Aurelia Butler

UK ministers are exploring cutting working-age benefits in real terms ahead of the general election expected next year in a push to create space for tax cuts and to set a political trap for Labour, according to senior Conservatives.Jeremy Hunt, chancellor, will present his Autumn Statement on November 22 and is under pressure from Tory MPs to start cutting taxes in the face of a tight fiscal backdrop.Although officials briefed on the discussions told the Financial Times that talks were at an early stage, one option being considered by ministers is to break the inflation link with benefit uprating.“It would put Labour on the spot because they’d have to say whether they were going to follow suit,” said one government insider. The Conservatives would argue the welfare squeeze was needed to fund tax cuts, the person added.Rachel Reeves declined to be drawn into what Labour has already identified as a potential trap. “This is all very speculative — we’re not commenting,” said a spokesperson for the shadow chancellor.The idea of cutting benefits in real terms would be controversial, including with some Conservative MPs, and would risk being seen as an attack on vulnerable people who are already struggling with the cost of living crisis.The Treasury declined to comment on a report by Bloomberg News that said options being considered by ministers included lifting benefits by at least 1 percentage point below inflation or raising them in line with projected lower inflation figures for next year.Government insiders said discussions about the Autumn Statement and next year’s benefit upratings were at a preliminary stage and confirmed such a move would be seen as highly political.The Department for Work and Pensions said: “In order to protect the most vulnerable from the impact of high inflation, the government increased benefits by over 10 per cent this year.“As is the usual process, the secretary of state will conduct the statutory annual review of benefits and state pensions in the autumn, using the most recent data available.”Allies of Liz Truss, the former prime minister, said she had proposed below-inflation increases to benefits during her shortlived premiership by linking increases to wages rather than price rises.Truss’s team claim her idea was rejected by cabinet members but would have saved almost £5bn a year. “This is another pale imitation of the Truss playbook,” said one ally.The government froze working-age benefits for four years from April 2016, so there is a precedent for such a move, but that was at a time of much lower inflation. The Bank of England expects the inflation rate in September — the rate relevant for benefit uprating — to be 6.9 per cent.The Treasury is preparing to increase the UK state pension by more than 8 per cent next year because of the controversial “triple lock”, which has raised retirees’ incomes faster than workers’ wages.The sharp increase in state pension payments follows a 10.1 per cent rise this year. Pensioners protected from last year’s energy-driven inflation will now receive another boost, this time in line with the increase in average wages. The government said it was committed to the triple lock. More

