Aurelia Butler

US national security officials are scrutinising an Abu Dhabi sovereign wealth fund’s planned $3bn takeover of New York-based Fortress Investment Group amid concerns in Washington over the UAE’s ties to China, people close to the situation told the Financial Times. The review by the Committee on Foreign Investment in the United States, an inter-governmental agency that vets whether deals can harm national security, is in its early stages and a decision is not expected for several months, the people added. Abu Dhabi’s Mubadala agreed to buy a majority stake in Fortress, which manages about $46bn in assets and specialises in distressed debt investing, in May from Japan’s SoftBank Group. Mubadala, which is run by chief executive Khaldoon al-Mubarak, said that it intended to close the deal in the first quarter of 2024, subject to regulatory approvals.The Cfius action comes as the Biden administration steps up scrutiny of China-related investment and prepares to unveil an executive order that would require US companies investing in certain sensitive sectors — including semiconductors, artificial intelligence and quantum computing — to notify the federal government. It would also prohibit investment in certain areas. Read the full story. Here’s what else I’m keeping tabs on today:Economic data: Housing prices across 20 major US metropolitan areas are expected to have fallen again in May. Separately, the Conference Board’s consumer confidence index is forecast to rise to 111.8 for July, from a reading of 109.7 in June, which was its highest since January 2022. The IMF also updates its World Economic Outlook. Alphabet: Investors will be listening for commentary on advertising revenue, cloud growth and artificial intelligence plans when Google’s parent reports earnings after the bell. Analysts expect $72.8bn in revenue in the June quarter, including $57.4bn in advertising sales, for earnings of $1.34 a share, according to Refinitv.Microsoft: The tech group’s stock hit a record last week after it announced a $30 monthly premium for generative AI features in its Microsoft 365 software. Investors will be keen to learn of any further integration intentions as weakness continues in its cloud and personal computing divisions. Analysts polled by Refinitiv expect Microsoft to have earned $2.55 a share on revenue of $55.5bn in the three months to June, up from $2.23 a share on sales of $51.9bn during the same quarter of 2022.Other earnings: Biogen, General Electric, Kimberly-Clark, LVMH, Raytheon, Snap Spotify, Unilever and Visa are among those also reporting today. See the full list in our Week Ahead newsletter.Five more top stories1. JPMorgan Chase reimbursed former executive Jes Staley for trips to meet Jeffrey Epstein, according to allegations in court documents. Staley, who later became chief executive of Barclays, also testified under oath that he told JPMorgan boss Jamie Dimon about the late disgraced financier’s misdeeds in 2006. Here’s more from the New York court filings.2. The heatwaves that hit North America and Europe in July would have been “virtually impossible without climate change”, said researchers who stressed that extreme weather events would occur with greater frequency. The World Weather Attribution group, an academic collaboration, added that human-induced warming made the recent extreme heat in China “at least 50 times more likely”. Read more.3. The US general counsel of EY has resigned after two years in the role, as the firm nears the conclusion of a probe into its failure to properly handle a staff cheating scandal. EY was forced under a settlement with US regulators to appoint an independent investigator to examine the actions of staff including “senior attorneys”. Here’s more on Ann Cook’s departure.4. Credit Suisse has been fined $388mn by US and UK regulators over the collapse of Archegos Capital for “significant failures in risk management and governance”. The collapse caused a $5.5bn trading loss and helped bring about the Swiss lender’s demise. Rival UBS, which took over the bank, could face corrective measures from Swiss regulators. Julius Baer: Switzerland’s second-biggest bank said it pulled in more than $10bn in new money from clients following the near-collapse of Credit Suisse.5. GlobalFoundries has criticised subsidies that Berlin is planning to offer TSMC, the world’s biggest contract chipmaker, for a planned plant in the east German city of Dresden. The US chip company’s chief executive fears the funds to its Taiwanese rival would distort competition, he told the Financial Times.The Big Read

