Aurelia Butler

The eurozone economy returned to growth in the first three months of the year as output expanded by 0.1 per cent. But the figure undershot economists’ expectations of stronger growth as stagnation in Germany, the region’s largest economy, offset expansions elsewhere in the bloc.The figures, which follow no growth over the previous quarter, confirm that the eurozone will avoid the winter recession that many predicted would follow last summer’s energy crisis, triggered by Russia’s full-scale invasion of Ukraine. The eurozone’s economy is now 1.3 per cent larger than in the first quarter of 2022. That compares with US growth of 1.6 per cent over the same period and a 4.5 per cent expansion of the Chinese economy in the same period.But most economists are forecasting only weak growth for the rest of this year. Melanie Debono, an economist at research group Pantheon Macroeconomics, said the region’s performance would “remain subdued” in the second and third quarters as “softer bank lending pulls down investment”. Others expect a slowdown in the US and sticky inflation to weigh on output. The growth figure, coupled with data showing inflation remained high in several eurozone countries, complicates the challenge facing the region’s rate-setters, who must decide whether to raise borrowing costs when they meet next week. Investors took the data as a sign the European Central Bank was likely to slow its interest rate rises when it meets on May 4. German two-year bond yields fell 0.16 percentage points to 2.7 per cent, while the euro dropped 0.4 per cent against the dollar to $1.0985.Analysts remain divided on whether the ECB will switch from a half-percentage-point rate rise to a quarter-point move next week. Policymakers have said incoming data will be decisive.Germany’s failure to grow was an improvement from a 0.5 per cent decline in the fourth quarter, but it was weaker than the 0.2 per cent growth forecast by economists in a Reuters poll.However, the French, Italian and Spanish economies all saw output accelerate from the previous quarter. Italy and Spain both recorded stronger than expected growth of 0.5 per cent in the first three months of the year. Growth in several of the bloc’s biggest economies was boosted by strong export sales, which offset declining or stagnant demand from households. Portugal had the strongest growth, recording a 1.6 per cent expansion, while the weakest performer was Ireland, with a 2.7 per cent contraction.French growth accelerated to 0.2 per cent, up from 0.1 per cent in the fourth quarter of 2022 and in line with expectations. Inflation in Germany fell to its lowest level for more than a year, after consumer prices rose 7.6 per cent in the year to April — down from an increase of 7.8 per cent in the previous month. Economists had forecast an unchanged reading in a Reuters poll.However, inflation in France increased more than analysts had predicted, rising to 6.9 per cent in the year to April, from 6.7 per cent in March. Inflation in Spain also increased to 3.8 per cent in April, up from 3.1 per cent in March. However, core inflation, which strips out energy and unprocessed food prices to give a better indicator of underlying price pressures, dipped to 6.6 per cent in Spain from 7.5 per cent a month earlier.

The IMF has told central bankers in Europe not to pause or relent in their attempts to tame inflation, saying it was better to over-tighten policy than risk permanently higher price pressures. Alfred Kammer, the director of the IMF’s European department, said this week that core inflation would prove “much more persistent” than people expected, and that rate-setters should not relax — even though headline inflation was now far below the peak of 10.6 per cent recorded in October 2022. The ECB has already raised rates at an unprecedented pace in an attempt to bring eurozone inflation down to its 2 per cent target. It has increased its deposit rate from minus 0.5 per cent last summer to 3 per cent in March. The latest figures for eurozone inflation are due out on Tuesday. “The bigger picture is that, even as Europe recovers from the energy crisis, the tighter monetary policy which has followed hard on its heels will weigh on investment and consumption,” said Andrew Kenningham, an economist at research group Capital Economics.Economists forecast eurozone growth of 0.2 per cent in the first quarter, according to a Reuters poll. More

