Aurelia Butler

For drinkers at the Coach House in central London on a busy work night this week, there was an uncomfortable piece of news to digest: the price of Britain’s favourite alcoholic beverage had just gone up — again. Stonegate, Britain’s biggest pub company which runs the Coach House, has announced it will charge pubgoers 20p extra for a pint of beer on busy evenings and weekends. It is part of what it called a new “dynamic pricing” policy in some of its venues.This has come much to the annoyance of some of its regulars. “It’s not right; we’re being done over enough on beer as it is,” says Adrian, a 37-year-old brand marketing manager, who has nipped into the pub near Piccadilly Circus after work. Sipping a £6.25 pint of Heineken, he admits that after the fuzziness of a few more drinks he might not even notice the price increase as the pub fills up. “It just fleeces people trying to enjoy themselves,” he adds. City workers enjoy a drink outside on a summer’s evening. The rollout of surge pricing in one beloved British boozer has reignited debate around the ethics of the strategy 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 storiesFor up-to-the-minute news updates, visit our live blogGood evening.The European Central Bank could be forgiven for breathing a sigh of relief today as new data showed wage growth in the eurozone stabilising. But the issue remains a big concern for central banks around the world.Hourly labour costs were 4.5 per cent higher in the April to June period compared with last year, though rising at a slower pace than in previous quarters. Ahead of the data, several ECB policymakers had told the FT that rates could rise again in December if inflation and wage growth remained hot, even after they lifted them to an all-time high of 4 per cent yesterday.ECB president Christine Lagarde said after the decision that labour costs were an increasing part of the inflation equation. The problem is particularly acute in Germany, the bloc’s biggest economy, but is also an issue in the UK and the US.The UK this week recorded wage growth at record levels while new data this morning showed it was the main cause of inflation in the country’s dominant services sector. Separate survey data ahead of next week’s Bank of England rate decision showed public satisfaction with its inflation strategy at a record low, reinforcing expectations of another quarter-point rise, taking the cost of borrowing to 5.5 per cent, the highest since 2008. August inflation data, published on Wednesday, the day before the BoE decision, could change the narrative.In the US, new data this week showed higher than expected inflation in producer prices as well as consumer prices ahead of next week’s Federal Reserve rates decision, although in this case it was driven mainly by a jump in petrol prices. (Here’s our explainer on why oil is back to $90 a barrel). Still, consumers are turning more positive: new survey data today showed year-ahead inflation expectations falling to an 18-month low.One of the big questions facing global policymakers is whether higher interest rates will leave economic scars. In her column today, Soumaya Keynes discusses two studies that argue they could hurt innovation and growth, even if they manage to get headline inflation down.“Monetary policy is a blunt tool, and the more things it is asked to do, the worse it will perform at each,” she writes. “For now, if hoiking up interest rates derails investment and innovation, the mess will be left to others to tidy up.”Need to know: UK and Europe economyThe northern section of the UK’s long-awaited High Speed 2 rail line, which would connect Manchester to Birmingham, could be in doubt after a meeting between PM Rishi Sunak and chancellor Jeremy Hunt to identify savings.Another sign of the times? Cash payments increased in the UK for the first time in a decade last year. “It’s something we do tend to see in times of falling consumer confidence and economic uncertainty,” said Adrian Buckle of trade body UK Finance. “We saw this in 2008.”UK estate agents, usually a chipper bunch, are in their gloomiest mood for 14 years, according to a new survey, thanks to falling house sales and prices and a property market clobbered by high mortgage rates.The UK’s opposition Labour party needs to be bold and deepen ties with the EU to ease trade friction if it gets elected, says public policy editor Peter Foster (for Premium readers). Foster also talks to the Rachman Review podcast about his new book, What Went Wrong With Brexit: And What We Can Do About It.Gloom is deepening in German manufacturing as the sector succumbs to short-term problems such as energy costs and longer-term structural issues including labour shortages and a lack of investment.Need to know: Global economyThere was a rare economic boost for China in this morning’s data showing retail sales and industrial production grew faster than expected in August, after policymakers stepped up stimulus measures.Uranium prices are up, too, hitting their highest levels since 2011 as governments warm to nuclear power. Nuclear has been gradually re-emerging as a critical carbon-free source that could help tackle climate change, a role that had been badly dented by Japan’s Fukushima disaster.Britain, Germany and France said they would retain sanctions on Iran that had been due to expire, in response to concerns over Tehran’s expansion of its nuclear programme. “Patronising, factually inaccurate, a contradiction in terms and a catalyst for political polarisation all within two words.” The “Global South” is a pernicious term that needs to be retired, writes