In the dark days of April 2009, the G20 summit became a turning point in the global financial crisis. Leaders agreed on joint initiatives and measures worth $1.1tn to boost trade and bolster struggling economies. The group of 19 big developed and developing markets and the EU was hailed as a forum for economic co-operation that could supplant the western-dominated G8.Reality has fallen short of that vision. The fracturing of the multilateral system, growing US-China tensions and Russia’s invasion of Ukraine have sapped the G20 even as the need for it has grown. There is little surprise that Russia’s Vladimir Putin will be absent from this year’s annual summit, in New Delhi, for the second year running. But China’s Xi Jinping is staying away for the first time. And widening divisions over the Ukraine war mean the event may also fail, as it never has before, to agree a joint communiqué — posing questions over the G20’s prospects.That will not prevent progress in some areas. Championed by India’s prime minister Narendra Modi, the African Union is expected to become a G20 member, expanding the voice of the developing world. This is despite disquiet in some quarters that admitting such a disparate organisation could make the G20 unwieldy. Important work has been done under the Indian presidency on reform of multilateral development banks, climate finance and developing country debt.Even if the summit does manage to agree on a joint text, it will almost certainly involve watering down the already nuanced language on Russia’s aggression in Ukraine agreed at last year’s Bali summit. Modi had hoped to import the same wording, but the fact some developing countries are balking — accusing the west of escalating the conflict by arming Ukraine — highlights the depths of the G20 divide.What happens in Ukraine and Russia will determine, to some extent, whether the group can be revivified. So will the attitude of China. Officials suggest Xi’s absence this year reflects Beijing’s rivalry and a bitter border dispute with New Delhi, rather than any long-term move to distance itself from the group. India’s attempts to cast itself as a leader of the developing world have irked China, which aspires to the same role. Xi has little wish to share the spotlight with Modi, who has seized on the G20 presidency as an opportunity to promote his country, and himself.Xi’s non-appearance, though, comes just weeks after China led a push to expand the Brics group of emerging economies to include Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates. There is a danger of bifurcation between the wealthy democracies of what is again the G7 — after Russia was ejected for annexing Crimea — and an enlarged Brics that has little in common save an ambition to reshape the US-led order.The absence of China’s president opens space, too, for Joe Biden of the US and other western leaders to demonstrate their own commitment to support, and heed, the developing world. It is an opportunity they should seize.Yet China and India share a desire to revamp global political and financial governance to make it more representative of emerging economies — and reform of the postwar Bretton Woods institutions is overdue. It is in China’s interest, as much as in India’s, to try to achieve its aims by engaging constructively in a gathering with the US and other big developed economies, rather than through an anti-western bloc.In an era of new superpower rivalries and the existential threat of climate change, it is in the global interest, too, for leaders of large but often antagonistic economies to sit down for “jaw-jaw”. The G20 has many flaws and inadequacies. But, aside from the dysfunctional UN, it is the best forum we have. More

