Aurelia Butler

BRASILIA (Reuters) – Brazil’s finance ministry sees room for leftist President Luiz Inacio Lula da Silva to raise the minimum wage as of May at a cost of up to 5 billion reais ($975 million) to the government, two sources in the ministry told Reuters on Friday. The sources, who spoke on condition of anonymity as the discussions are private, said a review of government spending, including curbing fraud in the Bolsa Familia welfare program, would pave the way for the new increase to be granted. “The minimum wage is easier to accommodate. If you are going to give an increase in May to reach 1,320 reais ($257), which would be everyone’s wish, it would be more or less 5 billion reais,” said one of the sources. The decision, which would bring the minimum wage up from 1,302 reais now, contrasts with the latest stance by Finance Minister Fernando Haddad that the current level already fulfilled Lula’s campaign promise to increase workers’ earnings above inflation. Haddad, however, did not deny the possibility of a new increase and said that the topic would be studied further.A real wage gain has already happened this year because the government of then President Jair Bolsonaro had forecast higher than observed inflation for 2022 when proposing this year’s budget.Because of that, the resources to guarantee a minimum wage increase that only compensated for past inflation were enough to secure a raise of 1.4%, to the current level. The newly-inaugurated Lula government set aside 6.8 billion reais in this year’s budget to further increase the minimum wage to 1,320 reais, a figure made public by Lula’s allies before he took office.But under the argument that beneficiaries of the social security system had increased in higher than expected numbers, the new government decided not to raise the minimum wage right away.Last month, Lula said the minimum wage policy for the coming years should take into account the country’s economic growth, setting up a working group to debate the subject. Haddad said recently that the policy of raising the minimum wage “a little above inflation” would help boost low-income consumption. ($1 = 5.1300 reais) More

WASHINGTON (Reuters) – U.S. job growth accelerated sharply in January while the unemployment rate hit more than a 53-1/2-year low of 3.4%, pointing to a stubbornly tight labor market, and a potential headache for Federal Reserve officials as they fight inflation.The Labor Department’s closely watched employment report on Friday also showed job creation in the past year was much stronger than previously estimated, suggesting the economy was nowhere near a recession. Though wage inflation cooled further in January, average hourly earnings increased faster in 2022 than previously estimated.  The strength in hiring, which occurred despite layoffs in the technology sector as well as in sectors like housing and finance that are sensitive to interest rates, poured cold water on market expectations that the U.S. central bank was close to pausing its monetary policy tightening cycle.Economists said the head-scratching report and other data on Friday showing a sharp rebound in services industry activity last month suggested the Fed could lift its target interest rate above the recently projected 5.1% peak and keep it there for some time.”The labor market is still running hot, too hot for the Fed’s liking,” said Daniel Vernazza, chief international economist at UniCredit Bank in London. “Anyone that thought the Fed might stop hiking as soon as its March meeting is likely to be disappointed on this evidence.”The survey of establishments showed nonfarm payrolls surged by 517,000 jobs last month, the most in six months. Economists in a Reuters poll had expected a gain of 185,000. Data for December was revised higher to show 260,000 jobs added instead of the previously reported 223,000. Employment growth last month was well above the monthly average of 401,000 in 2022.With January’s report, the Labor Department’s Bureau of Labor Statistics (BLS) published its annual payrolls “benchmark” revision and updated the formulas it uses to smooth the data for regular seasonal fluctuations in the establishment survey.The economy added 568,000 more jobs in the 12 months through March 2022 than previously reported. Revisions to payrolls data from April through December also showed more jobs created than previously estimated. The economy added 4.8 million jobs in 2022 instead of the 4.5 million previously reported.The revisions dispelled claims by researchers at the Philadelphia Fed who published a paper in December suggesting employment growth in the second quarter of 2022 was overstated by about a million jobs. The BLS revised its industry classification system, which resulted in about 10% of employment reclassified into different industries. Last month’s broad increase in employment was led by the leisure and hospitality sector, which added 128,000 jobs, with 99,000 of them in restaurants and bars. Leisure and hospitality employment remains 495,000 jobs below its pre-pandemic level. Professional and business services employment rose by 82,000, with temporary help jobs, a harbinger for future hiring, rebounding by 25,900 after declining for several months. Government payrolls jumped 74,000, boosted by the return of striking university workers