Economy

Former chancellor Rishi Sunak, one of the contenders to be Britain’s next prime minister, has pledged fresh help for households struggling with the cost of living crisis, as his allies stepped up attacks on his rival Liz Truss.Dominic Raab, the justice secretary and a Sunak supporters, claimed if Truss, the foreign secretary, were to win the Conservative leadership contest and press ahead with an emergency tax-cutting Budget it would be an “electoral suicide note” for the Tories.This came after Boris Johnson rejected calls to draw up a rapid response to the cost of living crunch involving soaring energy bills during his final weeks as prime minister, with Downing Street insisting big fiscal decisions had to be taken by his successor.The CBI employers group joined calls by Gordon Brown, the former Labour prime minister, for Johnson to start work now on a package of measures to help the vulnerable.Sunak declined to provide details of how much new support he would provide to households as prime minister — suggesting he would first need to know the revised level of the UK energy price cap due to take effect this autumn.But he said: “This winter is going to be extremely tough for families up and down the country, and there is no doubt in my mind that more support will be needed . . . bills are going up by more than anyone expected and the next government will need to act.”The regulator Ofgem is due to provide details later this month of the revised energy price cap that will be implemented in October. It is predicted it will cap household fuel bills at well in excess of £3,000 per year, compared to £1,971 currently.

Sunak said he would keep any one-off borrowing needed to pay for fresh household support to a minimum by seeking “efficiency savings across Whitehall”.Truss told the Financial Times last week she favoured tax cuts over “handouts” as the best way to help households, saying she would look at “what more can be done”. She wants to scrap a rise in national insurance — introduced by Sunak while chancellor — in an emergency Budget earmarked for September.Raab, writing in The Times, said it was wrong to rule out further direct support for families. He said: “If we go to the country in September with an emergency Budget that fails to measure up to the task in hand, voters will not forgive us as they see their living standards eroded . . . such a failure will read unmistakenly to the public like an electoral suicide note and, as sure as night follows day, see our great party cast into the impotent oblivion of opposition.”Meanwhile Johnson, who returned to work on Monday after a holiday in Slovenia, has argued that he does not have the authority to draw up new policies, including any measures on the cost of living crisis, ahead of a handover of power to his successor due on September 5.“By convention it is not for this prime minister to make major fiscal interventions during this period,” said Downing Street. “It will be for a future prime minister.”Sunak and Truss have so far proposed limited measures to address the cost of living crunch.

Tony Danker, head of the CBI, said it was not good enough. “The economic situation people and businesses are facing requires all hands to the pump this summer,” he added. “We simply cannot afford a summer of government inactivity while the leadership contest plays out followed by a slow start from a new prime minister and cabinet.” Brown said the inflation crisis was causing poverty of the kind he had not expected to see again in his lifetime and urged Johnson to convene the government’s emergency Cobra committee to prepare a response.He told Sky News that charities were stocking up on duvets, sleeping bags, hot water bottles and blankets “because they know that people can’t afford to heat their homes any more”.Brown branded as “stupid” Sunak’s windfall tax on North Sea oil and gas companies — introduced to help fund the government’s latest support for households — because it contained generous allowances for investments, cutting its potential yield from £15bn to £5bn per year.Labour is expected to unveil a plan for helping households later this month. More

