Aurelia Butler

Prices rose by 5.7%, speeding up from 5.1% in the 12 months to August, led by an unprecedented 10.6% jump in food prices as the war in Ukraine inflated the costs of animal feed, fertiliser and vegetable oil, the BRC said.Market research firm NielsenIQ, which co-produces the data, said 76% of consumers expected to be moderately or severely affected by the cost-of-living crisis over the next three months, up from 57% in the summer. “So households will be looking for savings to help manage their personal finances this autumn and we expect shoppers to become more cautious about discretionary spend, adding to pressure in the retail sector,” Mike Watkins, NielsenIQ’s head of retailer and business insight, said.Britain’s consumer price index, which measures a broader range of prices than the BRC’s data, hit a 40-year high of 10.1% in July before easing back to 9.9% in August.The cost of imported goods in Britain faces further inflationary pressure after a slump in the value of the pound triggered by the announcement of tax cuts by new finance minister Kwasi Kwarteng last week. More

LONDON (Reuters) – Wall Street giant JPMorgan (NYSE:JPM) is planning to double the size of its workforce at fledgling British retail bank Chase to at least 2,000 within two years, the CEO of the venture told Reuters, despite losses and some investor scepticism.JPMorgan said it had attracted one million customers and more than 10 billion pounds ($10.8 billion) of deposits to its UK mobile app bank since its launch last September.It’s a template the bank wants to replicate in other international markets – despite an intensifying cost of living crisis that has soured the outlook for retail banks globally.Britain in particular has been gripped by a crisis of investor confidence after finance minister Kwasi Kwarteng sent the pound and government bonds into freefall on Friday with a fiscal plan that unnerved markets.”We want to be international, starting with the UK,” Sanjiv Somani, UK chief executive of Chase, said in an interview at the bank’s UK headquarters in Canary Wharf in London on Friday.”You have to look at a ten-year view. If you look at anything shorter it will not lead to the right conclusion … The retail banking revenue pool is in the trillions, even outside the U.S.”He declined to say where Chase might launch next. Reuters reported this month JPMorgan is hiring retail bankers in Germany ahead of a potential launch there.Chase already has 1,000 staff in Britain – out of a total 19,000 JPMorgan employees in the country – and Somani says this number will “at least double” by the end of 2024.The venture will expand from current and savings accounts by rolling out lending products – likely starting with a credit card – by the end of 2023, Somani said.JPMorgan will also look to integrate its investments business Nutmeg – which it bought for around 700 million pounds last year – into Chase over that timeframe, he added.Somani started his career in retail banking in India helping Citi launch a much simpler version of a ‘digital bank’ – one that would text you your bank balance.”The idea is in the medium term we want to be a full service bank,” he said of Chase, adding it had no immediate plans to roll out branches.INVESTOR CONCERNSThe venture’s rapid growth has come at a hefty price tag – albeit one the world’s largest bank can easily absorb. JPMorgan disclosed at its investor day in May that it expected to lose $450 million on the venture in 2022 and outlined cumulative losses north of $1 billion over several years, before projecting it would break even in 2027-28.Somani said the May investor day projections still held, but that revenues generated from lending and expansion of Nutmeg’s fee-based services would ultimately put it in the black.Investors have expressed concern about a lack of detail on JPMorgan’s digital investments and about their uncertain prospects, adding to pressure on the international consumer arm to succeed.”History is against JPMorgan’s attempt to build a digital online bank in the UK and elsewhere,” said Mike Mayo, a banking analyst at Wells Fargo (NYSE:WFC), though he added JPMorgan’s U.S. digital expertise and deep pockets could make the difference.The UK market has seen many aborted attempts to challenge the dominance of its main high street banks – which include Barclays (LON:BARC), Lloyds (LON:LLOY) and NatWest. Germany’s N26 quit the country after just two years, while Citi axed its UK retail bank last week.Chase also faces stiff competition from both local digital brands like Monzo and those offered by large institutions such as Goldman Sachs (NYSE:GS)’ savings bank Marcus. Marcus grew at a similar pace to Chase early on, amassing 13 billion pounds of deposits in Britain in its first 17 months.Somani said JPMorgan’s backing nonetheless gave Chase an edge.”We’re the best-funded fintech in the world,” he said. ($1 = 0.9235 pounds) More

