Aurelia Butler

OTTAWA (Reuters) – Canada’s Liberals put red-hot real estate markets squarely in their sights on Thursday, laying out a budget geared at boosting housing affordability amid soaring inflation, while promising modest new spending to encourage medium-term growth.The 2022 budget set out C$9.5 billion ($7.5 billion) over five years in net new spending on housing initiatives and promised to legally ban foreign investors from buying Canadian homes for two years, though it gave no timeline for that legislation.It also pledged to target domestic housing speculators with new taxes, double new-home construction over the next decade and boost tax credits for first-time buyers. Most measures were outlined in the Liberal’s re-election campaign last year.”Our economy is built by people, and people need homes in which to live,” Finance Minister Chrystia Freeland said as she presented the budget to lawmakers. “We will prevent foreign investors from parking their money in Canada by buying up homes,” she continued.But Freeland later added there was no single “silver bullet” to solve Canada’s housing crisis. (Graphic: Canada fiscal projections in Budget 2022 – https://graphics.reuters.com/CANADA-BUDGET/PROJECTIONS/mopanbzggva/chart.png) The budget also hiked corporate taxes for the country’s most profitable banks and insurers to 16.5% from 15% on all taxable income over C$100 million, less than the 3% rise pledged in last year’s election campaign. That, along with a one-time recovery dividend, will boost revenues by C$6.1 billion over the five-year budget time frame.All told, the budget included a net C$29 billion in new spending over five years, as the waning COVID-19 pandemic allowed the government to ease off on emergency stimulus. While that was less spending than some feared, economists said it would not help ease inflationary pressures.”At the end of the day, we still are adding stimulus to the economy at a time when the Bank of Canada is actively trying to cool down inflation,” said Robert Kavcic, senior economist at BMO Economics.”I think it just reinforces what we’re already expecting, which is pretty aggressive near-term tightening from the Bank of Canada,” he added.Inflation hit 5.7% in February and is expected to go higher before easing off later this year as supply chain bottlenecks unwind and the central bank increases interest rates.The Bank of Canada is widely expected to make a rare 50-basis-point interest rate hike next week after raising its policy rate to 0.5% in March.”This budget had one job – reverse the taxes and deficits that have ballooned inflation to a 30-year high,” said Pierre Poilievre, a frontrunner to lead the opposition Conservatives. “When your house is on fire, you don’t douse it in gasoline.”The budget bill should pass in parliament after Prime Minister Justin Trudeau last month struck a support deal with the left-leaning New Democratic Party (NDP) to keep his minority government in power until 2025. HOUSING AFFORDABILITYFast rising home prices – up 50.6% in two years – have become a political liability for politicians, as Canadians of all stripes struggle to find an affordable place to live.While foreigners represent a small overall segment of home buyers in Canada, they can have an outsized impact on price escalation and are an easy target for politicians, experts say.Experts also questioned plans to double the pace of homebuilding over the next decade, noting that most supply measures would depend on other levels of government playing ball.”I’m not sure the federal government has any real levers here to influence supply,” said Robert Asselin, senior vice-president for policy at the Business Council of Canada, adding the whole housing strategy was “a bit gimmicky.”The budget offered a substantial incentive to companies investing in carbon-capture technologies and set aside as much as C$3.8 billion over eight years to accelerate critical mineral exploration.Military spending will see a C$8 billion boost over five years.The budget also outlined C$5.3 billion over five years on a national dental care program for lower-income families, a key NDP demand for propping up the Trudeau government.The budget deficit for the current fiscal year is nearly 10% lower than forecast in a December fiscal update, mostly due to higher revenues. The debt-to-GDP ratio is forecast to be 45.1% this fiscal year and to decline over the budget’s timeframe.($1 = 1.2600 Canadian dollars) More

Banco BPM has long been searching for a merger partner and held discussions with Credit Agricole back in 2020 which led nowhere. Italy’s No.2 bank UniCredit had also readied a takeover bid for Banco BPM but had to shelve it when Russia invaded Ukraine, sources have told Reuters.Credit Agricole said the transaction showed its appreciation of Banco BPM’s “solid franchise”, good financial prospects and “strong and performing management team.”The deal “strengthens the solid relationship with Banco BPM,” the French group said, adding it aimed to expand the scope of its strategic partnerships with Banco BPM, currently centred on consumer finance.Credit Agricole said it had not requested supervisory approval to cross a 10% threshold.Banco BPM said in a separate statement Credit Agricole’s stake purchase had not been previously agreed between the two banks.”The quality and importance of the investor, as well as the appreciation it expressed for our bank … represent a clear acknowledgement of the value and potential of Banco BPM,” the Italian bank said. More

