Aurelia Butler

The decree said that foreign-owned stakes in Danone Russia and Baltika Breweries were being put under the “temporary management” of government property agency Rosimushchestvo.It comes after the Russian subsidiaries of Germany’s Uniper and Finland’s Fortum were taken under state control in April.The Kremlin warned at the time it could seize more Western assets on what it said was a temporary basis in retaliation for foreign moves against Russian companies abroad after Moscow sent thousands of its troops into Ukraine last year.Carlsberg said in a statement late on Sunday it had “not received any official information from the Russian authorities regarding the presidential decree or the consequences for Baltika Breweries”.It added that the prospects for full disposal of its business in Russia were now highly uncertain. Carlsberg said in June it had signed an agreement to sell its Russian business, subject to regulatory approvals.Danone said in a statement that it was investigating the issue, adding that the Kremlin’s decision would have no impact on its financial guidance for 2023. The French company said last October it was seeking a buyer for its dairy food business in Russia, in a deal that could lead to a write-off of up to 1 billion euros ($1.12 billion).($1 = 1.1227 euros) More

Hello and welcome to the working week.From the struggling property market to lacklustre trade and industrial profits, several economic indicators for the Chinese economy are flashing red. But that will not be immediately obvious when the world’s second-largest economy publishes its second-quarter gross domestic product growth data on MondayThe headline figure should still look deceptively strong because of a low base effect, with some banks forecasting 7 per cent growth. But the underlying momentum is slowing, warn economists, raising concerns about the health of the country’s post-Covid recovery.In Europe, polls suggest Spaniards are about to change the country’s political path when they vote next Sunday, ejecting Socialist prime minister Pedro Sánchez and installing a conservative government set to overhaul a €3bn windfall tax reviled by banks and energy companies. The big question is whether the opposition People’s party, led by Alberto Nuñez Feijóo, can secure an absolute majority or whether it will need the votes of the hard-right Vox party to take office. If so, Feijóo will come under pressure to take more radical positions on areas from climate change and immigration to gender rights.The focus of UK politics will be three by-elections in previously safe Conservative seats on Thursday, including Boris Johnson’s former London constituency of Uxbridge and South Ruislip. The Tories are in danger of losing the lot, fuelling fears that Rishi Sunak’s party will lose in a landslide at the general election, due in the next 18 months.On Wednesday, eyes will be on UK inflation, which is expected to have slowed to 8.2 per cent in June, down from 8.7 per cent in May, according to economists polled by Reuters. More optimistically, the Bank of England is forecasting a decline to 7.9 per cent.Thursday will be an important moment for Hafize Gaye Erkan, Turkey’s new central bank chief, when she announces the country’s next interest rate move. It could be one of the bank’s biggest-ever pivots. Erkan’s predecessor cut rates from 19 per cent to 8.5 per cent in two years, sparking an acute inflation crisis and placing Turkey’s currency under intense pressure. It will require a huge increase in rates to restore economic order, according to economists and investors.Tesla is the earnings call to watch because it is one of a handful of US tech businesses — alongside Amazon, Alphabet, Apple, Meta, Microsoft and Nvidia — that have kept American stock markets rising in recent weeks. Read more about that in the Unhedged newsletter. Tesla’s stock is up 54 per cent since it last reported results three months ago. Big price cuts have helped the electric-vehicle manufacturer gain market share and investors want to see what effect this has had on the gross profit margin.What is your priority for the week ahead? Email me at [email protected] or, if you are reading this from your inbox, hit reply.One more thing . . . The Women’s World Cup football kicks off in Australia and New Zealand on Thursday. Could this be another breakthrough moment for gender equality in the sport? Crucial economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayForced-labour claims brought before London’s High Court against Dyson by 23 migrant workers and the estate of one