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    EU too slow in staving off Trump’s tariff war, says Juncker

    Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldFormer European Commission chief Jean-Claude Juncker has criticised his successor, Ursula von der Leyen, for not engaging personally to quickly stave off Donald Trump’s trade war.“I think that the commission would have been better advised to try to have a meeting as early as possible, because it was foreseeable that he would come back to the [trade] issue,” Juncker told the Financial Times. “There will be no deal without the active presence of the president of the commission,” he added, speaking in his Brussels office five floors below von der Leyen’s.European Commission president Ursula von der Leyen speaks with Donald Trump prior to their meeting at the World Economic Forum in Davos in 2020 More

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    Israel-Iran war crashes on to agenda at Canada’s G7 summit

    This article is an on-site version of our Europe Express newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday and fortnightly on Saturday morning. Standard subscribers can upgrade to Premium here, or explore all FT newslettersGood morning. Iran launched a new missile barrage on Israel’s cities early today as the Middle East conflict entered a fourth day​. Earlier, Israel​’s military said its air force ​had ​struck missile sites in central Iran​. Meanwhile European Commission president Ursula von der Leyen said last night that “Iran is the principal source of regional instability” as G7 leaders gathered in Canada. Today, I preview the G7 summit where the spiralling conflict is set to dominate the leaders’ talks, and our energy correspondent reports on talks today about the nitty gritty of plans to end the EU’s last vestiges of Russian energy imports.Powder kegA G7 summit that was already jam-packed with contentious global fractures got significantly more tumultuous with the spiralling conflict between Israel and Iran, with fears of a full-blown war in the Middle East set to dominate the Canadian gathering.Context: Leaders of the G7 countries — Canada, France, Germany, Italy, Japan, the UK, US plus the EU — are meeting today and tomorrow in Kananaskis in the Canadian Rockies. The group of advanced economies was set up to co-ordinate policies on key issues such as trade and security.Before Israel’s strikes on Iran began last week, the summit’s preparations were focused on efforts by the European members to avoid a conflagration with US President Donald Trump, convince him to maintain support for Ukraine, and find a solution to his threats of major tariffs against EU goods.But the Middle East has exploded on to the agenda, and will overshadow much of the formal and bilateral discussions. EU leaders have called for de-escalation amid fears of wider regional instability, even as Trump issues bellicose threats against Tehran.Iran has threatened to attack American, British and French military assets in the Middle East if their forces are used to help defend Israel from Iranian counter-attacks. The UK moved additional fighter jets to the region over the weekend.There are also concerns about the impact on global energy markets, and the threat posed to trade to and from Europe if Iran or its allies seek to disrupt the vital Gulf shipping lanes.In a call with Trump on Saturday, European Commission president Ursula von der Leyen said they had “discussed the tense geopolitical