How well did you keep up with the news this week? Take our quiz.Nato member states have agreed to supply new types of advanced weaponry to Ukraine, alliance representatives have said, as Kyiv prepares for a fresh offensive by Russia in the country’s east. The pledge came after a plea from Ukraine’s foreign minister for western countries to move faster with fresh supplies or instead see “many people die . . . because this help came too late”. Six weeks since Vladimir Putin, Russia’s president, ordered the invasion of Ukraine, Moscow’s troops have largely withdrawn from territory north of Kyiv after failing to seize the capital but are regrouping and rearming ahead of an attempt to advance in the eastern Donbas region, Ukrainian and western officials say.Meanwhile, the UN General Assembly voted to suspend Russia from the Geneva-based Human Rights Council. Ninety-three members of the UN gave their green light to Russia’s suspension — a rare rebuke for any member of the world body and the first such suspension of any permanent member of the UN security council.However, 24 UN members — including China, Iran, Bolivia, and Kazakhstan — voted against Russia’s suspension. India, Indonesia and Egypt were among the 58 countries that abstained.

The latest on the war in Ukraine: Life in Ukraine: As Russians appear to have given up on seizing Kyiv, residents who remained are attempting to resume some semblance of life.War crimes allegations: Aluminium producer Rusal became the first Russian company to publicly call for an investigation into Russia’s alleged war crimes.Business updates: Oil major Shell expects to take a $5bn financial hit in the first quarter following its decision to exit Russia, and Levi Strauss does not expect to reopen in the country this year, its chief executive told the FT.Oil and gas: Europe is under pressure to end its decades-long dependence on Russian oil and gas, but an analysis of the top global producers shows how difficult it would be to remove them from the energy mix.Alphaville: There are signs that Russia’s financial sector is finding its feet after the initial barrage from the sanctions.Opinion: The fallout from Ukraine threatens the G20’s future, writes Gillian Tett. Thanks for reading FirstFT Asia. Send any feedback on today’s newsletter to [email protected] — EmilyFive more stories in the news1. Ketanji Brown Jackson confirmed for US Supreme Court seat The US Senate has confirmed Ketanji Brown Jackson for a seat on the Supreme Court, making her the first black female justice to join America’s highest court in a big win for President Joe Biden, who championed her nomination.Further reading: Jackson’s historic nomination has spurred hope that a more diverse judiciary will foster change.

Ketanji Brown Jackson and Joe Biden embrace after watching the Senate vote © Bloomberg

2. Toshiba to consider take-private bids The Japanese company will set up a special committee to assess potential bids from private equity and other investors, opening the door for a landmark deal to take one of the country’s biggest industrial names private.3. Vietnam’s VinFast files for US IPO Carmaker VinFast is to float its shares in the US as Vietnam’s largest auto group seeks to fund its shift to become fully electric. The move makes it the latest carmaker to turn to the public markets in an attempt to become a major global electric brand.4. JD.com founder steps down Richard Liu has stepped down as chief executive of JD.com, the Chinese ecommerce group he founded more than two decades ago, marking the latest exit for one of the country’s top entrepreneurs. Beijing’s months-long campaign to rein in Big Tech has spurred several Chinese entrepreneurs to flee executive roles.5. Samsung bumper profit forecast Samsung Electronics has forecast its highest first-quarter operating profit since 2018 on strong smartphone and microchip sales, but the positive projections failed to dispel growing doubts over its technological edge against rivals Apple and Taiwan chipmaker TSMC.Coronavirus digest Japan is set to lift an entry ban on non-resident foreign nationals from 106 countries.A spate of lockdowns in China is piling severe pressure on transport and logistics across the country, exacerbating economic fallout.Shanghai reported nearly 20,000 new cases of Covid-19 on Wednesday, a record high for China’s financial hub.The days aheadJapan trade balance figures February data is set to be released on Friday. Rio London annual general meeting Rio Tinto company will lose another board member after its Friday AGM meeting. Non-executive director Hinda Gharbi is set to leave the company in the wake of the company’s 2020 decision to blow up an Aboriginal heritage site. (West Australian) French presidential election The first round of the country’s presidential election will be held on Sunday. Here’s what you need to know about the state of the race. If no single candidate wins a majority of votes this weekend (a likely scenario) there will be a second round on April 24. Related listen: What issues do French voters care about most? Gideon Rachman discusses this question on the latest episode of the Rachman Review podcast.