in California. (Graphic-Jobs by industry https://www.reuters.com/graphics/USA-FED/INDUSTRY/qmypmdoolvr/chart.png)Construction payrolls increased by 25,000 jobs, which were mostly among specialty trade contractors. Manufacturing employment rose by 19,000 jobs.Stocks on Wall Street were trading mostly lower. The dollar gained versus a basket of currencies. U.S. Treasury prices fell.WAGE GROWTH SLOWS Average hourly earnings increased 0.3% last month after gaining 0.4% in December. That lowered the year-on-year increase in wages to 4.4%, the smallest rise since August 2021, from 4.8% in December. But wage growth was revised up for 2022, suggesting only a moderate pace of cooling in wage inflation than previously thought. The average workweek increased to 34.7 hours from 34.4 hours in December.”While it is natural to be skeptical of the degree of strength in payroll growth and the increase in total hours worked given the perceived slowing of growth, we have been pointing out that almost all the labor market indicators going into this report showed an improvement in labor market conditions,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.(Average hourly earnings growth https://www.reuters.com/graphics/USA-FED/JOBS/dwpkrxdzdvm/index.html)President Joe Biden said the employment report was a sign that his economic plan was working. “Jobs are going up, inflation is going down,” the Democratic president wrote on Twitter.The Fed on Wednesday raised its policy rate by 25 basis points to the 4.50%-4.75% range, and promised “ongoing increases” in borrowing costs. Government data this week showed there were 11 million job openings at the end of December, with 1.9 openings for every unemployed person.The BLS also incorporated new population estimates in the household survey, from which the unemployment rate is derived. As such, the unemployment rate of 3.4%, the lowest since May 1969, is not comparable to December’s 3.5% rate, though it was not impacted by the new population controls.(U.S. jobless rate plummets to lowest since 1969 https://www.reuters.com/graphics/USA-JOBLESS/lgvdknozwpo/index.html)Household employment jumped 894,000, but accounting for the new population estimates, the increase was only 84,000. About 886,000 people entered the labor force, though the number declined by 5,000 after adjusting for the population controls. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, rose to 62.4% in January from 62.3% in December. It was unchanged after taking the new population estimates into account.The employment report hinted at a rebound in manufacturing production last month. There are also signs that retail sales got off to a strong start in 2023. The economy continued to show resilience despite 450 basis points of rate hikes since last March.”The Fed would be well-served to consider this as a success and think that slowing down the pace of hikes, would allow the job market to bend, but maybe not break,” said Rick Rieder, chief investment officer of global fixed income at BlackRock (NYSE:BLK) in New York. “Today presents good evidence of a job market not breaking and evidence of how the economy can adapt and adjust to remain vibrant in the face of major headwinds.” More

German carmaker BMW on Friday said it will invest €800mn to step up electric vehicle production in Mexico, as the Latin American country stands to benefit from its inclusion in US subsidies that have sparked tension with Europe.The investment includes €500mn for the construction of an assembly centre for lithium-ion batteries on the grounds of a BMW car plant in San Luis Potosí. The remaining sum will be used to prepare the plant for EV production. BMW said the investment would create 1,000 jobs. The investment is among the largest in the flurry of clean energy deals in North America to follow passage of the US Inflation Reduction Act climate law last year. At least $34bn has been announced to develop the continent’s EV supply chain since the bill was signed by US President Joe Biden, according to BloombergNEF, underscoring the region’s prime position to cash in on the energy transition and efforts to decouple supply chains away from China. The $369bn in green subsidies have sparked a tense diplomatic row with Europe, which argues they could unfairly draw investment away and breach World Trade Organization rules.BMW said the plant was planned before the IRA and that “production follows the market” for investment considerations. But the German company’s announcement, made days after Brussels unveiled a rival incentive plan, adds fuel to the fire of the bloc’s criticism that the US law is putting European industry at a disadvantage. On top of the proximity to the US market and its consumer tax perks for EVs, BMW said it would also benefit from Mexico’s labour force and its future supply of lithium. “There is an open dialogue with the Mexican authorities for understanding the rules and requirements for the access to these benefits by vehicles manufactured in Mexico,” it added.At a recent summit in Mexico City, the leaders of the US, Mexico and Canada reaffirmed their commitment to making the region of almost 500 million people a clean energy powerhouse.While the IRA excluded European allies from its green subsidies, the bill extended EV final assembly tax credits to Mexico and Canada. Countries