Aurelia Butler

The government has mainly blamed massive ticket fraud and Liverpool’s handling of their fans for Saturday’s trouble but also said the transport strike contributed to an overcrowding of fans near the Stade de France stadium.”The success of the strike during the Champions League final resulted in a clear display of strength for the trade unions,” said a joint statement from the CGT and UNSA unions representing workers on Paris’ RER and RATP public transport networks.The unions also threatened another strike on Friday to coincide with the France versus Denmark Nations League soccer match. The unions want better pay and working conditions. British Prime Minister Boris Johnson described the scenes outside the Stade de France, which saw some fans including children tear-gassed by French police, as deeply upsetting, while Liverpool Chairman Tom Werner has demanded an apology from the French sports minister.French Interior Minister Gerald Darmanin said Liverpool had provided their supporters with paper tickets, not electronic, which allowed for the possibility of what he described as a “massive fraud on an industrial scale”.The crowd trouble has become a political issue ahead of next month’s parliamentary elections and embarrassed France, which hosts the Rugby World Cup in 2023 and Olympic Games in 2024. More

How much cash should I keep as a proportion of my investments, beyond a fund for emergencies? Inflation would suggest as little as possible, but I know lots of people who have moved a big proportion of their assets into cash as stocks have fallen, both to mitigate losses and be ready to buy when things pick up again. What’s the best cash strategy in a high-inflation environment? Paul Surguy, managing director and head of investment management at Kingswood, recalls that former US president Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” Perhaps inflation is better described as a silent assassin: for most economies, it is always there, gradually eating away at the purchasing power of cash.

Paul Surguy, managing director of Kingswood

With price rises running at levels not seen since the 1970s, many have begun to ask what steps they can take to protect their assets. To appreciate the impact it can have on cash holdings, consider £1,000 in a bank today. At a current (and assumed consistent) level of inflation this will be worth £917.43 in a year’s time. In the UK, supply bottlenecks and the price of oil have intensified the increase. As these ease, it is hoped that inflation will naturally start to fall away. Cash is held as the ultimate protection. Historically, for those with memories that stretch back to the 1990s and early 2000s, one might expect to get a little bit of interest on cash in the bank. However, even with interest rates rising across the globe, any interest received is both minuscule and irrelevant when compared with inflation. So where can people go to protect their assets against inflation? Traditionally, property and equities would be the first port of call and should, within a certain risk tolerance, still be the best place. Inflation-protected bonds are a lower risk method of protecting investments. However, all of these are higher risk than cash in the short term, as their values will fluctuate. This is why investors should ensure they have a diversified portfolio appropriate for their risk tolerance. There are also a wider range of alternatives, such as gold (the traditional inflation hedge) and uncorrelated assets such as low-risk, hedge fund type investments.Having said this, cash remains the ultimate safety net for investors. Three to six months of income still feels like a sensible level of cash to maintain to cover any short-term emergencies. This can always be reassessed should inflation fall away or risk assets increase in value. We should also start to see a small increase in the interest paid by banks as central banks have clearly signalled that the direction for interest rates is upwards. Current expectations are for the UK to have an interest rate of just over 2 per cent by the end of the year. In the US the number is closer to 3 per cent. Certainly, this is higher than we have been used to, though less than history would suggest is “normal”.How can I settle holiday home dispute?My mother recently passed away and left her estate, including a holiday house on the Sussex coast, to my brother and me. My brother, who is an executor of the will, does not appear to be in a hurry to sell the holiday house, even though this was always the understanding. Can I force a sale?Kai Jones, a senior associate in the private client team at RWK Goodman, says it cannot be easy to deal with the loss of your mother and the fact that your brother appears to be reneging on the sale of the holiday home.