Good morning. Italian prime minister Giorgia Meloni is the latest EU leader to be warming up relations with the British government, praising her hosts on a visit to London yesterday for their controversial policy of detaining and deporting asylum seekers. “I absolutely agree with your work,” she saidToday, our agriculture correspondent previews a vote on extending EU single market access for Ukrainian goods, and our Paris bureau chief explains why Emmanuel Macron can’t go anywhere right now without the din of kitchenware being banged.Grain drainKyiv will find out who its true friends are today as EU member states vote on whether to extend tariff-free access for Ukrainian grain imports, writes Andy Bounds.Context: A year ago, Brussels lifted restrictions on Ukrainian foodstuffs to help the economy and prevent shortages in many developing countries relying on those imports. But much of the goods landed in nearby Poland, Hungary, Slovakia, Romania and Bulgaria. The glut crashed prices, and Poland and three others have imposed import bans.EU ambassadors are meeting today to discuss extending the measures, which expire in early June, for another year. This is seen as the last chance for a deal after Sweden, which holds the EU’s rotating presidency, delayed the vote following a heated debate on Wednesday.Pro-deal states say that there is enough support to get it through. “There is a qualified majority today and there was a qualified majority on Wednesday,” one diplomat said. “This is about the integrity of the single market.”But the five countries which are affected by the higher prices — which include some of Ukraine’s staunchest allies — are holding out for more reassurances from Brussels.Last week, the European Commission offered to stop imports from Ukraine to those countries until June 30, except for goods transiting to other destinations. It also promised €100mn support from a €450mn emergency fund, adding to €56mn already given.Diplomats warn that money could be at risk if fighting continues. “Patience is wearing thin. They should remember that money has to be approved and other countries might need it,” said one.Yesterday, the European parliament’s trade committee voted on the extension proposal.Seven MEPs from states neighbouring Ukraine abstained. “Our countries support Ukraine but not at the cost of our farmers,” tweeted Hungary’s Enikő Győri.Nonetheless, the extension was approved. Expect the same result today. Chart du jour: Hitting the ceilingEU finance ministers meet today to discuss an overhaul of the bloc’s debt rules. In a new report, the New Economics Foundation argues that the proposed reform would still prevent many EU countries from investing enough to limit climate change.Pots and pansEmmanuel Macron may have hoped that things would quiet down once his unpopular pension reform became law. Instead, things have got much louder, writes Leila Abboud.Context: The French have been protesting for months against Macron’s plan to raise the retirement age from 62 to 64. The reform, which was pushed through without a vote in parliament, cleared the last constitutional hurdle earlier this month.The newest protesting tactic is la casserolade — also known in English as banging on pots and pans whenever and wherever Macron or his ministers show up. The hardline CGT labour union, pressure group Attac, and far-left France Unbowed party have spearheaded the campaign that has seen protesters armed with kitchenware literally seek to drown out the government’s messaging as it tries to turn the page on the pensions battle. Macron’s visits to Vendôme in western France and last week to northeastern Alsace and Herault in the south were marred by the cacophony while several ministers have had their trips derailed. The government has started withholding the details of Macron’s trips until hours before to try to flatfoot the kitchenware-wielding protesters. It’s an absurd but humorous phenomenon, and a welcome change from the more dangerous protests that flared up in March and at times included massive garbage fires in Paris and heavy-handed police tactics. But there is also a darker side: Using France’s stringent anti-terrorism laws, prefects have begun issuing bans on people bringing “sound devices” or “sound amplifiers” to towns where Macron is appearing, allowing the police to confiscate pots and pans. Unions are planning big marches on May 1 for Labor Day in what Macron and his allies hope will be the last gasp of the protests. His prime minister this week promised 100 days of government action to improve public services. Will that restore quiet?What to watch today EU finance ministers meet for an informal council in Stockholm.Pope Francis travels to Budapest, meets premier Viktor Orbán.Now read theseXi-Ze: China’s leader finally called Ukraine’s president to smooth over a diplomatic row and ensure Beijing has a role in postwar talks, say analystsRapid de-risking: Berlin’s push to reduce exposure to China has taken on new urgency, writes Constanze Stelzenmüller.Neutral to Nato: Why former military generals getting elected to parliament is part of Finland’s new normal. More