Alan Beattie in his Trade Secrets newsletter (for Premium subscribers).Need to know: businessUS car workers launched the first strike action against Detroit’s big three of Ford, General Motors and Stellantis in almost a century. The dispute, over pay and a two-tier wage system, was described as “our generation’s defining moment” by the United Auto Workers union.TikTok was hit with a €345mn EU fine over how it processes the personal data of children and teenagers, the first handed out to the Chinese-owned social media platform. Shares in Arm, the SoftBank-owned chip designer, jumped 25 per cent on their first day of trading, valuing the company at more than $65bn. Its next challenge is jump-starting growth and specifically finding new sales as its core smartphone business matures. Arm’s listing has also spurred hopes among Wall Street bankers of a revival in IPO fees. Instacart’s raising of the price range for its IPO is another sign of a warming market for new listings.Apple will issue a software update for the iPhone 12 after several European countries indicated they could follow France in taking action over allegations of elevated radiation emissions.TSMC, the world’s biggest contract chipmaker, is betting big on silicon photonics, an emerging field that combines silicon chips with optic technology, to spur growth and make artificial intelligence applications such as ChatGPT even more powerful. Miami investment firm 777 Partners became the latest US investor to buy into the English Premier League, purchasing Everton for an undisclosed sum. The move ends the reign of British-Iranian businessman Farhad Moshiri after a series of setbacks on and off the pitch.Science round-upThe Bill & Melinda Gates Foundation said a series of low-cost measures to make childbirth safer could save the lives of 2mn mothers and babies around the world by 2030. Climate change is helping infectious diseases spread, fungal infections are highlighting the risks of antimicrobial resistance, and the wait continues for Long Covid treatments: Read our new special report: Communicable Diseases.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Commentator Anjana Ahuja says at least three descendants of Covid-19’s Omicron variant have scientists on alert. US regulators have approved new boosters from Pfizer and Moderna. Moderna’s mRNA flu vaccine is also showing some promising results.Dozens of UK scientists urged Prime Minister Rishi Sunak to back a “moratorium” on deep-sea mining over concerns about its environmental impact. Generative AI exists because of a scientific development called the transformer model, made by Google researchers in 2017. Here’s our visual representation of how it works.The truth is out there: Nasa unveiled a new report on unclassified UFO sightings, calling on companies, citizen scientists, pilots and air traffic managers to track activity as part of the US space agency’s efforts to gather more robust data.Some good newsResults from the UK’s Big Butterfly Count 2023 have been released today, revealing a better picture than had been feared. Although longer-term trends show worrying declines for some species, this year’s mixed weather has meant plenty of green food plants for caterpillars and nectar-rich flowers for adult butterflies.The Red Admiral was the UK’s most-seen species this year. Its presence is increasing as a result of climate change More

MOSCOW (Reuters) – Russia’s central bank raised its key interest rate by 100 basis points to 13% on Friday, jacking up the cost of borrowing for the third meeting in succession in response to a weak rouble and other persistent inflationary pressures. A month ago, responding to the rouble tumbling past 100 to the dollar and a public call from the Kremlin for tighter monetary policy, the bank had hiked rates by 350 basis points to 12% at an emergency meeting. On Friday, it gave hawkish guidance that it would consider further rate increases at upcoming meetings and said inflationary risks remained significant.”We raised the rate due to the appearance of inflation risks and will keep it at high levels for quite a long time, until we are convinced of the sustainable nature of the inflation slowdown,” the bank’s governor, Elvira Nabiullina, told a press conference.In a statement, the bank said: “Significant proinflationary risks have crystallised, namely domestic demand growth outpacing output expansion capacity and the depreciation of the rouble in the summer months,” the bank said in a statement. The decision to raise rates was in line with a Reuters poll.Nabiullina said the board of directors had considered holding rates, as well as a more aggressive tightening step, noting that bringing inflation to the bank’s 4% target by end-2024 will require a higher rate trajectory. MORE HIKES TO COME?Russia has gradually reversed an emergency hike to 20% which it made in February 2022 after Moscow despatched troops to Ukraine and the West imposed sweeping sanctions, bringing rates to as low as 7.5% this year. But as a sharp weakening of the rouble fuelled inflationary risks from a tight labour market, strong consumer demand and Moscow’s wide budget deficit, the central bank has been forced into a tightening cycle that began in late July. By 1301 GMT the rouble was 0.7% firmer against the dollar at 96.70, but off its session high of 96.10. The central bank adjusted its year-end forecast for inflation to 6.0-7.0% from 5.0-6.5%. Annual inflation was running at 5.33% as of Sept. 11, above the 4% target.Capital Economics said it was not convinced inflation would return to the bank’s 4% target in 2024, and expected more rate hikes to come. “Russia’s central bank is a hawkish institution that takes its commitment to inflation fighting seriously,” said Senior Emerging Markets Economist Liam Peach. “With fiscal policy set to remain loose, the economy likely to continue overheating and inflation pressures to build further, there will be more pressure on the central bank to tighten monetary policy.”The bank upgraded its 2023 key rate range forecast to 9.6-9.7% from 7.9-8.3%. It now sees this year’s current account surplus at $45 billion, up from $26 billion previously. The bank kept its 2023 economic growth forecast at 1.5-2.5%, but warned the economy had now completed its recovery phase and that supply-side constraints, namely the tightening labour market, would limit further growth.The next rate-setting meeting is scheduled for Oct. 27. More