Kai Jones, a senior associate at RWK Goodman

I presume that your brother is the sole executor and your mother’s estate is to be divided equally between the two of you. As executor, your brother has a duty to collect in the assets of the estate, settle any of your mother’s outstanding liabilities and administrative expenses, for example, legal fees. Once the estate assets have been gathered and liabilities settled, the executor is to distribute the balance to the beneficiaries. In addition, your brother should be aware that as executor, he should avoid any possibility of a conflict of interest between his duties and responsibilities as executor and his personal wishes. As a beneficiary, you have the right to require that the estate is administered properly and in accordance with the will.Therefore, if your brother has settled the estate liabilities he should distribute your share of the estate to you. The distribution would be by either liquidating the assets in the estate and distributing the cash equally or transferring the assets into your joint names. From what you said, the will does not make specific arrangements for the holiday home and its sale was an agreement between you. While you cannot technically force your brother to sell the holiday home, you could suggest that if he wishes to keep the holiday home for himself in his capacity as beneficiary, he could reimburse you for your share of the holiday home from his own funds or from his share of the estate.I would advise that you and your brother seek to resolve this amicably and mediation may assist with this. Legal action should only be considered as a last resort.If you are unable to resolve things amicably and believe that your brother is acting improperly as executor, you can apply to the court for directions regarding the sale of the property. You could also apply to have your brother removed as executor if you are concerned that he is having an adverse effect on the administration.If you made an application, the court will look at how the administration is being conducted and will act in the best interest of the estate. It will look at the terms of the will and ignore any agreement you and your brother may have made. I do hope that you and your brother are able to resolve the issue without legal intervention in order to avoid animosity. The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent. More

Eurozone inflation soared to a new record high of 8.1 per cent in the year to May, piling pressure on the European Central Bank to speed up the pace of its exit from ultra-loose monetary policy.The jump in eurozone price growth, from 7.4 per cent the previous month, was much higher than forecast by economists, who had expected 7.7 per cent, according to a Reuters poll. The core number, which excludes more volatile energy and food prices and is closely watched by ECB policymakers, also rose above expectations to 3.8 per cent, up from 3.5 per cent in April. The higher than expected core measure, which signals price growth is gathering pace across most categories of goods and services, could tip the balance at the ECB’s meeting in Amsterdam next week in favour of raising interest rates at a more aggressive pace than currently outlined. The ECB’s chief economist Philip Lane signalled earlier this week that the bank would raise rates 0.25 percentage points in July, and the same amount in September, saying this margin was the governing council’s “benchmark”. However, hawks are likely to push for a half percentage point rise at the July 21 vote. “These data are too hot to handle,” said Claus Vistesen, an economist at Pantheon Macroeconomics. “The risk of a 50 basis point hike [in interest rates] in July is very real, and we’d even argue that next week’s meeting is live.” Most ECB governing council members accept that the rise in inflation to quadruple its target of 2 per cent requires them to start raising its deposit rate, which is at minus 0.5 per cent and has been stuck in negative territory since 2014. But there are divisions over the pace of the move. President Christine Lagarde has urged the council the the council to move “gradually” by raising rates a quarter percentage point in July and September, following the end of the ECB’s bond-buying programme in early July. “Had they not boxed themselves in by promising to continue asset purchases until the third quarter, the ECB would surely be raising rates at next week’s governing council meeting,” said Andrew Kenningham, an economist at Capital Economics. Inflation has been pushed higher by the fallout from Russia’s invasion of Ukraine, which has sent energy and commodity prices surging and added to global supply chain disruption, while the lifting of Covid-19 restrictions has boosted demand across Europe. Energy prices increased 39.2 per cent in the year to May, while the price of food, alcohol and tobacco grew at an annual rate of 7.5 per cent, according to data released by Eurostat on Tuesday.The sharp rise in prices, which hit a record high in Germany of 8.7 per cent in the year to May, as well as rising in France, Spain and Italy, has prompted politicians to announce measures to offset the impact on households and businesses with subsidies, electricity price caps and tax rebates.The fastest rate of inflation in the 19-member eurozone was 20.1 per cent in Estonia, while the slowest was 5.6 per cent in Malta. More

