Aurelia Butler

The legislation, which would unilaterally replace parts of the post-Brexit deal that was agreed in 2020 by Britain and the EU, is due to be sent back to parliament’s lower house for a so-called second reading.Foreign minister Liz Truss said London’s priority was to protect a 1998 peace deal that Ireland, the United States and other countries have said could be put at risk by replacing parts of the Northern Ireland Protocol.”This legislation will fix the problems the Protocol has created, ensuring that goods can flow freely within the UK, while avoiding a hard border and safeguarding the EU Single Market,” Truss said in a statement on Sunday.”A negotiated solution has been and remains our preference, but the EU continues to rule out changing the Protocol itself – even though it is patently causing serious problems in Northern Ireland – which therefore means we are obliged to act.”Britain plans to stop some checks on goods moving to Northern Ireland from the rest of the United Kingdom and it is challenging the role played by the EU’s court.The EU’s ambassador to Britain said on Sunday that Britain’s plans were illegal and unrealistic.  “It is a treaty that we signed, ratified and even went through a general election in this country,” Joao Vale de Almeida told Sky News.The European Commission has launched legal proceedings against Britain, potentially leading to a trade war.EU officials say Johnson is trying to regain support among lawmakers in his Conservative Party after he narrowly won a confidence vote earlier this month. More

The Chinese memory chip producer Yangtze Memory Technologies plans to bring online a second plant in its home city of Wuhan as early as the end of this year, sources familiar with the matter say, in a move that could further close the company’s technology and output gap with global leaders such as Samsung of South Korea and Micron Technology of the US.The company, also known as YMTC, needs to expand production after a growth spurt that put it on the world’s semiconductor map and delivered a notable success in Beijing’s attempt to reduce China’s reliance on imported chips.Its original plant has been running near capacity and churned out 100,000 wafers a month at the end of 2021, two people told Nikkei Asia.YMTC held a global market share of nearly 5 per cent last year, according to analyst and industry estimates. It has become the world’s sixth-largest Nand flash memory maker behind Samsung, SK Hynix, Kioxia, Western Digital and Micron, and the only one from China.About 40 per cent of its output at present is 128-layer 3D Nand flash memory, the most advanced produced so far by a Chinese chipmaker. But that is one or two generations behind global leaders Samsung, SK Hynix and Micron. The rest of YMTC’s output is of older 64-layer 3D Nand flash memory.The new plant would first build mainly 128-layer flash memory and could later shift to even more cutting-edge chips, such as 196-layer or 232-layer 3D Nand flash memory, assuming development goes smoothly in 2023 and 2024.Apple has been testing YMTC’s flash memory products since last year and could place its first order for “limited quantities” as soon as this year, two people familiar with the matter told Nikkei Asia. The US tech giant has been talking with the Chinese chipmaker since 2018 in hopes of finding a cost-effective source of storage components.Securing a deal with Apple would be a milestone, highlighting the quality of Yangtze Memory’s chips, industry executives say. Apple’s Chinese suppliers, including those from Hong Kong, already outnumber those from Taiwan, making China the largest source of suppliers to the US company, according to a Nikkei Asia analysis. Apple also has close ties with several Chinese electronics manufacturers, including Luxshare, Goertek and BYD.Yangtze Memory’s success is also viewed as a victory for China, as the world’s second-largest economy strives to localise semiconductor production and build industry champions. Yangtze Memory is backed by the China Integrated Circuit Industry Investment Fund, Beijing’s most important chip investment funding vehicle. And YMTC is bullish on its growth prospects, increasing its investment budget from $24bn in 2016 to the equivalent of $32.8bn this year.The Chinese chipmaker is currently installing equipment at the new chip plant, a key step before it goes into production. The factory will eventually have twice the capacity of the first, several people briefed on the matter said. The total capacity for the two factories will reach 300,000 wafers per month and could help YMTC expand its market share to more than 10 per cent globally.

