Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The fallout from US President Donald Trump’s tariff policies risks raising government debt around the world to levels not seen since the end of the second world war, the IMF’s most senior official for fiscal policy has warned.Vítor Gaspar, the director of the IMF’s fiscal affairs department, said the fund’s current worst-case scenario — with public debt rising from 92.3 per cent of global output to 117 per cent by 2027 — could even prove too optimistic if trade tensions intensify. “In 2025, uncertainty sharply rose, trade and geoeconomic uncertainties escalated, financing conditions tightened and financial market volatility increased, and spending pressures have intensified,” Gaspar told the Financial Times. He added that risks were now “more considerable” than the fund’s projections, which were calculated towards the end of last year. The IMF said in its latest Fiscal Outlook, published on Wednesday, that a 117 per cent global debt-to-GDP ratio would be the highest since the aftermath of the second world war. The ratio hit an all-time high in 1946 of 150 per cent, before declining sharply over the 1950s and 1960s. Most of Trump’s “reciprocal” tariffs — first unveiled on April 2 — are now on pause as the US and its trade partners try to negotiate deals over the coming months that will lower the levies. US stocks rallied on Tuesday after US Treasury secretary Scott Bessent said a trade war with China — which remains subject to tariffs of 145 per cent, and which has retaliated with duties on US imports of 125 per cent — was “unsustainable”. Trump echoed Bessent’s remarks later in the day, saying the tariffs on China would “come down substantially”. Gaspar flagged that the global public debt burden was already “high, rising and risky” in 2024, when it climbed above the $100tn mark for the first time. This year “very high uncertainty” over trade policies meant countries “should double down” on efforts to put their “fiscal house in order”, he said. The remarks came as the IMF published forecasts suggesting countries representing 75 per cent of global GDP would see their debt burdens rise in 2025, compared with the previous year. This included the US, China, Germany, France, Italy and the UK. The fund’s baseline projections were similar to those issued in the previous October fiscal monitor, showing global debt to GDP levels topping 100 per cent by the end of the decade — surpassing a pre-pandemic peak. However it noted that “risks of even higher debt levels have increased”.Gaspar welcomed the new German government’s plans to loosen its debt brake as a “very significant” step that would allow Germany to increase public investments on infrastructure and other priorities. “This gives flexibility to a country that has low debt levels, compared with the standard of advanced economies, to spend more,” he said, adding that it was not expected to threaten the finances of Europe’s largest economy. He also praised the French authorities for “very promising” developments in passing their budgets. “It is a move in the right direction,” said Gaspar. “It is clear from developments in markets that the approval of the budget did reduce uncertainty.” More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldSir Richard Branson has launched a stinging attack on Donald Trump’s tariffs, saying that the US president’s “erratic and unpredictable” economic policies risk “doing so much damage”.The founder of Virgin Group said Trump’s policies were “very difficult for businesses to deal with”, after Washington announced a wave of tariffs and trade barriers this month that have shaken global markets. Virgin Group owns an investment portfolio that includes stakes in a range of businesses, including travel, entertainment and telecoms. “If we take Virgin, our cruise ships were booming, our airline was booming, our health clubs were full . . . They’re still OK, but you just sort of feel . . . if he continues, he’s in such danger of doing so much damage in this world,” Branson said on Wednesday.The US government earlier this month unveiled a series of tariffs on goods imported from its trading partners, which have threatened to disrupt global trade. Trump announced a 90-day pause on some of the toughest measures days later, following a big market sell-off, but he also ignited a trade war with Beijing by raising levies on most Chinese goods to as much as 145 per cent.