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The latest productivity figures show that the UK’s output per hour worked was just 0.6 per cent above its pre-pandemic 2019 average in the first quarter of this year. Why do British workers turn out less for every hour they work than their counterparts in other advanced economies such as the US, Germany and France? Low investment and skills gaps may be partly to blame.We’re also reading . . . Israel uproar: Protesters are preparing for the next phase of their battle against the judicial reforms of Benjamin Netanyahu’s hardline government.Drug pricing: The head of pharma group Novartis warned that the US government’s reform of drug pricing risks damaging public health as drugmakers have already begun to cut investment in pills for the elderly.Fentanyl: In less than a decade, Mexico’s drug cartels have created a highly profitable business to feed US demand for the synthetic opioid.Spanish politics: Spain’s election stalemate has given a kingmaker role to Catalan fugitive Carles Puigdemont and his separatist party.Chart of the daySaudi football club Al Hilal has approached Qatar-owned Paris Saint-Germain with a €300mn bid to sign Kylian Mbappé, a record-breaking offer for the French forward who has been locked in a contract dispute with his club. The approach from Al Hilal, which is owned by Saudi Arabia’s sovereign wealth fund, highlights Riyadh’s disruptive ambitions in sport.

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Take a break from the newsWristwatches are worn, coveted and collected by men and women alike, but the balance of power is shifting. These five female figures in the world of horology are rising to prominence in different areas, from dealing to designing.

The dealer: Zoe Abelson © Cody Cutter

Additional contributions by Tee Zhuo, Benjamin Wilhelm and David Hindley More

Good morning. Spain’s parliamentary election potpourri continues to provoke more questions than answers, and has created a most unlikely kingmaker: fugitive Catalan “president” Carles Puigdemont, currently in Belgian exile as a member of the European parliament.Today, we have news on Poland’s latest salvo against Ukrainian agricultural exports and a dispatch from Sicily, where the extreme summer heatwave has crippled the infrastructure.Berry bad neighboursEU agriculture ministers meet today to discuss gene editing techniques, cutting pesticide use, new rules on seed marketing — and Ukrainian strawberries, write Andy Bounds and Raphael Minder.Context: Poland, together with Hungary, Slovakia, Bulgaria and Romania, is campaigning to block additional food imports from Ukraine. The five frontline states say a big jump in imports depressed prices for their own farmers, and Brussels’ measure to tackle this do not go far enough.Back in April, the five countries agreed to lift unilateral import bans in exchange for guarantees that Ukrainian grain shipments would only transit through the five countries en route to other destinations. Those measures expire on September 15, and the five want them to be prolonged and expanded to other crops.Polish agriculture minister Robert Telus yesterday said that Poland wanted new measures to restrict soft fruit shipments, in particular frozen raspberries and strawberries. “We also want the scope of preventive measures to be flexible and subject to modifications in consultation with the European Commission,” Telus said. The Polish-led request for an extension of import restrictions comes after Russia this month pulled out of the Black Sea grain deal, which has added to concerns in Poland and other EU border countries about neighbouring Ukraine seeking to send more farm exports their way instead.Still, the atmosphere in the Brussels meeting room is expected to be pretty chilly, diplomats say. Poland has harangued other EU member states into backing ever tighter sanctions on Russia for its invasion of Ukraine, at considerable cost to their own economies. “Poland claims to be Ukraine’s best friend, but in the meantime is more concerned with protecting its own interests — particularly those of the ruling party — by catering to the rural electorate,” said a diplomat from another member state. The nationalist government in Warsaw faces a tight election in autumn. New figures from the commission show that the volume of Ukrainian maize, wheat, sunflower seeds and rapeseed entering the five countries was just 13,000 tonnes in June, compared with a peak of 1.3mn tonnes in November. Significant stocks remain unsold in the EU states, though. Several EU ministers are expected to attack the Polish position, but the commission itself is unlikely to want to pick a fight with Polish farmers ahead of the election for fear of inflaming anti-Brussels attitudes.One frustrated diplomat pointed out that the commission has sole control over the restrictions, leaving the dissidents powerless. Chart du jour: Downturn, again