Joe Biden is set to meet Jay Powell for the first time since his nomination to a second term as chair of the Federal Reserve, highlighting the US president’s concern about high inflation and threat it is posing to the recovery. According to the White House, the US president and Powell will gather on Tuesday as the Fed and Biden administration battle rising consumer prices, supply chain disruptions, the energy shock triggered by the war in Ukraine and the enduring pandemic. Biden chose to reappoint Powell for a new four-year stint as head of the Fed last year, bucking progressive calls for him to tap a Democrat for the job rather than a Republican who was elevated to the helm of the central bank by former president Donald Trump. Powell was confirmed by the Senate for a second term on May 13, with strong bipartisan support. A White House official said Biden would congratulate Powell “on his confirmation and the confirmation of the president’s other nominees to the Fed”. The official added that the pair would “discuss the state of the American and global economy, and discuss the president’s top economic priority — addressing inflation to transition from a historic economic recovery to stable, steady growth that works for working families”.Unusually for a president in an election year, with midterm elections due in November to determine control of Congress, Biden is supporting the Fed’s turn towards tighter monetary policy to fight inflation, underscoring just how problematic high prices are becoming both economically and politically for the White House and Democrats. “While I’ll never interfere with the Fed’s judgments, decisions, or tell them what they have to do . . . I believe that inflation is our top economic challenge right now, and I think they do too,” Biden said earlier this month. “The Fed should do its job and it will do its job, I’m convinced, with that in mind,” Biden said. Even though the Fed is an independent institution, US presidents have periodically held both public and private meetings with sitting chairs of the central bank. Biden last met Powell in November, when he nominated him for a second term as central bank chair. Trump met Powell and Janet Yellen, the Fed chairs during his tenure, and Barack Obama invited Yellen and Ben Bernanke, a former Fed chair, to the White House during his presidency. The meeting with Powell will give Biden a chance to demonstrate that the fight against inflation is his top priority ahead of the midterm elections, with polls showing voters are rebuking his handling of the economy because of soaring prices even while job growth has been very strong. The burden of high inflation, particularly with respect to petrol and food costs, will have been even more apparent over the Memorial Day holiday, one of the busiest travel weekends of the year. Biden and top officials in his administration have insisted that they are using every tool at their disposal to fight inflation, though they are still debating whether to reduce tariffs on Chinese imports in order to reduce some price pressures. Ultimately, however, they have increasingly pointed to the Fed as the agency with the greatest influence and responsibility for curbing inflation. More

Rishi Sunak has just unveiled a £15bn support package to help households as average UK energy bills are predicted to hit £2,800 a year. Even with the chancellor’s help, plenty of people will still be feeling the pinch — but the latest Money Clinic podcast episode is packed with practical tips and advice to help you save on your energy bills. Presenter Claer Barrett hears from Bella who is renting a draughty Victorian flat and wants to know her rights before she tackles her landlord. Homeowner Sam has seen his bills skyrocket and wonders if insulating his property would be a wise investment.On hand with tips for Bella and Sam are Gemma Hatvani, founder of the Facebook group Energy Support and Advice UK, and Brian Horne, a senior adviser at the Energy Saving Trust.

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If you would like to be a guest on a future episode of Money Clinic, email us [email protected] or send Claer a DM on social media — she is @ClaerB on Twitter, Instagram and TikTok. More

