Aurelia Butler

Today’s top storiesThe European Commission downgraded its growth forecasts for the EU economy and upped its predictions for inflation. Brussels now suggests 0.8 per cent growth for 2023 and 1.4 per cent in 2024, with inflation at 6.5 per cent this year and 3.2 per cent next year. The European Central Bank faces a tough decision on interest rates on Thursday. A British parliamentary researcher accused of working for Beijing has denied spying allegations levelled against him. Prime Minister Rishi Sunak told Chinese premier Li Qiang he had “significant concerns about Chinese interference in the UK’s parliamentary democracy”.US Treasury secretary Janet Yellen rejected accusations that the G20 watered down its position on Ukraine over the weekend after it appeared the wording in the group communique was softened to stave off the prospect of a split. The group did, however, agree on a bigger role for the reformed World Bank. For up-to-the-minute news updates, visit our live blogGood evening.BMW’s decision to invest more than £600mn to make electric Minis in Oxford has given a much-needed shot in the arm to the UK car industry in the latest example of how the west is scrambling to respond to a wave of electric vehicle competition from China. UK car production has fallen 40 per cent since the start of the pandemic thanks to plant closures, component shortages and decisions by manufacturers to move operations abroad. Brexit has been a key issue: China’s BYD, the world’s largest seller of electric and hybrid cars, blamed it for ruling out the UK as a location for its first European factory.The threat from China — the world’s largest market for cars — is all-encompassing. Over the past 15 years, it has built up an EV industry that is now making a concerted push into Europe with sales that could reach 1.5mn vehicles by 2030. Last week, BMW chief Oliver Zipse said the EU ban on combustion engines from 2035 was pushing European makers of cheaper cars into a price war with Chinese rivals that they were unlikely to win (although an exemption from Brussels for cars powered by e-fuels may provide a bit of a lifeline).China’s incursion into Europe was on full display at last week’s Munich motor show, with its carmakers taking up almost two-thirds of the floor space. Its industry has capitalised on the experience of joint ventures that international auto groups were required to form, while simultaneously placing significant bets on electric batteries.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Underpinned by vast state subsidies and unchecked bank lending, China, which has already cornered the market in the wider clean tech supply chain, is building battery plants far beyond levels needed for domestic demand, while manufacturers including world leader CATL are planning to expand into the US and Europe. It is also pouring record amounts into metal and mining investments to defend its position.The most significant response in the west has been the US Inflation Reduction Act, which has pumped money into clean tech, including electric vehicles and batteries. However, the investment has failed to quell discontent from autoworkers whose threatened strike over pay could deliver a multibillion-dollar blow to the US economy.In the EU, member states are being allowed to “match” incentives from elsewhere, while economy commissioner Paolo Gentiloni has urged Brussels to go further.Meanwhile, the UK and Germany are trying to postpone tariffs on EV sales between the UK and the EU after industry warned that the measure would backfire. At present, Britain’s post-Brexit trade deal means levies of 10 per cent will be imposed on EVs shipped across the Channel from January if they have batteries made outside Europe.France has introduced its own plan to subsidise EVs based on the emissions of their producers, in effect hitting Chinese manufacturers whose factories are run on electricity powered by coal.Need to know: UK and Europe economyA British Chambers of Commerce survey showed small and medium-sized businesses were completely unprepared for an impending “avalanche” of new EU regulations and taxes as they grapple with “Brexit 2.0”.UK researchers are looking at using artificial intelligence to reduce the environmental impact of aviation. A £15mn project will determine the role that AI could play in advising and eventually replacing human air traffic controllers.The EU is rethinking plans for stricter animal welfare measures over concerns they could fuel food price inflation. Brussels had promised to stop practices such as the use of cages for livestock, the killing of day-old chicks and the sale and production of fur. Need to know: global economyChina gave a strong warning against bets on renminbi depreciation and released a batch of positive lending data earlier than usual, spurring the currency to bounce back from last week’s 16-year low against the dollar.Subscribers can join our webinar this Wednesday (07.30 ET/12.30 UK) on China’s economic slowdown. Register here for your free ticket and send in your questions for FT specialist reporters and UBS economist Tao Wang.Singapore has for decades prospered because of its reputation as a safe and neutral haven for business but its reputation has been dented by a billion-dollar money-laundering scandal. Vietnam has boosted ties with the US during a visit by President Joe Biden with a new “comprehensive strategic partnership” and billions in semiconductor and AI deals. The US views developing countries in Asia as crucial to countering China’s power in the Indo-Pacific.North Korea is belatedly reopening from some of the most stringent Covid-19 restrictions in the world, ending a long self-imposed isolation that was unprecedented even by the reclusive regime’s standards.Need to know: businessWilko’s remaining stores will shut by early October after a rescue deal for a large chunk of the UK high-street discount chain fell through. About 300 Wilko stores and distribution centres are expected to shut in the coming weeks although administrators have sold 51 sites to discounter B&M.A Washington courtroom tomorrow becomes the focus for a historic government effort to rein in Google in the biggest antitrust showdown since Microsoft 25 years ago. Chipmaker Qualcomm said it had struck a three-year deal with Apple to supply it with 5G chips for its smartphones, in a sign that the latter’s in-house efforts may take longer than expected. Apple launches its iPhone 15 tomorrow and the company had hoped — before last week’s crackdown by China on iPhone usage among officials — this would help it become the world’s largest handset maker.Legal disputes in the shipping industry have hit the highest level in at least seven years, as declining profits and disruption caused by the war in Ukraine lead to clashes between shipowners and their customers, according to analysis shared with the Financial Times. The poultry industry for much of the postwar period was one of the fastest growing and productive sectors in UK farming, but it has been hit by a series of upheavals that illustrate not only the fragility of food systems but broader issues plaguing the economy. Read our new deep dive.Islamic scholars have ruled on how to make lab-grown meat halal in a sign of how the food industry is exploring how their products can fit religious dietary rules. Columnist Helen Thomas highlights how UK supermarkets are ramping up efforts to sell ads, either in-store or online, to consumer goods companies desperate for targeted marketing and measurable returns, similar to Amazon’s “sponsored products” feature.Another Big Read shows how the music industry has managed to remake itself after fears it would be left for dead in the digital era.