(Reuters) – U.S. junk-bond offerings have spiked in recent weeks on the back of strong demand from investors looking to boost their returns buying the risky yet high-yielding debt.But that demand is coming with a touch of caution: Unlike recent years, investors are asking for more protection through financial covenants and collateral in new bond offerings, analysts and investors said.Twelve high-yield issuers have raised $9.6 billion this week, making it the busiest week since November 2021, according to JPMorgan. Of this, some 55% comprised bonds secured by a company’s assets. Of a total $121 billion in new junk bond supply so far this year, 55% was secured. This stands in stark contrast to the same period in 2022, when only 25% of a total $81 billion was secured debt, according to Informa Global Markets data. The rise in protection is a sign of investors’ caution when buying risky debt, as a higher-for-longer interest rate environment raises the default risk for companies, investors told Reuters.According to rating agency Fitch, junk debt defaults are expected to reach 4.5% of all outstanding U.S. junk debt by the end of 2023, up from 2.8% in July.The rise in protections also shows investors have had more influence on how new debt should be structured.”When interest rates were super low, the issuer was able to prevail on many things,” said Anthony Canale, global head of research at Covenant Review. “It was an issuer’s market, and now it’s shifted the other way.””Now we’re seeing new deals actually have relatively strong covenants (structural protections for bondholders),” he added, pointing to greater restrictions on things like dividend payments or investments. The extra level of protection and high investment returns are ensuring strong demand for new junk debt.”Quite frankly, we are in the camp that this is a pretty interesting time to extend credit in the primary market, because of the terms that you’re able to negotiate,” said Brian Gelfand, co-head of global credit at asset manager TCW. “All-in yields are, on a historical basis, quite attractive [as is] the ability to push back on the margin on covenants and other structural terms,” he added.The ICE BofA High Yield Index had total year-to-date returns of 7.25%, while the Morningstar LSTA U.S. Leveraged Loan 100 Index returned 9.66%. In comparison, the ICE BofA Corporate Index, which tracks investment-grade bonds, has seen a 2.01% total return so far this year.More supply of new junk debt, including that backing recently announced leveraged buyouts, is expected to lift overall issuance volume of bonds and loans to $20 billion or more this month, said some investors.On Wednesday, a group of banks led by JPMorgan and Goldman Sachs held investor calls for $4.4 billion in term loans to fund merchant services provider Worldpay’s buyout by GTCR, according to three investors. The loans are part of a $9.4 billion debt package – the largest since last year’s buyout of Twitter by billionaire Elon Musk.In addition, two investors told Reuters, a Jefferies -led bank group began testing interest this week for a $1 billion term loan to help fund book publisher Simon & Schuster’s $1.4 billion buyout by KKR.JPMorgan, Goldman Sachs and Jefferies all declined comment. More

According to LSEG data, investors poured a net $9.7 billion into U.S. equity funds in the seven days ended Sept. 13, their biggest weekly net purchase since June 14. Data on Wednesday showed the annual rise in U.S. core inflation was the smallest in nearly two years in August, which solidified some expectations that the Fed would leave the rates unchanged next week. Equity large-cap funds drew $13.42 billion, the biggest weekly inflow since March 22. Mid-cap funds also received $153 million, but multi- and small-cap funds saw net selling worth $1.53 billion and $405 million, respectively.Among sectors, consumer discretionary and tech attracted inflows worth $957 million and $705 million, respectively. Consumer staples, however, faced about $770 million worth of outflows.Tech stocks surged during the week as Morgan Stanley upgraded Tesla (NASDAQ:TSLA)’s stock, saying its Dojo supercomputer could boost the company’s market value by nearly $600 billion. Meta Platforms (NASDAQ:META) also climbed after a report said it was working on a new, more powerful AI system.Meanwhile, purchases in money market funds stood at just $9.37 billion during the week, compared with about $35.3 billion of inflows a week ago.U.S. bond funds obtained $741 million, the first weekly inflow in five weeks.Investors purchased U.S. short/intermediate government & treasury, and general domestic taxable fixed income funds of $1.21 billion and $495 million, respectively, but withdrew $930 million from short/intermediate investment-grade funds. More