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A closely watched business survey has suggested the eurozone economy is shrinking. The purchasing managers’ index, a measure of activity at companies across the 20-country bloc, fell to an eight-month low in July.Catania’s infernoNo water, no power, no airport: The city of Catania in Sicily is wrestling with hellish conditions this summer as Italy reels from an unprecedented heatwave with temperatures surpassing 40C, writes Giuliana Ricozzi.Context: Large parts of the Mediterranean are suffering from record temperatures and wildfires as a consequence of climate change. This has hit the already fragile infrastructure in Sicily, leading to multiple service disruptions in its second-largest city of Catania.After days of malfunctioning, Catania’s water network, which serves the city’s 300,000 citizens, collapsed this weekend following a fire at an electrical station, the city’s water company said. This comes on top of frequent blackouts resulting from the impact of extreme heat on the power grid. The disruption of essential services has exasperated residents and business owners, with coffee bars shutting down and citizens filling up water tanks at public fountains.Grid operators have been working to solve the issues, but it’s still unclear when water will flow through the pipes again. Travellers are also having a terrible time. Catania’s airport, Italy’s fifth-largest serving some 10mn people last year, is working at reduced capacity after another fire more than a week ago. Most flights have been cancelled or moved to other airports in Sicily or the mainland. The Italian government has blamed the open-ended disruption on bad management by the local operator and the civil aviation authority.Industry minister Adolfo Urso said it was causing “serious damage to the production system of Catania and eastern Sicily”. Infrastructure minister Matteo Salvini will today hold a meeting to take stock of the situation.For now, it might be advisable to book flights elsewhere.What to watch today EU agriculture ministers meet in Brussels.Second day of EU industry ministers meeting in Bilbao, SpainNow read these‘Army of drones’: Ukrainian officials have indicated that Kyiv was responsible for another remote attack in Moscow yesterday, the fourth since May.Explosive inheritance: The EU’s environment commissioner has warned that tonnes of unexploded munitions from the two world wars litter the Baltic Sea.ETF giant: Ireland’s exchange traded fund assets have risen above €1tn for the first time, accounting for 68 per cent of the entire European market. More

Economists are at odds with markets over investors’ optimistic bets that the global economy is set for a soft landing and interest rates are close to their peak. Markets have rallied on both sides of the Atlantic in recent weeks, as the UK followed the US and eurozone in showing headline inflation is declining at a sharper-than-expected pace.“In all the major regions we have this sense of light at the end of the tunnel,” said Claus Vistesen, chief eurozone economist at consultancy Pantheon Macroeconomics. The improvement in the UK, where a fall from 8.7 per cent to 7.9 per cent represents the biggest single month drop on record, was “the last shoe to drop”, he added.While few now expect the deep recession that many forecast last year, many economists caution that central banks will struggle on the “last mile” of their journey to bring inflation sustainably back to their 2 per cent targets without raising rates so much that job losses mount.With central bankers in the US and eurozone meeting this week, and their UK counterparts convening next Thursday, investors hope that the latest good news on inflation will mean rate-setters moderate their plans to keep raising borrowing costs. Markets have priced in a near certainty of a further quarter point increase in interest rates from the Federal Reserve on Wednesday, but investors are betting that this will prove to be the peak in US rates and that the Fed could start loosening policy early in 2024. The European Central Bank is also expected to plump for a similar rise meetings next week, and an increase of at least that size is forecast from the Bank of England next month. Investors no longer expect UK rates to surge as high as the 6.5 per cent they bet on just a few weeks ago. Some think the ECB may also be close to a pause, after Klaas Knot, usually one of the most hawkish members of the ECB’s governing council, said on Tuesday that rates increases beyond the July meeting were “by no means a certainty”. However, economists are not convinced that the better data means growth over the coming quarters is assured. Some argue that the lagged effect of higher interest rates has yet to be seen and that economies are set to slow sharply. Others say that, if economies do prove resilient and jobs markets remain strong, central banks will end up having to take a harder monetary stance than markets are pricing in.Unemployment remains near historic lows on both sides of the Atlantic and official data shows wages growing faster than central banks think compatible with 2 per cent inflation.Robert Sockin, global economist at Citi, said it would be “historically unusual” for central banks to get inflation back to target without “a meaningful loosening in labour market conditions”.“We need to see unemployment going higher [before central banks stop raising rates],” said Luigi Speranza, chief economist at BNP Paribas. He still believes that the lagged effects of higher interest rates will produce a recession in the US and a long period of slow growth in the eurozone, where inflation is now 5.5 per cent, down from 10.6 per cent last October. Some economists think a soft landing could occur in the US, where inflation has fallen from double figure to just 3 per cent. Goldman Sachs now sees only a 20 per cent chance of the US economy entering a recession in the next 12 months, citing “the easing in financial conditions, the rebound in the housing market and the ongoing boom in factory-building”.Adam Posen, president of the Peterson Institute for International Economics, said US inflation could come down without a recession in an economy where labour traditionally has less bargaining power. But it would be a “heroic assumption” to expect inflation to evolve in a similar way in the eurozone, where workers had stronger rights. Eurozone PMI data out on Monday signalled the region could be heading for another quarter of economic contraction. In the UK, meanwhile, Posen said policymakers had lost credibility and were trying to hold down public sector pay unsustainably. Although the government has settled some pay disputes, and headed off strikes by teachers with a new pay offer of 6.5 per cent, it has yet to resolve a damaging dispute with the main doctors’ union. It would be a much bigger task to reverse a 15-year period of attrition in the relative value of public sector pay, which has led to worsening problems with recruitment and retention. In the private sector, figures published this month by Indeed, the online jobs site, show that growth in advertised wage rates has slowed sharply in the US, while plateauing in the eurozone and still accelerating in the UK. Dave Ramsden, the BoE’s deputy governor for markets, appeared last Wednesday to caution investors against over-interpreting the latest inflation print. Price pressures were still “much too high”, he said, underlining that rate-setters were focusing on wage growth and services inflation.For now, though, even some in the UK are focusing on the positives. “Disinflation is back,” said Michael Metcalfe, head of global macro strategy at State Street Global Markets. Paul Dales, at the consultancy Capital Economics, said that while he still expected UK output to shrink, successive contractions that together amount to around 0.5 per cent would be “the mildest recession we’ve ever had”. Given how much bleaker the UK’s prospects looked at the start of the year, he said, “that would still be classed as a really good result — essentially a soft landing”. More