Joe Biden will today begin fundraising for his re-election campaign as he hopes to top the $1bn raised for his 2020 run at the White House.The two-day event in Washington will bring together Wall Street financiers and other deep-pocketed backers of the president who helped fund his successful campaign three years ago.Several donors said the president’s top aides had begun making telephone calls as soon as Biden declared his intention to run on Tuesday.Attendees at today’s event are expected to hear from Biden and the first lady while tomorrow’s session will be broken into smaller groups based on donors’ locations, people familiar with the plans said.In 2020, which was the most costly presidential contest on record, Biden’s campaign raised $1.04bn. That compared with $774mn for the Donald Trump campaign, according to OpenSecrets, a campaign finance data site. But those figures exclude the funds raised by political action committees, which cannot co-ordinate directly with official campaigns but have few limits on fundraising and spending.Bruce Heyman, a former US ambassador to Canada and ex-Goldman Sachs banker who helped boost turnout among voters abroad for the Democrats in 2020, suggested the Biden campaign would need to raise more money this time around.The last election took place during the pandemic and therefore there was not as much “engagement in the field”, Heyman said. Democrats would also need to spend more to counter a Republican push to restrict voting rights, he said.Here’s what else I’ll be watching today:DeSantis touches down in London: Florida governor Ron DeSantis ends a four-country tour in London as he prepares to launch his presidential campaign.US bank turmoil: The Federal Reserve will release its highly anticipated report into the collapse of Silicon Valley Bank and, separately, the Federal Deposit Insurance Corporation reports on how it supervised Signature Bank.Economic data: The Federal Reserve’s preferred inflation gauge — the core personal consumption expenditures price index — is updated. Results: Oil majors Chevron and ExxonMobil release first-quarter earnings today. Consumer goods manufacturers Newell Brands and Colgate-Palmolive will also publish results.Five more top stories1. Amazon said growth slowed this month in its cloud computing division as customers cut back in response to challenging economic conditions. The comments took the gloss off results that beat expectations and its shares reversed gains in after-market trading. Related: Share price gains yesterday for Big Tech companies, led by Meta, helped the S&P 500 to its biggest daily rise since January 6. Read the full US market report. 2. Germany’s economy stagnated in the first quarter, holding back growth in the eurozone. The lack of growth in Europe’s largest economy and higher than expected inflation in several eurozone countries will complicate next week’s interest rate decision by the European Central Bank. Read more on Europe’s latest growth figures.3. Kazuo Ueda, the Bank of Japan’s new governor, has launched a comprehensive review of the central bank’s policy to combat decades of deflation. The BoJ kept interest rates at minus 0.1 per cent and said it would continue to allow 10-year bond yields to fluctuate by 0.5 percentage points above or below its target yield of zero at the end of Ueda’s first meeting as governor. Read more on the market reaction.4. First Republic’s advisers, led by JPMorgan, are racing to finalise a private-sector solution to prevent the San Francisco lender being shut down by the Federal Deposit Insurance Corporation. But the plan has not yet won the backing of White House officials.5. A significant number of shareholders backed demands for climate change plans from Goldman Sachs, Wells Fargo and Bank of America at meetings this week against the wishes of the banks’ boards. How well did you keep up with the news this week? Take our quiz.The Big Read

India’s large, youthful population could accelerate economic growth if the country can harness its skills, giving it the chance to join China among the ranks of economic superpowers. In what some are predicting will be an “Indian century”, will the world’s most populous country seize its demographic dividend or squander it?We’re also reading . . . Inside Google’s DeepMind-Brain merger: The sudden popularity of ChatGPT shattered Google’s belief that it had a strong lead in the race to build and commercialise AI. It led to the reorganisation of “Google DeepMind”.How to make MMFs safer: US money market funds have seen huge inflows amid the turmoil in the banking sector. Now is the time for reform, argues the FT’s editorial board. Sudan conflict: The reckless disregard for life in Sudan is a betrayal of the “revolution” that led to the overthrow of the dictator Omar al-Bashir in 2019, argues Africa Editor David Pilling.Chart of the day

Russia’s stock market has climbed to its highest level in more than a year as domestic retail investors with nowhere else to go snap up dividend-paying stocks that sold off heavily following the invasion of Ukraine. Read more on the Moex’s surprisingly strong performance.Take a break from the newsThe new adventure game The Kraken Wakes is the latest beneficiary of games developer Charisma’s revolutionary AI dialogue software. Adapted from the 1953 John Wyndham novel of the same name, The Kraken Wakes gives a view into what happens when games start talking back.Additional contributions by Tee Zhuo and Emily Goldberg More

Bonuses and deposit rate increases have encouraged hundreds of thousands of customers to switch bank with their current account this year, according to the Current Account Switch Service. Figures published on Thursday showed 341,000 accounts changed providers in the first quarter of the year, up 70 per cent compared with the same period last year.Switching data showed customers took advantage of a competitive landscape. Incentives such as cashback schemes and switching bonuses of up to £200 also appear to help cushion any customer concerns about administrative headaches. “At the start of the year the number of switching incentives on the market were at higher levels than seen in the past,” said John Dentry at Pay.UK, which operates the Current Account Switch Service, a sector organisation. “That drove switching volumes up by a considerable margin.” Customers have become more alive to the incentives on offer, as providers jostle for market share. Over 1.1mn current account switches were processed in the year between April 1 2022 and March 31 2023. Since the launch of a centralised service in 2013, the switching service has processed 9.1mn transfer requests in a UK market of 100mn current accounts. End-user data, published with a three-month delay, showed that Nationwide experienced the largest net inflow — about 112,000 new customers — between October and December 2022. This compared with Big Six rival Santander, which lost 35,000 customers. “Two hundred pound incentives now seem to be the norm and anything less than this benchmark in the future is likely to receive a lukewarm reception,” said Andrew Haggar at consultants MoneyComms. He said high inflation meant cash-strapped consumers were eager for extra income.

