Aurelia Butler

The writer is a former chief economist at Goldman Sachs and served as a UK Treasury minister in David Cameron’s government It is 20 years since I published a paper which formally grouped together the emerging economies of Brazil, Russia, India and China and coined the term “Brics” to describe them. I argued that since these countries were likely to continue their striking gross domestic product growth over the next decade, we urgently needed them to play a bigger role in global governance. With France, Germany and Italy in permanent economic and monetary union, I suggested their individual places in the G7 and corresponding representation at the IMF and World Bank could be consolidated into a single European seat, making way for the Bric countries to join a slightly expanded G7.It was not until 2003, when my team published a further piece entitled “Dreaming with Brics”, that we hypothesised these four nations could collectively become bigger economies than those of the G6 (excluding Canada). Our timing was fortuitous, coinciding with a globalisation boom which meant many international companies doing more business in Bric countries. A few years on, the financial crisis finally galvanised changes in global governance which were long overdue. My recommendation of consolidating the big continental economies into one representative never happened. But in response to the market turmoil, then US president George W Bush convened the G20 in 2008 — a grouping which included the four Bric countries. When Gordon Brown, then UK prime minister, hosted the expanded group in London a year later, this consolidated its central role in global economic and finance affairs. The introduction of the Financial Stability Forum — which subsequently became the Financial Stability Board in 2009 — and a rebalancing of the voting rights and ownership shares at the IMF and World Bank also seemed significant. These both struck me as important developments towards a greater shared prosperity, and a more representative form of global governance for the future. How disappointing then, another decade on in November 2021, that absolutely nothing has progressed. The mandated five-year review of the special drawing rights — which would probably boost the objective representation of key emerging currencies to reflect their growing strength — has been delayed. Due to US-China rivalry, the G20 itself now seems divided. Very little seems to get done. This is especially concerning because while the IMF predicts that developed economies will not suffer significant damage in the wake of the pandemic, emerging markets, with the exception of China, are expected to have far slower growth than projected before coronavirus struck.Not only has the G20 been unable to agree an equitable plan for Covid-19 vaccine distribution, but some members have also opposed the formation of a new Global Finance and Health Board, which would boost global resilience to future health challenges. The combined failure to show leadership on the 1.5C climate change target, the central feature of this month’s COP26 summit, is most worrying. Of course, the Bric leaders also formed their own economic and political club in 2009, with the addition of South Africa making it “Brics” — a development which boosted the popularity of the acronym. But other than forming another development bank, they have done very little policy co-ordination to foster their own collective economic effort. Neither have they contributed constructively within the G20 for the global common good. This is similarly disappointing. China is the only Bric country to have surpassed its growth projections, and India is not too far off from meeting its estimates. But due to dismal second decades, neither Brazil nor Russia have seen their nominal US dollar shares of GDP grow any bigger than they were back in 2001. The great challenge of how these countries successfully transition towards a higher income status for the whole of society remains unsolved. South Korea continues to be the sole shining example for those nations which genuinely aspire to that goal. In my professional lifetime, it is the only country which has evolved its economy to a level where its citizens are as wealthy as those in southern Europe. No other nation of more than 45m people has yet got close. Countries such as Brazil, Russia, Indonesia, Nigeria and Vietnam should seek to emulate Seoul’s economic success for their own societies. That will end up making their people wealthier and probably happier, while also promoting greater equality around the world.  More