with free trade agreements with the US are also eligible for battery subsidies, although companies are still waiting for the US Treasury to announce guidance.Mexico’s lower wages and border with the US helped the auto industry flourish under the North American Free Trade Agreement, which removed most trade restrictions with the US and Canada. Mexico is the largest exporter of auto parts to the US and nearly all major automakers including Ford, Toyota and Volkswagen have long-established operations in the country.A handful of companies have already decided to open new plants or increase EV production in Mexico. Ford is building an electric version of its Mustang in its Cuautitlán plant. General Motors plans to produce two EV models at its Ramos Arizpe plant, which currently produces only internal-combustion vehicles. Volkswagen plans to upgrade its Mexican plants for EVs in the second half of the decade. “We have an opportunity that we haven’t had all century and there is no way we will let it pass us by,” Marcelo Ebrard, Mexico’s foreign minister, said of the factors aligning in the country’s favour.Tesla, the US EV leader, has been scouting sites in Mexico for a new EV plant, though the company has not confirmed any final decision. Tesla did not respond to a request for comment.Top trade and industry leaders say Mexico would attract much more if its energy policies were more investor-friendly.Mexico’s President Andrés Manuel López Obrador has changed electricity market rules to favour the state utility’s higher-carbon electricity production over private, zero-carbon renewables. Neil Herrington, senior vice-president of the Americas at the US Chamber of Commerce, called the country’s energy policy “the single biggest risk” to attract EV and battery investment. “Building batteries is enormously energy-intensive . . . You have to have a lot of energy available and a lot of clean energy available at that,” said a Volkswagen representative. The German company is scouting a location in the US and Canada for its first North American battery cell factory.Louie Diaz of battery recycler Li-Cycle said that clean energy sources were a “key focus” in their site selection process and that the company was prioritising the US and Canada in North America. Foreign direct investment in Mexico has held up under López Obrador, and in 2022 it likely hit its highest level in several years, but business leaders say the country should be seeing a boom.“If the Mexican government adjusted its policies to welcome competition in the energy sector and to fully get on board with the energy transition, the investment the country would receive would be like hitting the jackpot on a Vegas slot machine,” said Amy Glover, director of McLarty Associates and member of the Council on Foreign Relations of Mexico. The US has 10 times the EV assembly capacity of Mexico and outpaces the rest of the continent in battery capacity, according to industry data provider LMC Automotive and Argonne National Laboratory. BloombergNEF tracked $715mn in new EV supply chain investments in Mexico following the passage of the IRA, compared to $32.5bn in the US or unspecified North American locations. Some subsidies in the IRA are limited only to manufacturing in the US. José Guillermo Zozaya Délano, executive president AMIA, of Mexico’s auto industry body, said that Mexico should issue its own set of incentives to attract investment south of the border.“The fact that we’re neighbours, friends and partners doesn’t mean we aren’t also competing,” said Zozaya Délano said.Additional reporting by Patricia Nilsson in Frankfurt More

Interest rates on five-year fixed mortgages are set to drop below 4 per cent after the Bank of England suggested inflation may come under control sooner than expected, according to brokers. The central bank on Thursday raised its benchmark interest rate by half a percentage point to 4 per cent, in response to high inflation. After 10 upward moves since December 2021, the BoE suggested rates may have peaked.Lenders, who set prices for their fixed mortgage deals using financial market expectations about future base rate movements, had already priced in the latest tightening of monetary policy.But after the BoE’s meeting on Thursday, market expectations of future rate increases dropped further. Traders anticipate one quarter-point rate rise in March, and that the BoE will then begin loosening monetary policy by the end of the year.The change in expectations in the overnight index swap market, which follows BoE decisions, suggests the average central bank rate over the coming two years will be 3.75 per cent, down from 4.34 per cent at the start of January. The average BoE rate over the coming five years is now 3.21 per cent, down from 3.93 per cent in January.Ray Boulger, manager at broker John Charcol, said he expected lenders to move quickly to improve their five-year fixed deals, where the lowest rates are currently around 4.2 per cent. “There’s a clear ability in the market now to offer a five-year fixed rate at sub-4 per cent and the first lenders to do that will get some good marketing from it,” he added. Demand for fixed deals is also likely to grow as interest charges on variable-rate mortgages rise in response to monetary tightening by the BoE. After the market turmoil that