deceased employee at the vacuum cleaner manufacturer’s Johor factory in Malaysia.China: Q2 GDP and June retail sales figuresJapan: Marine Day. Financial markets closed.UK: Rightmove July house price indexResults: DFS Furniture trading update, Oxford Nanopore H1 trading updateTuesdayCanada: June consumer price index (CPI) inflation rate figuresUK: Kantar grocery market share figures and price inflationUS: June retail sales and industrial production figuresResults: Arbuthnot H1, Bank of America Q2, BNY Mellon Q2, Charles Schwab Q2, Lockheed Martin Q2, Morgan Stanley Q2, Novartis H1, Ocado H1, PNC Financial Services Q2, Prologis Q2, Rio Tinto Q2 operations review, Swedbank Q2, Wise Q1 trading updateWednesdayUK: June CPI, retail price index (RPI) and producer price index (PPI) inflation rate figures. Also, Office for National Statistics UK house price index.EU: June harmonised index of consumer prices (HICP) inflation rate data.Results: Baker Hughes Q2, Goldman Sachs Q2, Hargreaves Lansdown Q4 management statement, IBM Q2, Netflix Q2, Northern Trust Q2, Severn Trent Q1 trading statement, Tesla Q2ThursdayGeneral Meeting of Kingspan shareholders to vote on the proposed delisting of the company’s shares from the London Stock Exchange.China: loan prime rate decisionFrance: June consumer confidence dataTurkey: interest rate decisionResults: 3i Group Q1 performance update, AJ Bell Q3 trading update, Alcoa Q2, American Airlines Q2, Anglo American Q2 production report, ASML Q2, Babcock FY, Capital One Q2, Dassault Aviation H1, Dunelm Q4 trading update, easyJet Q3 trading update, Getlink H1, Halliburton Q2, Howden Joinery H1, International Distributions Services Q1 trading update and AGM, Johnson & Johnson Q2, Kenvue Q2, Kier Group trading statement, Manpower Q2, Marsh & McLennan Q2, Nasdaq Q2, Philip Morris International Q2, Premier Foods Q1 trading update and AGM, Publicis H1, SAP Q2, SSE Q1 trading statement, Travelers Q2, United Airlines Q2, Vistry Group trading updateFridayJapan: June CPI inflation rate dataRussia: interest rate decisionUK: public sector net borrowing. Plus, official retail sales figures and GfK consumer confidence survey.Results: ABB Q2, American Express Q2, Close Brothers trading update, Comerica Q2, Danske Bank Q2, FirstGroup trading statement and AGM, Glencore H1 production report, Interpublic Q2, Nokia H1, Norsk Hydro Q2, Schlumberger Q2, Skanska Q2, Thales Group H1World eventsFinally, here is a rundown of other events and milestones this week. MondayUN Security Council briefing on Ukraine, with British foreign secretary James Cleverly expected to chair the meeting.UK: Post Office Horizon IT Inquiry chair Sir Wyn Williams to submit an interim report to parliament, setting out recommendations on the three schemes designed to compensate sub-postmasters affected by the Horizon affair.TuesdayThe Islamic new year begins this evening.India: G20 meeting of finance ministers and central bank governors in Gujarat concludes.WednesdaySouth Korea: The Boryeong Mud Festival, one of the country’s largest summer gatherings, begins in Boryeong, a town about 200km south of Seoul.UK: Treasury committee takes evidence from Financial Conduct Authority chair Ashley Alder and chief executive Nikhil Rathi, following concerns about the City regulator’s supervision of Odey Asset Management and its founder Crispin Odey and on the FCA’s wider work on non-financial misconduct.ThursdayAustralia/New Zealand: Fifa Women’s World Cup kicks off with games in Sydney and Auckland. The competition concludes on August 20 with the final in Sydney.UK: three by-elections in former prime minister Boris Johnson’s seat of Uxbridge and South Ruislip, in Somerton and Frome, and in Selby and Ainsty. Separately, the Conservative party is expected to name its candidate for next year’s London mayoral election.UK: 20,000 rail workers across 14 train operating companies are set to strike as part of an ongoing national pay dispute, repeating the walkout on Saturday. Senior doctors in England begin a 48-hour strike over pay.US: Comic-con International comic book festival begins in San Diego, US.FridayBelgium National Day, marking the date in 1831 when Leopold of Saxe-Coburg-Saalfeld took the oath as first king of the Belgians.SaturdayUK: 10th birthday of Prince George, eldest child of the Prince and Princess of Wales and second in line to the British throne following his father Prince William.SundayCambodia: parliamentary electionsFrance: 110th Tour de France cycling race continues with the 21st and final stage, a 115.5km flat route ride from Saint-Quentin-en-Yvelines to the Champs-Élysées in Paris.Spain: general electionUK: the RMT union launches what it describes as a “week of action” on London Underground in a dispute over pensions, job cuts and working conditions. More