Switching bonuses and cashback offered by providers do not count towards the £1,000 annual tax-free personal savings allowance. The Current Account Switch Service is offered by over 48 banks, building societies and neobanks, such as Monzo and Starling. The industry data under-reports the actual level of switching. For example, Chase UK, the offshoot of US group JPMorgan Chase, which has actively promoted account opening offers and grew to over 1mn customers last year, is still not a member of the service. Chase said it planned to join the switching service in the coming few months.Dentry added: “There’s been a shift towards more digital access to banking and that has followed switching in general, while the pandemic drove an initial change in how consumers were carrying out their banking business.”Successive rate increases have also made for a more attractive market for savers, according to Anna Bowes, co-founder savings monitoring website Savings Champion. Last week, the Financial Conduct Authority, the UK’s financial watchdog, wrote to MPs in response to growing concerns that banks were relying on customer inertia to offer less competitive options. It said it was open to revisiting plans for a single rate for easy accounts or more “onerous interventions”. About £256bn in easy-access savings accounts currently earns zero or near-zero interest, according to the Bank of England. The BoE raised the bank rate to 4.25 per cent last month — the 11th increase in a row — pushing more providers into raising savings or current account rates. Higher than expected inflation could see rates increase further. More

The writer directs the Center on the US and Europe at the Brookings InstitutionAn eye-catching phrase in the UK’s most recent national strategy document — the awkwardly named “Integrated Review Refresh 2023” — notes that western allies increasingly agree that “the prosperity and security of the Euro-Atlantic and Indo-Pacific are inextricably linked.” Everything Everywhere All At Once would be an equally accurate description of the current geopolitical mood. And that is why Germany, while straining to help Ukraine defend itself against its Russian attacker, is currently racing to reduce its exposure to a disturbingly assertive China.Its most urgent concern: ratcheting tensions over Taiwan, amid surging chatter of a US-China war. Germany’s foreign minister Annalena Baerbock, just back from a visit to Beijing, said a military conflict over the island would be a “horror scenario”. Indeed. The Rhodium Group, an economics and policy research firm, recently estimated that the global economic disruptions caused by a blockade of Taiwan could put “well over $2tn in economic activity at risk, even before factoring in the impact from international sanctions or a military response”. For Germany, one of the world’s most globalised economies, the effect would be akin to being struck by a meteorite. Next on the worry list is Beijing’s double game in Ukraine. In a long-delayed phone call on Wednesday with Ukraine’s president Volodymyr Zelenskyy, his Chinese counterpart Xi Jinping pledged his commitment to sovereignty and territorial integrity, and warned against nuclear wars (att’n Comrade Vladimir). Beijing has a keen interest in establishing itself as a peacemaker, and even more so as a rebuilder of Ukraine — especially if that comes at the expense of Kyiv’s western supporters.At the same time, China has deepened its economic leverage over Russia, and discreetly endorsed Kremlin positions. Xi let himself be feted for three days on a state visit to Moscow in March. And then there are the everyday headaches of growing Chinese interference in Europe: lectures and threats from Chinese diplomats, unfair trade practices, espionage, disinformation — and, lately, secret “shadow police stations” keeping tabs on Chinese expatriates. Cue a peculiarly German sign of genuine alarm: a storm of China papers. The country’s first-ever national security strategy, promised by the traffic light coalition on its accession in December 2021, continues to circle over the cabinet table in a slow holding pattern; there are credible rumours of a late May landing. Draft China strategies have, however, leaked out of both the foreign and the economics ministry. Three mainstream parties (CDU, SPD, Liberals) have published their own documents; the Greens have not, but they helm the foreign and economics ministries, and are anyway in the happy position of being able to whisper “we told you so”. All four converge on a notably hardened take on Chinese state capitalism and aspirations for global dominance.Yet Germany’s Beijing dilemma remains very real. China is its most important trading partner, ahead of the US. Berlin managed, with tremendous effort, to decouple from Russian fossil fuel in 2022. A full decoupling from China, in comparison, would amount to economic vivisection for Germany and indeed the rest of Europe.But then no one is advocating that, contrary to blaring complaints from some sectors of industry and the China lobby. The order of the day is “de-risking” (reducing dependency, especially in critical sectors of the economy like technology and rare earths) and deterring or defending against harmful Chinese actions. That sharper take is leading Berlin to re-examine, among other things, the recent plans to sell a minority share in a Hamburg port operator to the state-owned Cosco conglomerate, and the role of telecoms equipment from Chinese suppliers Huawei and ZTE in German networks.More is needed — especially given upcoming German-Chinese consultations in Berlin in June, and discussions of European China strategy at an EU leaders meeting shortly afterwards. The transatlantic alliance, the EU, and the member states, so effective in standing up to Russia together, have presented a sorry picture of disunity on China. But the blueprint has now been provided in a remarkably hard-hitting speech by EU Commission president Ursula von der Leyen. As for Germany’s China lobby, which according to reports includes two former cabinet ministers, it has (unlike its Russian equivalent) never been comprehensively mapped. Perhaps it is time for that. More