situation in the Middle East as well as the need for close co-ordination on the impact on energy markets”.Today in Brussels, ambassadors will prepare for an emergency video conference meeting of EU foreign ministers scheduled for tomorrow to discuss the Middle East crisis and potential responses.G7 host Mark Carney, Canada’s recently-elected prime minister, had hoped to use the gathering to present a united western front on shared issues such as economic security, emerging technologies and migration, and has dropped the traditional joint communiqué in a deft move aimed at avoiding likely disagreements with Trump on issues such as climate change.But events in the Middle East are set to continually distract the leaders, and lay bare the fractious geopolitical theatre that they are grappling with.Chart du jour: To the coreWhile the EU is making moves to stop buying Russian fossil fuels, it has delayed plans to gradually cut itself from a smaller but far more tricky reliance: Russian nuclear technology.Small printEU energy ministers will discuss how to wean the bloc off the last vestiges of Russian fossil fuels today, as Brussels seeks to sever the last energy ties with its former supplier, writes Alice Hancock.Context: The EU has sanctioned most Russian oil and coal imports, and in May published a rough plan to fully cut Russian fossil fuels by 2027. Rather than using sanctions, Brussels wants to ban the contracts with Russia via trade measures, which can be passed by a weighted majority and prevent a likely veto from Slovakia and Hungary.But the commission stopped short of setting out the details, and EU governments and the gas industry are concerned whether the legal basis will be strong enough to call off the contracts due to force majeure.A full proposal is expected tomorrow, after energy ministers discuss the plan in Luxembourg today.Hungary and Slovakia have already said in a statement that the Russian fuel phaseout plan runs contrary to energy security objectives and “raises both legal and political concerns”. Any decision on the matter should be unanimous, they said.But a senior EU diplomat struck an optimistic tone. There had already been some “informal discussions” about the plan. Once the legislative proposal “was on the table with the nitty gritty legal basis” there would be “the usual debates and arguments among member states”.“But if you ask me,” they said, “the necessary support for this will be there”.What to watch today G7 summit in Kananaskis, Canada.EU energy ministers meet in Luxembourg.European parliament plenary session kicks off in Strasbourg.Now read theseRemote work: JPMorgan’s European chief is planning to run the bank’s continental operations from New York.Unreformed: After two men were sentenced for the murder of journalist Daphne Caruana Galizia, her son Paul writes about what Malta still owes her.Critical hit: Russia hit Boeing’s offices in Kyiv in what appeared to be a deliberate strike on the US aerospace company as part of attacks last week.Recommended newsletters for you Free Lunch — Your guide to the global economic policy debate. Sign up hereThe State of Britain — Peter Foster’s guide to the UK’s economy, trade and investment in a changing world. Sign up hereAre you enjoying Europe Express? Sign up here to have it delivered straight to your inbox every workday at 7am CET and on Saturdays at noon CET. Do tell us what you think, we love to hear from you: europe.express@ft.com. Keep up with the latest European stories @FT Europe More