The writer is global head of G10 FX Options Trading at Goldman Sachs, and author of ‘Foreign Exchange — Practical Asset Pricing and Macroeconomic Theory’Foreign exchange markets have this year been jolted by a sudden increase in volatility. There are many reasons for this, but at the heart of the shift is deglobalisation.To understand why, consider first the opposite. In a hypothetical, perfectly globalised world, there would be no barriers to international trade, meaning goods could be produced in one country and transported to the other without cost or friction.Let us focus on Japan and the US in our hypothetical world, and suppose that each country produces goods called widgets of identical quality. In such a world the real foreign exchange rate cannot deviate from 1.0. That is because if the cost of a Japanese widget expressed in dollars were cheaper than a US-produced version, traders in international goods markets would buy more Japanese widgets, put them on ships and sell them in the US. The traders would continue until the arbitrage opportunity is competed away, forcing the real foreign exchange rate back to 1.0. Therefore there is little, if any, volatility in the real exchange rate.Since the coronavirus pandemic hit in 2020, the world we have been moving towards resembles our hypothetical world much less. The Global Supply Chain Pressure index produced by the Federal Reserve Bank of New York measures global transportation costs and other supply chain pressures. It has moved to the highest levels that we have seen.This is just one component of what is broadly being labelled “supply constraints”. Correspondingly, we are seeing somewhat dramatic variations in the real exchange rate.The yen may weaken and Japan may continue to run with lower inflation than the US. But with transportation costs so high, and with Covid-19 and other supply chain disruptions, it becomes more difficult for traders and business to take advantage of a cheap yen exchange rate. With such reduced demand, the yen is more vulnerable. The trade-weighted level of the yen has weakened by about 10 per cent in 2022 in real terms (after accounting for inflation), and by 20 per cent since the start of 2020. Our hypothetical world would not have seen such volatility. A second source of the high currency volatility we are experiencing comes from divergence in central bank policy rates, which are in turn driven by divergent international economies.The pandemic-driven economic collapse in 2020 and vaccine-driven recovery in 2021 were internationally shared experiences. During this period, there was broadly no reason for central banks across developed market economies to take different policy paths. But, this year, a divergence has begun.This is normal after a crisis: economies should be expected to react and cope with their respective debt burdens in different ways. However, the energy price shock — spurred on by the war in Ukraine — has created further divergences, with energy importers such as Europe, Britain and Japan suffering a negative impact, while energy-neutral countries such as the US have fared better.Markets are pricing in a total of 250 basis points of rate rises by the US Federal Reserve in 2022, compared with 100 basis points from the European Central Bank, 180 basis points from the Bank of England and potentially none at all from the Bank of Japan.Even in our hypothetical world, in which real foreign exchange rates are fixed, such divergence would cause volatility in nominal spot rates. The reason is that more interest rate rises bring down inflation expectations, thereby lifting the future purchasing power of the currency. With the Federal Reserve leading the way, it is no surprise that contracts to exchange the euro, sterling and yen at a future date have all moved substantially in favour of the dollar. And spot rates are trading at even higher premiums than usual to these forward rates because of higher US interest rates.This has been the lesson from history. Foreign exchange volatility remained broadly contained relative to what was seen in equity, interest rate and credit markets during the 2008-10 financial crisis. Yet between 2011 and 2017, we saw numerous idiosyncracies, such as the European sovereign debt crisis, Abenomics and the Brexit referendum.In 2017, currency fluctuations eased. But we are once again in a period of macro divergences. Until globalising forces re-emerge, the post-pandemic world will remain one of high foreign exchange volatility. More

The decision by Airbus to boost jet production is one of the strongest signals yet that the aviation industry is recovering from the pandemic — but it will be a key test on the health of its supply chain.For an industry still recovering from the Covid-19 crisis, China’s lockdown disrupting supplies of goods and materials and inflationary pressures forcing up costs, the ramp-up in production comes at a critical time.It is also a significant industrial and logistical challenge. Each Airbus aircraft is made up of roughly 3mn parts and the company receives more than 1.7mn every day at its plants across the world from roughly 3,000 suppliers for all of its civil programmes.But the European manufacturer, whose A320 family of aircraft dominates the market for single-aisle aircraft, is confident it can meet its bold pledge to raise production by 50 per cent to 75 planes a month by 2025 and move to a rate of 65 by next summer.

