Aurelia Butler

Good evening,Is the three-decade run of globalisation going into reverse? That is the concern for world leaders gathering in the Swiss city of Davos for the first time since the Covid-19 pandemic was declared.The blame is being shared between the Ukraine invasion, disruption to supply chains caused by coronavirus lockdowns, recent market turmoil and the worsening economic outlook worldwide, according to company executives and investors interviewed by FT reporters.FT columnist Rana Foroohar identifies another reason for deglobalisation, quoting from a paper by the economist Dani Rodrik: efficiencies created by trade coincide with a much larger redistribution of wealth — $50 for every $1 of greater trade efficiency — to the already rich. “Globalisation isn’t inevitable, despite what we were told by politicians in the 1990s,” Foroohar writes. “In order for any political economy to work, it has to serve domestic needs.”The world does appear to be forming into tighter alliances, reflecting the greater tensions between the US and China, and Russia and the west in general. Yesterday, President Joe Biden pledged to deploy US military support to defend Taiwan if China were to invade. He also agreed to strengthen America’s security co-operation with Japan against “China’s increasingly coercive behaviour” and the nuclear threat in North Korea.Taking a different view, Kristalina Georgieva, IMF managing director, used her speech at Davos to defend global trade, urging countries not to “surrender to the forces of geoeconomic fragmentation that will make our world poorer and more dangerous”. However, she did admit that international structures were being tested, particularly by the Russian invasion of Ukraine and warned that the global economy faces perhaps its “biggest test since the second world war”.Latest newsBinance promoted terra as ‘safe’ investment before $40bn collapseNorth Sea’s biggest oil and gas producer warns against UK windfall taxDidi investors vote to delist in US in bid to revive China businessFor up-to-the-minute news updates, visit our live blogNeed to know: the economyJoe Biden has signed a trade agreement with 12 Indo-Pacific countries aimed at boosting economic co-operation in the region while countering a more assertive China. Biden unveiled the Indo-Pacific Economic Framework, which includes nations that represent 40 per cent of the global economy, in Tokyo after meeting Prime Minister Fumio Kishida on his first visit to Asia as US president.Latest for the UK and EuropeThe European Central Bank’s eight-year experiment with negative rates will end within months, according to comments made in a blog by its president Christine Lagarde. She wrote that “based on the current outlook”, the institution was “likely to be in a position to exit negative interest rates by the end of the third quarter”. The deposit rate is now minus 0.5 per cent and has been in negative territory since 2014, when the region was facing a sovereign debt crisis.The war in Ukraine, the refugee crisis and rising inflation have been such that EU member states are now bracing themselves for demands from Brussels for more cash, diplomats from the bloc have told FT reporters. The latest budget plans for spending of more than €1tn over a seven-year period.The British government must “come clean” about the impact new nuclear plants will have on their energy bills, Sir John Armitt, chair of the National Infrastructure Commission, has said in an interview with the FT. Constructing such facilities would “inevitably add cost to bills” in the short term and would take “a long time” to deliver, Armitt warned.Global latestChina’s ambition to become self-sufficient in chipmaking is being hampered by its lack of appropriate infrastructure, according to the head of one of the world’s largest suppliers of a material critical for semiconductor production. Eric Johnson, chief executive of JSR, a rare American leader at a Japanese semiconductor company, said it would be “very difficult” for China to develop cutting-edge chipmaking technology without such support.Need to know: businessHSBC has suspended a senior executive pending an internal investigation over a speech he gave at an FT conference last week, according to people with knowledge of the matter. Stuart Kirk, who is global head of responsible investing at the bank’s asset management division, accused central bankers and policymakers of overstating the financial risks of climate change in an attempt to “out-hyperbole the next guy”.JPMorgan Chase has updated its guidance on how much it will earn in 2022, anticipating that it will benefit from rising interest rates. The Wall Street bank now expects its core lending business to increase to more than $56bn, from at least $53bn previously.American drugmaker Pfizer is seeking emergency authorisation in the US for its Covid-19 vaccine for children under the age of five after interim results from its clinical trial showed the jab is safe and highly effective. An approval would open up the last large market for the coronavirus vaccine.The World of WorkLegislation giving workers the right to digitally disconnect from work is being introduced in countries across Europe. However, in France, which pioneered such laws in 2017, the “right to disconnect” has so far had a limited impact. Indeed, the pandemic has raised expectations that employees should be “always on”.One of the things that made Covid lockdowns bearable was the decline in nuisance calls. But the cold call is back and appears to be worse than ever, perhaps because we were all enjoying its absence during the pandemic, says FT columnist Pilita Clark.Get the latest worldwide picture with our vaccine trackerAnd finally . . . 