WASHINGTON (Reuters) -A bipartisan group of U.S. lawmakers on Tuesday called on President Joe Biden to issue an executive order to boost oversight of investments by U.S. companies and individuals in China and other countries.The lawmakers including House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer and Republican Senator John Cornyn urged Biden to issue an order to “safeguard our national security and supply chain resiliency on outbound investments to foreign adversaries.”Congress has been considering legislation that would give the U.S. government sweeping new powers to block billions in U.S. outbound investments into China. The proposal was removed from bipartisan legislation to subsidize U.S. semiconductor chips manufacturing and research in a bill approved in August.The lawmakers, including Democrats Bill Pascrell, House Appropriations chair Rosa DeLauro, Senator Bob Casey and Republicans Brian Fitzpatrick and Victoria Spartz, said in a letter to Biden that as negotiations continue, “our national security cannot afford to wait.” They urged the president “to safeguard our national security and supply chain resiliency on outbound investments to foreign adversaries.”The White House and Chinese Embassy did not immediately comment.White House national security official Peter Harrell earlier this month said that the Biden administration has not yet made a final decision on a potential outbound investment mechanism regulating U.S. investments in China.Harrell stressed that any measure targeting such investments should be narrowly tailored to address gaps in existing U.S. authorities and specific national security risks.”When we cede our manufacturing power and technological know-how to foreign adversaries, we are hurting our economy, our global competitiveness, American workers, industry and national security. Government action on this front is long overdue to address the scope and magnitude of these serious risks we face as a country,” the lawmakers wrote.The Senate Banking Committee on Thursday will hold a hearing on outbound investment that will feature testimony from Cornyn, Casey and several former government officials among them Information Technology Industry Council Executive Vice President Robert Strayer.The proposed legislation is intended to give the government greater visibility into U.S. investments. It would be mandatory to notify the government of investments that may fall under the new regulations, and the United States could use existing authorities to stop investments, or mitigate risk. If no action is taken, the investment can move forward. More

UK negotiators have the “difficult” task of winning greater access to the Indian market for financial companies in a trade deal they hope to seal with New Delhi next month, the Lord Mayor of London has said.Vincent Keaveny acknowledged in an interview with the Financial Times that India might reject British calls to ease its tight restrictions on foreign financial services firms.The Lord Mayor is a largely ceremonial figure who heads the City of London Corporation, the local authority for London’s financial district, and lobbies for the UK financial services industry internationally.“We’re hopeful that there’ll be a significant services component to the trade agreement. It’s clearly a difficult area from the negotiators’ point of view,” said Keaveny, who was briefed on the talks ahead of a visit to India last week.Negotiators are working to finalise a deal in time for the Diwali festival on October 24, a deadline that Indian prime minister Narendra Modi and former UK prime minister Boris Johnson set earlier this year. Officials from both countries have since indicated that talks were on track.“There would be some disappointment if we don’t get a significant services component,” said Keaveny, a partner in law firm DLA Piper’s finance practice. “It’s probably something that will be negotiated right up to the wire.”Keaveny said that even if the trade deal did not meet the UK financial services industry’s hopes, it would still promote more Indian business for City firms. “The positivity that it will introduce to the relationship will flow through to the harder to address areas,” he added.Among the UK’s demands is easier market access for British whisky, which incurs triple-digit tariffs in India. City firms face a range of rules that they argue limit their ability to do business in India. Indian regulations for financial and professional firms include caps on how much equity foreign investors can hold, as well as requirements to operate as joint ventures. Foreign banks also face higher taxes than local ones, the City of London Corporation said.New Delhi wants more UK visas for its skilled workers, along with greater access for Indian services and products such as pharmaceuticals.Keaveny said UK firms would benefit from being able to hire more Indian students and professionals. “We, from the tech and financial services sector, have been pushing the [UK] government for some time now to ensure there’s greater mobility and greater talent,” he added.

Leaders from both countries see an early deal as a political boon. The UK’s new prime minister Liz Truss can present a deal with India as a pillar of her post-Brexit strategy to expand trade beyond Europe. It could also help boost confidence in Britain at a time when investors have dumped the pound and UK debt.India, meanwhile, is pursuing several trade deals as part of a broader strategy that officials hope will diversify trade away from its geopolitical rival, China. New Delhi is in talks with Canada and the EU after signing deals with Australia and the United Arab Emirates this year.Piyush Goyal, India’s commerce minister, told the FT in July that the country offered vast growth potential to investors. India “will probably grow 10 times in the next 30 years, as against the developed world which will probably be two times or three times 30 years from now”, he said. More