followed the then prime minister Liz Truss’s “mini” Budget in September, rates on many fixed deals soared above 6 per cent. It made variable rate loans a viable alternative for borrowers. However, fixed deals have dropped in price in recent weeks as stability returned to markets. As rates on variable deals rise, brokers said more borrowers would return to the certainty of a fixed monthly payment on their mortgages. The average rate on two-year fixed deals has dropped to 5.43 per cent, from 5.77 per cent at the start of the year, according to finance website Moneyfacts. Simon Gammon, managing partner at broker Knight Frank Finance, said borrowers would welcome a significant drop in the cost of two-year fixed mortgages.He added the decision on whether to take out a five-year fix had become more challenging as mortgage rates fall. “At the moment, five-year fixed rates are cheaper than two-year fixed rates,” said Gammon. “But a lot of people with uncertainty and those who don’t quite know when to fix are actually more interested in the shorter term deals.”Rising mortgage expenses are a major concern for homeowners in the cost of living crisis, and experts have warned of an impending “payment shock” as borrowers who took out fixed deals in the era of ultra-low interest rates face refinancing at much higher interest charges. More than 1.4mn households face higher charges this year as their fixed deals come to an end, according to data last month from the Office for National Statistics. More

Parsing central bank communications is a hit and miss exercise. Sometimes the chosen language is a deliberate attempt to guide markets, at other times it is just a slip of the tongue. Clues for when interest rates will peak, and even start falling, are now key for investment and mortgage decisions. With inflation seemingly past its peak, this week the Federal Reserve, European Central Bank and Bank of England indicated that the end of their historic tightening cycle is in sight. They are now at a defining moment: stop rises too late and deepen this year’s economic slowdown, or too soon and high prices could become entrenched. The risk of a mistake is high — and right now, their words are being examined closely.Although headline inflation is falling, central bankers are still trying to square a number of circles before ending their rate rises. The improved global growth outlook, pushed up in part by China’s reopening, will bring some price pressures. In Europe, the fall in natural gas prices will alleviate a major inflationary force, but it could facilitate more spending. Job markets remain tight too, adding to wage pressures. Central bankers also need to assess how much prior rate rises are impacting the economy. Pulling together a convincing narrative of how everything plays out, and hence what terminal rate is appropriate is tricky — as mixed messages from central bank meetings this week conveyed.The Fed slowed the pace of its rate rises to 25 basis points, noting that “ongoing increases” would be necessary to hit its inflation target. But Fed chair Jay Powell struck a more positive tone at the subsequent press conference. He said the “disinflationary process” was under way and did not push back against markets, which had priced in a lower peak in interest rates and even cuts later in the year. Indeed, although the Fed’s preferred measure of underlying price pressures eased further, job numbers rose unexpectedly on Friday, leading to a sell off in markets.The eurozone is further behind in its inflation battle. The ECB raised rates by another 50 bps and committed to increasing by the same amount in March. President Christine Lagarde doubled down, saying “we have ground to cover”. After all, annual core inflation growth — which excludes food and energy — remains stubbornly high. Yet the bank’s statement contained softeners, conveying “more balanced” risks to the inflation outlook and ambiguity on what happens after March.The BoE also raised rates by 50 bps, ditching language that it would need to act “forcefully”, and forecast inflation to drop below target in 2024. This points to an imminent end to its rate rises. Yet the meeting minutes noted inflation risks are “skewed significantly to the upside”. Amid the nuances, markets were not convinced about central bankers’ plans. Despite the rate rises, and scope for more ahead, investors chose to hear a dovish message and initially scaled back expectations of further central bank rises. In the direct aftermath, equities and bonds soared, building on a rally over easing price pressures since the start of the year. This has loosened financial conditions, which is itself inflationary — further complicating central banks’ task. If inflation proves more persistent, and rates need to go higher, investors will be in for a nasty repricing. Central banks’ recent slowing of rate rises makes sense to better calibrate the peak rate as new data comes in. A sustained easing in core inflation and wage pressure may next persuade them to stop decisively. Clearer communication will also be more important, just as rate setting becomes ever more delicate in this rate cycle’s final stretch. But this will be challenging until central bankers can pierce through the uncertainty with more convincing forecasts. More