Investing.com — World markets recover a bit of poise after Friday’s rout. Global health authorities warn that the new ‘Omicron’ variant of Covid-19 is potentially a high-risk development, but there is no evidence yet of it being more deadly than Delta. European gas prices continue to surge, as Gazprom (MCX:GAZP) reports record profits, and oil prices bounce on speculation that OPEC and its allies will pause their program of incremental output increases. Here’s what you need to know in financial markets on Monday, 29th November.1. Global markets retrace Omicron routGlobal markets recovered some – but by no means all – of their Friday losses as governments and health officials around the world stepped up their reaction to the discovery of the new Covid-19 variant, known as Omicron.The dollar index, which tracks the greenback against a basket of developed market economies, stabilized after the initial shock of the news led traders to reprice the risk of interest rate hikes next year. By 6:35 AM ET (1135 GMT), it was up 0.1% at 96.165, still firmly within the upward trend that dates back to June. The yield on interest rate-sensitive two-year Treasury bonds was at 0.54%, up two basis points on the day but still down some 14 basis points from last week’s high.European equity indices recovered about one-third of what they had lost on Friday, while emerging market currencies, oil and base metals also enjoyed recoveries of varying strength overnight.2. WHO warns on Omicron but the verdict is far from clearThe Omicron variant was designated by the World Health Organization on Friday as a ‘variant of concern’, but the UN body stressed that there remains ‘substantial uncertainty’ over the dangers it poses. That uncertainty extends to how effective the current generation of vaccines will prove against it. Moderna (NASDAQ:MRNA) CEO Stephane Bancel and Pfizer (NYSE:PFE) CEO Albert Bourla have both expressed confidence that their vaccines can be adapted to fight the new variant within a couple of months.Preliminary research findings in South Africa, where it was first identified, suggest it is sufficiently transmissible to ‘crowd out’ the Delta variant that has dominated this year’s waves of infection around the world. However, South African researchers have also said that it tended to trigger only mild infection (something that may not hold for the older populations of the northern hemisphere).Various countries including the U.S. have now closed their borders to arrivals from South Africa and a handful of neighboring states. Japan and Israel have banned all foreign arrivals. However, there is already evidence of the variant as far afield as Canada, Australia and Europe.3. Stocks set to open higher; retail and travel sectors in focusU.S. stocks are set to follow the global pattern of a partial retracement when they open later, recouping around 1% after falling over 2% in a holiday-thinned Friday session.By 6:20 AM ET, Dow Jones futures were up 251 points, or 0.7%, while S&P 500 futures were up 0.9% and Nasdaq 100 futures were up 1.2%.Retail stocks are likely to be in focus later, against a backdrop of anecdotal reports suggesting that Black Friday sales volumes in physical stores were still more than 25% down from the level of 2019, suggesting that the shift to online that was accelerated by the pandemic is not being wholly reversed as mobility restrictions ease.Also of interest will be the travel and hospitality sectors, which suffered badly on Friday from the news about the Omicron variant.4. Europe freezes as its prices boil overEveryone loves an underdog. However, the big winner from this year isn’t going to warm anyone’s hearts. Russian gas monopoly Gazprom (OTC:OGZRY) said earlier it has already earned more in profit in the first nine months than in any previous year, thanks to its tactic of restricting exports to Europe beyond the minimum levels required by its contracts.Gazprom’s realized export prices have more than tripled this year to over $300 per 1,000 cubic meters. It published its numbers just as temperatures across north-west Europe plummeted due to an Arctic weather front. Withdrawals from European storage facilities consequently accelerated, increasing the risk of real shortages, rationing and economic contraction later in the winter.That will also pose a risk to European inflation levels. ECB board member Isabel Schnabel said earlier the ECB expects annual inflation to have peaked in November. Spain’s inflation rate hit 5.6% this month and preliminary German data are due later in the session.5. Oil recovers on OPEC+ output speculationCrude oil prices rose over 5%, rebounding after sliding as much as $10 a barrel on Friday due to Omicron concerns. The rebound was helped by speculation that OPEC and Russia will decide not to raise output in January, reflecting the new outlook for fuel demand and the decision by the U.S. and other major importers to release strategic reserves in the coming months.By 6:30 AM ET, U.S. crude futures were up 5.0% at $71.58 a barrel, while Brent futures were up 4.7% at $74.97 a barrel.The Commodity Futures Trading Commission’s data on net speculative positioning will be released later in the day, having been pushed back from Friday due to the Thanksgiving holiday. More