The company is split into two parallel teams composed of hundreds of top engineers tasked with developing 196-layer and 232-layer flash memory, one of the people said. Its aim is to catch up with foreign rivals.The most advanced products on the market, which Samsung, Micron and SK Hynix have all succeeded in producing, are 176-layer 3D Nand flash memory chips. They are now racing to create chips composed of more than 200 layers. Kioxia and Western Digital said they will be making 162-layer 3D Nand flash memory by the end of the year.The more layers a flash memory chip has, the more advanced the chips are — and the harder they are to develop and produce commercially. Nand flash memory is a vital storage component used in all kinds of electronic devices, from smartphones and PCs to data centre servers and connected cars.Most YMTC flash memory is currently used to make consumer-grade solid-state drives (SSDs), mainly for the Chinese market. Its clients include leading storage makers Lenovo, Longsys and Kimtigo of China, as well as Adata of Taiwan. YMTC has also introduced its own brand, ZhiTai, to sell SSDs directly to consumers.Its share of the global flash memory market has risen quickly from 1.3 per cent in 2019, when it first put 64-layer Nand flash memory into production, according to Counterpoint Research, which believes it could grab nearly 6 per cent of the market by 2023, up from 4.8 per cent in 2021.Brady Wang, an analyst at Counterpoint, told Nikkei Asia that Yangtze Memory had been working on its technology even before the company was formally launched in 2016. It had demonstrated its capabilities and gradually become a viable global player after years of effort, Wang said. It had also more than doubled its payroll in four years, to about 8,000 employees currently.“It recruits many engineers and veterans who have Chinese backgrounds but used to work for multinational tech and chip companies,” Wang said. “Managing a plant, however, is different from managing several plants at a massive scale. It remains to be seen if it [can] successfully ramp up production.”Political tension between the US and China also increases uncertainties for Chinese companies like YMTC, Wang said.Washington has slowed the advance of China’s semiconductor industry by adding the country’s top chipmaker, Semiconductor Manufacturing International Co, and the telecom equipment group Huawei, to a trade blacklist to restrict their use of American technology. Yangtze Memory has been among the most aggressive companies in pushing ahead with the development of domestic chipmaking equipment, but it continues to maintain good relationships with US and other foreign vendors to ensure its expansion plans come to fruition.YMTC declined to comment for this story.A version of this article was first published by Nikkei Asia on June 23, 2022. ©2022 Nikkei Inc. All rights reserved.Related StoriesInside Shanghai’s COVID lockdown nightmareTSMC says it will make ultra-advanced 2nm chips by 2025From chemicals to gases, chip suppliers reel as materials prices surgeChina chipmaker SMIC says phone, PC demand has dropped ‘like a rock’ More

