Aurelia Butler

Today’s top storiesThe eurozone returned to growth in the second quarter as preliminary data showed gross domestic product rose 0.3 per cent. Inflation fell in line with expectations to 5.3 per cent in July, but the core measure remained unchanged at 5.5 per cent.Chinese manufacturing activity shrank for the fourth consecutive month, according to PMI survey data, reinforcing expectations that Beijing will step in with new stimulus measures. Hong Kong’s economy grew much less than expected in the second quarter. As the Bank of England prepares to raise interest rates to a 15-year high on Thursday, the Financial Conduct Authority detailed a 14-point plan to ensure banks passed rate rises on to savers. The FCA is also still under pressure to overhaul bank rules for politicians as the dispute over “debanking” continues.For up-to-the-minute news updates, visit our live blogGood evening.It’s been quite the day for UK environmental policy. Ministers have been trumpeting plans to expand carbon capture and storage while simultaneously announcing the “maxing out” of North Sea drilling and, as revealed by the Financial Times, making it cheaper for companies to pollute. Prime Minister Rishi Sunak said plans to store carbon dioxide under the North Sea would help Britain make the move to a net zero economy by 2050 and support up to 50,000 jobs. The announcement should bolster confidence in a fledgling industry that has suffered many false starts in recent years, the FT’s Lex column says. The commitment to issue more drilling licences, however, puts the government at odds with environmentalists and the opposition Labour party, which plans a moratorium on new exploration.The move builds on Sunak’s new “proportionate and pragmatic” approach to tackling climate change following his party’s unexpected win in the Uxbridge and South Ruislip by-election, which focused heavily on campaigning against the extension of London’s ultra-low emissions zone for motorists.Accusations of backtracking on green commitments were fuelled separately by quiet government changes to carbon pricing.Like its EU equivalent, the UK emissions trading scheme, launched after Brexit in 2021, puts a price on emitting a tonne of CO₂. Large emitters and electricity generators get allowances to cover some of their emissions, with a cap and trade system giving incentives to cut emissions rather than pay to buy more. The changes announced this month offer more allowances than expected to polluting industries, sparking warnings that it will undermine green investments and increase fossil fuel use.“The changes to the carbon market have largely passed under the radar in the UK, but will have the biggest impact of any policy on the UK’s emissions path,” said James Huckstepp, an analyst at BNP Paribas.Meanwhile, a parliamentary report hit out at the UK’s ambitions for nuclear power, arguing that the target to more than triple generation capacity by 2050 lacked detail on how it planned to get there in order to encourage investment. (The US is also experiencing difficulties in nuclear funding).As the period of super profits relating to the war in Ukraine comes to a close, oil majors too are facing scrutiny over their plans for cleaner energy. The pressure to water down proposals is particularly strong in the US, where opposition Republicans have attacked asset managers’ support for environmentally friendly policies. An FT Big Read tackles another problem for the clean energy transition: will there be enough cables? Demand for interconnectors and other infrastructure such as wind turbines is growing rapidly, straining supply chains for the electricity cables and converter stations needed for connection to the grid. The head of one of the largest cablemakers said Europe was entering “the third electrical infrastructure revolution”, referring to previous growth spurts at the turn of the 20th century and after the second world war. Need to know: UK and Europe economyUK mortgage approvals rose unexpectedly in June despite increases in interest rates. Analysts had expected the housing market to slow while lenders repriced mortgage deals. One of the leading candidates to become the eurozone’s next chief banking supervisor called for a more “critical mindset” in overseeing the sector. Stress tests showed EU banks were “robust” with just three lenders falling below minimum capital requirements under the most severe economic conditions.Need to know: global economyJapanese government bond yields jumped as global debt, currency and equity markets began to absorb a landmark shift by the Bank of Japan to allow yields to rise more freely, unwinding decades of ultra-accommodative monetary policy.The surge in food price inflation is becoming a serious concern in India which has banned exports of several rice varieties after public anger over high prices. The move has sent shocks around the globe: India is the world’s largest rice exporter, and many countries depend on it for shipments.

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South America is bracing itself for the impact of the El Niño weather event, with flooding and droughts intensified by climate change forecast to deliver a $300bn hit to growth for the region’s economies, which are particularly dependent on agricultural exports. Need to know: businessThe UK competition watchdog reopened its consultation on Microsoft’s proposed $75bn acquisition of Activision Blizzard, potentially reversing its decision to stop the blockbuster deal. Microsoft has asked the Competition and Markets Authority to take into account its recent agreement with Brussels about the takeover, a new licensing agreement with Sony for Activision’s Call of Duty game and other evidence that led a US judge to overturn the US regulator’s attempts to block the deal. Heineken, the world’s second-largest brewer, cut its profit growth forecasts after a slowdown in Asia and the reluctance of US and European drinkers to pay higher beer prices. Operating profits fell a more than expected 22 per cent in the first half of the year.French finance minister Bruno Le Maire said the country’s new automotive subsidies were “paving the way” for Europe’s car industry to withstand the threat of cheaper Chinese electric vehicle imports. The government will only pay subsidies for new EVs based on the emissions of their producers, hitting manufacturers from China, where the industry relies on electricity largely powered by coal.A new Big Read examines how Silicon Valley start-ups are helping the US military take advantage of evolving technology such as artificial intelligence that could transform modern warfare.