Good evening,Oliver Dowden, the former co-chair of the Conservative party, has called for “intervention of a considerable scale” on soaring UK energy bills. By January, households could be burdened with annual costs of more than £4,200 — another £500 on top of the last estimate.The chorus of voices urging politicians to step up their efforts swelled this morning as former prime minister Gordon Brown told LBC that the two leadership candidates should agree a package for households with Boris Johnson this week. “It’s not good enough acting in September. These problems amount to a national emergency,” he said. The CBI, Britain’s biggest business lobby group, has also called on Johnson to act now. This piles significant pressure on Tory leadership frontrunner Liz Truss, who told the Financial Times last week that she would “look at what more can be done” but “in a Conservative way of lowering the tax burden, not giving out handouts”.The foreign secretary has promised to cut the rise in National Insurance, which her rival Rishi Sunak introduced when he was chancellor, if she becomes prime minister.Both leadership candidates will continue to be pressed on how they plan to tackle the cost of living crisis, as more signs emerge of the financial strain Britons are under.In times like these, people with poor credit often turn to community lenders, who can help them with small loans. But now these non-profits are struggling to meet demand and the owner of one provider has said he was forced to decline 90 per cent of applicants. Meanwhile, the number of households vulnerable to loan sharks or illegal lenders has increased from 310,000 in 2010 to 1.08mn in 2022, according to the government’s Illegal Money Lending Team.But the pawnbroking industry is enjoying a renaissance as cash-strapped households seek small loans secured on their jewellery and watches to help cover bills.The charitable and voluntary sector has become an integral part of the country’s social safety net, reports public policy editor Peter Foster, but its attempts to plug the gaps are being hampered by dwindling resources as donations slow.The single biggest cause of despair is soaring energy bills. Energy regulator Ofgem said last week it would now alter its price cap every three months, instead of twice a year, to allow consumers the chance to enjoy smaller bills when wholesale prices drop. In the current climate however, the only likely move is up. Support for a campaign of non-payment is growing.People with mortgages are facing a further squeeze after the Bank of England increased interest rates by the largest amount in 27 years. The BoE also lifted its forecast for inflation, which it now expects to hit 13 per cent by the end of the year.As economists debate what type of fiscal or monetary policy can best help against a looming recession, Duncan Weldon, the author of a new book on the British economy, says choosing the right mix is “very much akin to picking out the least crumpled shirt from the laundry basket: the best option is not necessarily a good one”. He concludes:The country is poorer than it thought it would be. In the short term that is unavoidable. The real policy debate is about how that pain is divided between households, firms and the government’s balance sheet — not how it is avoided.Latest newsBioNTech and Pfizer will begin clinical trials of vaccines adapted to new Covid variantsA number of multibillion-dollar buyouts that boosted US dealmaking were confirmed today: Pfizer agreed to buy drugmaker Global Blood Therapeutics for about $5bn; US appliance maker Whirlpool agreed to pay $3bn for Emerson Electric’s food waste disposal business Insinkerator; Avalara agreed to be acquired by private equity firm Vista Equity Partners in a deal that valued the cloud-based taxation specialist at $8.4bn, including debt; Digital media company Axios has agreed to sell to Cox Enterprises for $525mnGreater Manchester and West Midlands mayors seek powers over vocational skills in the regions to tackle widening inequality among adults in EnglandFor up-to-the-minute news updates, visit our live blogNeed to know: the economyThe US Senate passed Joe Biden’s flagship tax and spending bill, known as the Inflation Reduction Act. It contains significant climate change legislation, as well as measures to cut prescription drug prices, and is seen as a major victory for the president ahead of the November midterm elections.Western capitals are increasingly worried that Turkey might help Russia avoid sanctions after the pledge made by the two countries leaders to expand co-operation on trade and energy.Latest for the UK and EuropeUK government plans to cut up to 91,000 civil servant jobs will mean public services being slashed and at least $1bn in redundancy payments, according to a review by Boris Johnson’s former chief of staff.Italians are speculating whether the hand of Moscow hangs over last month’s ousting of prime minister Mario Draghi. Some believe President Vladimir Putin exacted payback for Draghi’s tough stand over Russia’s invasion of Ukraine.Ireland is benefiting from a €8bn corporate tax windfall after bumper pandemic-boosted revenues from tech and pharma companies. The country’s tax take has soared since 2015, with employment and foreign investment also at record highs.The European Central Bank is pumping billions of euros into weaker eurozone debt markets to protect them from the effects of its decision to unwind stimulus programmes as it battles to contain inflation.Global latestTensions are still high around Taiwan as China extended its “real war conditions” military exercise. Beijing has also stepped up its propaganda offensive against Taipei. Chief foreign affairs commentator Gideon Rachman warns that the idea of armed conflict over Taiwan is gaining ground in Beijing and Washington.US banks are busy repositioning themselves to stress their fossil fuel credentials to placate Republican politicians critical of their commitments to the environment and social justice.Big US oil and gas producers, meanwhile, remain unmoved by politicians’ calls to increase supply. Executives say they are under pressure from Wall Street to return windfalls from soaring prices to investors through dividends and share buybacks, rather than spending heavily to increase production.Brazilian president Jair Bolsonaro is banking on recent improvements in the economy to boost his chance of re-election in October. A strong rebound in services and falls in unemployment mean the economy is now forecast to grow 1.7 per cent this year, a big improvement from as recently as January when banks predicted a recession.Need to know: businessChina’s Baidu is offering the world’s first commercial human-free robotaxi service in the cities of Chongqing and Wuhan. Baidu is best known as an internet search engine but robotaxis, along with cloud computing, are now said to be its long-term drivers of growth.