“It’s just such a pity because everything was going so bloody well up to about three months ago,” Branson said. The billionaire was speaking as his long-haul specialist airline Virgin Atlantic launched a new daily route to Riyadh in Saudi Arabia from London’s Heathrow airport. The airline, which is 51 per cent owned by Virgin Group, flies most of its passengers between the UK and the US, and is heavily exposed to a potential downturn in transatlantic flying. Shai Weiss, Virgin Atlantic’s chief executive, said on Wednesday that some passengers had delayed booking trips because of the uncertainty. But he said the weakness of the US dollar, which has fallen in reaction to Trump’s tariffs, could help encourage British travellers to book holidays in the US. Virgin Atlantic earlier this month warned that it had seen signs of softer demand from US customers booking to fly to Europe, one of the first signs of a slowdown in demand for transatlantic flying.The number of European travellers visiting the US has fallen sharply as political and economic tension have combined with fears of a more hostile border policy, the Financial Times has previously reported. Virgin Atlantic also announced on Wednesday the launch of flights to South Korea from 2026, as it expands its routes to Asia. “Whilst transatlantic travel remains core to our business, we are incredibly excited to expand our network in the east,” said Juha Järvinen, chief commercial officer. More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back to FirstFT. Markets are in a more positive mood today — we’ll explain why. Here’s what else we’re covering: Putin’s peace offerLutnick’s son in crypto venture Musk steps back from DogeCrackdown on US scienceMaga Catholics seek “Trump-like” popeMarkets surged overnight after Donald Trump said he had “no intention” of firing Jay Powell, pulling back from a historic confrontation with the US Federal Reserve chair. What did Trump say? The president reiterated his recent complaints that the Fed needed to cut borrowing costs but added: “I don’t want to talk about that because I have no intention of firing him [Powell].” Trump’s sustained criticism of Powell in recent days had rattled global markets and threatened the independence of the Fed, which helps underpin investors’ confidence in the global financial system.How have markets reacted to the comments? Futures tracking the S&P 500 were up 2.5 per cent and those for the tech-heavy Nasdaq climbed 2.7 per cent ahead of the start of trading on Wall Street. In Europe, the Stoxx Europe 600 is up 1.8 per cent and in Asia Japan’s Topix closed 2.1 per cent higher. The dollar index gained 0.3 per cent, extending its rebound from a three-year low, while US government bonds rallied, with the yield on the 10-year Treasury note falling 0.04 percentage points to 4.35 per cent. Gold dropped 2 per cent after hitting a record high of $3,500 per troy ounce yesterday.What this means: Investors said the president’s pledge not to dismiss Powell proved there were some members of his inner circle who recognised that markets valued the independence of America’s major institutions. “This shows there are some guardrails around this president,” said Dec Mullarkey, managing director at fund manager SLC Management. Powell has repeatedly said he would serve his full term as Fed chair and believed his early dismissal would not be allowed under US law. Follow the latest market reaction to Trump’s comments.Join Unhedged’s Robert Armstrong and other FT experts at 8am ET for a webinar covering Trump’s trade policies how they have reshaped markets. Register for free. Here’s what else we’re keeping tabs on today:World Bank-IMF Spring meeting: The event continues in Washington with the release of the Fiscal Monitor Report on global public finances and comes a day after the organisation cut its global growth forecast. Ukraine: A planned ministerial meeting in London to discuss the future of Ukraine has been downgraded after US Secretary of State Marco Rubio withdrew. It comes after the FT reported that Russian President Vladimir Putin offered to halt his invasion at the current front line. Companies: Boeing, IBM and Philip Morris International are among the companies reporting results today. Goldman Sachs holds its annual shareholder meeting.Pope Francis: The late pontiff’s body will be moved to St Peter’s Basilica today to allow Catholics to pay their final respects ahead of Saturday’s funeral. Here’s more on the funeral plans. Five more top stories1. Scott Bessent yesterday warned that the US-China trade war was “not sustainable” and that the two countries would have to de-escalate their dispute in the “very near future”. But the US Treasury secretary admitted trade negotiations with China would be “a slog”. He was speaking at a private conference hosted by JPMorgan. Here’s more on the comments which helped lift market sentiment around the world.2. Elon Musk said he would refocus his attention on Tesla and “significantly” scale back his US government role after the billionaire’s carmaker reported its lowest quarterly profits since the end of 2020. Tesla shares, which have fallen by nearly two-fifths since the start of the year, roared back in after-market trading. 