Today’s top storiesThe UK failed to attract offshore wind developers to its latest round of contracts for new projects, in a blow to the country’s decarbonisation plans. Apple shares clawed back some ground after falling on news that China could crack down on the use of its devices by officials, denting hopes that the launch of its iPhone 15 next week could make it the world’s biggest smartphone maker.European natural gas prices jumped after workers at LNG facilities in Australia, a key liquefied natural gas exporter, began strike action, fuelling fears of disruption to global supplies.For up-to-the-minute news updates, visit our live blogGood evening.“Solving the greatest challenges of the world together” sounds like a great slogan, but as world leaders arrived in India for a two-day G20 summit, tensions over China and the war in Ukraine have made the prospects of multilateral agreements on the big issues as distant as ever.Although some of the lustre has gone from the event with the no-show of Chinese president Xi Jinping and Russian president Vladimir Putin, the meeting does offer a chance for India to burnish its credentials as a rising global power in the year its population overtook China and its economy was among the world’s fastest growing,High on the agenda from US president Joe Biden is the bulking up of multilateral institutions as a counterweight to the rising power of China. Consensus has already been reached on making the African Union a permanent G20 member, while Biden is also pushing for the expansion of the World Bank’s lending capacity. Still, the weekend is likely to be notable for its deep divisions, notes Brussels bureau chief Henry Foy [for premium subscribers], with a reminder that Europe and its allies are distinctly in the minority.“It’s quite a lesson for us,” said one European diplomat. “We enjoy the G7 and get this feeling that everyone agrees with us. And then we come to the G20 and it’s brutally clear that’s really not the case.” The biggest source of friction is over the war in Ukraine. UK prime minister Rishi Sunak is among those urging India to “call out” Moscow over its invasion. His Indian counterpart and summit host Narendra Modi has been neutral throughout the conflict, but has spoken about its impact on food and commodity prices. Sunak, Britain’s first prime minister of Indian descent, will also be hoping to make progress on a post-Brexit trade deal.Climate change is another bone of contention. More than a dozen major Indian companies have written to G20 leaders for action on fossil fuels and support for the green transition but, as the FT reported in July, China, backed by Saudi Arabia, has obstructed negotiations and refused to debate issues such as emissions targets. And on the subject of fossil fuels, US president Joe Biden, facing political heat at home over rising petrol prices, may also grab some time on the sidelines with Saudi Arabia’s Crown Prince Mohammed bin Salman to discuss the kingdom’s push with Russia for $100-a-barrel oil.The economic backdrop adds extra pressures. G20 leaders were given a gloomy pre-summit update from the Financial Stability Board, the world’s most powerful financial watchdog, which warned of “further challenges and shocks” to the global financial system. Some question whether the G20 has outlived its usefulness other than as an opportunity for bilateral meetings of leaders on the margins. Either way, hopes are not high for any major breakthroughs. “We saw the growing international divisiveness at the last summit in Bali,” said one analyst. “The New Delhi summit is not going to be any different because of the widening international divisions.”Need to know: UK and Europe economyUK businesses expect inflation and wage growth to ease, according to a Bank of England survey, providing some relief for policymakers ahead of their next interest rate decision on September 21. Columnist Camilla Cavendish says dodgy materials and poor construction in schools are emblematic of Britain’s addiction to short-termism and the tendency to drive down public sector costs via opaque contracts. Reinforced autoclaved aerated concrete, or Raac, has also been found at Heathrow and Gatwick airports. German industrial production fell again in July, upping the pressure on the government to do more to lift the economy which has been beset by high energy prices, rising interest rates and a slowdown in trade with China, its second biggest export market. Adding to the gloom, the EU’s statistics office cut its official estimate for eurozone growth in the second quarter from 0.3 per cent to 0.1 per cent. The widening gulf with the more robust US economy has sent the euro down for eight weeks in a row.Ireland’s dairy farmers are in crisis. They face having to cull cows because an EU decision to limit the use of organic nitrogen on farms from the manure produced by their animals, just as milk prices are falling and land values are rising sharply. Need to know: Global economyChina’s renminbi hit a 16-year low following data showing a slump in the country’s exports. Stimulus efforts have however brought some hope to the country’s stricken property sector. US Treasury secretary Janet Yellen said the impact of China’s slowdown on her country would be small and that Beijing had “quite a bit of policy space” to address the challenges. Veteran investor Mohamed El-Erian said it was no longer certain that China would become the world’s largest economy.The latest in our Big Government series looks at the $100tn path to net zero. The sums involved are huge: in 2021, the International Energy Agency calculated that annual investment would need to rise from an annual $2tn to almost $5tn, or 2.5 per cent of global GDP, by 2030. It would still total $4.5tn in 2050. African leaders at a summit in Kenya backed a global carbon tax to help their green energy transition. They also called for a six-fold increase in renewable energy capacity across the continent, where hundreds of millions of people lack access to energy and clean forms of cooking.In the meantime the threat of coups across the continent is spreading. Mali, Guinea, Burkina Faso, Chad, Sudan, Niger and now Gabon have all faced military takeovers over the past three years: here are some clues on spotting the next one.Need to know: businessGermany is supporting the UK’s call to postpone tariffs on electric vehicle sales between the UK and the EU after the motor industry warned the measure would backfire. The debate comes as Europe’s carmakers buckle up for an onslaught of Chinese competition.

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British American Tobacco, the world’s biggest cigarette maker, finally agreed to sell its Russian business to local management, a year and a half after vowing to exit the country following the full-scale invasion of Ukraine. The Russian assets of Volvo AB, the Swedish truckmaker, are also to be transferred to a local investor.The South Korean film industry has been hit by allegations about inflated box office performance. A new FT film looks into the owners behind the gambling brands that sponsor top flight football clubs, uncovering a global network of shell companies and “front” organisations.