A demonstration of Baidu’s Apollo Go autonomous taxi service in Beijing, China © Kevin Frayer/Getty Images

Chinese investors are also piling into a more traditional asset: jade. The semi-precious stone has been in short supply for several reasons, including a coup in Myanmar, which produces 70-90 per cent of the world’s supply of jadeite, the rarer of two distinctive stones collectively known as jade.Something else in short supply is lithium, a key raw material for electric car batteries. Carmakers are rushing to invest in projects to secure new sources but a top producer says the market will stay tight until 2030.Big Tech, which is already suffering from a range of financial problems, now faces a triple whammy of changes that could affect their business models, writes columnist Rana Foroohar: new EU rules, US listing requirements and internet fragmentation.It’s plain sailing though for the offshore shipping industry, which has benefited from the steep rise in oil and gas prices. Clarksons, the world’s largest shipbroker, says its index tracking rates paid to lease rigs, subsea vessels and offshore supply vessels are at the highest level in seven years.Warren Buffett’s Berkshire Hathaway slowed new investment sharply in the second quarter, as the US stock market sell-off drove the conglomerate to a $43.8bn loss. Investors are selling stakes in buyout funds at a record pace.The pandemic turbocharged demand for industrial warehouse space but, as our Big Read details, this is now cooling rapidly as signs grow that the ecommerce boom is slowing, the global economy is faltering and locals push back against the erection of massive eyesores.Tensions are increasing between Royal Mail and its workers over plans for its lossmaking UK postal business.The World of WorkCity centres are experiencing a moment of radical change, as physical stores are displaced by online retail and offices remain half empty as employees work from home. FT architecture critic Edwin Heathcote says planners must grasp the opportunity to reimagine our urban areas for the new world of work.Do young workers have an image problem? As business returns to some sense of normality, columnist Pilita Clark says some managers are starting to tire of pandering to the whims of their younger staff who they see as disengaged, indifferent and even deluded. Get the latest worldwide picture with our vaccine trackerSome good news . . . Coral cover on the northern and central Great Barrier Reef is at its highest since monitoring began 36 years ago. Paul Hardisty, chief executive of the Australian Institute of Marine Science, said the results in the north and central regions were a sign the reef could still recover, although other areas showed it was still vulnerable to disturbances.A ranger inspects the state of the coral on the Great Barrier Reef © David Gray/ReutersHave you spotted some good news stories you’d like to share with FT readers? Please send them to us at disruptedtimes@ft.com. More

The writer is professor of globalisation and development at Oxford university and the author of ‘Rescue: From Global Crisis to a Better World’. He tweets @ian_goldinFor the first time in history there are more people over 65 than under 5. Pensioners outnumber children in a growing number of countries, including the UK, much of Europe and Japan. By 2030 there will be over 1bn people over 65 and more than 200mn over 80, with the number of elderly doubling over 20 years.Improvements in public health and medicine account for increased longevity, a long-term trend of about two years per postwar decade (notwithstanding the recent reversals which are primarily due to the pandemic and inequalities in healthcare). More surprising is how quickly fertility is falling. More than half the countries in the world are now below the level of fertility required to keep the population the same from generation to generation. In a single generation, societies as different as Iran and Ireland have seen their birth rates plummet in a way that cannot be explained by cultural and religious beliefs. Nor do income levels explain the difference. The United States and countries as diverse as Italy, South Korea, Japan, Hungary, Poland, Russia, China and Brazil are all recording record lows in fertility, and even India is now below replacement level. In fact, over half of projected population growth in the coming 30 years will be in just eight countries. The collapse in fertility coupled with increased longevity leads to a rapid ageing of societies. The working age population of the 38 member countries of the OECD is projected to decline by around a quarter over the coming 30 years without higher levels of migration. As a rapidly growing elderly population rely on the taxes, pension contributions and services provided by fewer and fewer workers, economies will come under increasing strain. With average life expectancy after retirement approaching 20 years in the developed world and real adjusted returns barely positive, much higher levels of savings are required to fund pensions. More saving means less consumption, dampening demand for everything other than services for the elderly.A key challenge is to direct a growing share of the savings into long-term investment, as the collapse in corporate and public investment means that as societies have aged, so too have their stock of infrastructure, health, education and other systems, with this contributing to the slowdown in productivity.The declining size of the workforce will mean that the revenue of governments through payroll taxes will shrink. The growing share of a declining workforce that need to be devoted to elderly care acts as a further drag on productivity and growth, since care work is necessarily not open to many gains in efficiency.The widening gap between the improvements in life expectancy and the much slower progress in addressing dementia and other degenerative brain diseases is compounding the pressures on families, care systems and private and public finances. Ageing also exacerbates income and wealth inequalities. With these disparities being widened by the pandemic, the gap in life expectancy exceeds 10 years between the poorest and richest communities in the US and UK. And there is a staggering 32-year gap in average life expectancy between rich countries like Japan and some of the poorest countries, such as Sierra Leone. Across Africa, the median age is below 20, half that of Europe and much of East Asia. Asia’s growth benefited from labour-intensive manufacturing, back-office processing and call centres. The automation of these processes is removing the middle rungs of the development ladder, with potentially dire consequences for the 100mn young Africans who will be entering the labour market over the next 10 years.Demography is not destiny, but it does need to inform public policy and individual decisions. It means greater attention must be paid to improving health, extending working lives, accepting more migrants, increasing productivity and growing savings. The shift from consumption to savings can increase the potential for a circular economy and reducing carbon emissions. It also reduces interest rates and inflation, allowing for higher levels of investment in clean infrastructure, health, housing and education, which are the bedrock of sustained growth.If we stop kicking the demographic time bomb down the road, it will be possible to achieve stable and sustainable societies that provide a better life for future generations as well as our own. More