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It’s bye-bye to “revenge buying”. The post-pandemic luxury boom, driven by exceptional growth in China and the US, where pent-up demand and financial stimulus generated new shoppers in droves, looks to be over. One notable exception is Hermès which reported a 22 per cent rise in sales in the first half of the year.For premium subscribers, our Trade Secrets newsletter looks back at the year so far in globalisation. In short, not great for those who want open markets, but could have been worse. The world of workThree years after millions of workers were ordered home, the question of where and when staff work remains a live issue, writes columnist Pilita Clark. For one thing, it is becoming clearer that remote work does not necessarily harm productivity, she says.Scrutiny has made it harder to be an overt old-style bully but subtler forms of harassment can be as destructive. The modern bully convincingly mimics the traits of the sought-after empathetic leader but ignores and isolates colleagues they do not rate. The UK is trying to widen access to occupational health services and meet increased demand for them at a time when unusually high numbers of people are out of work due to ill health. Read more in our Health at Work special report.Some good newsInternational Tiger Day on Saturday was marked by announcements of significant increases in tiger populations in India and Bhutan. India recorded an average total of 3,682 — making it the home of 75 per cent of the world’s wild tigers.International Tiger Day celebrations in Bengaluru, India © Jagadeesh NV/EPA-EFE/Shutterstock More

DAKAR (Reuters) – Niger’s regional and Western partners have announced a series of sanctions against the country following last week’s coup. Niger is the world’s seventh-biggest producer of uranium, the radioactive metal widely used for nuclear energy and treating cancer. It is also one of the world’s poorest countries, receiving close to $2 billion a year in development assistance.According to 2023 budget projections, of Niger’s total budget of 3,245 billion CFA francs ($5.53 billion) for the fiscal year, around 342.44 billion francs was expected to come from external budget support and loans.Another 978.47 billion francs was supposed to come from project grants and loans from external partners. In total, more than $2.2 billion, or around 40% of its budget, was expected to came from external partners.These sanctions have been imposed on Niger since the coup: WEST AFRICA REGIONAL BLOCThe Economic Community of West African States and the West African Monetary and Economic Union have imposed some of the most stringent sanctions on Niger so far since the coup.With immediate effect, the bloc has suspended all commercial transactions with Niger, frozen Niger’s state assets in the regional central bank, frozen assets of the state and state enterprises in commercial banks, and suspended all financial assistance with regional development banks.The financial sanctions could lead to a default on Niger’s debt repayments. On Monday, a planned 30 billion CFA francs ($51 million) bond issuance by Niger in the West African regional debt market was cancelled by the regional central bank following the imposition of sanctions. Niger had planned to raise 490 billion CFA francs ($834 million) from the regional debt market in 2023. EUROPEAN UNIONThe European Union, one of Niger’s biggest contributors, has suspended its financial support and cooperation on security with Niger with immediate effect.The EU allocated 503 million euros ($554 million) from its budget to improve governance, education and sustainable growth in Niger over 2021-2024, according to its website.FRANCE France, another major partner of its former colony, suspended development aid and budget support with immediate effect, demanding a prompt return to constitutional order. French development aid for Niger was at around 120 million euros ($130 million) in 2022, and expected to be slightly higher this year.France also has around 1,500 troops in Niger. It relied on Niger after it withdrew its counter insurgency troops from neighbouring Mali and Burkina Faso in 2021 and 2022, respectively.UNITED STATESThe United States, a major donor of humanitarian and security aid, has warned that the military takeover in Niger could lead to the suspension of all cooperation.So far in fiscal 2023, it has provided nearly $138 million in humanitarian assistance. There are about 1,100 U.S. troops in Niger, where the U.S. military operates from two bases. (Additonal reporting by Daphne Psaledakis in Washington, Gabriela Baczynska in Brussels and Juliette Jabkhiro in Paris; Editing by Nick Macfie) More

