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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.France has lobbied fellow EU countries to pledge additional measures aimed at raising the euro’s profile as a global reserve currency, as part of Paris’ long-standing campaign for more joint borrowing. A draft EU statement circulated ahead of a leaders’ summit later this month, seen by the Financial Times, asks the bloc’s institutions including the European Central Bank “to explore actions to reinforce the international role of the euro”. The push was prompted by US President Donald Trump’s erratic trade and economic policy, which has weakened the dollar’s dominant role, opening up space for the Eurozone’s 25-year-old currency to become more attractive for international transactions.Paris argues that investors are looking for a safe haven from US Treasury debt, so the EU should issue more joint debt to service the market, according to officials familiar with its thinking. France and other heavily indebted countries, including Italy and Spain, have long pushed for more common borrowing in order to be able to spend more on priorities such as defence without adding to their national burden. “There is a great opportunity for the euro to play a bigger role globally,” said IMF managing director Kristalina Georgieva at a meeting of EU finance ministers in Luxembourg on Thursday. “When I look at the search for quality safe assets, at this point it is facing a constraint on the offering of these assets. It is not by chance that so much now is being parked in gold,” Georgieva added, in reference to ECB data showing that gold has overtaken the euro as reserve asset for central banks. ECB president Christine Lagarde wrote in the FT this week that this was “a ‘global euro’ moment”, although the bloc would need to reform to seize it, including by creating an “ample supply of safe assets”. “Despite a strong aggregate fiscal position, with a debt-to-GDP ratio of 89 per cent compared with 124 per cent in the US — the supply of high-quality safe assets is lagging behind,” Lagarde wrote. “Recent estimates suggest outstanding sovereign bonds with at least a AA rating amount to just under 50 per cent of GDP in the EU, versus over 100 per cent in the US.”An EU official said this was a “classic Lagarde move, pitching French ideas” such as joint borrowing. Philip Lane, the ECB’s chief economist, said in a speech earlier this month that the design of the euro area had resulted in an “undersupply of safe assets” and that one way of responding to this would be by issuing fresh common bonds to fund European-wide projects. However another option would entail generating “a larger stock of safe assets from the current stock of national bonds,” he said. He cited a paper by Olivier Blanchard of the Peterson Institute and Ángel Ubide of Citadel that proposes replacing a proportion of bonds issued by individual European governments with Eurobonds. The decision to issue more joint EU debt can only be taken unanimously. Germany and the Netherlands, who would have to pay back a greater share of the debt, are staunchly opposed to more common borrowing.A senior EU diplomat said the commission will take into account Berlin’s opposition. But if the situation deteriorates “pressure will grow especially as some member states’ economy is in — well — not so good condition”.The EU is already struggling to repay the almost €800bn of common debt it issued during the Covid-19 pandemic to fund economic stimulus.The European Commission estimates €30bn per year, or a fifth of the budget from 2028, will be spent on repayments, unless it refinances the debt. France says that issuing more debt on top would create enough liquidity to tempt investors, according to two people familiar with the matter. “If more member states got their credit rating up, there would be no shortage of euro denominated safe assets,” said an EU diplomat.A spokesperson for the French permanent representation in Brussels declined to comment.European Council President António Costa, who will chair the June 26-27 summit, has put the role of the euro on the agenda as part of a broader discussion about deepening the bloc’s still fragmented single market amid the current geopolitical turmoil.Costa told the Financial Times that better integration of the single market and cross-EU rules on savings and investments would “reinforce the euro’s global standing, building on the EU’s position as an open, stable, and reliable partner”.The dollar’s role was already diminishing before Trump took office. At the end of 2024, the dollar accounted for 58 per cent of global foreign exchange reserves, down from 65 per cent 10 years before, according to think-tank Chatham House. The euro currently accounts for around 19 per cent of foreign