of responsibilities, creating a grab-bag full of exciting new abbreviations.Chief among them are CBAM, the carbon border adjustment mechanism to stop emissions-heavy imports undercutting carbon-taxed EU production; EUDR, the deforestation regulation that bans the sale of products, including palm oil, coffee and beef, raised on recently cleared land; and CSDDD, the corporate sustainability due diligence directive, which holds companies responsible for environmental and labour abuses in their global supply chains.Whatever the intentions, they’ve all created a lot of bureaucracy and resentment, especially among low- and middle-income countries, which say they’re basically neo-imperialism in a progressive wrapper. To certify, say, an Indonesian smallholder oil palm grower, of whom there are several million, can mean an inspector armed with geolocation data has to turn up to each and every farm. (This at the behest of European countries that flattened their own forests centuries ago.)Recently there’s been a rethink thanks to the apparent fragility of global trade, threats of punishment tariffs from Trump, who regards such standards as protectionism, and a general backlash against environmental regulations. The EU decided last year to delay the introduction of EUDR by one year until 2026, and in April issued new guidance which considerably simplified (some would say weakened) the regulation.Recently French President Emmanuel Macron joined forces with Germany to argue for scrapping the due diligence directive, which at the least seems likely to end with it too being watered down. Given that France was one of the main progenitors, that’s quite the reversal.Pragmatism but not partnershipSo the EU has listened to developing countries’ concerns and a new era of mutual trade and prosperity can begin, right? Ish, verging on no. Lobbying from European business associations was almost certainly more influential in delaying and watering down the EUDR than protests from emerging markets (EM). And, critically, as Jodie Keane from the ODI Global think-tank said in a recent letter to the FT, there’s little sign the EU has developed a joined-up policy towards trade and development, particularly given the damage climate change can wreak on growth. If you’re in the right place, the view from some developing countries currently doesn’t look too bad. I talked recently to Odrek Rwabwogo, an economic adviser to Ugandan President Yoweri Museveni. Uganda has long exported unprocessed coffee beans to the EU and has struggled to move up the value chain, he says, because the big international coffee-roasting companies are reluctant to set up there.The EUDR created a threat even to Uganda’s existing exports, but that seems to have diminished with the pushing back of deadlines and easing of compliance standards. “There’s not much noise any more on this from the EU and we hope it ends well,” Rwabwogo told me. “We don’t hear the demands for workshops and ultimata on deadlines that we were suffering from about six, seven months ago. Out of two million households that grow coffee, we now have around 970,000 that are [EUDR] compliant.”Rwabwogo also says Ugandan agriculture luckily seems so far to have been spared the dislocations from floods and wildfires induced by climate change that have hit other coffee-producing countries. Although the big coffee processors still aren’t moving production to Uganda, the country has attracted some smaller ones. It has also diversified into other products, such as avocados for the European market, with the help of development assistance from the UK, traditionally a big aid donor. Exports have been boosted by direct flights to London, which restarted last month for the first time in a decade.There are, however, big buts and missed opportunities. Complying with the EUDR doesn’t mean the EU is helping Uganda build a value chain. “The discussion is on traceability,” Rwabwogo says. “It’s very, very extractive. If the EU said it would leave 50 per cent of the value chain in our country, it wouldn’t need to order us to do something like the EUDR because it would be in our enlightened self-interest.”Rwabwogo says there are no signs of aid drying up as yet. But the UK has savaged its overseas development assistance (ODA) budget to 0.3 per cent of gross national income from an already reduced 0.5 per cent, within which it dishonestly counts the costs of processing asylum seekers in Britain as aid. The EU has, in effect, redirected aid from supporting development in sub-Saharan African countries to aiding a horrendously abusive detention system for migrants in Libya and Tunisia.European politicians still sometimes talk about partnership with developing countries in Africa, but usually it doesn’t mean much any more. Easing off on the EUDR is welcome to low- and middle-income countries, but imposing and then removing an obstacle to EM exports to Europe doesn’t constitute an enlightened use of trade to support development.Charted watersGlobal oil prices predictably shot up as Israel attacked Iran. But it’s worth noting that, unlike during previous episodes of war in the Middle East, fracking has made the US a net exporter of oil and gas, consequently changing its direct incentives to get heavily involved in the region.Trade linksReuters reports that India will follow China in restricting exports of rare-earth minerals.Whither those bogus “reciprocal tariffs” and so-called negotiations? Nobody knows anything about what Trump will do, but Sam Lowe in his Most-Favoured Nation newsletter has a much better record of guessing than most, and here’s his bet. The FT’s Unhedged newsletter examines the perhaps surprising lack of inflation as yet from Trump’s tariffs.A Bloomberg story says that this week’s summit of leaders of the G7 rich nations will avoid even trying to issue a communiqué in case it simply causes a row.Veteran markets guru Mohamed El-Erian notes in the FT that the oil shock comes at a bad time for the global economy and will create stagflationary forces, and the FT’s Lex column agrees. Showing that not all globalisation is about hydrocarbons and shipping containers, this is a lovely piece in the FT on how Turkish barbers (sometimes “Turkish” barbers) built an international brand, specifically with regard to the UK.Trade Secrets is edited by Harvey NriapiaRecommended newsletters for youChris Giles on Central Banks — Vital news and views on what central banks are thinking, inflation, interest rates and money. Sign up hereFT Swamp Notes — Expert insight on the intersection of money and power in US politics. Sign up here More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldFormer European Commission chief Jean-Claude Juncker has criticised his successor, Ursula von der Leyen, for not engaging personally to quickly stave off Donald Trump’s trade war.“I think that the commission would have been better advised to try to have a meeting as early as possible, because it was foreseeable that he would come back to the [trade] issue,” Juncker told the Financial Times. “There will be no deal without the active presence of the president of the commission,” he added, speaking in his Brussels office five floors below von der Leyen’s.European Commission president Ursula von der Leyen speaks with Donald Trump prior to their meeting at the World Economic Forum in Davos in 2020 More