For an institution whose members habitually make decisions at the pace of an elderly sloth with chronic sciatica on a work-to-rule protest, the speed with which the World Trade Organization postponed its big ministerial meeting was truly phenomenal. On Friday, a day after news of the Omicron variant spreading, and just a few hours after it became clear the South African and EU delegations would not be allowed to visit Switzerland, the meeting was put off by unanimous decision of the WTO’s 164 member governments. Let’s be frank: there was very little chance that even the in-person meeting that had been planned would create many breakthroughs anyway. Strictly limited delegation sizes and social-distancing rules meant the ministerial wouldn’t feature the classic all-night pressure-cooker negotiating sessions, shouts, tears, no one leaves this room till we all agree, the whole theatrical thing, that can sometimes produce movement. Today’s main piece looks at who might secretly be feeling some relief (most of the big players we reckon) and who might not. Charted waters is also on the topic of Omicron. A reckoning postponedThe people you really have to feel for are the WTO’s staff and its director-general Ngozi Okonjo-Iweala. It’s a small organisation without many powers of its own. Convening is largely what it does. It’s been trying hard to have an impact on the world trading system during the Covid pandemic, and now a ministerial originally scheduled for June 2020 is indefinitely pushed back again.We’re less convinced by the displays of grief from the big member countries. We suspect some are quite relieved because it means that their spin and hypocrisy is no longer going to be exposed. And for the one or two governments that we reckon will be disappointed, it’s probably not for very principled reasons.Those two are South Africa and, particularly, India. As we’ve often pointed out, in issue after issue the two of them have formed an awkward squad in the WTO that generally prevents consensus forming.On the biggest two issues, fisheries subsidies and the intellectual property waiver for Covid treatments, India has stuck fast to hardline positions that have zero chance of reaching consensus. On fisheries subsidies, Delhi has demanded improbably sweeping “special and differential treatment” (SDT) exceptions available to developing countries that would have punched a big hole in the new rule book. On Covid treatments, its joint waiver proposal with South Africa would have abolished IP protection over an impossibly large swath of medical products, and despite occasional noises of moderation from the South Africans the two have collectively shown no real sign of compromise. So why would India have wanted the ministerial to go ahead? So it could kill it, obviously. Signing trade deals is politically toxic in India — the last substantive one was the deal that created the WTO in 1994 — and knifing them in public goes down well. Kamal Nath, the India trade minister who did more than anyone else to crash the ministerial in 2008 where the Doha round died, used to say that killing Doha would make him so popular with the voters he could win his home state without bothering to campaign. To be fair, India’s supposedly liberalising Prime Minister Narendra Modi has done some deregulation of customs procedures and so on, but even he won’t sign substantive formal trade agreements. The Regional Comprehensive Economic Partnership in the Asia-Pacific was an obvious place to start — it wouldn’t have required much liberalisation and India could have been a counterweight to China. But he pulled out.Some people still seem to think India makes unrealistic demands as a tactic to get negotiating leverage. For a long time we’ve taken the view that no, India simply wants to kill deals. A former adviser to Modi became ambassador to the WTO last year and by all accounts is uncompromising and combative. (The Indian mission in Geneva has declined repeated requests for interviews.)One deeply unfortunate consequence of Delhi’s oppositionalism is to allow other countries to hide their weaknesses and failures. China, being a huge and fast-growing middle-income economy, should really agree to renounce its (self-defining) special and differential status, as have more progressive emerging markets like Brazil. But India is so vocal about keeping SDT that China can fall in behind India without having to make the argument itself.On fisheries, India’s demands for improbably large carve-outs draw attention away from the EU’s problems with persuading some of its member states, notably France and Spain, to eliminate fuel subsidies for their long-distance fishing fleets.To be fair to the EU, it has put a lot of effort into keeping the WTO system on the road and won’t be filled with unalloyed joy by the ministerial’s postponement. True, on IP waivers, the EU wasn’t looking forward to spending a week being beaten up by health campaigners blaming them for not supporting the maximalist India-South Africa proposal. The real skulker in the shadows on that issue is the US. The rhetorical commitment to a vaccines waiver that Katherine Tai, the US trade representative, made back in May has never been tested by India and South Africa submitting a politically realistic compromise. The US, which would face serious heat from its pharmaceutical industry if it ever agreed to a substantial waiver, has simply sat there in meetings telling other countries to make a deal.This is cynical stuff. The Biden administration has done a number on its domestic health campaigners, who are totally convinced the US is gung-ho for a full waiver and it’s those insufferable Europeans and particularly those awful Germans standing in the way. One particularly entertaining element of this is the campaigners’ belief that Emmanuel Macron is keen on a waiver but Germany is blocking him. If you believe that, we have a nuclear submarine fleet to sell you: French officials assure us they fully support the EU’s negotiating position.So there we are. It was obviously the right decision to cancel, but even though the ministerial wasn’t likely to agree much it’s a shame the big WTO members managed to evade an opportunity for scrutiny. Whatever date the ministerial gets rearranged to, our bet is we’ll be back with the same set of problems and the same countries saying the same things. We’ll keep an eye out for progress and make sure you’re updated, but we don’t imagine that’s going to be happening too often.Charted watersIt’s been hard to escape news about the new Omicron variant over the past few days. The new strain, which has dominated the headlines since a batch of cases were discovered in South Africa, has led several nations to impose stringent bans against travel from southern Africa. Some European nations have found cases closer to home over the weekend, including the UK and Germany.While it’s unclear exactly where the variant originated from, it’s worth making the point that — by mitigating transmission — vaccinating far greater amounts of people in developing countries would likely slow the pace at which the virus can mutate. The chart below is from September, but we doubt much has changed in the interim. To stress, it’s not only immoral to allow billions of poorer people to go without, it also undermines advanced economies’ own interests. Claire JonesTrade linksBrazil attacks the protectionism it says is behind the EU’s new anti-deforestation initiative. Writing in the Pittsburgh Post-Gazette, US trade representative Katherine Tai and commerce secretary Gina Raimondo expound the view that more expensive steel is just what everyone in America needs.The FT editorial board says that Turkey’s currency and inflation problems are almost entirely of its own making.Nitori furniture containers that previously returned without cargo will now carry (Nikkei, $) premium rice from Hokkaido, Japan to China, where it is expected to cost 10 times the price of local varieties. Quantum computing companies, memory chipmakers and suppliers of navigation chips are among the eight Chinese businesses hit by the latest US blacklisting action, restricting their access (Nikkei, $) to American technologies. Alan Beattie and Francesca Regalado More