Digitising sections of the US logistics industry that still do business on paper has helped CDL 1000 top this year’s ranking of the fastest growing American companies.Since being founded in 2018 by Andrew Sobko, Chicago-based CDL has grown rapidly by applying technology to arcane processes or thorny problems in the industry.“Ports in the US are very complicated, they’re still 40 years behind on infrastructure and everything else,” says Sobko. “We’re digitising the logistics space and the most complicated part of the supply chain: logistics out of US ports and rail yards. We deliver a DoorDash-like experience to customers and to trucking companies.”The company’s revenues went from $116,000 in its founding year to $64.3mn in 2021, equivalent to a compound annual growth rate of 722 per cent. That rapid growth came at a time when Covid caused an array of severe problems in the logistics industry, as high demand collided with disruption from rolling lockdowns. Factory closures, driver shortages and sharply higher shipping costs were among the factors that led to delayed vessels and gummed-up ports and warehouses.Enter CDL, which started out with drayage — the process of transporting goods from a port to a company’s warehouse. This is complicated because of what Sobko says are “six touchpoints” that can cost time or money if any are missed.

A trucking company needs to schedule an appointment with a port to take a shipping container. It needs to arrive with the right chassis to carry the container and with any “demurrage” or late fees paid, otherwise the container stays put for several days until another appointment is made. After the container has been extracted, taken to a warehouse and emptied, it then needs to be returned to the shipping line within two days — otherwise, there are late fees to be paid and these can stretch to thousands of dollars, says Sobko.“Historically, drayage was controlled by locally-based asset-based trucking companies,” he explains. “And all of them were operating on paper. They have paper on the walls, managing containers. They were making a lot of money, that’s how the industry operated for 40 years. We came in as a disrupter.”CDL started offering to pay the demurrage fees for customers — with systems in place to pay the fees instantly and thus avoid delays — before passing on the bill with a 5 per cent charge. It also offered to cover all of a company’s demurrage fees out of a given port if it was given all of a company’s business there.“That part of our business has blown up, in a good way,” Sobko says. “In reality, you have to pay those fees urgently . . . so we pay on behalf of Fortune 500 companies with our own balance sheet, our own credit card . . . it’s like a Fintech platform, we centralise the payments, audit them, dispute some of them.”

CDL then expanded into trucking, devising algorithms to price and schedule large numbers of shipments, and an easy-to-use “DoorDash-like” interface for customers. “We give them full visibility [with] real-time tracking, which is not common in the trucking industry,” he says. A large US retailer might need to arrange shipments between thousands of pairs of locations. Pricing this might take a week by hand, but just a few minutes if automated, Sobko notes.As for the trucking companies, the pitch to them is more consistent work. Referring to one customer, “sometimes, they need to move 100 trucks, today, out of Chicago to Atlanta, and with one click they can take it as one transaction. All of the old-school brokerage firms, they sell shipments as individual transactions [but] we sell them in volumes as one transaction”, he says.The logistical problems caused by Covid have eased, but CDL says it is still signing up several large companies every week. “We might be charging a premium for it, but we have solutions for all of the big problems in Covid,” says Sobko. “The worse it gets, the better it is for us.” More