exchange reserves, according to the IMF, a similar level to 2000 when it was created.Additional reporting by Sam Fleming in London More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.UK credit card borrowing costs have soared to the highest levels in nearly two decades as falls in personal loan rates have paved the way to fresh options for consumers to tackle debt.The average annual percentage rate (APR) from the start of March until the start of June rose to 35.7 per cent, the highest on record since at least 2006, according to data provider Moneyfacts UK.The average interest rate on cash withdrawals from credit cards also hit record levels over the same period, increasing from 29.4 per cent a year ago to 30 per cent today.The rise in credit card costs came despite a cut in the base rate in May by the Bank of England from 4.5 per cent to 4.25 per cent.“Consumers who use their credit cards for everyday purchases will be disappointed to see borrowing costs rise to the highest point since records began almost two decades ago,” said Rachel Springall of Moneyfacts.She acknowledged that “a combination of factors” had led to the increase, including some providers, such as Halifax, increasing their purchasing and cash rates during the period.According to analysis from the Money Charity, the financial education charity, the average credit card debt per household stands at £2,579.At the same time as the rise in credit card borrowing costs, there were better deals on offer for personal loans. Over the March to June period, the average unsecured personal loan rate for £3,000 and £5,000 deals over three years dropped to their lowest since June 2023.Rates for £7,500 and £10,000 loans over five years also recorded a slight reduction in the period compared with same time last year.Springall said an unsecured personal loan was a “sensible choice” for consumers struggling with multiple debts who are looking to consolidate them, in particular if they are paying a high rate of interest on credit cards.Lenders are also offering a wider variety of deals to help people manage their debt, with the number of interest-free purchase offers available jumping to 64 in the March to June period from the 58 over the same time last year. The average interest-free purchase term on credit cards rose from 267 days in March to 286 in June. More

Israel’s attacks on Iran threaten to cut China off from critical oil trading partners, highlighting its need for greater energy independence and disrupting Beijing’s hopes for a bigger role in the region. For years, China has used its relationship with Iran to expand its influence in the Middle East, while making cheap Iranian crude, and Gulf supplies more broadly, a bedrock of the energy mix for the world’s biggest buyer of oil.Chinese President Xi Jinping said this week that all parties to the conflict between Israel and Iran should work “as soon as possible to prevent further escalation of tensions”. China has said the US should not interfere with its “normal trade” with Iran and has opposed US-led sanctions.“Of course, China is worried [by the latest attacks],” said Gedaliah Afterman, an expert on China and the Middle East at the Abba Eban Institute for Diplomacy and Foreign Relations in Israel. “If this situation continues to escalate, then they lose quite a bit, both in terms of their energy security and Iran as a strategic card that China holds.”Since US-led sanctions on Iran’s nuclear programme were stepped up in late 2018, Beijing and Tehran have strengthened ties.Beijing has become Tehran’s most important economic lifeline, buying the vast majority of Iranian oil shipments and supplying the country with electronics, vehicles and machinery, and nuclear power equipment. Some content could not load. Check your internet connection or browser settings.Last year, Iranian oil accounted for as much as 15 per cent of the crude shipped to the world’s second-biggest economy. Overall, China last year imported about 11.1mn barrels of oil a day, according to the US Energy Information Administration. Chinese purchases of Iranian crude edged higher through most of 2023 and 2024 but started to ease late last year as the threat of new US sanctions increased, according to data from cargo tracking research group Kpler and Bernstein.Iran exported 2.4mn barrels of crude a day in September 2024, with China accounting for 1.6mn barrels. By April, Iranian shipments had fallen to 2.1mn barrels a day, of which China accounted for 740,000 barrels. Malaysia is also an important exporter to China as cargoes shipped from Iran are relabelled or transferred to avoid sanctions, analysts said.Analysts from Fitch Ratings this week said that, “even in the unlikely event that all Iranian exports are lost”, they could be replaced by spare capacity from Opec-plus