Aurelia Butler

Rishi Sunak has invited Britain’s trade union leaders to talks on Monday in an attempt to find a solution to the wave of disruptive strikes across the UK.The UK prime minister said in a broadcast interview on Friday that government departments had written to the relevant unions inviting them for talks to begin on Monday.Workers including train and bus drivers, nurses and paramedics have been taking industrial action to protest against real-terms pay cuts at a time of soaring inflation.Sunak had previously said he wanted a “grown-up conversation” with the public sector unions on their next pay settlement for the 2023-2024 financial year.The prime minister said he wanted to have conversations with the unions “about what’s affordable, what’s reasonable, what’s responsible” for the country.“The most pressing economic priority we have is reducing the cost of living and getting a grip of inflation is the best way we can do that to ease the cost of living, not only for nurses but for everyone,” he said.But Sunak’s offer to discuss the coming year’s pay settlement falls short of union demands for higher settlements for the current financial year. More

Inflation in the eurozone fell more than expected in December on the back of lower energy prices, ending a two-month period of double-digit rates as economic sentiment improved across the single currency bloc.The flash index published by Eurostat on Friday showed consumer prices rose at an annual rate of 9.2 per cent in December, down from 10.1 per cent the previous month and a record annual rate of 10.6 per cent in October. Annual inflation rates ranged from 20.7 per cent in Latvia to 5.6 per cent in Spain. The drop in the average rate across the bloc exceeded expectations of a fall to 9.5 per cent in a Bloomberg poll of economists.“The fall in inflation and improvement in economic sentiment in December suggest that the eurozone’s case of stagflation is not as acute as feared a few months ago,” said Andrew Kenningham, chief Europe economist at consultancy Capital Economics. However, core inflation, excluding more volatile food and energy prices which fell sharply in December, still rose to a new high of 5.2 per cent, exceeding economists’ expectations that the figure would remain at the 5 per cent rate recorded in November. Core prices rose 0.6 per cent in December alone. In December, Eurostat’s estimate of annual energy price inflation stood at 25.7 per cent, well below November’s rate of 34.9 per cent, while the rate of price growth of services and non-energy industrial goods edged higher. The increase in annual core inflation highlighted policymakers’ fears that lower petrol, gas and electricity costs would bring down the headline rate without addressing underlying inflationary pressures. With core prices rising at more than twice the European Central Bank’s 2 per cent inflation target, Philip Rush, founder of consultancy Heteronomics, said: “Inflation won’t be able to sustainably return to the target until this core problem is conquered.”François Villeroy de Galhau, the French central bank governor, said on Thursday that the ECB would need to keep raising interest rates to address underlying price pressures.He said the programme of monetary tightening would probably end by the summer, but did not say how much further he thought interest rates needed to rise from the current 2 per cent rate. Financial markets expect a peak in eurozone interest rates of roughly 3.5 per cent.

The ECB has signalled its intention to raise rates by 0.5 percentage points both at its February and March meetings with moves after that likely to be guided by the incoming data on core inflationary pressures and the extent of a European economic downturn. Bert Colijn, senior eurozone economist at ING, said: “With energy inflation dropping quickly and energy supply forecasts improving, 2 per cent [headline inflation] could be reached much sooner than expected. Still, rising core inflation will be enough for the ECB to continue to hike by 0.5 percentage points in February and March.”The latest economic sentiment indicator suggested the euro area was faring better than feared, with prices falling 0.3 per cent in the month of December on the back of a 6.5 per cent drop in energy prices. The index showed a rise of 1.8 percentage points to 95.8 per cent of the long-term average for the indicator of 100. Employment expectations were broadly stable in December and well above the long-term average. More