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It says there is demand for new narrow-body jets as airlines renew their fleets after the pandemic and that it will be able to meet the higher rates by adding production capacity at its existing industrial sites, including the building of a second final assembly line at its US operations in Mobile.Stepping up production will require a careful balancing act between meeting resurgent demand for new, more energy efficient planes from airlines under pressure to reduce carbon emissions, while ensuring thousands of suppliers can deliver after cut backs during the crisis.In addition, concerns over the availability of raw materials such as aluminium and titanium following the war in Ukraine and a shortage of skilled workers risk further strains.Dominik Asam, chief financial officer at Airbus, admits that “right now there is tremendous pressure on the supply chain. Everything is tight”.

An Airbus A320neo aircraft. The company is using a ‘supplier watchtower’ to anticipate bottlenecks in the supply chain © Guillaume Horcajuelo/EPA-EFE

Worries over the bold production targets have already been raised, with aircraft lessors warning the supply chain was fragile as they pushed back against the higher rates when Airbus first floated them last year.Although the company last month secured an extension to vital engine supply contracts, this was only until 2024. Some industry executives fear risks still remain.John Plueger, chief executive of aircraft lessor Air Lease and one of Airbus’s biggest customers, told the Financial Times in a recent interview that he believed there is “significant risk going to 75 a month despite the demand”. “All of our single-aisle A321 and A320neo aircraft this year are already delayed from one to four months. In addition to supply constraints and labour . . . we always remain focused on quality in the production process and taking delivery.”Airbus said it had made “some adjustments in view of the current environment for a variety of reasons” but added that it was still “working towards” its previous guidance to deliver 720 aircraft by the end of the year.“Demand is not an issue,” said Rob Morris, head of consultancy at Ascend by Cirium. But there are “big challenges”, notably getting the “engine suppliers on board”.Morris points out that CFM International, the joint venture between Safran and GE Aviation, supplies engines to both Airbus’s A320 programme and to Boeing for its 737 Max family.Boeing is building at a slower rate as it is still trying to clear its backlog of stored jets following two deadly crashes of the Max, but this could change in the coming months, adding additional strains to the industry’s supply chain. “If Airbus does [increase its] rate at 75, given CFM’s lead on the A320 programme, they will be doing more than this rate, given they also provide engines to Boeing,” Morris said.Asam said the company was in talks with the engine providers and that the “tone has changed from half a year ago”, when they initially cautioned about the ramp-up. “I trust as we move ahead and prove strong demand from customers . . . I am pretty confident there will be support from them.” Most of the parts for the planes are assembled gradually by suppliers in the various tiers of the supply chain before arriving at the group’s final assembly lines around the world, from Toulouse to Mobile in Alabama.The company is using what it calls a “supplier watchtower” initiative to anticipate and help to mitigate bottlenecks and other risks that might come up among its 12,000-plus direct commercial aircraft suppliers. The initiative does not specifically track suppliers but risks such geopolitical ones.Critical to aid the ramp-up, according to Philippe Mhun, Executive Vice President Programmes & Services at Airbus, is that the company has given suppliers visibility.“We are having open book discussion with our suppliers,” he said, adding that Airbus has given companies “certainty that what we are ordering is firm”.It is also procuring some raw materials, including aluminium and titanium, for some suppliers to help with sourcing as well as pricing.The aerospace industry has relied heavily on Russian-produced titanium, but both Airbus and Boeing have in recent months said they are looking to find alternative supplies. Airbus has previously said it has enough titanium stockpiled to last the short and medium-term.

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One uncertainty is China and the lockdowns in the country that has complicated the logistical challenge, notably in terms of deliveries of planes to airline customers. About 20 per cent of Airbus’s annual deliveries go to China on average.“Around 50 per cent of delivery commitments in China are through the leasing companies. That is dampening the impact of the slowdown,” said Mhun.Some of the European company’s Chinese customers are still able to send people to Toulouse to take delivery of planes, according to people familiar with the matter.Airbus has also managed to hand over some aircraft using “e-deliveries”, which simplify the contractual transaction process.One unavoidable reality of today’s environment is cost inflation across the aerospace industry.Christian Scherer, Airbus chief commercial officer, said the company was able to maintain its pricing through the pandemic, but admits that pricing pressures from inflation are a “cause of concern for us as an industrial enterprise”. “Those inflationary pressures are a reality that the ecosystem will have to absorb,” he said.Despite the various challenges, Scherer insists that the rate of 75 is the right one. “What we have dialled here is a right flight level for a sustainable period of time.”  More