Video: Following the money behind Premier League betting sponsors | FT Film

Science round upThe world is way off track to meet the Paris climate goals and is heading for a temperature rise of up to 2.6C, according to the first comprehensive UN stocktake of global efforts on global warming. Global temperatures between June and August this summer were at their highest since records began in 1940, according to the EU’s earth observation agency. The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services warned that “invasive alien species” were having a catastrophic economic and environmental impact. The UK confirmed it would rejoin the EU’s Horizon research programme, with an €800mn discount to compensate for being locked out for almost three years since Brexit. It is also participating in the Copernicus satellite observation scheme but has refused to join Euratom, the EU’s nuclear technology programme.UK researchers have developed a 10-minute finger-prick blood test that can detect a range of diseases from long Covid to Alzheimer’s. Other UK scientists warned that delays at the medicines regulator meant an important UK trial looking for ways of treating long Covid risked running out of money before it finishes.There was better news on Covid vaccines: test results have brought hope that the latest versions can protect against the highly-mutated new variant BA. 2.86. Early onset cancer cases have risen 80 per cent in the past three decades, according to a new study, “upending received wisdom about the types of cancers typically affecting the under-50s”. Breast cancer has risen the fastest, alongside cancers of the windpipe and prostate.In the absence of well-preserved DNA from ancient humans it is quite possible our real origin story will never be told, writes commentator Anjana Ahuja.Could space mining really help us to replenish scarce resources on earth? Watch our new video.

Video: Can space mining alleviate shortages of key resources? | FT Energy Source

Something for the weekendTry your hand at the range of FT Weekend and daily cryptic crosswords.Some good newsThe Ticket Bank is a new UK programme offering free and heavily discounted tickets to arts and sports events for those who can’t afford them. Anyone who has received cost of living help from the government is eligible to apply.

© Jordan Curtis Hughes More

Italy’s rightwing government has agreed an “anti-inflation pact” with producers and retailers to hold down prices for pasta and other consumer staples, as Rome attempts to ease the pressure on households reeling from higher living costs.The government said on Friday it would launch an “anti-inflation quarter” for the three months from the beginning of October until the end of the year. While the precise details remain fuzzy, the pact commits its signatories to try to resist raising prices, which have soared over the past years following the pandemic and Russia’s invasion of Ukraine. The pact follows months of negotiations between Prime Minister Giorgia Meloni’s government and Italy’s business establishment over what to do about the soaring cost of staple goods such as pasta. Adolfo Urso, the minister of enterprises who met the business organisations, wrote on Friday on the social media platform X that Italian businesses large and small were now engaged “in a collective effort to contain the prices of the Italian shopping basket”. Participating companies will be entitled to use stickers and other promotional material with a logo of a shopping cart in the green and red colours of the Italian flag.Speaking separately to journalists after meeting representatives of major consumer goods producers, Urso said the new pact — which will cover selected food products and other common household essentials — would “give a definitive blow to inflation” and increase public consumption, providing an overall economic boost to the country.Eurozone inflation reached double digits during the autumn of last year after Russia’s invasion of Ukraine pushed up the cost of food and energy. At 5.3 per cent in the year to August, inflation remains substantially above the European Central Bank’s target of 2 per cent. Italy’s inflation rate was 5.5 per cent in the year to August, according to official estimates. That is a lot lower than the 11.9 per cent reached in October 2022, but still uncomfortably high. The worst spate of inflation for a generation has triggered accusations of greedflation, with some saying companies are taking advantage of higher costs to bolster their profit margins. However, retailers, especially in the food sector, claim their margins are small and have shrunk even further owing to higher prices from their suppliers and higher labour costs. The Federation of Italian Food Industries, which endorsed the pact, said the local food industry’s margins have already declined from an average of 10.3 per cent in 2019 to 5.7 per cent last year because of higher raw materials costs. “The sense of responsibility and protection of Italians and families in difficulty have prevailed,” the organisation said in a statement. Consumer organisations expressed scepticism that Italy’s three-month campaign against inflation would yield substantial benefits. “The government is giving a big gift to retailers who will boast that they are the saviours of the country,” said Massimiliano Dona, president of the National Consumers Union. “It’s all smoke and mirrors . . . it’s fluff.”Meloni’s government has shown a strong tendency to intervene when it feels consumers are getting a raw deal. Rome has found itself in a row with European airlines, led by Ryanair, over its attempt to cap airfares after ticket prices to popular holiday islands soared over the summer. More