FRANKFURT/BRUSSELS (Reuters) -Euro zone inflation tumbled last month but underlying price pressures are still rising and economic growth indicators are surprisingly benign, suggesting that the European Central Bank will keep raising interest rates for months to come. Fighting a historic surge in prices, the ECB has since July increased borrowing costs at its fastest pace on record. It has promised a string of further moves this year to curb inflation that its own economists see staying above its 2% target well into 2025.Consumer price growth across the 19 countries using the euro slowed to 9.2% in December from 10.1% a month earlier, Eurostat data showed on Friday – well below a Reuters poll forecast of 9.7%, with the decline driven by lower energy prices.The euro zone has since expanded to 20 nations, with Croatia joining on Jan. 1. But the headline number masked a more malignant trend, with all key components of core inflation accelerating.Excluding volatile food and energy prices, inflation picked up to 6.9% from 6.6%, while an even narrower measure that also excludes alcohol and tobacco rose to 5.2% from 5%.Services and non-energy industrial goods inflation, both watched closely by the ECB to gauge the durability of price growth, accelerated, adding to concerns that inflation is proving more stubborn than expected. “Rising core inflation means that not much will sway the European Central Bank from the hawkish path it set out late last year,” ING economist Bert Colijn said.MILD RECESSIONA string of other indicators also suggest that the bloc’s winter recession will be milder than anticipated, leaving the ECB with more work to do to tame prices. A key economic sentiment indicator improved more than expected while retail sales data also showed surprising resilience.Exceptionally mild weather, implying lower consumption of costly energy, will help too, by propping up household spending power and preserving corporate margins.But that may complicate life for the ECB.The recession was expected to push up unemployment, naturally dampening price pressures. But employment, already at a record high, is actually going up, not down. Fiscal support for households is also proving more generous than hoped and this excessive spending is adding to purchasing power, weighing against the ECB’s restrictive policies. “The delayed passthrough of high production costs and a still-strong labour market will sustain core inflation,” Riccardo Marcelli Fabiani at Oxford Economics said. “With core inflation at record levels and likely remaining high over the coming months, we expect the ECB to deliver two 50 basis point hikes in February and March and pause afterwards amid easing inflation and subdued economic trends.”Although inflation may rise again in January, the peak has probably passed and the ECB’s focus will start shifting to how quickly it will fall back. Markets and surveys are beginning to factor in the possibility that price growth will stay longer above 2% and even the ECB’s own forecasts, which have proved overly optimistic over the past two years, do not see the bank hitting its target until late 2025.The problem is that the longer inflation stays high, the more difficult it will be to tame it as firms start adapting their pricing and wage policies, perpetuating price pressures.That is why the ECB raised rates by a combined 2.5 percentage points last year – mirroring its global peers, even if somewhat later – and promised big hikes in both February and March that are set to take the deposit rate to around 3%.”We expect the deposit rate to be at 3.25% in the spring, where it is likely to remain for some time thereafter,” Commerzbank (ETR:CBKG)’s Ralph Solveen said. More

Good morning and we start today with how we began this holiday-shortened week: the election of a new Speaker in the House of Representatives.The contest to elect a new Speaker will drag into a fourth day after lawmakers voted to adjourn proceedings yesterday evening following a historic 11th ballot defeat for Republican Kevin McCarthy.Despite last-ditch attempts by McCarthy to quell opposition and secure the 218 votes he needs to be elected Speaker, 20 Republicans repeatedly voted against him, depriving him of the simple majority needed to clinch the gavel.McCarthy has resisted calls for him to step aside in favour of another Republican to break the historic deadlock. Steve Scalise, a congressman from Louisiana and McCarthy’s deputy, is seen as a possible compromise candidate.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