3. Howard Lutnick’s son is partnering with SoftBank, Tether and Bitfinex to capitalise on a crypto revival under Trump. Brandon Lutnick, who took over as Cantor Fitzgerald’s chair after his father became US commerce secretary, is creating a multibillion-dollar bitcoin vehicle that will absorb billions in cryptocurrency from the other partners.4. Grant Thornton US is in talks to buy more than half a dozen of its sister firms in Europe and the Middle East in a private equity-driven acquisition spree that will dramatically reshape the accounting firm’s global network. Stephen Foley in New York has more details.5. Former OpenAI employees and leading artificial intelligence experts are joining forces to oppose the ChatGPT maker’s transition to a for-profit company. In a joint letter submitted to the California and Delaware attorneys-general last night, the group opposed the move while echoing the concerns of Elon Musk. Read more on the letter. Today’s big read© Freya Hyde/FT montage/Getty ImagesThe Trump administration has embarked on a wide-ranging campaign to shrink publicly funded US science, slashing finance for leading organisations and suppressing research on subjects including gender inequalities, vaccines and climate change. Critics say the cuts, fuelled by cost-cutting and ideological missions, threaten to undermine the innovation that has powered America’s economic success. But after a slow start resistance is gathering, report Michael Peel and Hannah Kuchler.We’re also reading . . . Vance’s audition to be Trump’s heir: The many contradictions of the vice-president should not distract from his ambition, writes Edward Luce.Peronist Pope: Outsiders might be surprised to learn that Francis was markedly less popular in his native Argentina than other Latin American Catholic strongholds, writes Michael Stott.Tradwives: Domestic influencers have become pin-ups of the religious right’s quest for higher birth rates, writes Chine McDonald of think-tank Theos. Chip tariffs: Levies on components of foreign-made semiconductors would function as a major tax increase on electronics sold in the US, writes Chris Miller.Chart of the dayIt is the job of the IMF to make sense of what Trump’s unnecessary shock might mean for the world economy, writes Martin Wolf. But the fund, like everyone else, has no idea what the US president will do next, an uncertainty that is itself economically paralysing.Some content could not load. Check your internet connection or browser settings.Take a break from the newsWhat does the future of beer look like? HTSI drinks columnist Alice Lascelles visited the new Heineken Studio in Amsterdam for a taste of innovations including flavoured foams and a “personalised draught system”.Serving a foam-infused pint of Heineken More

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This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back to FirstFT Asia. In today’s newsletter:China pulls back from US private equity investmentsCATL’s battery breakthroughThe legacy of Pope FrancisChinese state-backed funds are cutting off new investment in US private equity, according to several people familiar with the situation, in the latest salvo against President Donald Trump’s trade war.What to know: State-backed funds have been pulling back from investing in the funds of US-headquartered private capital firms in recent weeks in response to pressure from the Chinese government, according to people with knowledge of the matter. Chinese investors would no longer make new fund commitments to US firms, the people said. One added that some were backing out of allocations they had been planning to make, in cases where they had not yet made a final commitment. Why Chinese funds are pulling back: Multiple buyout executives said Chinese investors had changed their approach to US private equity since the trade war began. China has borne the brunt of US tariffs announced in the past three weeks that threaten to significantly curtail trade between the world’s two biggest economies. Trump has imposed new tariffs of up to 145 per cent on Chinese exports and Beijing has retaliated with 125 per cent tariffs.Why it matters: In recent decades, Chinese sovereign wealth funds have poured billions of dollars into many of the largest US private capital groups including Blackstone, TPG and Carlyle Group. Top industry executives told the FT that the fallout from Trump’s trade war was prompting some evaluation of where to invest. “There definitely are questions from global investors and clients about what’s happening here,” Blackstone president Jonathan Gray said on an earnings call last week. US-China trade war: Beijing has warned it will retaliate against countries that negotiate trade deals with the US “at the expense of China’s interests”.Opinion: Ruchir Sharma explains how the trade war will reorder the global economy — not burn it down.Here’s what else we’re keeping tabs on today:Economic data: South Korea publishes March PPI inflation rate data and Hong Kong reports monthly labour market figures.Global economy: The IMF’s World Economic Outlook is published. Kristalina Georgieva, the managing director of the IMF, warned last week that the fund was preparing to cut growth forecasts amid trade turmoil and market volatility.China-Kenya ties: Kenyan President William Ruto begins a five-day state visit to China.Don’t miss the opportunity to join Unhedged’s Robert Armstrong and other FT experts on Wednesday as they discuss how Trump’s policies are shaping markets in a subscriber-only webinar. Register for