producers.Other, more severe, energy disruptions could emerge. The war, which is at risk of spilling over into a broader regional conflict, has already sparked threats from Iran that it could block the Strait of Hormuz.Hundreds of billions of dollars in oil and gas are shipped through the waterway to China from nearby Gulf States each year, including Saudi Arabia, China’s biggest supplier of crude outside Russia. A view of a ship on fire in the area of reported collision between two oil tankers near the Strait of Hormuz More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Consumer confidence in the UK rose for the second consecutive month in June, supported by a more positive economic outlook, according to a closely watched survey that raises hopes of stronger household spending.The GfK consumer confidence index — a measure of how people view their personal finances and broader economic prospects — rose two points to minus 18 in June, the research group said on Friday.It followed a three-point improvement in May and took the score to levels last seen at the end of 2024, before US President Donald Trump announced tariffs on most American imports. However, it remained well below the 2015-19 average of minus 5.6.Neil Bellamy, consumer insights director at GfK, said the rise in confidence was “driven by improvements in how consumers see the general economy”.But, he warned, sentiment remained “fragile”, citing rising oil prices linked to conflict in the Middle East and continued tensions over tariffs. “Now is certainly not the time to hope for the proverbial ‘light at the end of the tunnel’,” he said.Policymakers monitor consumer confidence as an indicator of future spending, which affects economic growth. Consumer spending has remained weak over the past year despite wages rising faster than inflation. Household consumption contributed only 0.1 percentage point to the 0.7 per cent overall economic growth in the first three months of the year. With interviews conducted in the first half of June, the GfK index showed that expectations for the general economic outlook over the next 12 months rose five points to minus 28. However, the index tracking respondents’ views of their future personal finances remained unchanged at 2.Improved economic data for the first quarter and new UK-US trade agreements, which reduce the risk posed by Trump’s import tariffs, have led economists to raise their growth forecasts. Analysts expect UK economic growth of 1 per cent in 2025, up from 0.7 per cent they forecast in April, according to data by Consensus Economics, a company that averages leading forecasters. A separate survey by the British Retail Consortium this week also indicated that overall sentiment is improving. The findings showed that the proportion of people expecting the economy to improve over the next three months rose to 34 per cent in June, from 28 per cent in May and 24 per cent in April. Spending intentions also increased. Helen Dickinson, chief executive of the British Retail Consortium, said younger generations had registered “the biggest improvement” in both their economic outlook and personal finance expectations. This may partly reflect a rise in the minimum wage in April, she noted. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Canada’s Prime Minister Mark Carney will impose measures to counter the oversupply of steel and aluminium imports and may increase levies on the US, as increasingly protectionist measures are deployed in the global tariff war over crucial industrial inputs.Carney on Thursday said Canada would “adjust” its 25 per cent counter-tariffs on imports of the two metals from the US, based on how talks with Washington had progressed by July 21.As an anti-dumping measure, Canada will also apply new tariffs on any increase beyond 2024 levels in steel imports from countries that do not have a free trade agreement with Canada.The moves come after US President Donald Trump’s “catastrophic” doubling of tariffs on Canadian steel and aluminium earlier this month.François-Philippe Champagne, Canada’s finance minister, said the quotas have been launched to “stabilise the domestic market and prevent harmful trade diversion as the result of the US actions that are destabilising markets”.Carney added: “Steel from other countries, from third countries, starts to come into Canada if we don’t protect our industry, so we are setting these quotas.” The anti-dumping measures are probably aimed at China, on which Canada already has a 25 per cent surtax on imports of steel and aluminium.Ottawa would also start buying Canadian steel and aluminium for domestic infrastructure projects, defence spending and the automotive industry, the prime minister said.