At the same time Democratic party leaders have shown little willingness to help end the stalemate, despite suggestions that the party could band together with a group of Republicans to back an alternative candidate. Instead they have united behind Hakeem Jeffries, the 52-year-old congressman from New York, who took over as the Democrat leader in the House after Nancy Pelosi said she would step down.The deadlock has been humiliating for McCarthy. The last time a Speaker needed more than one ballot was in 1923, when nine rounds of voting took place. But this is the first race for the Speaker’s gavel to require a minimum of a dozen ballots since 1821.The FT View: This week’s events in the House of Representatives represent an existential moment for the Republican party.Five more stories in the news1. Exclusive: Taiwan to create domestic satellite champion to resist China Taiwan is in talks with a number of domestic and international investors to help its space agency establish its own satellite communications provider. Inspired by the role Elon Musk’s Starlink has played in the war in Ukraine, Taipei is expanding efforts to fortify itself against a potential assault from China.2. Ukraine to receive more military hardware Germany’s chancellor Olaf Scholz has dropped his opposition to providing Ukraine with heavy weaponry, agreeing yesterday to provide the government in Kyiv with Marder infantry fighting vehicles and a Patriot missile battery. The US will send Bradley fighting vehicles after talks between Scholz and Joe Biden. The new pledges of military support from Berlin and Washington follow France’s decision to provide armoured combat vehicles to Ukraine earlier this week. 3. Samsung profits fall 69% The biggest piece of corporate news so far today comes from Samsung. The world’s largest producer of memory chips, smartphones and TVs said profits slid in the fourth quarter to an eight-year low as a slowing global economy crushes demand for its products. The surge in demand during the pandemic has reversed and now its customers are having to cope with inventory surpluses. 4. ChatGPT developer in funding talks The developer behind the artificial intelligence bot ChatGPT, which went viral last month signing up more than 1mn users in five days, is in discussions to raise fresh capital. San Francisco-based OpenAI is talking to investment groups, including Peter Thiel’s Founders Fund, about a deal that would value it at $30bn, up from the $20bn valuation it received during a secondary share sale in 2021. 5. China and Hong Kong to reopen border After nearly three years of coronavirus restrictions, China and Hong Kong have confirmed plans for a limited reopening of their shared border on Sunday. Hong Kong’s chief executive John Lee said yesterday crossings would be limited to 60,000 a day each way, a fraction of the pre-pandemic visits. The move is timed to coincide with the dropping of quarantine requirements for overseas travellers to China. How well did you keep up with the news this week? Take our quiz.The day ahead Employment report Investor attention will once again be on the employment market today, with the release of the December jobs report and unemployment rate. The number of jobs created by the US economy last month is expected to have slowed from November, according to a Bloomberg survey of economists. The Federal Reserve is actively trying to cool the hiring market by rapidly increasing interest rates to reduce price pressures in the economy. Thanks to all our readers who voted in yesterday’s poll. Two-thirds of voters thought the US economy would slide into recession this year.Markets outlook Equity markets in Europe were flat ahead of the release of the jobs report while contracts tracking Wall Street’s benchmark S&P 500 dipped slightly. US shares fell yesterday after a report showed job creation in the private sector last month was stronger than expected.Anniversary of US Capitol attack US president Joe Biden will deliver remarks at the White House to mark the second anniversary of the January 6 insurrection. In a final report released at the end of the last year, a congressional panel said former president Donald Trump was the “central cause” of last year’s attack on the US Capitol. Putin’s 36-hour ceasefire due to start in Ukraine A unilateral ceasefire ordered by Russian president Vladimir Putin over the Orthodox Christmas on January 6-7 is due to begin today. The ceasefire, which followed an appeal by Patriarch Kirill, head of the Russian Orthodox Church, was dismissed by Kyiv as hypocritical and a propaganda stunt.Returning to its regular January schedule, the World Economic Forum’s 2023 annual meeting will bring together global leaders in Switzerland next week. Join FT Live at Davos for in-person and digital events January 16-20. View the events and register for free here.What else we’re reading and watching Ruchir Sharma’s investor guide: from peak dollar to better TV The end of the era of easy money and return of inflation shook up the global financial system last year, clearing the way for new winners to emerge. Ruchir Sharma picks the 10 trends that will shape 2023. A Moscow diary: fear, loathing and deep denial While missiles rain down on Kyiv and villages in Russia’s backwaters have lost much of their adult male populations to the draft, Putin’s war does not seem to have changed much in Moscow. Max Seddon, the FT’s Moscow bureau chief, has been back to the Russian capital.🎥 Watch: How India can revolutionise women’s cricket The Indian Premier League transformed cricket from a game struggling to find a future to one of the most valuable sporting assets in the world. While top men’s players have become millionaires, female players have struggled to make ends meet. The launch of a women’s league could change the game around the world.

Video: How India can revolutionise women’s cricket | FT Scoreboard

Premium subscribers can get more on the business of sport by signing up to the Scoreboard newsletter. Whatever happened to Google Search? Google Search was once one of the wonders of the online world, writes Elaine Moore. Its clean, organised pages of results filtered the otherwise unmanageable slog of information on the internet, she writes. That was until it became cluttered with adverts.More on technology: Innovation Editor John Thornhill offers a partial defence of Silicon Valley. The seven types of email you should never, ever send With inboxes already filling up with junk mail since the return to work, Tim Harford offers his guide to bad email etiquette. Take a break from the news Our six films to watch this week include a grouchy Tom Hanks in A Man Called Otto, Antonio Banderas as a killer in The Enforcer and Christian Bale meeting Edgar Allan Poe in The Pale Blue Eye.

Tom Hanks and Mariana Treviño in ‘A Man Called Otto’ © Niko Tavernise More