Ajay Rajadhyaksha is global chair of research at Barclays.Financial markets trade on narratives. And for the past several weeks, the dominant story in both bond and equity markets has been that the Fed will pivot, and soon. Investors expect a rapidly weakening economy to force the US central bank to do an about-turn, and cut rates barely months after hikes finish.This belief built up a head of steam across July, with many investors suggesting that the Fed could signal a shift at its Jackson Hole retreat in late August. Every weak housing data point fed into this narrative; every contraction in PMI was grist for this mill. A sharp pullback in commodities prices, a collapse in business and consumer confidence, a decline in market expectations for inflation over the next decade – all these pointed in that same direction. And then there was history: the Fed did a volte-face in both of the last two hiking cycles. Hikes in the summer of 2007 gave way to cuts in 2008. And memorably, the Fed hiked in December 2018 only to change course by January 2019. Small wonder that markets have been waiting for the US central bank to signal a shift again.Easier said than done.The data that matter most – inflation and wages – are still too strong for the US central bank to breathe easy. Way too strong. And the numbers are accelerating, even before July’s strong jobs report. Consider the last inflation print. Core CPI (which excludes food and energy prices) over 6 months is running at an annualised pace of almost 7 per cent. But the 3-month rate is almost 8 per cent. And the 1-month number annualised is nearly 9 per cent. That means core CPI is speeding up, not slowing down, and is in a very different zip code than the Fed’s 2-per-cent target.Even more important is the move in wages. For the past few months, it looked like wage growth was slowing down. Average hourly earnings, reported in the monthly jobs report, seemed to have settled into a 3.5- to 4-per-cent annual rate. Then three things happened all at once. First, the Atlanta Fed wage growth tracker showed that wages accelerated strongly in June (6.7 per cent annually):

Three-month moving average of median wage growth, hourly data © Atlanta Fed’s calculations, Current Population Survey and US Bureau of Labour Statistics