Stock markets traded in positive territory in Europe today, paving the way for a firmer open in the US after the discovery of the new Omicron coronavirus variant triggered a sharp sell-off at the end of last week.Europe’s Stoxx 600 rose 1.1 per cent in early dealings, recovering from a fall of more than 3.5 per cent on Friday. London’s FTSE 100, Germany’s Dax and France’s Cac 40 all increased about 1 per cent. Futures tracking the US S&P 500 index added 0.9 per cent after the US benchmark fell 2.3 per cent on Friday.There was less optimism in Asia where a broad gauge of markets in the region ended the first trading session of the week down about 1 per cent. Japan’s Topix fell 1.8 per cent, while Hong Kong’s Hang Seng and South Korea’s Kospi each fell about 0.9 per cent.Brent crude, the international oil benchmark, however, rose 4 per cent to $75.59 a barrel, having lost more than 10 per cent on Friday in its largest fall since April 2020.The yield on the US benchmark 10-year Treasury note, which moves inversely to its price, gained 0.05 percentage points to about 1.54 per cent after falling the most since March 2020 on Friday.But uncertainty surrounds the new variant that was first discovered in southern Africa earlier this month.The World Health Organization said yesterday Omicron’s impact was not yet known and added there was “substantial uncertainty” regarding its ability to transmit and potential to pierce through natural and vaccine immunity. On Friday it labelled Omicron a “variant of concern”.Analysts at Moody’s Analytics said it would be “at least two more weeks before more will be known as scientists around the world build a better understanding of the new variant and as the severity of infections becomes clearer”.Are you changing travel or work plans because of the new strain? Email me at [email protected]. Thanks for reading and here is the rest of the day’s news. Five more stories in the news1. Half of this year’s big IPOs are under water Half of the companies that raised more than $1bn at initial public offerings this year are trading below their listing price. Their weak performance has raised questions about the valuations pinned to companies by large investors such as SoftBank and Warburg Pincus and leading underwriters including Goldman Sachs and Morgan Stanley.2. Macau casino stocks tumble Shares in Macau’s biggest listed casino groups fell sharply today and Suncity Group, the Chinese gambling hub’s biggest junket operator, suspended trading following the arrest of its chief executive at the weekend.Go deeper: The reputation of Macau as a classy playground for the Asian middle class is under increasing scrutiny from Xi Jinping’s government in Beijing.3. Nissan seeks to dominate EVs The Japanese carmaker has announced a ¥2tn ($17.7bn) vehicle electrification plan in a bid to assert its dominance over incumbent global automakers and newcomers such as Tesla. 4. Brussels urged to regulate Big Tech EU competition chief Margrethe Vestager has urged the approval of rules to curb the power of Big Tech, even if they are imperfect. “It’s important that everyone realises that it is best to get 80 per cent now than 100 per cent never,” she said. 5. Virgil Abloh dies of cancer The American designer known for bringing streetwear into luxury fashion and a rising star within the LVMH group has died of cancer at the age of 41, the company said yesterday.