China has slapped export controls on a wide range of drones and drone components, a move with potential impact on the Ukraine war and on public security applications in many western countries.“The risk of some high-specification and high-performance commercial-use drones being converted to military use continues to rise,” the Chinese commerce ministry said on Monday.As a leading drone producer and “responsible great power”, China had decided to broaden restrictions on the export of unmanned aerial vehicles, the ministry said.The controls, which take effect on September 1, follow repeated appeals by EU officials to China to restrict supplies of military or dual-use technology to Russia since Moscow’s invasion of Ukraine. Ukrainian forces have successfully used commercial drone models with self-designed payloads to target Russian military units. But Russia’s military has also increasingly relied on UAVs for attacks on Ukraine.China has urged both parties to seek peace talks. But Beijing’s growing military co-operation with Moscow, its refusal to condemn the invasion, and its repeated statements in support of Russian security concerns have undermined its claim to be neutral on the conflict.China has a dominant role in the global drone supply chain and Shenzhen-based company DJI is the world’s largest commercial drone maker by shipments.One notice issued on Monday by China’s commerce ministry, customs administration, military-use technology regulator and the military’s equipment development department limits exports of drones carrying narrowly defined equipment suitable for military use such as powerful radars or hyperspectral cameras.But another notice from the four departments covers a broad range of drone components, and industry executives said this rule was expected to have an impact on commercial-use drones as well.“The focus of the controls is dual-use components,” said a DJI sales manager, adding that while ordinary DJI products would not be affected, parts and some high-performance models might be restricted. In a statement, DJI said it had always strictly complied with export laws and regulations in China and any other jurisdictions where the company operated. “While we are evaluating the specific impact to our business from these new regulations, we would like to point out . . . drones and drone-related equipment can be exported normally after fulfilling relevant compliance criteria as long as they are used for legitimate civilian purposes,” said DJI.“China’s modest expansion of the scope of its drone control . . . is an important measure to demonstrate our stance as a responsible major country, to implement global security initiatives and maintain world peace,” the commerce ministry said. Authorities had notified relevant countries and regions, it added.The controls would affect some drones for the consumer market and no civilian drones could be exported for military purposes, the ministry said.Analysts believe the widespread use of DJI drones means the new controls could potentially disrupt the sale of drones for applications such as domestic security and agricultural applications in many western countries. More

SYDNEY (Reuters) – Australia’s home prices rose for a fifth straight month in July, according to property consultant CoreLogic, although the monthly gain slowed as an increase in new listings offered more options to buyers, taking heat out of the market. CoreLogic figures on Tuesday showed prices nationally rose 0.7% in July from June, slowing from a jump of 1.1% in the earlier month. Since finding a floor in February, national prices have risen 4.1%, following a 9.1% decline from their peak in April last year. Home price gains in Sydney slowed to 0.9% for the month compared with June, down from growth of 1.7%, the data showed. The Reserve Bank of Australia (RBA) has jacked up interest rates by a whopping 400 basis points since May last year to tame inflation, but housing prices found a bottom earlier than expected due to short supply and surging migration levels. The burden on mortgage holders could increase further this week, with a slim majority of economists polled by Reuters expecting the RBA to hike by another quarter-point on Tuesday. Futures, however, show expectations of a pause. CoreLogic research director Tim Lawless said sellers were becoming more active at a time that is normally seasonally subdued, with new listings added in Australia’s main cities in July lifting by 3.9% over the previous month. Listings in Sydney jumped 9.9% from a year ago and were 18% higher than the average for the previous five years. “If we do see the volume of listings increase further, which is likely as we approach spring, that could take some further heat out of the market unless that is offset by a more substantial lift in active buyers,” said Lawless. So far, it seems demand is keeping up with the increased flow of new listings, said Lawless, adding that more home owners could be picking current market conditions as a good time to sell rather than waiting until later. Separate data from PropTrack also out on Tuesday was more upbeat, with national prices returning to positive annual growth in July and just 1.4% lower than their peak last year. More

(Reuters) – Gradually quickening inflation will force the Bank of Russia to hike interest rates again this year, a Reuters poll showed on Monday, and the rouble will struggle to claw back losses sparked by June’s abortive armed mutiny in the next 12 months. The central bank increased its key rate by a larger-than-expected 100 basis points on July 21, with the weak rouble adding to inflation pressure from a tight labour market and strong consumer demand.The average forecast of 18 analysts and economists polled in late July shows the key rate ending 2023 at 9.50%, with annual inflation expected to climb from just above the 4% target currently to 5.6% by year end. “Accelerating inflation in recent weeks raises risks that the Bank of Russia will again lift the key rate by 100 basis points at its next meeting on Sept. 15 to 9.5%,” said Mikhail Vasilyev, chief analyst at Sovcombank.The high base effect of last year’s double-digit price rises saw annual inflation drop below the central bank’s target in recent months. Economy ministry data showed it moved back above 4% last week for the first time since late March, in a symbolic blow for Moscow.The rouble’s sharp drop has added to already stubborn inflationary pressure. The Russian currency weakened sharply after mercenary leader Yevgeny Prigozhin’s Wagner group briefly marched towards Moscow in late June, slumping to a more than 15-month low in early July. Analysts give the rouble only a slim chance of strengthening, with the average forecast suggesting the rouble will trade at 89.00 against the dollar a year from now, up from a prediction of 87.90 a month ago. In spite of higher rate expectations, analysts again improved their forecasts for Russian gross domestic product (GDP), now envisaging 2023 growth of 2.0%, up from 1.2% in the late June poll. (Reporting and polling by Alexander Marrow and Elena Fabrichnaya; Editing by Sharon Singleton) More