Hello and welcome to the working week.Now would seem a good time for central bankers to get together and brainstorm some ways of getting their economies out of a global inflationary crisis. So thank goodness for the European Central Bank’s annual Forum on Central Banking, a gathering amid the palaces in the pretty Portuguese Riviera town of Sintra to discuss the challenges for monetary policy in a rapidly changing world: a title that organisers admit was only recently agreed upon given the, er, rapidly changing world that the eurozone economies now face. Federal Reserve chair Jay Powell, World Trade Organization head Ngozi Okonjo-Iweala and Bank of England governor Andrew Bailey are among the top drawer list of speakers.Geopolitical summits are again a bit of a theme this week. Nato will gather in Madrid on Tuesday for three days of discussion, including its expansion in the wake of Russia’s invasion of Ukraine. Among the topics for deliberation are maintaining support for Ukraine, reinforcing partnerships and maintaining an open door, and strengthening transatlantic unity.This also happens to be the week for Ukraine’s Constitution Day, a public holiday for the country marking the foundation of an independent state in 1996. Talking of separation, Scottish first minister Nicola Sturgeon is expected on Tuesday to set out in detail how she plans to hold a second independence referendum. Read Robert Shrimsley’s excellent opinion piece to appreciate the reasons why Sturgeon is choosing to do this now. The future of Britain is the subject of a conference taking place in London, jointly organised by the Tony Blair Institute and the Britain Project, a cross between a campaign group and a think-tank.Of course, reorganising countries is a controversial business as will no doubt be debated on Friday, the 25th anniversary of the handover of Hong Kong by the UK to China. The story of journalist-turned-political-activist Claudia Mo, powerfully told in this weekend’s FT Magazine, recalls the battles fought and ultimately lost by those seeking to maintain autonomy for the city region in the last quarter century — although that will not stop protesters from taking to the streets on Friday. This week will also see the next instalment of the UK’s summer of discontent with barristers walking out on Monday in ongoing protests over cuts to legal funding — although the Ministry of Justice questions this, saying that criminal legal aid is increasing by £135mn a year. Postal workers may follow the lawyers on to picket lines as the Communication Workers Union this week sends out ballots for industrial action to more than 115,000 of its members.In need of a little lighter entertainment? Well, it’s a good week for major sporting tournaments with the start of both Wimbledon fortnight and the Tour de France, which this year begins in Copenhagen. The FT has also published its list of summer reading recommendations.Thanks again for your messages about this newsletter. If you have yet to comment, or wish to say more about what does and does not warrant a mention, then email me at [email protected] dataConsumer confidence reports, inflation and gross domestic product updates this week will give some indication of the effectiveness of the various monetary policy tightening measures in play, and will no doubt give the central bankers in Sintra food for thought.Sweden and Hungary’s central bankers are making interest rate decisions this week.CompaniesA quieter week for diaried corporate announcements. The most significant earnings announcements are all from the US. Investors in Nike, the global sports brand, might be more interested in the senior leadership team than the numbers. Nike’s head of diversity Felicia Mayo will leave the company at the end of next month after just two years in the role.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayThe annual European Central Bank Forum on Central Banking begins in Sintra, PortugalUS, May durable goods orders dataResults: Nike Q4TuesdayFrance, consumer confidence figuresGermany, consumer confidence figuresHungary, interest rate decisionUK, Office for National Statistics publishes the first results from the 2021 Census in England and WalesUS, monthly consumer confidence and house price index figuresWednesdayGermany, preliminary consumer price index (CPI) figuresJapan, May retail figuresSpain, flash inflation and retail sales dataSweden, Riksbank’s monetary policy meetingUK, British Retail Consortium shop price indexUK, EU chief Brexit negotiator Maroš Šefčovič will speak at Bloomberg’s London HQ on the EU-UK partnershipUS, Q1 GDP figuresResults: General Mills Q4ThursdayCanada, April GDP dataEU, May unemployment figuresFrance, May producer price index (PPI) data and June CPI dataGermany, June unemployment figures, May import prices plus May retail trade data. Also, ECB president Christine Lagarde’s speech at the first meeting of the Simone Veil Pact, organised by Renew Europe.Italy, May unemployment figures plus May PPI dataJapan, May industrial production dataUK, final Q1 GDP figures and consumer trends report plus Nationwide’s June house price dataResults: Walgreens Boots Alliance Q3FridayChina, France, Italy, UK, US: Caixin and S&P Global manufacturing purchasing managers’ index (PMI) dataThe ECB will end its long-running bond-buying scheme, part of stimulus measures introduced a decade ago, to help battle stubbornly high inflationEU, flash June inflation figuresItaly, May CPI dataJapan, monthly unemployment rateUK, consumer credit figuresUS, construction spending statisticsWorld eventsFinally, here is a rundown of other events and milestones this week. MondayThe UN Ocean Conference, co-hosted by the governments of Kenya and Portugal, begins in LisbonUK, the Wimbledon tennis tournament begins at the All England Lawn Tennis and Croquet Club in south west London amid controversy over the banning of Russian playersUK, lawyers who are members of the Criminal Bar Association begin strike action in an escalating dispute with the government over funding of trials. The walkout by criminal defence barristers is likely to cause widespread disruption to court hearings across England and Wales.TuesdayFrance, the new National Assembly holds its first session after the June 12 parliamentary election results created a hung parliament — read Martin Sandbu’s (premium) Free Lunch newsletter for a more complete explanation. Also, Australia’s new prime minister Anthony Albanese is due to visit Paris to “reset” relations with France after tensions erupted over a scrapped submarine deal.Spain, Nato’s summit in Madrid begins with heads of government from its 30 member countries expected to attend and discussions to include Sweden and Finland’s applications to join the military alliance. 2022 marks the 40th anniversary of Spain joining Nato.Ukraine, Constitution Day marking the anniversary of the signing of the Constitution of Ukraine in 1996UK, London mayor Sadiq Khan hosts the State of London debate at the O2 in Greenwich plus the Henley Royal Regatta begins on the river ThamesUS, British socialite Ghislaine Maxwell is due to be sentenced after being found guilty in a sex abuse trialWednesdayBelgium, the Ommegang festival, including a pageant re-enacting the historical entry of Charles V, begins in BrusselsUK, Committee on Climate Change publishes its 2022 progress report to parliament, assessing the UK’s chances of achieving net zero by 2050. Plus another strike threat looms with a ballot for industrial action at Royal Mail over plans to remove 542 frontline delivery managers amid wider restructuring.ThursdayPhilippines, Ferdinand “Bongbong” Marcos Jr, son and namesake of the notorious late dictator, takes office as the country’s new presidentUK, the Future of Britain conference, organised by the Tony Blair Institute to discuss progressive solutions to the country’s problems, begins in LondonFridayBrazil takes over the presidency of the UN Security Council for JulyCanada Day, federal holiday commemorating the formation of the union of the British North America provinces that created Canada in 1868Denmark, the Tour de France begins in Copenhagen. It will end on the Champs-Élysées in Paris on July 24.EU, the Czech Republic assumes the six-month presidency of the EUHong Kong, 25th anniversary of the reversion of the former colony from British to Chinese ruleIndia, annual Rath Yatra, or Chariot, Hindu festivalRwanda, National Day commemorating independence from BelgiumSomalia, National Day commemorating the country’s creation from British Somaliland and Italian SomalilandUK, deadline for WikiLeaks founder Julian Assange to launch an appeal against the decision to extradite him to the US to face espionage chargesSaturdayItaly, the Palio di Siena, Italy’s most famous (and controversial) horse race, takes place in the street of Siena’s Piazza del CampoUK, 50th anniversary of the Pride in London paradeUS, World UFO Day takes place on the anniversary of the Roswell incident in New Mexico in 1947SundayBelarus, Independence DayUK, the 134th annual Wenlock Olympian Games — believed to have inspired the modern games — begin in Wenlock, Shropshire More