Second, the average hourly earnings data were revised upwards. Lo and behold, wages are no longer slowing in that series.But most significant was the latest release of the Employment Cost Index (ECI), the Fed’s preferred indicator. Private sector wages accelerated sharply to a 6.5-per-cent annualised pace in June. The cherry on the cake, of course, was the unemployment rate reaching a post-Covid low last week. The US labour market is not just not slowing down. It is speeding up.It is true that labour markets are famously backward looking. In September 2008, around the financial crisis, the jobless rate was still 6.1 per cent. When it peaked at 9.9 per cent a year and a half later, the US was well on its way to recovery. Even so, Fed officials care deeply about wages. If high wage expectations get embedded in an economy, high inflation can remain ‘sticky’ for far longer. A 2-per-cent inflation target is hard to achieve if per-capita wages rise 6 per cent in 2023. Central bankers don’t like admitting it, but a primary goal of rate hikes is to cause enough job losses to ensure that wage growth slows down. And if that isn’t happening despite several rate increases, it adds pressure on the central bank to raise rates further, and keep them high for longer.Admittedly, monetary policy does work with a long and variable lag. That is why central bank decisions are usually based on forecasts; today’s data is not supposed to be the dominant driver of today’s policy. But these are not normal times. The inflation spike of the last 12-15 months has been massive, persistent, and made a mockery of forecasts. And one by one, central banks have had to adjust policy to incoming inflation data. The Fed broke its own forward guidance and hiked 75bp in June because of a strong May CPI report. And the ECB followed in July, hiking 50bp despite promising 25bp.Strong jobs reports are usually greeted with enthusiasm in the Marriner S Eccles building. But the starting point on inflation, including core inflation, is simply too high. Markets have gotten ahead of themselves in expecting the Fed to start taking a more dovish approach. As things currently stand, any Fed surprises over the next few months are more likely to be hawkish. Investors waiting for an imminent pivot will have to keep waiting. More

KYIV (Reuters) – Ukraine has formally requested a new programme from the International Monetary Fund and hopes to receive aid under the programme from November to December, Ukrainian Prime Minister Denys Shmygal said on Monday.”We expect to receive the corresponding assistance from the IMF already in November-December of this year,” he said in a statement on the government website. More

ISTANBUL (Reuters) – Western sanctions have given the Turkish metals sector a chance to serve as “warehouse and bridge”, the head of an industry group said, citing increased interest from Russian companies and also from EU companies seeking to sell to Russia via Turkey.The West, including Britain and European Union countries, have imposed sanctions on Russian elites, banks and strategic industries since Russia on Feb. 24 began what it terms a “special military operation” in Ukraine.Cetin Tecdelioglu, head of the Istanbul Ferrous and Non-Ferrous Metals Exporters’ Association (IDDMIB), said Russian demand had increased for Turkish products it could no longer source from European companies and Turkish companies had received enquiries from European businesses about supplying Russia via Turkey.”What they (Russia) cannot buy from Germany, Italy and France, they are buying from us. Separately, a lot of EU companies are planning to sell their products to Russia via Turkey,” he told reporters on Friday.”They want to use Turkey as a warehouse and bridge, while Russia wants supply from Turkey,” he said, adding that it was an “historic opportunity” for Turkish companies.He did not name the companies concerned, nor specify how many, but he said they produced copper, aluminium, kitchenware and machinery.Turkey’s ferrous and non-ferrous exports totalled 8.9 billion lira ($495.58 million) in the first seven months of 2022, according to IDDMIB data, a rise of 33% from a year ago. They accounted for 6.2% of Turkey’s exports.Turkey’s ferrous and non-ferrous metal exports to Russia rose by 26% year-on-year to $170 million by Aug. 8, the data also show.The rift between Moscow and the West over Russia’s invasion of Ukraine has led to concerns of a possible cut-off of Russian gas to Europe, which could force the shut-down of some European industrial production.Tecdelioglu said that could provide another opportunity for Turkish exporters of metal products.Turkey has criticised Russia’s invasion, sent armed drones to Ukraine and sought to facilitate peace talks between the sides. But it has not backed Western sanctions on Moscow and seeks to maintain close trade, energy and tourism ties.Relations between the West and China have also deteriorated after U.S. House Speaker Nancy Pelosi https://www.reuters.com/world/taiwan-says-chinese-planes-ships-carry-out-attack-simulation-exercise-2022-08-06 visited Taiwan last week, which Tecdelioglu said was another potential chance for Turkey if it disrupts previous trade ties.”We are receiving signals of some opportunities,” he said.Turkey has not commented publicly on Pelosi’s visit, but has over recent years modified its language on Uyghur Muslims who form a significant minority in Turkey.Turkish President Tayyip Erdogan last year told his Chinese counterpart Xi Jinping it was important to Turkey that Uyghur Muslims live in peace as “equal citizens of China” but said Turkey respects China’s national sovereignty.($1 = 17.9589 liras) More