free.Five more top stories1. China’s CATL has unveiled upgraded battery cells it claims can offer faster charging for electric vehicles than its rival BYD. The world’s biggest EV battery maker said yesterday that a new version of its flagship Shenxing battery cell could offer a 520km range from just five minutes of charging time. Read more about CATL’s breakthrough.2. Wall Street stocks and the dollar tumbled amid mounting uncertainty over the US economy as Trump renewed his attacks on Federal Reserve chair Jay Powell. The dollar fell to a three-year low against a basket of its big trading partners after the US president stepped up his criticism of Powell — whom he called “Mr Too Late” — for not cutting rates.More US news: Harvard University has sued the Trump administration to block its “unlawful” efforts to freeze more than $3bn in federal funding and increase government oversight of the venerable institution. 3. US and Philippine forces are to conduct their first “full battle test” for fighting together in flashpoints such as Taiwan or the South China Sea. The two countries’ annual Balikatan exercises, which began yesterday, combine elements practised over the past two years — such as targeting enemy ships with missiles from shore or protecting islands from attack — into a war scenario under realistic conditions.4. The US Federal Trade Commission has sued ride-hailing app Uber, saying it made “false or misleading” claims about its subscription service. The case signals that the Trump administration will continue to clamp down on Big Tech groups despite recent overtures made by executives in the industry.5. Crypto casino takings have soared to tens of billions of dollars a year, new data showed, as gamblers bypassed blocks in their home countries to bet on unregulated offshore platforms. Despite being illegal in most countries, wagers paid in cryptocurrency last year generated $81.4bn in gross gaming revenue — a fivefold rise since 2022.Obituary: Pope Francis, 1936-2025The first non-European pontiff in centuries pioneered change but was not the radical liberal of conservative imaginings More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe writer is a contributing columnist, based in ChicagoSteve Pitstick has been farming in the US Midwest for 51 years, about an hour outside Chicago, the city that grain built. Seven generations of his family have made their living off the land.Now farms like his in Illinois — the largest soyabean-exporting state in the US — are at the rough end of President Donald Trump’s US-China trade war. Illinois paid a huge price for Trump’s last trade war with China in 2018. Back then, the US lost $27bn in agricultural exports in 2018-19 alone, with losses concentrated in the Midwest. Illinois alone lost $1.41bn annualised.I caught up with Pitstick as he was rushing to get this year’s soyabean and corn crops into the ground on his son’s farm near Elburn, Illinois. Talking fast so that he could get back to moving boxes of seed around the farm with a forklift, the 66-year-old tells me he’s not fretting about the recent dramatic deterioration in trade relations with China, the top export destination for US soyabeans. And neither is the market, he says. “So far the [soyabean futures] market has proven that it doesn’t care . . . it has actually rallied since the tariffs started,” he tells me. “It will all work out in the end.” Many working in the farming sector think there will be a trade deal with China before the crops being planting now are harvested More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldIt is time to retire the phrase: “When America sneezes, the rest of the world catches a cold.” Said to have first been used in relation to Napoleonic France, that idiom lost its value after Waterloo. Donald Trump is about to destroy its modern equivalent. In foreign policy, the president’s choice no longer to be a reliable ally providing trusted security guarantees is a seismic change. It ensures that other countries will now be less willing to accept US demands. But it is on the economic front that hubris is most likely to result in humility for a country that has long since lost its status as the world’s largest producer of goods and services. It is not just that Trump’s negotiating hand with tariffs is much weaker than he imagines. It is that the rest of the world controls 85 per cent of the global economy and no longer has to follow whatever the US does. Provided cool heads prevail in global commerce, the hotheads in the White House will not dominate the landscape. This century, America’s share of global goods imports has fallen from 19 per cent to 13 per cent, according to World Bank figures. These figures probably understate the country’s true importance because imports and exports along supply chains often end up as US final demand (for example, if Chinese batteries are supplied to European electric vehicles and bought by Americans), but its share of global commerce is undoubtedly falling. The White House might seek to generate a sense of global economic dominance, bringing