In early 2009, when I got off a plane to begin an overseas posting in Washington, the city seemed to fizz with energy. The US was in recession but Barack Obama had just become president after a campaign which promised “hope and change”. I thought back to those days recently when Rachel Reeves, the UK shadow chancellor, went to Washington to deliver a speech that seemed to tap into the new political zeitgeist — an approach she has dubbed “securonomics”.After years of slow economic growth, a global pandemic and a war in Europe, people are in no mood to believe in grand visions any more, and politicians have moderated their rhetoric accordingly. In fact, their promises seem to have retreated right down Maslow’s hierarchy of needs to settle at the basic necessities of life. Hope and change is out; “security” is now in.In her speech, Reeves said the world was living through an “age of insecurity” in which countries like Britain were “buffeted by global forces”. Her answers to this problem were very similar to those advanced by the Biden administration: friendshoring over globalisation; industrial policy over laissez-faire; resilience over efficiency. “It is time for us to admit that globalisation, as we once knew it, is dead,” she said. I think the diagnosis is right. But when it comes to the economy, I am less convinced about the cure. Insecurity is indeed a real and deep problem in countries such as the UK, but it’s hard to see how globalisation is to blame. Let’s start with the labour market, where unemployment is low at just 4 per cent and the proportion of jobs classed as “low-paid” has dropped to the lowest since the data series began in 1997. It’s a success story on many metrics. But viewed through the lens of insecurity rather than income, there are profound and widening inequalities between workers who have a steady income and those who don’t.In one recent paper, economists used machine learning to analyse 46mn UK job adverts between 2014 and 2019. They found “a significant shift in the distribution of work arrangements” which led to a “polarised picture” in which low wage vacancies became disproportionately likely to be flexible, non-salaried and without full-time hours or a permanent contract. In contrast, when flexible work was advertised for higher-paid workers, it was more likely to be offered with a fixed salary, which meant this group could enjoy the benefits of flexibility alongside the security of steady pay. There are other ways in which the system bestows the most security on the workers who need it the least. According to one recent poll, just 12 per cent of workers with incomes over £60,000 said they would expect not to be paid if they unexpectedly missed a day of work due to a family emergency, compared with 56 per cent of workers earning less than £20,000 a year. And government data suggests that 75 per cent of managers are covered by company sick pay schemes, compared with less than half of workers in caring, leisure and other service occupations.Insecurity is also growing in the housing market, where a rising proportion of lower-income households are living in the least secure private rented sector. For low-income adults born in the 1960s or before, private renting rates ranged from 5 to 20 per cent at almost every age, according to the Institute for Fiscal Studies. For those born in the 1970s, the rates have been about 25 to 30 per cent, and for those born in the 1980s, they are about 40 to 50 per cent.Security is unevenly distributed when it comes to essentials such as electricity and gas too. While most households pay for energy in smoothed out monthly direct debits, some have to pre-pay for it on meters, which means unpredictable fluctuating costs based on the weather, not to mention the extra cognitive load involved in remembering to pre-pay before going away to make sure everything in the freezer doesn’t defrost. An adviser at the Citizens Advice Bureau in Blackpool once explained to me that these problems compound one another. “Your income’s not stable, your work’s not stable, your housing’s not stable,” she said. “Everything’s built on sand.” As Graeme Cooke argues in an essay for the Joseph Rowntree Foundation, giving people a sense of security can provide “a psychological, as well as a material, platform for people to take risks, think long-term [and] invest in themselves and their family”. There is a powerful case, then, to tackle insecurity in pursuit of a happier, healthier, more productive society. But how much of all this is the fault of “global forces”? Is the rise of China to blame for UK pre-payment meters? Did globalisation cause the shortage of affordable housing? There might be good national security reasons to embrace friendshoring. An industrial policy which brings decent jobs to deindustrialised areas would certainly help those communities. But when it comes to the everyday insecurity that runs deep in Britain, most of the problems lie closer to [email protected] More