GAZA (Reuters) – The Gaza Strip’s Hamas rulers have been unable to pay salaries for 50,000 public sector workers, with officials in part blaming a delay in a monthly payroll grant from Qatar, a crucial aid donor to the impoverished Palestinian enclave.The salary crisis has sparked an unusual amount of criticism on social media in Gaza, including by some of Hamas’ own employees. A drop in tax revenue and a jump in spending has made the situation even more difficult.Most of Gaza’s 2.3 million residents live in poverty, and the economy is dependent on foreign aid. Qatar has paid hundreds of millions of dollars since 2014 for construction projects. It currently pays $30 million per month in stipends for families, fuel for electricity, and to help pay public sector wages.Hamas officials say no salary aid has been received since just over half of a $5-million grant to support the May payroll. The reason for the delay was not clear.In Doha, Qatar’s International Media Office did not immediately respond to a request for comment.”The government is going through a stifling and escalating financial crisis, with a continuous increase in the deficit month after month, which led to the delay of salaries this month,” Awni Al-Basha, the Hamas-appointed deputy minister, told Hamas Aqsa radio.”We are making significant efforts to pay the salaries, and we hope to do so at the end of this week,” he said.Monthly payroll costs Hamas 125 million shekels ($34.5 million) per month, said Basha.On Sunday, Salama Marouf, chairman of the Hamas government media office, said there has also been an increase in spending, particularly for the ministry of health and repayment of bank debts. He called on Qatar to increase the salary grant to $7 million.Gaza has been under an Israel-Egyptian blockade since 2007 when Hamas, which opposes peace with Israel, took control. Public sector employees have not received full salaries since 2013.”With 60% (of salaries) we used to meet the basics of our needs at home. What happens when the salary is completely cut off?” said Mahmoud Al-Farra, an employee at the Hamas government media office. “This a big disappointment.”Some took to social media, questioning whether the crisis was authentic.”Where are the taxes they collect and the grants that enter Gaza go?” one resident posted on Facebook (NASDAQ:META). More

Top Biden administration officials dimmed hopes of an immediate easing of tariffs against China on Sunday even as they signalled scope for a more constructive relationship with Beijing.Speaking ahead of a meeting of Group of 20 finance ministers and central bankers in India, US Treasury secretary Janet Yellen said she was eager to work more closely with China on areas of “mutual concern” following a four-day trip earlier this month that she said put the relationship on “surer footing”. However, at a press conference that followed her remarks, she stressed that while it would be useful to identify ways to de-escalate tensions over time, it is “premature” to relax trade restrictions.“The tariffs were put in place because we had concern with unfair trade practices on China’s side and our concerns with those practices remain. They really have not been addressed and China put in place retaliatory tariffs of its own,” she told reporters. “Perhaps over time this is an area where we could make progress, but I would say it’s premature to use this as an area for de-escalation, at least at this time.”The US is completing a four-year review of the trade tariffs. Jake Sullivan, the White House national security adviser, on Sunday expressed frustration with what he described as a “self-defeating move” by China to impose export controls on critical ingredients to manufacture computer chips beginning on August 1.“We’re not looking to end all trade with China, what we’re looking to do is have a small yard of restrictions on technology with national security implications, and a high fence around that yard,” he told CBS News. “That’s what we’re going to continue to do, And China, of course, will have to make its own decisions.”The Biden administration is considering ways to prevent US investment from helping China’s military. During her trip to Beijing, Yellen said those controls would be “highly targeted and clearly directed narrowly at a few sectors where we have specific national security concerns”.