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There has been much excitement about tomorrow’s opening of London’s Elizabeth Line, a £19bn east-west express underground rail route. But with passenger numbers falling on the capital’s existing network and working patterns in flux, could large-scale investment in metro rail become a thing of the past? The FT’s Big Read team investigates. More

Volodymyr Zelensky has urged the international community to help fund Ukraine’s reconstruction after the war and use frozen Russian assets to compensate victims. Borrowing words used to launch the reconstruction of Europe after the second world war under the Marshall Plan, Ukraine’s president said his proposal to help cover a rebuild that looks set to cost more than $500bn was “designed to counter hunger, poverty, despair and chaos”. Speaking by video link to a packed main conference hall at the World Economic Forum in Davos, Zelensky said: “I invite you to take part in this reconstruction. The work to be done is colossal. There are more than [$500bn] in losses. Tens of thousands of buildings have been destroyed.”He suggested a “special, historically significant reconstruction model” under which separate countries, cities and companies would take leading roles in rebuilding specific cities and industries in Ukraine.Russian assets in various jurisdictions “should be found, seized or frozen, and allocated to a special fund to compensate all the victims of the war”, he told business leaders and officials, adding that this would set a precedent that could be used around the world. The US and Europe have frozen assets worth €300bn from the Russian central bank, but are yet to confiscate them. Ukraine’s officials accept that there are no internationally legal ways to confiscate frozen Russian assets as yet. But that has not stopped them pushing the moral arguments to such a move. “If the aggressor loses everything, then it deprives him of his motivation to start a war,” Zelensky said.His comments echoed those of other Ukrainian representatives, who have come to the Swiss mountain resort with a disciplined and unified message on sanctions, the global impact of the conflict and rebuilding. The president denounced the “brute force” deployed by Russia in his country. He also claimed “tens of thousands of lives” could have been saved if the west had given Ukraine all of the weaponry, political and financial support it needed as well as passing more sweeping sanctions against Russia when the invasion began in February. “Values must matter when global markets are being destabilised,” Zelensky said.Ukraine, Zelensky said, needed “at least $5bn a month” in financing to survive Russia’s onslaught, separate from the larger sums required to rebuild the country. US and European finance ministers met last week to discuss how to plug Ukraine’s short-term financing gap, with Treasury secretary Janet Yellen acknowledging that existing commitments fell short. Western countries, led by Switzerland, have organised a conference in the summer to discuss the reconstruction of Ukraine’s cities, infrastructure and industry, but no proposals are yet on the table. Zelensky called for tougher sanctions on Russia and for all foreign companies to leave the country. He added Russian banks should be thrown out of the global financial system, all relations with Russian IT companies should cease, and no trade with Moscow should take place. “[Sanctions] should be maximum, so that Russia and every other potential aggressor that wants to wage a brutal war against its neighbour would clearly know the immediate consequences of their actions,” he said. European countries are still arguing over an EU plan to ban the import of Russian oil. Robert Habeck, Germany’s vice-chancellor, told the forum on Monday that the world was “seeing the worst of Europe” in the debate over a ban on Russian oil. Some states, notably Hungary, are blocking the development. More

BRUSSELS (Reuters) – Lithuania, Slovakia, Latvia and Estonia will call on Tuesday for the confiscation of Russian assets frozen by the European Union to fund the rebuilding of Ukraine after Russia’s invasion, a joint letter by the four showed on Monday.On May 3, Ukraine estimated the amount of money needed to rebuild the country from the destruction wrought by Russia at around $600 billion. But with the war still in full swing, the sum is likely to have risen sharply, the letter said.”A substantial part of costs of rebuilding Ukraine, including compensation for victims of the Russian military aggression, must be covered by Russia,” said the letter, that is to be presented to EU finance ministers on Tuesday.The letter, seen by Reuters, also calls for the 27-nation bloc to start preparing new sanctions against Moscow.”Ultimately, if Russia does not stop the military aggression against Ukraine, there should be no economic ties remaining between EU and Russia at all – ensuring that none of our financial resources, products or services contributes to Russia’s war machine,” it said.The four countries noted that the EU and like-minded countries have already frozen assets belonging to Russian individuals and entities and some $300 billion of central bank reserves.”We must now identify legal ways to maximise the use of these resources as a source of funding – for both the costs of Ukraine’s continued efforts to withstand the Russian aggression, and for the post-war reconstruction of the country,” they said.”Confiscation of state assets, such as central bank reserves or property of state-owned enterprises, has a direct link and effect in this regard.”The European Commission said last Wednesday it could check if it was possible to seize frozen Russian assets to finance Ukraine under national and EU laws but did not mention central bank reserves. Various EU officials have cautioned that confiscation of assets is legally tricky as there are no appropriate EU laws for it.”In cases where legal ways to confiscate the assets will not be identified, it should be used as leverage and released only once Russia compensates Ukraine for all the damages done,” the four countries said.Russia calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists. More

“Strong economy, big storm clouds,” JPMorgan Chase & Co. chief executive officer said at the firm’s investor day Monday. “I’m calling it storm clouds because they’re storm clouds. They may dissipate.”Monetary and fiscal stimulus have been fueling strength in the economy, but countervailing forces including high inflation and quantitative tightening by the Federal Reserve are creating a combination that’s not been seen before, Dimon said. A recession is possible, but it would be unlike past downturns because of the unique blend of economic conditions acting on the economy, he said.The investor day is the New York-based bank’s first since before the Covid-19 pandemic. Senior leaders including Dimon, Chief Financial Officer Jeremy Barnum and President Daniel Pinto are set to speak. For a Live Blog of JPMorgan’s investor day, click here. The biggest U.S. bank is seeking to ease concern among investors following backlash over its plans to ramp up spending to build out offerings, bolster technology and compete for talent. The bank on Monday maintained its expense outlook of $77 billion excluding legal costs, an 8.6% hike from 2021. JPMorgan also raised its estimate for net interest income excluding its markets business to more than $56 billion for 2022. That would be a 26% increase from last year, according to a presentation on its website Monday. ©2022 Bloomberg L.P. More