other countries into line for fear of the consequences. But what this century has taught us is that few crises are actually global. For sure, few economies emerged from the global financial crisis or the Covid pandemic unscathed. But there have been many more localised economic crises that did not infect the rest of the world. Brexit and the Liz Truss episode were confined to the UK. The Eurozone bore the vast brunt of its 2010-12 sovereign debt crisis. Europe alone suffered from natural gas shortages and price surges in the wake of Russia’s invasion of Ukraine. Globalisation is far from complete.The US is a sovereign nation and free to destroy its part in the global economic rules-based system it created. But in setting high tariffs and flip-flopping on them, spreading fear among immigrants and undermining the effectiveness of the US government, the policies will hit hardest at home. The stagflationary shock of generating huge business uncertainties and higher imported goods prices puts the Federal Reserve in a bind. It is struggling to articulate whether to worry more about higher unemployment or rising prices. But the inflationary effects of Trump’s tariffs hit mostly in the US. Other countries facing a demand shock can simply offset this with looser policy. Of course, there will be some collateral damage. Countries with high export shares in GDP and with the US as a very large trading partner — think Canada and Mexico — are more vulnerable. Smaller economies that export food and basic goods such as T-shirts to America are also likely to be hit hard. But when economists calibrate their models and look at the underlying realities, it is the US that looks weak. Consensus Economics, which collates private-sector forecasts, shows that economists on average expect the US economy to grow almost a percentage point less in 2025 than at the time of Trump’s inauguration, and 2026 does not look much better. Eurozone and Chinese GDP forecasts have been trimmed by far less. This week, finance ministers and central bank governors will convene in Washington for the IMF and World Bank spring meetings. There is often one country at such gatherings that has earned pariah status. No doubt fingers will point at the US this year. The only question is how polite other countries choose to be. But America’s economic problems are its own. When it shoots itself in the foot, it is the US that will be [email protected] More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Britain is to expand production of explosives as the government seeks to strengthen its defence resilience and reduce the country’s reliance on imports, including from the US.BAE Systems, Britain’s biggest defence group, has over the past five years invested £8.5mn in novel manufacturing methods to be able to produce its own supply of cutting-edge explosives and propellants. The company previously imported RDX explosives, which are used in 155mn rounds for British army guns and other weapons, from the US and France.The new manufacturing methods will remove the need for nitrocellulose and nitroglycerine, key raw materials for the production of energetics and propellants used in ammunition and which have been in high demand since the war in Ukraine. Defence contractors have struggled to scale up output of ammunition because of supply chain constraints of various outputs, including nitrocellulose, also known as “guncotton”. Germany’s Rheinmetall earlier this month agreed to buy a small producer of propellants for ammunition to strengthen its supply chain. BAE’s “leap forward in synthetic energetics and propellant manufacture will strengthen the UK’s supply chain resilience,” said Steve Cardew, business development director for the company’s maritime and land defence solutions. The novel methods would also “support our ramp up of critical munitions production to meet growing demand in response to the increasingly uncertain world we’re living in”, Cardew added. The move comes amid growing concerns over Washington’s commitment to its Nato allies under the Trump administration. It will allow BAE and the UK to produce munitions that do not contain parts from the US. A pilot of the new manufacturing technology has already demonstrated that the explosives can be produced in small nodes, removing the need for a large-scale factory, according to BAE. The company plans to erect shipping containers at sites across the UK to produce the materials. BAE also announced that by the summer it expects to have increased production of 155mm artillery shells 16-fold over the past two years to meet the demand. The 155mm ammunition is the standard for most Nato howitzers — long-range artillery launchers — including America’s M777 and France’s Caesar, both of which have been sent to Ukraine. BAE said it had invested more than £150mn in its UK facilities over the past three years, including in a new explosive filling facility at Glascoed in south Wales which will become operational in the summer. The company secured a £280mn contract from the Ministry of Defence to boost output in 2023. More