Today’s jobs data was dynamite. Not only did the US add a forecast-smashing 517,000 jobs in January, December’s figure was revised up, the unemployment rate fell to 3.4 per cent — the lowest since 1969 — and earnings are growing at a 4.4 per cent annual pace.Revisions are probably coming. As Oxford Economics’ Ryan Sweet notes:The surge in job growth in January overstates the strength in the job market as employment growth in January frequently surprises to the upside and doesn’t warrant any change to the change to the baseline forecast.It’s also likely that 2Q22 payrolls grew slower than initially reported, as Barclays pointed out this week. Still, today’s report basically paints a picture of a US economy still humming nicely along. Which is odd, because a lot of people said that the US was facing a recession last year, or was already in one. The Heritage Foundation even dubbed it “Biden’s Recession”.The US’s GDP did decline for two consecutive quarters last year, the traditional definition of a recession. But even if the jobs market was weaker than initially reported in 2022, the latest data shows that weakness was shortlived. And the National Bureau of Economic Research hasn’t made an official recession call. Last year, on the other hand, recession vibes were almost off the charts. Here are Google searches for “recession” exploding, surpassing even the Covid-induced peaks of 2020 and the global financial crisis in 2008.The media, as is its wont, did not help:Household confidence, naturally, slid through the year (although inflation may have been a bigger factor here):

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Even CEOs seem to buy into the recession narrative. Here are mentions of “recession” in earnings calls, which spiked in early 2021 and remained remarkably common through that year and 2022. Are we jinxing things? Quite possibly, and if the (highly visible) tech sector is anything to go by, some companies are beginning to find way to cut back — even if that isn’t translating into the headline figures.It’s certainly too early to call a ‘soft landing’. What’s sauce for Joe Biden is . . . not sauce for Jay Powell and the Fed, who must be worrying about the inflationary threats from a tight jobs market.All this week, FTAV’s inbox has been stuffed with commentary about central banks finally turning a corner on tightening. But what lies beyond is unknown. More

The writer is a former permanent secretary at the UK TreasuryThe IMF has held a totemic place in British discourse ever since 1976, when the country lost the confidence of the markets and had to apply for an emergency loan. So when the Fund predicts, as it did this week, that the UK will grow slower than any other advanced economy, it needs to be taken seriously. Add to the mix a level of industrial unrest not seen in decades, the Bank of England revising down to 1 per cent its view of the economy’s trend rate of growth, a rate not experienced since the 1970s, and the general gloom around the third anniversary of Brexit — and it’s tempting to ask whether Britain has regained its status as the “sick man of Europe”. Forecasting is a mug’s game. Britain’s economy may or may not grow this year. Germany and France may grow faster. But none of the big European economies are predicted to grow by more than 1 per cent. This is a world of small numbers in which no country will be satisfied with its performance. Gross domestic product statistics are notoriously unreliable in the short run, which is why, when I was at the Treasury, I preferred to focus on revenues. These rarely lied. They may be flattered by inflation at present but they still indicate that the economy has been stronger than many had feared. Falling energy prices will provide further support. Britain still has a lot going for it. It has strong university cities, not least London, a thriving research base, great creative industries and an irrepressible financial sector. Unlike in the 1970s it has a dynamic labour market. We should not get too downhearted. But there is no denying that Britain has a problem. First, Rishi Sunak, the prime minister, and Jeremy Hunt, the chancellor, are still picking up the pieces from their disastrous inheritance. To regain credibility, they have had to pursue a much more restrictive policy than would have been the case had Liz Truss never become premier. At the same time, the Bank of England will have to keep interest rates higher for longer, having kept policy too loose in 2021. Macroeconomic policy will hold back growth in the short run. But that’s a price worth paying for restoring stability. Second, there was a perfectly respectable political case for Brexit. And many of Britain’s problems predate its departure from the EU. But the evidence that Brexit is a drag on economic performance is compelling. Britain’s trade is growing more slowly than it did in the past. Inward investment is lower now that the UK is no longer a gateway to the single market. In a protectionist world dominated by large trading blocs Britain finds itself isolated. The tide of competition, which was a central driver of British productivity growth in the 1990s and 2000s, has receded. Third, the UK has an inefficient and underpaid public sector. The government’s solution has been to use inflation to impose the biggest cuts in real wages in generations. History