US national security officials are scrutinising an Abu Dhabi sovereign wealth fund’s planned $3bn takeover of New York-based Fortress Investment Group amid concerns in Washington over the United Arab Emirates’ ties to China, people close to the situation told the Financial Times. The review by the Committee on Foreign Investment in the United States, an inter-governmental agency that vets whether deals can harm national security, is in its early stages and a decision is not expected for several months, the people added. Abu Dhabi’s Mubadala agreed to buy a majority stake in Fortress, which manages about $46bn in assets and specialises in distressed debt investing, in May from Japan’s SoftBank Group. Mubadala, which is run by chief executive Khaldoon al-Mubarak, said it intended to close the deal in the first quarter of 2024, subject to regulatory approvals.Mubadala and Fortress declined to comment. The US Treasury, which oversees the Cfius process, said it did not comment on transactions that it “may or not be reviewing” but added that it was “committed to taking all necessary actions within its authority to safeguard US national security”.The Cfius action comes as the Biden administration steps up scrutiny of China-related investment and prepares to unveil an executive order that would require US companies investing in certain sensitive sectors — including semiconductors, artificial intelligence and quantum computing — to notify the federal government. It would also prohibit investment in certain areas.The FT previously revealed that Cfius, which can require steps to mitigate its concerns or block a deal outright, intervened in SoftBank’s 2017 takeover of Fortress. Cfius forced SoftBank to relinquish day-to-day control over Fortress and took further steps to monitor SoftBank’s level of direct influence on the investment firm. At the time, the FT reported that Cfius was concerned about some of SoftBank’s investments, which included a large stake in China’s Alibaba Group, and the business links of its founder Masayoshi Son. Mubadala acquired a near 10 per cent stake in Fortress in 2019 and received Cfius clearance for that purchase, according to people with knowledge of that review. However, a new review is needed for its plan to purchase a further 60 per cent in Fortress, the people added. As part of the deal, Fortress insiders would own the remaining 30 per cent with a special class of shares that allows them to appoint a majority of its board. Mubadala has other investments in the US, which include a stake in US private equity firm Silver Lake thanks to close relations between its co-chief executive Egon Durban and Mubarak. One expert in the Cfius process told the FT that there were likely two reasons the inter-agency body will take a close look at the planned Fortress takeover, including growing concerns in Washington over budding relations between Abu Dhabi, the capital of the UAE, and China. “What we are also witnessing in the pendulum swinging back to where sovereign wealth funds are under increased scrutiny,” the person said, referring to the period after Cfius investigated a deal for Dubai Ports World to buy P&O, the UK-based port operator. Cfius approved the deal in 2006, but following uproar from US politicians, including then-senator Hillary Clinton, the UAE compelled DP World to relinquish control of five port terminals in the US that it acquired in its purchase of P&O.