FIGHTING* Russian forces fully occupied the eastern Ukrainian city of Sievierodonetsk on Saturday, both sides said, confirming Kyiv’s biggest battlefield setback for more than a month following weeks of some of the war’s bloodiest fighting.* Russian missiles struck a residential building and the compound of a kindergarten in central Kyiv on Sunday, killing one person and wounding five more, officials said, as Moscow stepped up its air strikes on Ukraine for a second day.* Russian missiles struck near the central Ukrainian city of Cherkasy on Sunday, killing one person and hitting a bridge that helps connect western regions with eastern battle zones, Ukrainian officials said.ECONOMY AND DIPLOMACY* U.S. President Joe Biden told allies “we have to stay together” against Russia, as world leaders met on Sunday at a G7 summit in the Bavarian Alps that will be dominated by war in Ukraine and its painful impact on food and energy supplies across the globe.* Russia edged closer to default on Sunday amid little sign that investors holding its international bonds had received payment, heralding what would be the nation’s first default in decades.* British Prime Minister Boris Johnson and French President Emmanuel Macron agreed to provide more support for Ukraine in its war with Russia, Johnson’s office said on Sunday as the leaders met on the sidelines of a Group of Seven summit.* Indonesian President Joko Widodo said on Sunday he will urge his Russian and Ukrainian counterparts to open room for dialogue during a peace-building mission to the countries because “war has to stop and global food chains need to be reactivated”.QUOTES* “At this stage of the war it’s spiritually difficult, emotionally difficult … we don’t have a sense of how long it will last, how many more blows, losses and efforts will be needed before we see victory is on the horizon” – Ukrainian President Volodymyr Zelenskiy.* “We can get through all of this and come out stronger. Because Putin has been counting on it from the beginning that somehow the NATO and the G7 would splinter. But we haven’t and we’re not going to.” – U.S. President Joe Biden. More

The UK is in the throes of the kind of labour unrest not seen for decades. This is visible in the railways, London Underground and British Airways. Teachers and other public sector workers may join in. The explanation for this is clear. Unanticipated inflation delivers losses everybody wants to recoup. This triggers social conflict.Yet if inflation is bad, so is the cure. Unless one believes it will magically disappear, the way to end entrenched inflation is via a period of below trend output and rising unemployment. This will be “stagflation” — a combination of high inflation with weak growth that lasts for some time and might require more than one tightening before it ends.Start with the inflationary process itself: how far is the inflation imported and how far is it due to excessive domestic demand?In the UK, the price level for goods other than energy and food has risen by 8 per cent over the past two years. The comparable figure in the US is 10 per cent. In the eurozone, however, it is only 4.7 per cent. This supports the view that the domestic inflationary dynamic in the UK (and US) has been stronger than in much of the eurozone.