The offshore renminbi exchange rate fell to a record low on Wednesday, putting further pressure on China’s central bank to directly intervene to prop up the country’s currency.The offshore rate fell as much as 0.7 per cent to Rmb7.2281 against the dollar, the lowest on record since Hong Kong clearing banks were first allowed to freely open renminbi accounts in 2010.Meanwhile, the more tightly regulated onshore rate also fell 0.7 per cent to Rmb7.225. That drop took the onshore rate down 13.6 per cent for the year to date, underscoring the impact of widening policy divergence between a dovish China seeking to shore up growth and a hawkish US Federal Reserve.Measures taken by the People’s Bank of China have so far stopped short of deploying significant foreign exchange reserves, instead relying on indirect measures to discourage bets on continued falls and slow the pace of depreciation. On Monday, the central bank introduced new measures effectively making it more expensive to short the currency.The offshore renminbi, introduced to facilitate greater international use of China’s currency, is not subject to the onshore rate’s dollar trading band, which limits moves to 2 per cent in either direction from a midpoint set each morning by the central bank. Following a serious sell-off in 2015 spurred by a one-off devaluation, however, Chinese authorities throttled liquidity in the Hong Kong market and the offshore renminbi has since closely followed the onshore rate.“Since the PBoC can do little to change the fundamental forces driving the dollar’s gains, attempts to reverse market trends would likely fail, undermining its credibility,” Wei He, an analyst at Gavekal Dragonomics, said. “The better course is probably to allow the current trend to play out, while limiting volatility and waiting for the inevitable reversal of direction.” More

LONDON (Reuters) -The International Monetary Fund openly criticised Britain’s new economic strategy on Tuesday, following another slide in bond markets that forced the Bank of England to promise a “significant” response to stabilise the economy.Pressure piled on new finance minister Kwasi Kwarteng to reassess his policy, which unleashed turmoil in financial markets, as leading economists, investors and executives said that rock-bottom investor confidence would recover only if the plan was scrapped.New British Prime Minister Liz Truss of the Conservative Party came into office on Sept. 6 saying she wanted to snap the economy out of years of stagnant growth with deep tax cuts and deregulation.Kwarteng’s plan, designed to support households and businesses with energy bills while doubling the long-run rate of economic growth. It requires an additional 72 billion pounds ($77.17 billion) in government debt issuance in this fiscal year alone, shocking investors, sending the costs of such borrowing even higher.The IMF said the proposals, which sent the pound to touch an all-time low of $1.0327 on Monday, would likely increase inequality and it questioned the wisdom of such policies.”Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy,” an IMF spokesperson said.”We are closely monitoring recent economic developments in the UK and are engaged with the authorities,” the spokesperson said.The IMF holds symbolic importance in British politics: its bailout of Britain in 1976 following a balance-of-payments crisis had long been regarded as a low point of modern British economic history.BUDGETThe Fund said a budget due from Kwarteng on Nov. 23 would provide an “early opportunity for the UK government to consider ways to provide support that is more targeted and reevaluate the tax measures, especially those that benefit high-income earners.”Earlier in the day, BoE Chief Economist Huw Pill said the central bank was likely to deliver a “significant” rate increase when it meets next in November, adding that financial market upheaval would have a big impact on the economy and would be factored into its next forecasts.British government bonds have sold off at a ferocious pace since the fiscal plans sparked a crisis of confidence in Truss’s handling of the economy.”It is hard not to draw the conclusion that this will require a significant monetary policy response,” Pill told the CEPR Barclays (LON:BARC) Monetary Policy Forum.With analysts still speculating about Britain’s future financial direction, and markets volatile, a growing number of mortgage providers, unable to price loans, suspended sales. REVERSE COURSE?U.S. economist Larry Summers, a former U.S. Treasury Secretary, said rocketing interest rates on long-dated British debt were a sign that credibility had been lost.Shai Weiss, head of airline Virgin Atlantic, urged the government to stabilise economic affairs and accept that a move to fund huge tax cuts with vast government borrowing had left Britain in a weaker position.”All of us in this room should be humble enough to say that if I said something that is not working, maybe I should reverse course, that is not a bad thing to do,” he said at a press conference to announce an alliance with SkyTeam. Two years before a general election is due, the opposition Labour Party has a 17-point lead over the Conservatives, a level not seen in more than two decades, according to a YouGov opinion poll for The Times newspaper. The Bank of England and Treasury had released statements on Monday afternoon in the hope of reassuring investors, with the central bank saying it would not hesitate to raise interest rates if needed.That immediately knocked the pound further, however, as some investors had bet on an emergency rate hike. It recovered slightly on Tuesday and was up 0.4% on the day at $1.0726 at around 2006 GMT. Kwarteng met leading bankers, insurers and asset managers on Tuesday and said he was “confident” that his economic strategy would work when combined with supply side reforms.But many remain unconvinced.”(There) is still no clear sign that the source of the problem – the government’s fiscal strategy – is being reversed or reconsidered,” J.P. Morgan economist Allan Monks said.”This will need to happen before November in order to avoid a much worse outcome for the economy.”($1 = 0.9330 pounds) More