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 workUK trade unions are reporting the government to the UN watchdog on workers’ rights over its new anti-strike laws, arguing they fall short of international legal standards. Even as some employers take a more aggressive approach to getting staff back in the office, new data shows the picture on working patterns is more nuanced, with many companies moving from fixed positions to offer much more flexibility.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

And although divides between work and leisure time may have become blurred since the adoption of hybrid working, it’s still important to draw deliberate boundaries between the two, writes columnist Tim Harford.Some good newsA giant leap for womankind: trailblazing 19th-century UK astronomers Annie Maunder and Alice Everett have had two asteroids named in their memory. The Guardian reports: “They charted the stars for pitiful wages, knowing their observations about the universe would be attributed to male colleagues, and died in relative obscurity, their scientific achievements unrecognised and overlooked.” More

One of the Bank of England’s more hawkish policymakers on Monday indicated that she did not back pausing interest rate rises, arguing that the UK central bank still needed to do more to ensure tighter monetary policy was working. Speaking to a business audience in Canada, Catherine Mann opposed recent suggestions by senior members of the Monetary Policy Committee that the BoE was close to the peak of interest rates and could think about holding them at their current level of 5.25 per cent. Her forthright speech suggests there will be a lively debate on whether to lift the cost of borrowing at the next meeting of the nine-member panel on September 21. “In my view, holding rates constant at the current level risks enabling further inflation persistence, which will have to be unwound eventually with a worse trade-off,” said Mann, predicting rates would have to surpass their current 15-year high if the BoE was not sufficiently resolute. Mann warned that allowing inflation, now at 6.8 per cent, to remain above the BoE’s 2 per cent target was not a risk to be taken lightly, noting: “The longer this overshoot is allowed to continue, the more likely a departure from the old ‘low inflation, low volatility’ steady state.” “I would rather err on the side of over-tightening,” she added.Mann, an external MPC member, has regularly voted for faster interest rate rises than the majority on the committee in the past two years, and her words differed significantly from other rate-setters’ recent comments.Huw Pill, BoE chief economist, indicated last month that he favoured keeping rates close to current levels for a longer period, rather than raising them further.

Last week, BoE governor Andrew Bailey and Sir Jon Cunliffe, outgoing deputy governor for financial stability, told MPs that rates were now near their peak. Swati Dhingra, a fourth MPC member, said she thought borrowing costs were already too high. Mann indicated she was not yet certain interest rates were sufficiently high to be “restrictive” and constrain spending in the economy.She said it was a “risky bet” to assume the central bank had done enough to force inflation to fall, warning that not taking enough action could cause the rate of price rises to stick at roughly 3-4 per cent, rather than coming durably down to the 2 per cent target.“We need to communicate and act on our commitment to do what is necessary to achieve the 2 per cent target, sooner rather than later,” she said, adding that the BoE could easily reverse rises if interest rates climbed too high. More