Abloh’s family said he had been battling an aggressive form of cancer, cardiac angiosarcoma, and had chosen to keep his 2019 diagnosis private © Reuters

Coronavirus digestJapan is to ban foreign visitors following the emergence of the Omicron variant, in one of the strongest responses to the new coronavirus strain from a large country.Six cases of the Omicron variant have been discovered in Scotland today, bringing the UK total to 9.Governments around the world are scrambling to curb the spread of the Omicron variant which first emerged in southern Africa earlier this month.Drugmakers in the US and UK are racing to find out more about the new variant.Explainer: Here is what we know so far about the new variant that has sparked global alarm.Is Omicron different for markets? Robert Armstrong assesses the impact of the new strain on the outlook for global financial markets in the latest edition of the Unhedged newsletter.The day aheadG7 health ministers hold emergency meeting The UK will chair an emergency meeting of health ministers of the world’s richest economies to discuss the latest developments in the response to the Omicron variant. Our live blog will keep you updated throughout the day.Ghislaine Maxwell trial begins Opening arguments begin in the highly anticipated trial of British socialite Ghislaine Maxwell in New York. The former girlfriend of Jeffrey Epstein is accused of grooming underage girls for sex. Maxwell, 59, has repeatedly denied the charges.Cyber Monday In the lead-up to Christmas, online retailers hold special promotions and prepare for a deluge of orders after a busy Black Friday.Iran nuclear talks resume in Vienna Talks are set to resume between Iran and global powers in Vienna, Austria on reviving the nuclear accord abandoned by former US president Donald Trump. The talks take place following a five-month hiatus to allow for elections in Iran. What else we’re reading and watchingAmerica’s abortion battle returns to the Supreme Court The pink-walled Jackson Women’s Health Organization has become the focal point of a legal battle that could overturn Roe vs Wade, the landmark decision to legalise abortion in the US, in a critical test that will come before the Supreme Court this week.Is Turkey on the brink of hyperinflation? Turks have been watching with horror as the lira has tumbled since early November, while inflation surged. If President Erdogan refuses to abandon his fixation with low-interest rates, Turkey could be headed towards hyperinflation, analysts warn. Video: NFT sales redraw the art market The art world is grappling with a new frontier, where ownership of digital assets is encrypted on the blockchain. The FT talks to artists, auction houses and collectors about how NFTs have opened up opportunities for creators — and speculators.

How to spot the chancers who are ‘winging it’ at work We’ve all been at meetings, watched panels or seen speeches where participants are bluffing, writes Emma Jacobs. Some (many?) of us may even have been the bluffers, she says. Why the rich fall for the cult of wellness Nearly two years into a pandemic in which medical science has largely saved the day, you may think that interest in the “wellness” trend would be waning. Not a bit of it. Pseudoscience is mixed up with enough real science to make anything believable, says Rymer Rigby.Food & drinkHeavens, we need cheer and conviviality — and what’s more cheering than a convivial glass of fizz? Wine critic Jancis Robinson reveals some of her best bubbly for the winter, from a £10 Crémant to a memorable Krug. More