OTTAWA (Reuters) – Canada’s economy gained a much greater than expected net 39,900 jobs in August and the unemployment rate remained at 5.5%, official data showed on Friday, a sign of underlying strength despite high rates.Analysts polled by Reuters had forecast a net gain of 15,000 jobs and for the unemployment rate to edge up to 5.6% from July.Statistics Canada said full-time positions grew by 32,200 jobs while part-time jobs posted a more modest gain of 7,800.The labor market has been resilient even as the Bank of Canada raised its key overnight rate 10 times since March 2022 to cool the economy. Monthly employment growth is averaging 25,000 so far this year.”Always a little bit wary about putting too much weight on individual jobs numbers, but this certainly comes down on the hawkish side of the scale and it will keep the Bank of Canada on pins and needles ahead of that October meeting,” said Andrew Kelvin, chief Canada strategist at TD Securities. The average hourly wage for permanent employees, a figure the central bank watches closely, rose by 5.2% from August 2022 compared to a year-on-year increase of 5.0% in July.The Bank of Canada has repeatedly expressed concern that it will be hard to fully curb inflation if wages maintain their current patterns of rising between 4% and 5% annually.The bank stayed on the sidelines on Wednesday but said on Thursday it might have to tighten monetary policy further. Its next rate announcement is due on Oct. 25.Employment in the goods sector fell by a net 2,500 jobs in August, largely in manufacturing, while the services sector gained a net 42,400 jobs, mostly in professional, scientific and technical services. More

Employment in the goods producing sector fell by a net 2,500 jobs, largely in manufacturing. The services sector was up by a net 42,400 positions, mostly in professional, scientific and technical services.Market reaction: CAD/STORY:Link:https://www150.statcan.gc.ca/n1/daily-quotidien/230908/dq230908a-eng.htmCOMMENTARYROYCE MENDES, DIRECTOR & HEAD OF MACRO STRATEGY, DESJARDINS “This report alone won’t make the Bank of Canada regret holding rates steady earlier this week. However, it does highlight that the economy hasn’t completely stalled. We continue to expect that the central bankers are done raising rates. But with progress towards rebalancing the economy slow, they won’t be signaling ‘mission accomplished’ anytime soon.”DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS, SCOTIABANK “We did get the rebound, but not through the ways in which I might have expected it. The self-employed played a big role in it, and that’s the softest of the soft data that you treat with skepticism. It’s all full-time. I guess that’s a plus.””It’s really tough to read the data throughout the summer months in Canada, because we’ve had so many unusual shocks from wildfires to strikes and everything else. And so we’re getting some ups and downs. And it’s tough to cut through to the evidence and see what’s really going on in terms of underlying behavior. A report like this just adds to the question marks… I’ll take the headline, but it’s still skeptical toward what’s going on underneath the hood.”ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS”With estimates of the output gap having been revised heavily over recent years as policymakers have struggled to calculate the impact of supply shocks, the unemployment rate has become an even more important gauge of slack in the economy.””At its current rate, unemployment is still modestly below levels which brought wage growth consistent with a 2% inflation target pre-pandemic. That was evident by the still strong wage inflation in today’s report, with an acceleration to 5.2% year-over-year from 5.0%, coming in contrast to consensus expectations for a slight deceleration.””As such, even though the Bank is still likely done with its interest rate hiking cycle, today’s data is consistent with the notion that rate cuts are not yet on the horizon.”ANDREW KELVIN, CHIEF CANADA STRATEGIST, TD SECURITIES”Certainly a bit hawkish, particularly the wages number. Showing that uptick on a year-over-year basis was not anticipated and I think that will not give the Bank of Canada a great degree of comfort.””In terms of the increase in jobs. This is above the breakeven pace for the labour market, so it’s a strong increase.””Always a little bit wary about putting too much weight on individual jobs numbers but this certainly comes down on the hawkish side of the scale and it will keep the Bank of Canada on pins and needles ahead of that October meeting.” More