Sullivan said on Sunday that he expected President Joe Biden and Xi Jinping of China to speak again “at some point”.“It is a big, complex, challenging relationship that has to be managed carefully and that can only really be done effectively from the very top.”Washington has increased its diplomatic outreach to Beijing in recent weeks, with John Kerry, the presidential envoy on climate, becoming the third cabinet member to go to China. Kerry, who arrived on Sunday, is set to meet his Chinese counterpart, Xie Zhenhua and other officials over three days of meetings. More

Investors are expecting UK inflation to have slowed when figures for June are published on Wednesday — the question is how quickly.Expectations for UK policy rates ramped up sharply last month following unexpectedly strong wage numbers and stubbornly high consumer price inflation data, as markets priced substantially higher interest rates to bring down inflation to the Bank of England target of 2 per cent.The June numbers will be watched also by the government, as Prime Minister Rishi Sunak has made it one of his five goals to halve inflation over the course of this year.Economists polled by Reuters forecast that UK inflation slowed to 8.2 per cent in June, down from 8.7 per cent in the previous month. That would still be above the Bank of England forecast of a decline to 7.9 per cent.Sandra Horsfield, economist at Investec, expects a sharper decline to 8.1 per cent, driven by lower petrol and, to a lesser extent, food price inflation. However, she forecasts core inflation, which strips out the more volatile food and energy prices, to be unchanged at 7.1 per cent.“As concerns primarily centre on the sticky nature of core inflation, merely seeing lower headline inflation would not deter additional tightening,” said Horsfield. She expects that the Bank of England will increase rates by another half percentage point to 5.5 per cent in August following the same increase in May. “Indeed, we doubt the MPC will be confident enough to pause raising rates in September either,” she added.Markets are pricing that the Bank of England will increase interest rates to 6 per cent by the end of the year. To reverse some of the recent surge in interest rate expectations that pushed up mortgage rates, “data will have to show clear signs that disinflation is accelerating”, said Horsfield. Valentina Romei Will the euro keep rising against the dollar? The euro hit a 16-month high against the dollar this week as traders ramped up their bets that the Federal Reserve will stop raising interest rates ahead of the European Central Bank.The euro has risen by more than 2.9 per cent against the greenback since the start of July to trade at $1.1233, its highest level since March 2022, boosted by US inflation slowing faster than expected to 3 per cent for the year to June. The outlook for inflation in the eurozone looks more difficult, with consumer prices in Germany rising 6.8 per cent for the year to June, higher than economists had forecast. Traders still fully price in two more 0.25 percentage point rate rises for the ECB, but have removed bets that the Fed will move beyond a widely anticipated rate rise in July.“The euro had no difficulty at all taking out its spring high against the dollar this week,” said Jane Foley, head of FX strategy at Rabobank. “But what’s interesting now is that you’ve seen members of the ECB Governing Council talking about weakening economic data, in contrast to sentiments from [ECB president Christine] Lagarde last week,” she said. The eurozone has already entered a technical recession, with output across the bloc shrinking by 0.1 per cent in each of the past two quarters, and German house prices falling at a record rate this year and manufacturing struggling with weaker demand from China. “It could be that once we get to September the market may realise that the eurozone has growth issues of its own, interest rates have peaked and suddenly the euro doesn’t look very attractive any more,” Foley said. Mary McDougallWhat will retail sales tell us about the health of the US consumer? Retail sales data for June to be released on Tuesday will offer insight into the health of the US consumer as the labour market begins to slow. Economists polled by Reuters forecast that the Census Bureau will report a 0.4 per cent increase in overall retail sales in June from the previous month, following an increase of 0.3 per cent in May. Excluding the autos sector, retail sales for June are expected to have risen 0.3 per cent. Bank of America analysts believe that last month’s figures will be lower than the estimate, however, in part because the bank — which has a large retail presence in the US — has seen a decline in its own credit and debit card spending. The analysts cite a 0.2 per cent decline in card spending in June, consistent with the recent slowdown in the labour market. Bank of America therefore expects the Census Bureau data to show a 0.2 per cent decline in retail sales ex-autos for June, and a 0.1 per cent drop in the core control group. The US reported last week that hiring had slowed in June after months of unexpected strength. That slowdown — which is nevertheless still modest — could put some pressure on spending, and comes amid expectations of a recession, tight financial conditions and slowing inflation, all of which crimp spending. Kate Duguid More