These are disorientating times for people my age. For most of my adult life, inflation has been weak and wage growth weaker. Now, inflation in the UK is 9 per cent. Last week, unionised drivers for the manufacturer JCB secured a 9.5 per cent pay rise. Rail unions are planning to strike. Britain’s policymakers, like their counterparts in other countries, are fretting about the possibility of a wage-price spiral.Are we going back to the 1970s? I read the Financial Times archives for a flavour of how the last bout of high inflation played out. In 1974, the paper reported, the cost of living rose 19 per cent while the basic wage rate rose 26 per cent. Wage threshold agreements, aimed at compensating people for inflation, were “fuelling the fires” by creating a “built-in twist in the wage-price spiral”. At the end of that year, the National Institute of Economic and Social Research warned that pay settlements were anticipating inflation and creating a “self-fulfilling prophecy”.It is hard to overstate how fundamentally the labour market has changed since then. The unions that negotiated those pay settlements have shrunk in size and power. At their peak in the 1970s, roughly half of employees were union members. Now the figure is just 23 per cent — and they are clustered disproportionately in the public sector. For large parts of the economy, the idea that pay rises are the result of bargaining between unions and employers is a relic of a previous era: only 13.7 per cent of private sector employees now have their pay set this way.Even in the public sector, where unions have held out the longest, their power to push up pay has waned. Indeed, average annual total pay growth in the public sector was just 1.6 per cent in January to March this year, compared with 8.2 per cent in the private sector.Alongside these changes in the size and role of trade unions, more people have struck out on their own. The proportion of workers who are self-employed almost doubled between 1975 and 2019 to about 14 per cent. This rise was driven by the “solo self-employed” who on average earn less than employees.In other words, the 21st-century UK labour market is far more individualistic than it was the last time the country faced a serious bout of high inflation. That doesn’t make a wage-price spiral impossible. But if it does happen, it won’t unfold in the same way. Outside pockets of union strength like train drivers, it would have to be driven by individuals’ market power to secure higher pay for themselves, which in turn would force employers to push up prices to protect their profits, and so on.On most metrics, workers have more market power than they have had for a long time. Employers are hungry for staff. The number of job vacancies has outstripped the number of unemployed people for the first time on record. People are switching jobs at higher rates than usual. And nominal pay is indeed on the rise.But employers are doing their best to make sure this does not become entrenched. They are offering pay top-ups in the form of bonuses, golden hellos and temporary “market supplements” in an attempt to avoid increasing the base rate of pay. The latest wage data for the first quarter of the year suggests average total pay rose 1.4 per cent in real terms thanks to bonuses. Without the bonuses, regular pay fell 1.2 per cent in real terms.Averages also conceal a lot. Analysis by the Institute for Fiscal Studies shows that the employees in the UK who have secured the biggest pay rises over the past two years are the ones who were paid most to begin with. In the latest quarter, pay grew fastest in finance and business services, thanks partly to high bonuses.Strangely, the IFS has found that the occupations with very high levels of job vacancies such as cleaning have not experienced the highest pay growth. This is in stark contrast to the situation in the US where the lowest-paid workers have secured the biggest pay rises. Xiaowei Xu, a senior IFS economist, says it is possible that UK employers in these sectors have felt unable to raise prices to sustain higher pay, unlike those in financial services.Andrew Bailey, governor of the Bank of England, suggested earlier this year that to help keep inflation under control, workers shouldn’t ask for big pay rises. It is more realistic to expect people to protect themselves against inflation by securing higher wages if they can. The question is who has that power in today’s atomised labour market, and who does not. We might well see a wage spiral for some and a price spiral for [email protected] More