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This article is an on-site version of our Europe Express newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday and fortnightly on Saturday morning. Standard subscribers can upgrade to Premium here, or explore all FT newslettersGood morning. Iran launched a new missile barrage on Israel’s cities early today as the Middle East conflict entered a fourth day​. Earlier, Israel​’s military said its air force ​had ​struck missile sites in central Iran​. Meanwhile European Commission president Ursula von der Leyen said last night that “Iran is the principal source of regional instability” as G7 leaders gathered in Canada. Today, I preview the G7 summit where the spiralling conflict is set to dominate the leaders’ talks, and our energy correspondent reports on talks today about the nitty gritty of plans to end the EU’s last vestiges of Russian energy imports.Powder kegA G7 summit that was already jam-packed with contentious global fractures got significantly more tumultuous with the spiralling conflict between Israel and Iran, with fears of a full-blown war in the Middle East set to dominate the Canadian gathering.Context: Leaders of the G7 countries — Canada, France, Germany, Italy, Japan, the UK, US plus the EU — are meeting today and tomorrow in Kananaskis in the Canadian Rockies. The group of advanced economies was set up to co-ordinate policies on key issues such as trade and security.Before Israel’s strikes on Iran began last week, the summit’s preparations were focused on efforts by the European members to avoid a conflagration with US President Donald Trump, convince him to maintain support for Ukraine, and find a solution to his threats of major tariffs against EU goods.But the Middle East has exploded on to the agenda, and will overshadow much of the formal and bilateral discussions. EU leaders have called for de-escalation amid fears of wider regional instability, even as Trump issues bellicose threats against Tehran.Iran has threatened to attack American, British and French military assets in the Middle East if their forces are used to help defend Israel from Iranian counter-attacks. The UK moved additional fighter jets to the region over the weekend.There are also concerns about the impact on global energy markets, and the threat posed to trade to and from Europe if Iran or its allies seek to disrupt the vital Gulf shipping lanes.In a call with Trump on Saturday, European Commission president Ursula von der Leyen said they had “discussed the tense geopolitical situation in the Middle East as well as the need for close co-ordination on the impact on energy markets”.Today in Brussels, ambassadors will prepare for an emergency video conference meeting of EU foreign ministers scheduled for tomorrow to discuss the Middle East crisis and potential responses.G7 host Mark Carney, Canada’s recently-elected prime minister, had hoped to use the gathering to present a united western front on shared issues such as economic security, emerging technologies and migration, and has dropped the traditional joint communiqué in a deft move aimed at avoiding likely disagreements with Trump on issues such as climate change.But events in the Middle East are set to continually distract the leaders, and lay bare the fractious geopolitical theatre that they are grappling with.Chart du jour: To the coreWhile the EU is making moves to stop buying Russian fossil fuels, it has delayed plans to gradually cut itself from a smaller but far more tricky reliance: Russian nuclear technology.Small printEU energy ministers will discuss how to wean the bloc off the last vestiges of Russian fossil fuels today, as Brussels seeks to sever the last energy ties with its former supplier, writes Alice Hancock.Context: The EU has sanctioned most Russian oil and coal imports, and in May published a rough plan to fully cut Russian fossil fuels by 2027. Rather than using sanctions, Brussels wants to ban the contracts with Russia via trade measures, which can be passed by a weighted majority and prevent a likely veto from Slovakia and Hungary.But the commission stopped short of setting out the details, and EU governments and the gas industry are concerned whether the legal basis will be strong enough to call off the contracts due to force majeure.A full proposal is expected tomorrow, after energy ministers discuss the plan in Luxembourg today.Hungary and Slovakia have already said in a statement that the Russian fuel phaseout plan runs contrary to energy security objectives and “raises both legal and political concerns”. Any decision on the matter should be unanimous, they said.But a senior EU diplomat struck an optimistic tone. There had already been some “informal discussions” about the plan. Once the legislative proposal “was on the table with the nitty gritty legal basis” there would be “the usual debates and arguments among member states”.“But if you ask me,” they said, “the necessary support for this will be there”.What to watch today G7 summit in Kananaskis, Canada.EU energy ministers meet in Luxembourg.European parliament plenary session kicks off in Strasbourg.Now read theseRemote work: JPMorgan’s European chief is planning to run the bank’s continental operations from New York.Unreformed: After two men were sentenced for the murder of journalist Daphne Caruana Galizia, her son Paul writes about what Malta still owes her.Critical hit: Russia hit Boeing’s offices in Kyiv in what appeared to be a deliberate strike on the US aerospace company as part of attacks last week.Recommended newsletters for you Free Lunch — Your guide to the global economic policy debate. Sign up hereThe State of Britain — Peter Foster’s guide to the UK’s economy, trade and investment in a changing world. Sign up hereAre you enjoying Europe Express? Sign up here to have it delivered straight to your inbox every workday at 7am CET and on Saturdays at noon CET. Do tell us what you think, we love to hear from you: [email protected]. Keep up with the latest European stories @FT Europe More