The writer is chair of Rockefeller InternationalThe buzz around “American exceptionalism” keeps on growing, boosted by the strength of the US economy and markets compared with other developed countries — and to a stumbling China. But this confident talk overlooks the extent to which US growth now depends on deficits and debt.Based on those measures, the US has started to look exceptional in a bad way. Once typical, it is now the biggest deficit spender in the developed world. During the pandemic, the US budget deficit tripled to more than 10 per cent of gross domestic product, more than double the peak in other developed economies. In coming years, the US deficit is expected to average close to 6 per cent of GDP — well above its historic norm, and a full six times the average in other developed economies.How did the US steer so deeply into the red? Most countries have ended the spending programmes that were launched to ease the pain of pandemic-induced lockdowns. But all the $6.7tn in new spending from the Biden administration came after 2020 was over. Most of it had nothing to do with pandemic relief. Instead, Joe Biden used the sense of crisis to launch a latter-day New Deal, building infrastructure and industry ostensibly to compete with China and combat climate change. No other government plans to spend as heavily, leaving the US all but alone on the road to deeper deficits. Fans of Bidenomics see it as smart investment. But they ignore the curve-busting scale of new spending and its potential consequences for US debt, inflation, and growth in the long run.The US has been running deficits almost every year since the 1960s without triggering a serious financial crisis. So the conventional wisdom is that deficits don’t matter. Many economists argue that they pay for themselves if the economic growth generated by new public spending exceeds the government’s interest payments. That feat was easier to achieve when interest rates were near zero, however. Now that rates are rising, it’s almost impossible.Though public debt is at historic highs — more than 100 per cent of GDP across the developed world — it is stabilising in Europe but rising relentlessly in the US. With interest rates rising rapidly at the same time, the interest paid on public debt is increasing — and doing so much faster in the US.Within 10 years, US government interest payments will exceed spending on defence and on social programmes such as Medicaid. The Bank for International Settlements says developed economies need to bring deficits down sharply in this high-rate environment or end up with more new debt than new growth. The Biden team clearly feels this advice doesn’t apply to the world’s leading economic superpower. Through 2025, the trillions unleashed by this administration will push government spending up to 39 per cent of GDP, most of it not covered by new revenue. In other big developed economies, spending is poised to fall sharply as a share of GDP, while revenues hold up relatively well.Under pressure from Congress last month, Biden signed the Fiscal Responsibility Act of 2023, creating the appearance of a new restraint. Despite what look like large spending cuts of $1.3tn over 10 years, the US deficit is still projected to hover near 6 per cent of GDP throughout the next decade. Though inflation dipped last week, it’s still running well above 2 per cent, and Biden’s defenders blame its return on anything but his spending plans, including the lingering effect of global supply chain disruptions. While inflation did spike worldwide, it did so most sharply in nations that spent the most during the pandemic. Few spent more than the US. A recent study from the Federal Reserve attributed two-thirds of America’s recent inflation surge to excess demand, and half that increase in demand to deficit spending.But the positive view on American exceptionalism still dominates. Many favour Biden’s calls for bigger government, dismissing fears of a deficit-driven crisis as crying wolf and preparing for a threat that never comes. They scoff at the idea that foreigners might ever tire of financing US spending habits or buying into US markets. America’s flaws pale and its technology dazzles in comparison to rivals in Europe and Asia.So why should anyone care about the US’s deepening debt and deficits? Because it is now one of the most fiscally irresponsible nations. Its deficit has climbed the ranks to worst in the developed world, its public debt is already the third highest after Japan and Italy. To wilfully ignore this new reality is an exceptionally risky mistake. More