Europe’s solar power industry has warned that a glut of cheap Chinese imports has pushed some manufacturers to the brink of bankruptcy, hampering the EU’s efforts to boost local production of green technologies.SolarPower Europe, a trade group for the industry, wrote to the European Commission on Monday that soaring stockpiles and “fierce competition” among Chinese manufacturers to gain market share in Europe had pushed down the prices of solar modules by more than a quarter on average since the beginning of the year.“This is creating concrete risks for companies to go into insolvency as their significant stock will need to be devalued,” the letter said. Norwegian Crystals, a producer of the ingot used in solar cells, had already filed for bankruptcy last month, it added. Norsun, another Norwegian solar company, this month said it would suspend production until the end of the year.The EU is hoping that solar power will become the biggest generator of energy within the bloc as it tries to reach a target of having 45 per cent of energy generated by renewables by 2030 — a goal set to be voted on by the European parliament this week.China’s dominance of the solar supply chain is prompting fears that the EU is developing a reliance on Beijing akin to its dependence on Russian gas © Ina Fassbender/AFP via Getty ImagesBut China’s dominance of the solar supply chain means that its products account for around three-quarters of the bloc’s solar power imports, prompting fears that the EU is developing a reliance on China akin to its dependence on Russian gas until Moscow’s full-scale invasion of Ukraine.The cost of manufacturing a solar module in Europe is more than double the current spot price, SolarPower Europe said.The EU has already sought to limit unfair competition from China by placing tariffs on Chinese imports in 2012, after Beijing ploughed massive subsidies into its solar industry. But the bloc lifted them again in 2018 in order to boost installations of renewable energy, just a year before the commission declared China a “systemic rival”. Brussels has not reinstated them since, despite recently pushing European companies to “de-risk” their supply chains from China as part of a wider effort to reshore manufacturing amid heightened geopolitical tensions. A spokesperson for the commission did not immediately respond to a request for comment. The dramatic drop in prices meant the EU’s goal to manufacture 30GW of the solar power supply chain in Europe by 2030 was now “at serious risk”, the letter said. The wind industry has made similar calls to Brussels fearing that turbine manufacturers are also being undercut by Chinese rivals.Western executives have also warned that China is massively subsidising and building battery plants for electric cars, far beyond levels needed to meet domestic demand — a trend that could also scupper Europe’s ambition to expand its production of EV batteries.SolarPower Europe’s statements were echoed in a separate letter on Monday signed by more than 40 solar companies including Swiss company Meyer Burger and German PV manufacturer Heckert Solar.European spending on solar power components had increased from €6bn in 2016 to more than €25bn last year, leading to a glut of Chinese solar panels that were now sitting in European warehouses, the second letter read. The amount of Chinese photovoltaic cells in storage was enough to cover Europe’s overall annual demand twice over, it said.Chinese companies had now taken “a dumping stance in the European market”, offering two-year contracts with prices “consistently undercutting” spot market prices. Such deals usually included clauses that demanded minimum orders and exclusivity, it added.The solar industry letters both recommended that the commission makes an emergency acquisition of European solar manufacturers’ inventories and accelerates a planned regulation banning products made with forced labour.Around two-fifths of global production of polysilicon, the main raw material for solar panels, comes from the western region of Xinjiang where the Chinese government has been accused by human rights groups of forcing Muslim minorities to work at factories in detention camps. Beijing rejects carrying out any human rights abuses in the region.Walburga Hemetsberger, chief executive of SolarPower Europe, said she was aware that others in the sector would also be petitioning the commission. “We all agree that the unchecked price drops are a critical risk for the sector, and EU leaders must take urgent action.” More

Beijing has the resources to deal with its economy short-term but must face longer-term structural economic issues such as demographics and high debt, Adeyemo said in television interviews.”Those are going to be far harder for them to deal with over time,” he told CNN.Fears of an economic slowdown have gripped China, whose leader skipped the G20 summit this past weekend.Biden on Sunday said China’s growth was slowing due to a weak global economy as well as Chinese policies, although he did not cite specific policies. Biden, ending his Asia trip for the summit and a visit to Vietnam to shore up ties, noted China’s issues with real estate and high youth unemployment.Adeyemo, on CNN, said China’s economy faces “significant headwinds,” adding: “a slowing Chinese economy is going to have an impact, but mostly on their neighbors.”Asked about the potential for China to sell its holdings in U.S. Treasuries, Adeyemo told CNBC: “I am more concerned about what China’s slowdown means for their neighbors and for Europe, than what it means for the United Sates given how strong our economy is.”While some of China’s particular decisions will affect specific companies, “when you look at the economy, the United States has some exposure but it’s limited,” he added.Adeyemo urged China to open up its economy to the private sector, saying that could boost its economy by creating competition.”Chinese businesses are able to do business here, sell things to American consumers. We want American businesses to be able to do the same in China on a level playing field,” as well as European businesses, he told CNBC. More