suggest this policy is unsustainable. Finally, the economy is suffering from chronic under-investment, both in the private and public sectors. Infrastructure policy has been driven by prestige projects rather than a hard-headed focus on which ones might yield the biggest economic return. Lack of house building and poor land use remain major barriers to growth. Every government promises planning reform; every government backs off. But all is not lost. The pendulum has begun to swing. The Sunak government is showing signs of wanting to tackle problems rather than to deny their existence, notably by making the NHS one of its “five priorities”. A re-energised Labour party is waiting in the wings. Positive noises are also emerging from the negotiations on the Northern Ireland Protocol. If the government can finally get Brexit done, it can begin to focus on how Britain co-operates with the EU. This will be a slow process. But the country will find a new equilibrium consistent with the wishes of the electorate to make it easier to do business with our main trading partner. Next, it needs to create an environment that encourages investment and innovation. Macroeconomic stability should help, as would a supportive tax regime. Public investment needs to be focused on maximising returns. At some point, a government will create a better planning system and more efficient taxes on property. But above all ministers need to prioritise skills, now that we no longer rely on the central European taxpayer to train our workforce. Sooner rather than later the government needs to accept that it can’t cut wages in the public sector year after year. But the quid pro quo needs to be a renewed focus on reform and productivity. The obvious starting point is the NHS. The country needs an honest conversation about what an ageing population and a more dangerous world means for taxation. Simply raising the age of eligibility for the state pension is not enough. Sunak missed a trick when he repealed the health and social care levy. He should resist backbench Tory calls for pre-election tax cuts the country can’t afford. For much of the last 40 years, the British economy outperformed those of our near neighbours. If the nation grasps the nettle of sensible structural reform, there is every reason it can do so again.  More

This article is the latest part of the FT’s Financial Literacy and Inclusion CampaignHow people manage money with their other halves is something I find fascinating, particularly because so few of us ever talk about it — sometimes, even within our own relationships. It’s possible to read the financial compatibility runes before your very first date. Will it be a swanky restaurant, street food or double espresso? And will they insist on paying, go Dutch or bring along a discount voucher? (Martin Lewis once said the latter was a sure-fire sign your date was marriage material — you may disagree). It could be a while before you disclose your property ownership status or how much you both earn. I know a surprising number of couples who have no idea what their other half makes. Normally, it’s not until you start living under the same roof that questions about joint accounts and how you might divide and mingle your money come up — and this is the point at which things can take a sinister turn. One in six women has experienced financial abuse from a current or former partner, according to research by the charity Surviving Economic Abuse and it really can happen to anyone — including financial experts. On Money Clinic podcast this week, I spoke to Sarah Coles, a senior personal finance analyst with Hargreaves Lansdown, who was trapped in a financially abusive relationship for years. She likens the experience to “slowly boiling a frog”. As the abuse builds up so gradually over time, “you just adapt, and then it becomes this impossible situation”. It’s all about control — and when an abuser controls your finances, they can control everything you do. At first, her ex-partner would sulk if she spent her own money on things she needed, but over time his reactions became more extreme, evolving into rules about what she could and could not spend money on. If she tried to push back, the restrictions would tighten. Sarah ended up working three jobs to support the family, while he quit his job and spent money like water. Financially and emotionally drained, victims of abuse feel powerless to leave, and our secrecy about money as a society plays into the hands of abusers. Charities say many abusers are using the cost of living crisis as a tool, providing a convenient cover story if they take away a victim’s car or stop them from socialising with friends. Sarah’s friends and family had no idea what was going on until one day, she was caught off guard by a question about why her clothes didn’t fit, and admitted she wasn’t allowed to buy new ones. As she tells me on the podcast, after that conversation, she could clearly see that she needed to get out. “You’re just so busy coping with it that you don’t really take a step back and think about the full picture of what’s happening to you.” After her ex passed away, Sarah chose to speak out about her experiences to raise awareness of how common a problem this is: “Personally, I don’t feel at all ashamed — I think anyone can fall victim to abuse.”