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What else we’re readingAsia-Pacific start-ups seize growth at home This year’s FT ranking of Asia-Pacific’s high-growth companies is the first of its kind to include data from the pandemic period. And it offers a unique insight into which companies have most effectively navigated Asia’s severe lockdowns.Twitter’s edit button will not rewrite your life Usually editing is a good idea. The proliferation of rambling newsletters on platforms such as Substack has reinforced the need for it. However, Twitter’s virtue is that it is a forum for quick debate. Introducing edits would only make this a ponderous affair, writes Emma Jacobs. The weaponisation of finance, part 2 The second of a two-part series on the new era of financial warfare examines how the sanctions freezing Russia’s foreign currency reserves have created an incentive for countries to bypass the US currency. The big question now is: Will there be a backlash against the dollar?The Franciscan monk helping the Vatican take on AI Engineer, teacher, ethicist and priest — Paolo Benanti is all of these things. He is also helping the Vatican to navigate the moral and ethical issues surrounding cutting-edge technologies such as bioaugmentation, neuroethics and artificial intelligence.‘The forces of self-interest and technology cannot be undone’ As part of the Economists Exchange series featuring conversations between top FT commentators and leaders in the field, former World Bank economist Branko Milanovic considers Africa’s growing role in global inequality.Books Competitive co-operation or containment? Martin Wolf reviews two books that set out opposing views on how the US should approach its relationship with superpower rival China. More

WASHINGTON (Reuters) -The United States is ramping up sanctions against Russia to deprive Moscow’s “war machine” of money and components needed to sustain its invasion of Ukraine, but curbing a main source of funding, Russian energy exports, will take time, U.S. Deputy Treasury Secretary Wally Adeyemo told Reuters on Thursday.The United States and its allies have “a lot more that we can and we will do” to punish Moscow if Russia fails to halt its invasion, Adeyemo told Reuters in an interview. Ukrainian leaders called on Thursday for the democratic world to stop buying Russian oil and gas, and cut Russian banks entirely from the international financial system.After an initial drive to freeze Russian assets, Washington and its allies announced incremental steps this week as they approach the limit of sanctions to punish Russia without also causing economic pain at home.A new investment ban announced on Wednesday by President Joe Biden forbids Americans from investing in Russian firms’ equity and debt and investment funds, cutting off Russia’s defense industry and other sectors from the world’s biggest source of investment capital, Adeyemo said. “What this means is that Russia will be deprived of the capital it needs to build up its economy, but also to invest in its war machine,” Adeyemo said. Asked whether it would prohibit companies already in Russia from further funding those operations, he said Treasury was consulting with the private sector.Kremlin officials, who have described their actions in Ukraine as a “special military operation” have insisted that Western sanctions will not have any effect on their goals and will solidify Russian supportAdeyemo said the United States and its European allies will target Russian military supply chains to deny access to key components – “things that are important to building their tanks, to supplying missiles and making sure that they have fewer resources” to fight the war in Ukraine but also to project power in the future.”I think the impact will be immediate in the same way the impact on the economy has been immediate” from prior sanctions, Adeyemo said. Russia’s economy is headed for a 10% contraction this year and inflation is approaching 20%, U.S. officials estimate.The Treasury later on Thursday put Russian diamond miner Alrosa on its sanctions blacklist https://home.treasury.gov/news/press-releases/jy0707, while the U.S. State Department did the same for United Shipbuilding Corp, a state firm building naval ships and submarines and its subsidiaries and board members.White House Economic Council director Brian Deese said on Wednesday that the Biden administration also would ban transactions with United Aircraft Corp, the maker of Sukhoi and MiG fighter jets — planes that are also flown by U.S. allies including some NATO members. Adeyemo said Russia’s defense sector since 2014 has set up front companies to acquire critical supplies and materials to build up Moscow’s military. A number of these firms were targeted by sanctions https://home.treasury.gov/news/press-releases/jy0677 last month.ROUBLE SUPPORT DRAINS WAR FUNDS Financial sanctions have forced Russia to spend more of its hard-currency energy revenues to defend its rouble currency, Adeyemo said, eating into funds available for the war effort.After losing 45% of its value against the dollar in the first two weeks of the Ukraine invasion, the Russian rouble has risen to just below its pre-war level, thanks to capital controls by Moscow and distortion by the Russian central bank, U.S. officials say. “What that means is that Russia has less money and the president is forced to make choices between propping up the economy and investing in the war in Ukraine,” he said. Adeyemo said his meetings last week with European allies in London, Brussels, Paris and Berlin helped focused on next steps and helped to accelerate the sanctions announced on Wednesday.Adeyemo said he was encouraged by “strong statements” from European countries about reducing their dependence on Russian energy but said the continent was in a different position from the United States, the world’s top oil producer.”Because of our ability to produce energy at home, we were able to ban the Russian import of oil to America rather quickly,” he said. “It’s going to take them more time but what they’re doing is they’re reducing their dependence over time.” More