According to LSEG data, investors withdrew a net $5.96 billion out of U.S. equity funds during the week, compared with about $4.42 billion worth net withdrawn the previous week.Data pointing to a slowdown in the services sector in China and Europe in August, stirring concerns about global economic growth.Meanwhile, U.S. Treasury yields surged to a two-week high on Wednesday after data showed the services sector unexpectedly accelerated in August, indicating that inflation pressures remain firm.Investors offloaded about $3.96 billion worth of equity large-cap funds compared with about $110 million worth of net selling in the previous week. Small- mid-, and multi-cap funds also witnessed $1.56 billion, $365 million and $4 million worth of net selling, respectively.Among sectors, communication services, consumer staples, and metals & mining saw $460 million, $320 million and $267 million, worth of net selling, respectively.Money market funds drew $32.18 billion worth of inflows, the biggest amount in three weeks.U.S. bond funds witnessed outflows for a fourth successive week, with about $622 million in net selling.Investors sold U.S. general domestic taxable fixed income funds worth $1 billion, the biggest amount in three months. Government bond funds also saw about $260 million worth of outflows, the first in five weeks. Meanwhile, high-yield bond funds obtained $696 million, staying in demand for a second successive week. More

(Reuters) -Wall Street’s main indexes were poised for a subdued open on Friday as investors awaited a fresh inflation reading next week after recent economic data stoked worries interest rates could remain higher for longer. Stronger-than-expected services activity data and a fall in weekly jobless claims have dented investor sentiment, dragging the S&P 500 and Nasdaq 1.4% and 2% lower so far this week, respectively.The Consumer Price Index reading for August is due on Sept. 13, while the Federal Reserve’s policy decision is scheduled for Sept. 20. “This month of September so far has taken the path of a negative outlook on rates, meaning that the Fed will probably continue to raise rates to combat the stubborn growth of the economy in the U.S.,” said Peter Andersen, founder of Andersen Capital ManagementTraders see a 93% chance of interest rates staying at current levels in September, while pricing in a 55.4% chance for a pause in rate hikes in the November meeting, according to CME FedWatch Tool.Shares of Apple (NASDAQ:AAPL) edged 0.1% lower in premarket trading after a two-day selloff following news that Beijing had ordered central government employees in recent weeks to stop using iPhones at workplaces.Another report on Friday said China was expanding iPhone restrictions to local governments and state-owned companies. Wall Street analysts see a small hit to Apple’s revenue this year from the curbs, with Morgan Stanley saying the worst case scenario was a 4% drop.At 8:20 a.m. ET, Dow e-minis were down 24 points, or 0.07%, S&P 500 e-minis were down 3.5 points, or 0.08%, and Nasdaq 100 e-minis were down 19.5 points, or 0.13%.Investors also digested mixed commentary from several Fed speakers on Thursday. New York Fed President John Williams kept his options open over future interest rate policy while Dallas Fed President Lorie Logan said though it “could be appropriate” to skip a rate hike in the upcoming meeting, more policy tightening might be needed. San Francisco Fed President Mary Daly is due to speak later in the day.Among individual stocks, Faraday Future Intelligent Electric rose 4.4% before the bell. The electric-vehicle maker said there were efforts to spread misinformation about the company and manipulate market sentiment.Adobe (NASDAQ:ADBE) rose 1.7% after Mizuho upgraded the software firm to “buy” from “neutral”.DocuSign (NASDAQ:DOCU) added 1.0% as the e-Signature product provider beat second-quarter results estimates and raised its annual revenue forecast. GameStop (NYSE:GME) fell 1.4% on a report that the U.S. Securities and Exchange Commission was investigating the videogame retailer’s chairman, Ryan Cohen.Kroger (NYSE:KR) lost 1.3% after the big-box retailer reported a quarterly net loss as it took a $1.4 billion charge related to a nationwide opioid settlement. More