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    FirstFT: Israel-Iran conflict enters fourth day, roiling markets

    This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereToday’s agenda: G7 summit; JPMorgan’s Europe chief relocates; Adnoc bids $19bn for Santos; profile of Gavin Newsom; and a deathbed letter to Vivienne WestwoodGood morning. We start the working week with the latest updates on the conflict between Israel and Iran, which has entered its fourth day.What’s the latest? Both sides traded strikes over the weekend and into this morning, with Iranian rockets hitting several locations in the greater Tel Aviv region today. Iranian state media claimed a power plant in Haifa was also struck. Earlier, the Israeli military said it had launched strikes against missile sites in central Iran. In a social media post, it also said it had hit “numerous” weapons production sites in Tehran.What’s the global fallout? Oil and gold prices jumped this morning. Israel’s decision to target Iran’s energy sector — with strikes on at least two gas processing plants and two fuel depots — has poured more risk into global energy markets. Investors are concerned that Iran could retaliate by striking energy targets in other Gulf countries or impede the flow of oil and gas through the Strait of Hormuz, through which a third of the world’s seaborne oil passes. What could come next: Benjamin Netanyahu has warned that regime change could “certainly be the result” of Israel’s attacks, in response to a question about assassinating Ayatollah Ali Khamenei. Israel’s prime minister declined to comment on reports that Donald Trump had vetoed an Israeli plan to kill Iran’s supreme leader, saying “we’ll do what we need to do”. The US president has also warned that the US “could get involved” in the conflict. We’ll bring you real-time updates on the war and its impact at our live blog. Here’s more analysis on the situation:Nuclear weapons? Experts say Iran has become a “threshold” state but question Israel’s claim that Tehran had begun an atomic bomb programme.What are Israel’s goals? If Iran’s Islamic regime falls, the alternative will not be a liberal pro-western government, writes former MI6 chief John Sawers.Why was oil output raised? With the conflict, the Opec+ cartel’s recent move to boost crude production is coming under intense scrutiny.Other world leaders, including European Commission president Ursula von der Leyen and UK Prime Minister Sir Keir Starmer, are hoping the G7 summit in Canada, which began yesterday, will help de-escalate the conflict. Apart from that, here’s what else I’ll be watching today:Opec: The cartel publishes its monthly oil market report.EU: Ministers meet to discuss how to wean the bloc off Russian nuclear imports.Five more top stories1. Exclusive: JPMorgan’s European chief plans to relocate from London to New York, while keeping his role running the bank’s Europe, Middle East and Africa business. The move by Filippo Gori, who is also the lender’s co-head of global banking, is the latest in a string of examples of senior bankers overseeing UK-based operations from the US. 2. Abu Dhabi’s national oil company is offering $19bn to take over Santos, leading a consortium to bid for one of Australia’s largest energy companies. Santos said its board would recommend the offer, subject to terms being agreed. Read the full story.3. Rachel Reeves will set out a 10-year infrastructure plan for Britain this week, starting with a new programme to repair crumbling bridges, flyovers and tunnels. Allies of the UK chancellor say she will commit to increasing the infrastructure budget to at least £725bn over the next decade.MI6: Blaise Metreweli has been appointed the new chief of the UK Secret Intelligence Service, becoming the first woman to lead the spy agency.4. Luca de Meo will step down as chief executive of Renault to take the helm at Kering, where he will lead efforts to turn around the struggling French luxury group, according to people briefed on the plan. The carmaker said he would remain in place at the company until July 15. More details on the move.5. Minnesota police have detained the suspect in the politically motivated killing of state representative Melissa Hortman and her husband, and the shooting of state senator John Hoffman and his wife. Vance Boelter was apprehended after a two-day manhunt across the US state. News in-depth© FT montage/GettyTo Israeli military planners, Iran’s Fordow facility is akin to Mount Doom: a tightly guarded nuclear enrichment plant, buried half a kilometre beneath a mountain, which is ringed by air defences and symbolically situated near the ancient religious city of Qom. Satellite analysis shows how the underground site has become central to Tehran’s nuclear ambitions — and a major challenge for Israel.We’re also reading . . . Gavin Newsom: Trump’s decision to send troops to Los Angeles has allowed California’s governor to sell his brand of resistance to the rest of the country.Chinese economy: Mounting calls on Beijing to “rebalance” by encouraging more consumer spending are misguided, writes Ruchir Sharma.Brazil’s beef barons: The New York listing of food giant JBS marked a dramatic comeback for brothers Wesley and Joesley Batista, who were in jail eight years ago.Chart of the day US green bond sales have fallen since Trump won a second term as president, as companies seek to avoid unwanted attention by backing away from or playing down their environmental activities. Take a break from the newsMalcolm McLaren and Vivienne Westwood were partners in life and art but the bitterness of their rupture never faded. Now, a never-before-seen 16-page deathbed letter, written by the man who invented punk, has shed new light on their “tempestuous” relationship. © Mirrorpix/Getty Images More

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    Oil price worries disrupt Bank of England interest rates decision