The US concern was not about China, but about its ports being vulnerable to terrorist attacks. US lawmakers alleged that Dubai was a transfer point for nuclear-related components to Iran, Libya and North Korea.The Biden administration has been concerned about indications that China was building a military facility at Khalifa Port in UAE, as part of an effort to project military power. China has one international base, located in Djibouti, and is building another naval facility in Cambodia.In September last year, President Joe Biden also issued an order telling Cfius to pay close attention to deals involving critical technologies, including artificial intelligence, quantum computing and biotechnology. While the order did not name China, the industries are frequently mentioned by US intelligence agencies as ones where China is trying to obtain US technology. More

The UK is on track to incur the highest debt interest costs in the developed world this year as persistently high inflation and an unusually large proportion of government bonds linked to price rises damage the public finances.The Treasury will spend £110bn on debt interest in 2023, according to a forecast by Fitch. At 10.4 per cent of total government revenue, that would be the highest level of any high-income country — the first time the UK has topped the data set that goes back to 1995 — after an improvement by the prior leader Iceland.Roughly a quarter of UK government debt is in the form of so-called index-linked bonds, whose payouts fluctuate in line with inflation, making the country a huge outlier internationally. Italy has the next highest share with 12 per cent of its bonds tied to inflation, while most countries have less than 10 per cent.“We’ve had a very large inflation shock which is adversely affecting the public finances and that is obviously a key driver of the sovereign credit rating,” said Ed Parker, global head of research for sovereigns and supranationals at Fitch.The agency reiterated in June its negative outlook on the UK’s double A minus credit rating, citing “the UK’s rising government debt and uncertain prospects for fiscal consolidation”.Parker said a negative outlook signals that a downgrade is “more likely than not if current trends continue” and that the agency would normally hope to clarify a negative outlook within two years. Debt interest costs as a proportion of revenue are a key measure of debt affordability and have jumped in the UK in the past couple of years while coming down elsewhere. The UK will sit at the top of the Fitch debt interest costs table after its ratio increased dramatically in the past two years from an average of 6.2 per cent between 2017 and 2021.In contrast, the average among western Europe and North American countries is set to fall from 4 per cent in the five years to 2021, to 3.7 per cent this year, as inflation has boosted government revenues and in some countries the debt expiring had higher interest rates than new debt issued. Rising debt costs in the UK come as inflation proves harder to tame than in other developed economies, despite recent signs of improving data. The UK’s retail price index, which guides index-linked gilt interest payments, rose 10.7 per cent in the year to June, while wage inflation has yet to show signs of easing. Fitch forecasts the UK’s debt interest-to-revenue ratio should start to fall next year as inflation continues to ease, with the interest burden of both the US and Italy set to overtake the UK in 2024.However, rating agencies expect the UK’s interest costs to stabilise at historically high levels. “We expect the debt affordability of the UK to remain relatively weak” said Evan Wohlmann, a senior credit officer at rival rating agency Moody’s. “Debt affordability is at risk from more persistent inflation as well as from a potential sustained erosion of the UK’s policy credibility,” he added. Moody’s, which has an Aa3 negative rating on the UK — its fourth highest level — also has a negative outlook, a position it has held since October and expects to clarify within 12 months. Concern among rating agencies on the UK’s credit outlook comes after the Office for Budget Responsibility, the UK’s fiscal watchdog, warned that public finances were in a “very risky” position, with government debt on course to hit 310 per cent of gross domestic product in 50 years. The OBR said that the UK was “more vulnerable” than other advanced economies when it came to public debt, which in May surpassed 100 per cent of gross domestic product for the first time since 1961.The government plans to sell £241bn of gilts in the current financial year, a sharp increase from £139.2bn issued in the previous 12 months, with issuance net of Bank of England bond purchases and sales expected to be about three times more than the average over the past decade.This article has been amended to correct Moody’s UK rating More