Below is a list of some of the actions taken by governments aimed at offering relief to hard-hit consumers and companies:AMERICAS:* The U.S Senate on Sunday approved the “Inflation Reduction Act of 2022”, a $430 billion plan which among other things lowers the cost of prescription drugs, raises some corporate taxes, and introduces consumer tax credit measures to encourage energy efficiency.* Brazil’s President Jair Bolsonaro and lawmakers have been pressuring state-owned energy giant Petrobras to further cut petrol prices. The company in July twice announced separate price reductions cumulatively totalling 9%, bringing prices to their lowest levels since March. EUROPE:* Germany plans to introduce a gas price levy on all consumers from Oct. 1. The government in July announced 15-billion euro state bailout of Uniper, the country’s largest importer of Russian gas. It had also introduced a tax cut on petrol and diesel, while slashing public transport costs.* France’s parliament on Aug. 3 adopted a 20 billion euro inflation-relief package, lifting pensions and some welfare payments, and allowing companies to pay employees higher tax-free bonus payments, in a bid to boost household purchasing power.* Italy on Aug. 4 approved an aid package worth about 17 billion euros. The legislation aims to cut electricity and gas bills and adds to about 35 billion euros already spent since January to soften the impact of power, gas and petrol costs. * Poland in July introduced the so-called “payment holidays” relief scheme for individuals holding mortgages in Polish zlotys, allowing them to skip payments for eight months over a two-year period.ASIA:* India in May imposed restrictions on exports of food items including wheat and sugar, which account for nearly 40% of the consumer price index, and cut taxes on imports of edible oil.* Japan deployed a $103 billion relief package in April to cushion the economic blow from rising raw material costs, which consisted of subsidies to curb gasoline prices and cash payouts to low-income households with children. Prime Minister Fumio Kishida has signalled there may be additional steps if rises in living costs persist.MIDDLE EAST AND AFRICA:* Saudi Arabia and the United Arab Emirates in early July announced boosts to their spending on social welfare. The UAE doubled financial support to low-income Emirati families, while Saudi Arabia’s King Salman ordered the allocation of 20 billion riyals ($5.32 billion).* Turkey in early July increased its minimum wage by about 30%, adding to the 50% rise seen at the end of last year.($1 = 3.7575 riyals) More