Demonstrators marched on Japan’s parliament yesterday to protest against the state funeral of Shinzo Abe, while tens of thousands of supporters queued nearby to honour one of the country’s most powerful and divisive leaders since the second world war. After an initial period of shock and public grief that followed Abe’s assassination in early July, the government’s decision to hold a ¥1.6bn ($11mn) funeral sparked a public outcry and a sharp fall in popularity for Prime Minister Fumio Kishida. In a ceremony held at Tokyo’s Budokan arena, Kishida spoke in front of more than 4,000 guests including world leaders, Japanese politicians, business figures and members of the imperial family. Among the foreign dignitaries in attendance were US vice-president Kamala Harris, Indian prime minister Narendra Modi, Australian prime minister Anthony Albanese and UK foreign secretary James Cleverly.What do you think about Japan’s decision to hold a $11mn state funeral for former prime minister Shinzo Abe? Tell me what you think at [email protected]. Thanks for reading FirstFT Asia. Here is the rest of the day’s news — EmilyFive more stories in the news1. IMF urges UK to ‘re-evaluate’ tax cuts The IMF has launched a biting attack on the UK’s plan to implement £45bn of debt-funded tax cuts, warning the “untargeted” package threatens to stoke soaring inflation. The multilateral lender said it was “engaged with the authorities” since the tax cuts were unveiled last week, sparking a collapse in the value of sterling and a spike in the country’s borrowing costs.2. Sabotage warnings surface after Nord Stream leaks Danish, German and Polish officials have signalled that suspicious leaks on two Russian gas pipelines in the Baltic Sea are highly likely to be the result of sabotage, heightening concerns over the vulnerability of Europe’s energy infrastructure.Russian-held referendum results: Voters in four Russian-occupied provinces of southern and eastern Ukraine overwhelmingly agreed to their regions joining Russia in referendums regarded as sham votes by Kyiv and its western partners.3. Renminbi falls against dollar despite new support measures The renminbi lost further ground against the dollar yesterday, putting pressure on China’s central bank to deploy significant foreign exchange reserves for the first time since 2017. The renminbi’s fall of 11.5 per cent year to date to trade at Rmb7.1631 against the dollar has come as a result of widening policy divergence between a hawkish US Federal Reserve and dovish China. China economy news: China’s economic output will lag behind the rest of Asia for the first time since 1990, according to new World Bank forecasts.

4. SoftBank-backed Grab targets first profit Grab, one of south-east Asia’s biggest tech groups valued at $10.8bn, said the 10-year-old business would be profitable by 2024, even as growth slows against mounting global recession fears and rising inflation. 5. Do Kwon says he is not hiding as crypto manhunt intensifies The co-founder of collapsed cryptocurrency operator Terraform Labs said he is not in hiding after Interpol issued a red notice against him. Do Kwon has remained active on social media, writing Twitter on Monday that he was making “zero effort to hide. I go on walks and malls”, as the threat of prison hangs over him in South KoreaThe day aheadBank of Japan minutes The central bank will publish the minutes of its last monetary policy meeting when Japan intervened to strengthen the yen for the first time in 24 years.US-Pacific Island Country summit President Joe Biden will host the first ever US-Pacific Island summit today in Washington, where the US will continue its efforts to counter China’s influence in the region. (Politico) What else we’re readingThe cost of China’s information vacuum Global expertise about the country accumulated by scholars, diplomats and businesspeople has become more important than ever — yet many of those sources are now running dry as censorship has been tightened and access for foreigners has been sharply restricted.‘Sense of crisis’ grips South Korea chip industry, warns minister There is growing fear among Korean officials and industry executives that the country will shed production facilities as domestic chipmakers, lured by subsidies and tax incentives, rush to build semiconductor plants in the US. Generous state funding is also allowing China to catch up fast in the memory chip sector.Russians run and hide from Putin’s zealous draft officials Nearly a week after President Vladimir Putin announced the “partial” mobilisation of army reservists to bolster his forces in Ukraine, tens of thousands of Russians are refusing to enlist. In the face of the civil disobedience, the Kremlin is faced with a dilemma: should it crack down on the dissenters or backtrack?

Travellers from Russia cross the border to Georgia at Verkhny Lars on Monday © Irakli Gedenidze/Reuters

China’s Nio warns energy crisis slowing European expansion William Li, the group’s founder and chief executive, said that soaring energy costs are impeding the company’s rollout of battery swapping stations across Europe. In contrast to rival carmakers that rely on recharging their batteries, Nio uses a system of swap stations in which batteries are replaced in a process that takes just minutes.Two arrested on fraud charges linked to ‘$100mn deli’ in New Jersey A New Jersey sandwich shop which became a symbol of stock market exuberance was at the centre of an international conspiracy that defrauded investors and wrecked the ambitions of two high schoolteachers, according to an indictment unsealed in US federal court.Cocktails in Tokyo FT Globetrotter is celebrating all things Tokyo this autumn, and would love to hear from you. Share your favourite place to drink cocktails in the Japanese capital, including what to drink there, when to go and why it is so great. The best answers will be published in FT Globetrotter soon. More