Carrying a “very high” global risk of surges according to the World Health Organization, the Omicron variant is threatening a brisk economic revival and could jeopardise plans by the ECB and other global central banks to dial back emergency support after nearly two years.But ECB President Christine Lagarde, her deputy Luis de Guindos and French governor Francois Villeroy de Galhau put on a brave face against this new risk. “There is an obvious concern about the economic recovery in 2022, but I believe we have learnt a lot,” Lagarde told Italian broadcaster RAI late on Sunday.”We now know our enemy and what measures to take. We are all better equipped to respond to a risk of a fifth wave or the Omicron variant.”She was echoed by her fellow countryman and ECB policymaker Francois Villeroy de Galhau who said “successive waves have proven so far to be less and less damaging, and this one shouldn’t presumably change the economic outlook too much”.ECB vice-president Luis de Guindos acknowledged the “high degree of uncertainty” and called for keeping all policy options open but he argued much higher vaccination rates should help Europe better deal with these risks.All major vaccine manufacturers have begun work on a new variant and U.S. firm Moderna (NASDAQ:MRNA) said a new vaccine could be available in large quantities in early 2022.Markets regained composure on Monday as investors awaited further details of the variant, which has caused travel curbs to be reimposed in some countries. [MKTS/GLOB]UNDER PRESSUREThe ECB is under pressure to reduce its monetary stimulus, starting from its 1.85 trillion euros ($2.09 trillion) Pandemic Emergency Purchase Programme (PEPP), as euro zone inflation makes multi-decade highs above 4%.But consumer sentiment started turning south even before news of the variant broke last week, data showed on Monday.”Given the rapid developments over the past days concerning the Omicron variant, the November…reading likely overstates broader sentiment in the eurozone among participants,” Rory Fennessy, an economist at Oxford Economics, wrote in a note.”The current uncertainty posed by the Omicron variant adds another headwind to the economic outlook.”The ECB has pledged to run PEPP until the damage wrought to inflation by the pandemic is repaired.This has arguably happened, with inflation in the euro zone seen hitting 4.4% this month and staying above the ECB’s 2% target next year.De Guindos said on Friday that PEPP would end in March as planned and the debate among policymakers was about “alternatives”.With the PEPP decision seen as a done deal before the advent of the new coronavirus variant, euro zone rate setters had mainly been discussing whether to increase bond purchases via other channels, such as the ECB’s regular Asset Purchase Programme.($1 = 0.8861 euros) More

TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda on Monday voiced confidence the country’s economy will overcome the impact of the coronavirus pandemic in coming months due to dramatic progress made in vaccinating the population.”I’m quite sure the Japanese economy would overcome the impact of COVID-19 in coming months, and would be on a recovery and growth phase within a couple months,” he said at a Paris Europlace forum.Kuroda made the remarks before reading a prepared speech on green finance, underscoring the BOJ’s intention of communicating to markets its optimism over the world’s third-largest economy.The BOJ next meets for a rate review on Dec. 16-17. It is set to keep monetary settings unchanged and may decide whether to extend a set of pandemic-relief lending programmes beyond their current March 2022 deadline.Japan has lagged other advanced nations in making a strong recovery from the pandemic’s hit as state of emergency curbs to combat the virus weighed on consumption.While the Sept. 30 lifting of the curbs has given rise to hopes of a rebound in consumption, supply bottlenecks and parts shortages have disrupted manufacturers’ production and weighed on the export-reliant economy.Concerns over Japan’s fragile recovery have prompted the government to unveil a record $490 billion spending package earlier this month, bucking a global trend towards withdrawing crisis-mode stimulus measures. More

“Although responding to climate change is an urgent priority, the completion of full decarbonization will take considerable time,” Kuroda said a speech delivered to the Paris Europlace online forum.”In promoting decarbonization of the economy as a whole, it is important to provide stable support for structural change in sectors and industries where decarbonization will be difficult to achieve in a short period of time,” he said. More

Inflation would trend back towards 2% next year, she told ZDF television on Monday, as supply bottlenecks and energy price growth level off. The current high figures reflected both supply bottlenecks and from a base effect resulting from prices being lower last year at the height of the pandemic.”Most forecasts actually assume inflation will fall below 2%, so there really are no signs of price rises getting out of control,” she said.”If we thought inflation would permanently settle above 2%, we would definitely react. However, at the moment, we see no indications of this,” she added. More