On paper, the EU should be an attractive partner for many low- and middle-income countries across the globe. It is the biggest market in the world, its social model is widely admired and it is less pushy on foreign policy alignment than either China or the US.Also on paper, Latin America should be the most promising place for the EU to press this advantage home. The region is culturally close to Europe, it is largely democratic and shares the EU’s founding values, and immigration from it into the bloc has been relatively easy to absorb.But when European and Latin American leaders meet this week for their first summit in almost a decade, their attempts at collaboration will feel like starting, if not from square one, then not much further than square two. At best, the EU-Mercosur trade agreement, under way for decades, will get a political push towards ratification.The likely underwhelming summit is a sign that the EU has not contemplated, let alone articulated, what deeper forms of relationship it can offer non-members beyond traditional trade deals and association agreements. The pandemic and Russia’s war against Ukraine woke European leaders up to their continent’s dangerous dependence on others for the foundations of its security, from energy to microchips. They also found their geopolitical priorities were less widely shared than they may have assumed when this mattered less.The first step to solving the problem — recognising that it exists — is happening, then. Not before time. The construction of post-1945 European unity around economic integration conditioned leaders to seeing the world stage as a market square: a place to sell exports and source raw materials. A marketplace, however, is so easy to take for granted that one forgets it requires political underpinnings — which Europe was long content to let the US sustain. After the 2008 crisis, European leaders were too consumed by internal problems to adapt to America’s increasing dereliction of this role.The pandemic and the war have boosted French president Emmanuel Macron’s concept of “strategic autonomy”, but even this comes with a dose of solipsism. More than standoffish autonomy, the EU needs strategic engagement to get other countries more firmly on its side.Europe’s neglect of the world contrasts with China’s Belt and Road Initiative, which uses geopolitics and infrastructure to reshape trade patterns to its advantage — including by turning the heads of some EU states. The fact that Beijing has not fully succeeded does not mean it has been wrong to try. The EU is, to be fair, catching up. Its pandemic recovery fund, new energy policy and drive to promote technological and industrial investment have righted the balance that made some member states look kindlier on Beijing than on their neighbours. The war has rekindled the political will to use membership prospects to mould others in the EU’s image. The current difficult dealings with Turkey should be a cautionary tale: that country was reforming until it was convinced in the 2000s that the EU’s door was not open in good faith. The EU cannot afford to lose Ukraine in the same way.What is missing still is a committed strategy for deep relationships with countries beyond the conceivable membership candidates. This is not just a matter of, say, securing critical minerals and metals supplies (though it is that too). It is about shaping a world where the EU remains relevant because it has more and closer allies on global issues such as the geography of supply chains, tech rules, multilateral governance and climate change.That is a much higher-stakes ambition than the EU has shown to date. It would require a commensurate devotion of both financial and political resources, and partnership forms going deeper than conventional trade deals. This could mean new forms of participating in the single market itself, or large-scale migration partnerships. As EU leaders contemplate how they adapt their institutions to a larger membership, they should also consider how to create tighter links with far-flung non-members. They should match China’s ambition and aim for a global economy as centred on Europe as possible. But they should aim higher than Beijing in attracting countries not through financial entrapment but by offering deeper, mutually beneficial links. Think of this more-for-more approach as “Belt and Road with liberal democratic characteristics”. That may seem unrealistic. Yet it is of the deepest realism, for nothing less can protect Europe’s interests if the US gives up on the liberal rules-based order after next year’s presidential [email protected] More