“Steel and aluminium workers are on the frontline of this trade crisis, these are the workers who will help us build one strong Canadian economy,” Carney said in Ottawa.But Catherine Cobden, Canadian Steel Producers Association president, and Marty Warren, United Steelworkers union’s national director for Canada, said the government’s decision “falls short of what our industry needs”.“We will continue to review the details of the measures and work constructively with the federal government to get a plan that works for Canadian steel producers and the thousands of workers that make up our sector,” they said in a statement.On Monday, during the G7 summit in Kananaskis, Alberta, Carney met Trump to discuss a new economic and security partnership. “We agreed to pursue negotiations towards a deal within the coming 30 days,” the prime minister posted on X on Monday afternoon.Trump on June 4 introduced 50 per cent tariffs on imports of steel and aluminium to the US, increasing the 25 per cent rate applied in March.At the time, Canada’s steel industry described the doubling of the tariff as “catastrophic” for a sector that faced widespread job losses and production shutdowns.Canada is the largest supplier of the two metals to the US, accounting for nearly a quarter of US steel imports in 2023 and about half of aluminium imports last year.The steel sector is a C$15bn (US$11bn) industry that employs 23,000 people and supports an additional 100,000 indirect jobs, according to the CSPA.Carney said he was in touch with Trump “frequently on a range of issues” and these latest measures would keep the steel industry afloat while Ottawa negotiates a new trade deal with the White House.This story has been amended to clarify the measures announced by Canada More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Will Eric Trump’s real estate plans save Vietnam’s export-driven economy? With President Donald Trump threatening to impose 46 per cent tariffs on its goods from July 9, the country — which sends nearly 30 per cent of its exports to the US — could use some goodwill from America’s first family. Hanoi has rushed to clear the way for a $1.5bn Trump Organization golf resort. Eric Trump and Vietnam’s prime minister broke ground on the project in late May, just seven months after it was announced. The US president’s son has also been discussing a Vietnamese Trump Tower.Vietnam’s hopes for a tariff reprieve do not rest only on real estate. It has offered to remove its own tariffs on US goods, clear non-tariff barriers and buy Boeing planes and US gas. American companies that have made Vietnam central to their “China plus one” diversification strategy, and which account for much of the south-east Asian country’s $125bn trade surplus with the US, have also been lobbying. President Trump should listen, not least because unnecessarily alienating a nation that is a potential pillar of resistance to Chinese regional domination looks like geopolitical madness. Yet even if Trump softens his tariff threat, it is clear that Vietnam has to change its economic model. Surging foreign investment in its manufacturing sector has driven rapid growth in recent years, but with the ratio of exports to GDP standing at nearly 90 per cent in 2023, diversification and development of its domestic market is badly needed. Export-related employment grew rapidly between 1995 and 2019, but Vietnam saw “zero net job creation from domestic demand”, the World Bank said last year in a report that warned reform implementation had “stalled in recent years”. Exports are still dominated by low-value-added factories reliant on inputs from China. Only 5 per cent of manufacturing workers are high-skilled.To Lam, Vietnam’s Communist party chief, is shaking things up. Lam is merging provinces, scrapping ministries and cutting bureaucratic jobs. Last month he unveiled plans to revamp the legal system, increase international engagement and provide more support for domestic technology and innovation to help Vietnam meet its goal of becoming a high-income nation by 2045. But the most important decision by the party’s governing Politburo, Resolution 68, was to officially recognise the private sector as the economy’s key driving force. Lam wants to foster 20 large private companies integrated into global value chains by 2030 and boost the number of private enterprises to at least 3mn by 2045, from under 1mn now.There is much here to applaud. Bureaucratic streamlining, fairer and more open law enforcement, and support for the private sector will promote homegrown entrepreneurialism. But Lam makes clear it would still be “a socialist-oriented market economy, managed by the state, under the leadership of the party”. The focus on a cohort of private national conglomerates risks misdirecting capital and creating opportunities for corruption. Nor is Lam diluting the party’s power or easing its tight censorship and media controls, even though more diverse oversight could help his reforms succeed.Still, the push for change is encouraging. As one of the world’s most rapidly ageing countries, Vietnam’s clock is ticking. In a speech last month, Lam referenced an old proverb on the price to be paid for arriving late at a watering hole. Vietnam, he said, currently had a golden opportunity for development, but without urgent reform would risk falling behind in the global race and being left “like a slow buffalo drinking muddy water”. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The Swiss National Bank has cut interest rates by a quarter point to zero but did not go so far as negative rates, as it battles to restrain its currency, which has surged on global trade tensions. It is the first time that the Alpine country, which is one of the few globally to experiment with negative rates, has an interest rate of zero as it tackles lagging inflation and a surging Swiss franc, a haven currency that investors have bought up amid US President Donald Trump’s trade war.The cut comes after annual inflation in Switzerland dipped to minus 0.1 per cent in May, the first negative reading in four years. The appreciating Swiss franc — up 10 per cent against the dollar this year — has slashed the cost of imports, dragging down consumer prices.The Swiss franc strengthened after Thursday’s expected cut, but was flat against the dollar by late afternoon at SFr0.819 per greenback.A minority of traders had been betting on a larger, half-point cut, according to levels implied by the swaps markets. The franc’s rally after Thursday’s decision was prompted by those bets being “unwound”, said analysts at BBH. SNB chair Martin Schlegel said at a press conference that the bank would “not take a decision to go negative lightly”. The central bank would also have to take into account the interests of savers, pension funds and others, he said. Traders slightly trimmed their bets on further rate cuts after Schlegel’s remarks, and were putting a roughly 40 per cent chance that the SNB would cut again to minus 0.25 per cent by March next year. Switzerland’s two-year government bond yields, which are sensitive to movements in rate expectations, rose 0.1 percentage points to minus 0.09 per cent.The SNB has also repeatedly flagged financial stability risks from soaring valuations for Swiss property in a lower interest rate environment. Schlegel did not, however, rule out a move into negative territory, with global trade turmoil possibly forcing the bank down that path in the months ahead. “It sounds like they are going to play it by ear, which slightly dents market conviction on negative rates,” said Francesco Pesole, an FX strategist at ING.The sharp rise of the so-called Swissie this year has complicated policymaking. The SNB is attempting to ease pressure without triggering accusations of currency manipulation from the US, which placed Switzerland on a watchlist during Trump’s first term. Analysts say rate cuts are a diplomatically safer route than direct FX intervention. The SNB’s decision contrasts with the Federal Reserve’s continued wait-and-see approach. The Bank of England also held rates at 4.25 per cent at its latest meeting.However, Norway’s central bank unexpectedly cut borrowing costs on Thursday, loosening monetary policy for the first time since the start of the Covid-19 pandemic. The strength of the economy in western Europe’s largest oil and gas producer had led it to keep rates higher than nearly all its neighbours, including Sweden’s Riksbank and the European Central Bank. But Norges Bank decided that the inflation outlook was subdued enough that it could cut rates by a quarter point to 4.25 per cent. Switzerland first introduced negative interest rates in December 2014, when the SNB set the deposit rate at minus 0.25 per cent to stem the franc’s appreciation amid safe-haven inflows. The SNB at one stage pushed the rate down to minus 0.75 per cent, the lowest level in the world. The policy remained in place for more than seven years, also making it one of the world’s longest negative rate periods until it exited it in 2022. Thursday’s cut creates a potentially tricky situation for Swiss banks. They no longer earn interest on their reserves with the SNB but theoretically have less justification to pass that cost on to customers.Daniel Kalt, chief economist at UBS, the country’s largest bank, said zero per cent was probably the most difficult scenario for banks.“In terms of pressure on net interest margins, it couldn’t be worse than with the situation we have today. With this, it is hard for banks to justify charging customers fees like they did during the previous period of negative interest rates,” Kalt said.Video: Why governments are ‘addicted’ to debt | FT Film More