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Nor is this problem exclusive to women, or indeed heterosexual relationships. Arguments about spending too much money are part and parcel of everyday life as bills soar, but is your partner prepared to compromise, or will they wield control? I have a friend who left her (female) partner after years of being financially bullied via the unlikely medium of an Excel spreadsheet. The lower earner by some margin, she would feel nervous if her girlfriend suggested they went to a fancy restaurant. If they had any kind of disagreement over the meal, her partner would coolly add “make sure you put your half of this on the budget spreadsheet” knowing this would wipe out her ability to socialise for the rest of the month. Having children can also be a catalyst for abuse if one partner becomes a full-time carer and loses their earnings power (we hear from another survivor on the podcast who experienced this). The loss of earnings power is tricky to navigate in non-abusive relationships. After years of being financially independent, feeling like you have to beg your partner for money is deeply uncomfortable. And while leaving all the “money stuff” to your husband might have been the norm in previous generations, this could cost you in more ways than one. Wealth managers say it’s often a huge struggle for widows to take the financial reins later in life (it’s also a challenge for an industry geared towards supporting the needs of male clients). For younger generations, there are different issues. The high cost of renting a home on your own — let alone buying one — adds to the pressure to couple up swiftly, and could also make it much harder to leave a bad relationship. Your Juno, a financial education app aimed at Gen-Z women, introduced specific modules about financial abuse after a poll of its users found that 26 per cent had already experienced it. The importance of building up a “Fuck Off Fund” (a phrase immortalised by a Billfold article by the US financial journalist Paulette Perhach) is by far the most downloaded lesson in the app, says co-founder Margot De Broglie. “A lot of community members have shared that they leave any financial talk until it becomes absolutely necessary, so quite late into a new relationship,” she adds, making it harder to spot warning signs.

A separate module on how to bring up the topic of finances when dating is also incredibly popular, offering a range of questions to test the waters in the early stages of a relationship (“Are you saving up for anything fun?”) building up to when things get more serious (“What financial decisions do you think should be made as a couple?” or “If I spent £100 on something and didn’t tell you, would you be upset with me?”)Users are also urged to watch out for potential signs of financial manipulation, including their partner being secretive about money, having a lifestyle that’s at odds with their income or asking to borrow money. Surviving Economic Abuse has found that 60 per cent of people who experience financial abuse will also be coerced into debt by their partner, making it even harder to leave and rebuild their lives. “Creditors can be fantastic, and in many cases can write off the debt completely,” says Nicola Sharp-Jeffs, the charity’s founder, noting that banks are now doing more to help victims (TSB and HSBC offer “safe spaces” in branches and, increasingly, employers have policies around domestic abuse). Slowly, the financial industry is waking up to the scale of this problem. But the hidden nature of financial abuse partly rests on the taboo nature of discussing how we manage money in relationships and getting a sense check about what is normal, and what is not. I definitely think it’s something we should all try to talk about. Claer Barrett is the FT’s consumer editor and the author of ‘What They Don’t Teach You About Money’. [email protected] More