    Bank of England rate-setters already grappling with unpredictable US trade policy and unreliable UK data now face a fresh oil price shock as they meet this week to set borrowing costs in the wake of Israel’s air strikes against Iran. The potential for prolonged conflict and disruption to energy supplies would make the BoE’s Monetary Policy Committee even more inclined to caution at a meeting where it was already widely expected to hold interest rates at 4.25 per cent, economists said. Fallout from the air strikes on Friday would also make it even harder for the committee — deeply divided since its nine members split three ways in May — to convey a clear sense of how far or fast it might lower rates in future, they added. Jens Larsen, a former BoE official now at the Eurasia Group consultancy, said the Israel-Iran conflict was the latest in a sequence of geopolitical shocks making it difficult to set monetary policy around the world. “The Bank of England has said it will respond to the volatile geopolitical environment and repeated shocks by making greater use of scenarios to communicate all the uncertainty out there,” he said.“But so far this is very much a work in progress. It is hard to discern a clear narrative from the BoE on the outlook — they can’t afford to just throw up their hands and say they have no idea what is going on.” When the MPC cut rates by a quarter-point in May in a 5-2-2 vote, it repeated its guidance that it would take a “gradual and careful” approach to further monetary loosening. Markets have interpreted the wording as pointing to a 0.25 percentage point cut in interest rates each quarter. But the committee has rarely been so divided in its thinking. The last time there was a unanimous vote on monetary policy was in September 2021, when rates were at a historic low of 0.1 per cent. Last month, the MPC split three ways, with BoE chief economist Huw Pill joining external member Catherine Mann in voting for rates to be kept at 4.5 per cent, while fellow external members Swati Dhingra and Alan Taylor backed a jumbo half-point cut. Even among the five-member majority, the decision was “finely balanced”, according to minutes of the meeting, with some members, including governor Andrew Bailey initially minded to hold rates and swayed at the last minute by US President Donald Trump’s sweeping “liberation day” tariffs. The intense geopolitical uncertainty is only one reason why the MPC is so divided. The committee is also struggling to determine whether the UK economy — which suffered a fresh setback in April, with a 0.3 per cent drop in output — is on the brink of big job losses, or whether workers are still well-placed to press for wage rises that could fuel inflation. Doubt over the quality of crucial economic data is making it harder to answer these questions: in recent evidence to MPs, Bailey called attention not only to well-flagged problems with jobs data, but also to increasing volatility in GDP figures, and a “puzzle” in official data showing productivity had fallen in a way “usually associated with quite serious recessions”. Analysts are increasingly frustrated by the lack of clarity in the BoE’s own messaging. Andrew Wishart, senior UK economist at Berenberg, said one problem was that rate-setters appeared reluctant to comment too explicitly on the extent to which government tax policy had hit jobs. Bailey’s own reticence also made it harder to gauge the MPC’s direction of travel, Wishart said, with the governor giving “high-level” speeches on themes such as globalisation rather than a clear steer on his thinking.“It’s hard to pin him down . . . and since he is effectively the swing voter on the committee, that does make it much more tricky,” Wishart added.The BoE says that it wants to explain the uncertainties around its forecasts by making greater use of scenarios, setting out how inflationary pressures could evolve in different situations and force it to vary its policy approach. But analysts say the two scenarios set out in May’s monetary policy report have shed little light on the committee’s thinking — especially since MPC members do not necessarily align their own views with either scenario. “The scenarios haven’t really been particularly helpful,” said Andrew Goodwin, at the consultancy Oxford Economics, adding that they “felt like a box-ticking exercise” to follow up on the recommendations of a highly critical review by former US Federal Reserve chair Ben Bernanke. Rob Wood, chief UK economist at consultancy Pantheon Economics, agreed that the experiments with scenarios had not yet paid off. “It amounts to saying inflation could be higher or lower than you think,” he said. “Maybe it will improve over time, but I don’t think it is saying very much.” Economists are hoping the BoE will give a clearer steer on Thursday, following a run of weak data that will lessen the worries about inflation persistence. But if the Israel-Iran conflict triggers a sustained rise in oil prices it will only heighten the difficult trade-offs faced by the MPC. BoE chief economist Huw Pill last month voting for rates to be kept at 4.5 per cent. More

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    What history tells us about the impact of an oil price jolt

    Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is author of ‘Blood and Treasure, the Economics of Conflict from the Vikings to Ukraine’Worries over geopolitical risks have regularly featured towards the top of polls of investor concerns over the past year. In recent months, “geopolitical risk” has often been a polite euphemism for unpredictable American tariff policies, preferred by US institutions which do not want to annoy the White House too much. But now the geopolitical risk which is materialising is a more traditional one, the threat of long-running conflict in the Middle East putting global oil supplies at risk.Oil prices rose as much as 12 per cent in the immediate aftermath of Israel’s attacks on Iran’s nuclear facilities. Over the weekend, the conflict escalated further with Israel hitting, among other targets, a major oil terminal in Tehran. Iran produces around 3.3mn barrels per day of crude, of which 2mn are exported. Given global oil demand is estimated at 103.9mn bpd by the International Energy Agency and that Saudi Arabia and the UAE are reported to be capable of raising production quickly by more than 3.5mn bpd, even a severe disruption in Iranian production is probably manageable. The increase in the oil price following the first Israeli strikes reflected wider concerns that the conflict could spiral to a point where Tehran attempted to close the Strait of Hormuz to tankers or even attack the oil facilities of its neighbours.The interplay of geopolitical uncertainty, oil prices, and macroeconomics is rarely straightforward, as some useful research from the European Central Bank published in 2023 indicates. It points out Brent crude prices leapt by 5 per cent in the immediate aftermath of 9/11 terrorist attacks in New York as investors priced in the chance of war in the Middle East disrupting supplies. But they were down by 25 per cent within 14 days as fears that a slowing global economy would weaken oil demand came to the fore. In the two weeks following Russia’s invasion of Ukraine in February 2022, Brent prices rose by 30 per cent. But they were back at their pre-invasion level eight weeks later.The ECB research suggests geopolitical shocks impact the global economy through two channels. In the short term, the most important of these is usually the risk channel. As financial markets price in the chance of further disruptions to global oil supplies, it causes an increase in the cash value of holding oil contracts — known as the convenience yield — putting upward pressure on oil prices. But in the longer term, the economic activity channel comes into play. Higher geopolitical tensions tend to act as negative shock to global demand as increased uncertainty weighs on investment and consumption and potentially disrupts trade. This channel usually dampens global oil demand and prices. In other words, oil price pressures resulting from geopolitical shocks have tended to be short-lived.This has not always been the case. The oil price shocks of 1973 and 1979 were both followed by US recessions and the potential for a geopolitically driven oil price spike to capsize the global economy still tends to concern both policymakers and investors. They can perhaps take some solace from research published earlier this year by the Federal Reserve Bank of Dallas. The authors of this study adopted a novel approach, attempting to separate out oil price uncertainty from wider macroeconomic uncertainties. They found that geopolitically driven oil price risks are unlikely to generate sizeable recessionary effects. Even a large increase in the risk of a production shortfall on the scale of 1973 or 1979 would only, according to the model, lower economic output by 0.12 per cent.While high uncertainty about future oil supplies can raise crude prices in the short term, unless those risks materialise, the global macroeconomic fallout is likely to be limited. A similar impact is evident in asset prices more generally. According to the IMF’s most recent Global Financial Stability Report, geopolitical risk events since the second world war have usually been associated with a modest fall in equity prices in the short term but, in most cases, with no lasting impact. Global equity markets eventually shrugged off both Iraq’s invasion of Kuwait in 1990 and Russia’s of Ukraine in 2022. Again though 1973 stands out as an exception, with the oil embargo of that year leaving global equity markets sharply lower 12 months later.Much will, of course, dependent on how long the Israel-Iran conflict lasts and how it escalates. It should be remembered that even during the “Tanker War” of the 1980s, in which during the Iran-Iraq more than 200 oil tankers passing through Hormuz were bombed, oil prices stabilised after an initial spike. The effects of anything short of a major disruption in Middle Eastern oil output are likely to be contained. More

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    As Trump Returns to G7, Rift With Allies Is Even Deeper

    In 2018, the president called for the group to embrace Russia and stormed out of the summit. Now he is seeking to shrink America’s military role abroad and embarking on a more expansive trade war.When President Trump last attended a Group of 7 meeting in Canada, he was in many ways the odd man out.At that meeting, in 2018, Mr. Trump called for the alliance of Western countries to embrace Russia, antagonized allies and ultimately stormed out of the summit over a trade battle he began by imposing metals tariffs on Canada.As he returns on Sunday for the Group of 7 meeting in Alberta, those fissures have only deepened. Since retaking office, the president has sought to shrink America’s military role abroad and made threats to annex the summit’s host after embarking on a much more expansive trade war.Mr. Trump is now facing a self-imposed deadline of early July to reach trade deals. His trade adviser even promised in April that the tariffs would lead to “90 deals in 90 days.” Despite reaching framework agreements with Britain and China, the administration has shown scant progress on deals with other major trading partners.The future of the president’s favored negotiating tool is uncertain as a legal battle over his tariffs plays out in the courts. But a failure to reach accords could lead the Trump administration to once again ratchet up tariffs and send markets roiling.“I think we’ll have a few new trade deals,” Mr. Trump told reporters at the White House on Sunday as he left for the summit.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More