(Reuters) -Canada on Monday released a framework for eliminating inefficient fossil fuel subsidies, making it the first G20 country to deliver on a 2009 commitment to rationalise and phase out government support for the sector.Climate policy analysts said the framework was an important step forward, but fell short by continuing to allow government support for oil and gas projects that plan to reduce emissions through technologies such as carbon capture and storage (CCS).The framework will apply to existing tax measures and 129 non-tax measures, but Ottawa will not cancel any ongoing multi-year subsidy agreements that are already in place.The government has not put a dollar value on the subsidies impacted, or published an inventory of exactly which subsidies are included.”This ensures that the only federal support for oil and gas goes to projects that decarbonize the sector and result in significant greenhouse gas emissions reductions,” federal Environment Minister Steven Guilbeault told a press conference.Fossil fuel actives will be exempt from the framework if they fall into one of six categories: enabling significant carbon emissions reductions, supporting clean energy, providing essential energy to a remote community or short-term support for an emergency response, supporting Indigenous participation in fossil fuel activities or are projects that have a credible plan to reach net-zero by 2030.Eliminating fossil fuel subsidies is part of a 2022 deal signed between Prime Minister Justin Trudeau’s minority Liberal and the New Democratic Party (NDP), formalising NDP support for the government.The NDP critic for Climate Change and Environment, Laurel Collins, said the new rules did not go far enough.”While we know that we had to fight like hell to get the Liberals where they are today, it is clear that this announcement doesn’t meet the urgency of the moment when climate disasters are putting everything we value at risk,” Collins said.CCS ‘LOOPHOLES’Laura Cameron, policy advisor for the International Institute of Sustainable Development, praised the framework for using the internationally recognised World Trade Organisation definition of a subsidy, but criticised continuing support for oil and gas projects planning to build CCS.Canada, the world’s fourth-largest oil producer, expects the technology to play a major role in decarbonizing the industry and last year announced a CCS investment tax credit.The Pathways Alliance, a collaboration between Canada’s six largest oil sands producers, is planning to develop a C$16.5 billion ($12.53 billion) CCS hub in northern Alberta. Pathways President Kendall Dilling said in a statement that the organization was pleased the framework recognized the need for government partnership on its project. Climate campaigners Environmental Defence also criticised the framework for not applying to public financing of fossil fuel projects through government-owned crown corporations, such the loan guarantees for the C$30.9 billion Trans Mountain pipeline expansion project.Ottawa plans to release a framework to phase out public financing of fossil fuel projects within the next year.”The Government of Canada must quickly take the final step and end all fossil financing – without any loopholes for fossil gas, fossil hydrogen or CCS,” Environmental Defence program manager Julia Levin said in a statement.($1 = 1.3164 Canadian dollars) More

SEOUL (Reuters) -South Korea’s economy sped up faster than expected in the second quarter, flattered by headline improvements in trade although weaker consumer and business spending add to the case for the central bank to loosen its restrictive monetary policy.Gross domestic product (GDP) grew by a seasonally adjusted 0.6% in April-June on a quarterly basis, according to preliminary estimates from the Bank of Korea, after a 0.3% increase in the preceding three months.It beat the median 0.5% rise forecast in a Reuters survey of economists and marked the biggest quarterly growth since the second quarter of 2022.By expenditure, exports fell 1.8%, but imports dropped at a much faster rate of 4.2%, bringing a net growth contribution of positive 1.3 percentage points to the heavily trade-reliant economy.”Qualitatively, it is not so positive as the headline figure indicates,” said Park Sang-hyun, chief economist at HI Investment Securities.”Growth will improve going forward, but it is too early to talk about recovery, as a sluggish Chinese economy may delay the recovery of exports that are already weaker than previously expected.”Private consumption as well as facility and construction investments were all weaker than the quarter before, down 0.1%, 0.2% and 0.3%, respectively, while government spending dropped 1.9%, the biggest since early 1997.GDP for the quarter was 0.9% higher than the same quarter the year before, compared with an expansion of 0.9% in the January-March quarter and a 0.8% increase expected by economists.Asia’s fourth-largest economy is expected to grow 1.4% in 2023, down from 2.6% in 2022, according to the latest forecasts by the central bank and the government.”The upshot is that the central bank, enabled by falling inflation, is likely to step in to support the economy by loosening monetary policy in the coming months,” said Shivaan Tandon, emerging Asia economist at Capital Economics. More