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The latest Economic Outlook from the OECD also shows that the inflationary process is now widespread in the UK. Thus, the proportion of goods and services with annual inflation running at over 4 per cent rose from 14 per cent to 66 per cent between April 2021 and April 2022. Finally, the ratio of unemployed workers to the number of vacancies was lower in the first quarter of this year in the UK than in the previous two decades. The US situation is similar.The OECD also forecasts that UK headline inflation will still be running at 4.7 per cent at the end of next year. Inevitably, then, people will seek to recover the large losses in their standards of living. This means that there will be strong pressure for higher wages. This pressure will be further strengthened by a growing lack of confidence in the Bank of England’s ability or determination to hit its inflation target. Contrary to what some in central banking circles believe, inflation targets are not hit because they are credible: they are credible because they are hit. But if wages do indeed catch up with past (and expected) rises in prices, a further spiral of domestically generated inflation will emerge, partly offsetting any diminution in the rate of imported inflation.In sum, in countries like the UK and US, the economy must be weakened enough to eliminate the domestic overheating and remove the likelihood of a destructive wage-price spiral.

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This raises two questions: how big a weakening will be needed and how is it going to be delivered?An optimistic view on the first question is that taking just a little bit of excess from the labour market will be enough to remove the risk of a domestic inflationary spiral. This seems highly improbable. Given the reductions in real incomes that have occurred, workers will expect and receive catch-up increases in wages in any reasonably robust labour market. It is likely that unemployment will have to rise substantially if this is to be limited.The answer to the second question depends on how far such a slowdown is going to happen anyway. The view that it will happen anyway notes the contractionary impact of higher prices of energy and food, fiscal tightening (in part because cash limits will bite in real terms), likely reductions in growth of credit as confidence deteriorates, falling asset prices and the war in Ukraine. Thus, the UK economy will be forced to slow down directly, but also indirectly, because the world economy has slowed. The OECD’s forecast for the UK for next year is for zero growth.

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Will even more than this need to happen to bring inflation down to target? Possibly not, particularly if, as seems plausible, actual growth will be even lower than forecast next year. But the longer this inflation continues, the harder it will be to regain the target. It is possible that deliberate policy tightening will need to be greater than now expected.The market currently expects the Bank of England’s short rate to peak at around 3 per cent a year from now. That would still be a substantially negative in real terms rate under any plausible inflation expectations. This looks a mouse of a rate, given the scale of current and prospective inflation overshoots. Central banks have made big mistakes, as Mervyn King has argued. At present, the Bank like other central banks hopes that a very modest tightening will do the trick. If it does, it will be because the economy is going to slow a great deal anyway. Bad times lie ahead. The question is how [email protected] Follow Martin Wolf with myFT and on Twitter More

“We need to fix that. We need British steel to be provided with much cheaper energy and cheaper electricity for its blast furnaces. But until we can fix that, I think it is reasonable for UK steel to have the same protections.”The Sunday Telegraph newspaper said Johnson was seeking tighter quotas for steel imports from emerging economies to protect domestic producers, a move which could breach international trade rules.Britain proposed on Thursday to extend for a further two years an existing package of tariffs and quotas on five steel products to protect domestic steelmakers.However, the Sunday Telegraph said wider measures were being finalised for announcement in the coming week.Johnson said Britain should not to remove tariffs unilaterally without other European countries doing it too. “I don’t think that’s the right way forward. I want another solution. The difficulty is: is that possible to do while staying within our World Trade Organisation obligations? That’s the problem. But these are tough choices that you have to make.”Johnson’s Conservative Party last week lost two by-elections including one in an industrial area which had historically supported the opposition Labour Party. More