Kia ora again from the South Pacific where this Trade Secrets writer is having a brief and chilly hiatus from the height of summer elsewhere. Today’s main piece looks at some rare pieces of good news: moves by the Quad partners and the WTO to tackle the ecological and human rights disaster created by the global fishing industry. We give a reality check on the scale of the problems and offer some new solutions. Charted waters is looking at the movement of people and the international competition for talent. Email me at edward.white@ft.com. Trade Secrets will be back in two weeks, with my colleague Andy Bounds taking the chair for a guest appearance.Some good news at last, but not enoughOver recent years the Financial Times has documented horrific claims of environmental pillage and modern-day slavery across the global fishing fleet. We’ve written about Taiwanese vessels where Indonesian crews worked 22 hours only to return to sleeping and eating quarters rife with insect infestations. We’ve also exposed the Korean ships that hunted down walruses, seals and dolphins for their livers and genitals. And we’ve reported on China’s distant water fleet — by far the world’s biggest — which stands accused of rapacious illegal overfishing, decimation of endangered species and abuse of south-east Asian fishing crews.Despite the stark risk overfishing poses to the livelihoods of millions of people, a constant complaint from NGOs has been that governments are doing far too little in response. Policing an industry which operates on the high seas — out of sight out of mind — has not been a high priority for many developed nation capitals. Yet in recent months two key wins have been notched in favour of the oceans and marginalised workers.The Quad security grouping of the US, Japan, Australia and India in May launched a new satellite-based initiative across the Asia-Pacific region, a plan mostly targeted at illegal Chinese fishing. The Indo-Pacific Partnership for Maritime Domain Awareness will see the Quad partners fund a commercial satellite-based tracking service that will pass on maritime intelligence to countries in near real-time. US officials told the FT’s US-China correspondent Demetri Sevastopulo that the new system would monitor radio frequencies and radar signals that would allow countries in the region to pick up vessels that have turned off automatic identification systems (AIS) transponders to avoid detection — a key problem in illegal fishing.Then in June, the WTO’s 12th ministerial conference finally — after 20 years of negotiations — reached an agreement to end harmful fisheries subsidies. As Alice Tipping of the International Institute for Sustainable Development neatly surmised: while the exceptions for developing countries are still to be worked out, the rules will at the least force governments to consider the legality and sustainability of the fishing activity they subsidise, something that very few do at present.In a world that has over the past three years lurched from a pandemic to war in Europe, and where big economies teeter on the edge of economic recession, it seems important to note these positive steps when they do occur. That being said, neither the WTO’s breaking of a decades-long bureaucratic impasse nor the Quad partners promising to police the Pacific portend to be a panacea. The scale of the problem, Trade Secrets believes, requires far bolder action. For the uninitiated: the UN estimates that up to 26mn tonnes of fish are caught illegally each year (with a value of about $23bn). Globally, around 20 per cent of all fish caught come from illegal, unreported and unregulated fishing activities. And half of global fish stocks are fished at biologically unsustainable levels (a change from 10 per cent in the 1970s).Yet the fishing industry still enjoys massive subsidies. And it’s not just China. Researchers in academic journal Marine Policy found that China, the EU, the US, Korea and Japan — the top five — account for close to 60 per cent of total global subsidies, at a massive $20bn. They also noted that over the previous decade “the bulk harmful ‘capacity-enhancing’ subsidies, particularly those for fossil fuels have actually increased as a proportion of total subsidies”.What’s more, subsidies classified as harmful still stand at about $22bn, annually. Earlier this year, one of the most extensive investigations into China’s distant water fleet found that 95 per cent of the crew on board reported witnessing illegal fishing. The problems are among their most acute in West Africa, where Chinese trawlers catch an estimated 2.35mn tonnes of fish annually.From a common sense point of view, the Quad’s focus on the Pacific will miss huge swaths of the most problematic areas, especially off the coast of western Africa, but also South America. The focus only on China is also problematic given vessels from the Quad-friendly countries of Taiwan and South Korea have for years faced accusations of widespread environmental plunder and shocking treatment of south-east Asian crews.And while the US has also promised to increasingly utilise its coastguard to help police Chinese fishing — a move started by the Trump administration and continued under President Joe Biden — sending a few cutters into the vast Pacific, an area of 165mn square kilometres, is not expected to significantly move the dial.Similarly, when it comes to the WTO breakthrough on subsidies, in a speech in late July WTO director-general Ngozi Okonjo-Iweala herself said: “Reaching the agreement was a vitally important step — but implementing it is what will matter.”Implementation is one issue. Enforcement is another. To make serious improvements via the WTO its members will probably have to bring complaints against China, a move that will undoubtedly risk backlash from Beijing.So, what is really needed? Trade Secrets posed this question to Steve Trent, the founder of the Environmental Justice Foundation who has decades of experience advocating for sweeping changes in the fisheries industry.Trent believes a focus on China in the short-term remains “valuable” and he supports the Quad’s initiative given that abuses are “systemic across the Chinese fleet, without independent and consistent monitoring, the likelihood is these abuses will continue, at least in the near term”.But longer term, Trent is clear: “Ultimately, you need transparency across the architecture of global fisheries governance. It is quite simple. Every vessel, we should be able to see who is fishing what, where, when and how”.One of the key first steps, he believes, is for the major market states of Japan, the US and the EU to align their regulation and requirements for market access and exclude from their markets those products where they cannot prove the provenance, when they do not have the transparency that allows surety that it “has not been produced by a slave, caught by a slave, or caught legally or unsustainably”.Alan Beattie writes a Trade Secrets column for FT.com every Wednesday. Click here to read the latest, and visit ft.com/trade-secrets to see all Alan’s columns and previous newsletters too.Charted watersFor today’s Charted waters, I want to focus on the international market for human capital rather than goods and services. My colleague John Burn-Murdoch has (once again) produced some excellent data analysis on the subject.What we can see from the above chart is that the UK has become a younger country, now the fourth-youngest in Europe, but only because of migration.Now for the bad news. The UK’s luck in attracting young foreign workers is on the turn. As the above chart shows, it is not just Brexit. The global competition for talented labour has been increasing for the past decade. The question is what the UK is going to do about this. The concern is that it is going to do nothing. (Jonathan Moules)Trade linksArgentina’s new economy minister has pledged to bring fiscal order to the country and regain market confidence by establishing a “super ministry” to tackle double-digit inflation.The British pound and government bond yields slipped last week after the Bank of England raised interest rates by the most in 27 years to battle surging inflation and warned of a protracted recession.Opec and its allies agreed one of the smallest oil production increases in the group’s history as Saudi Arabia attempted to appease western allies without using up all its unused capacity.Favouring political allies when constructing supply chains is expensive, tricky and possibly self-defeating, according to Alan Beattie.Trade Secrets is edited by Jonathan Moules More