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    How to end Europe’s backwater investment status

    Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldAs European policymakers fret about the threat to EU competitiveness posed by Donald Trump, there is at least one US phenomenon that Europe would love to import: the country’s ability to fund itself with dynamic equity finance provided by individuals and institutional investors. Europe continues to rely on loans from its hobbled banking system for corporate finance.A European Central Bank analysis found that if EU households put as much into equities and bonds as American counterparts, it could redirect a stock of up to €8tn, and an ongoing flow of €350bn a year, away from cash deposits. The EU has been pursuing a Capital Markets Union to spur such a shift for a decade — to no tangible effect. So why should anyone take the initiative seriously now?In an interview last week, ECB president Christine Lagarde told the Financial Times that despite the challenges posed by a second Trump term, she had never before seen “such a level of understanding and excitement” among policymakers in the region to shake up the status quo and ensure more European money is productively invested.Her own recipe, underpinned by a CMU now rebranded as a Savings and Investment Union, involves a change of regulatory structures, particularly by turning securities regulator Esma into a powerful institution like the Securities and Exchange Commission that could cut through nation states’ self-interest and push an agenda of securities investment across the region.The nomination of Maria Luis Albuquerque as the EU’s next financial services commissioner has given bankers hope that there will be practical follow-through, too. The Portuguese politician and former Morgan Stanley non-executive has already pledged to consolidate the fractured EU market for securitisation. She is expected to try to build a “coalition of the willing”, encouraging the likes of France, Germany and other like-minded issuance locations to establish common principles for the treatment of insolvencies in securitised products, overriding national rules. Creating a more homogeneous market, and simultaneously allowing banks to recycle a larger share of risk, is seen as a crucial way to attract large-scale institutional investors, both local and international.For retail investors, Lagarde envisages a new investment structure, which could be EU-kitemarked, to guarantee common standards and low costs. She also recognises that equity investment may need to be tax-incentivised. France’s Livret A scheme is a partial blueprint — it diverts the savings of bank customers into tax-free contributions to state priorities, like funding the defence budget. But in common with the UK’s cash Isa regime, the Livret A tax break misses a trick: it traps retail money in zero-risk products with low guaranteed returns, rather than fostering the enthusiasm for equity investment that 401k schemes have long supported in the US. Lagarde and other European policymakers don’t accept that Europeans’ attitude to risk is fundamentally lower than their American cousins.Politicians, limited by straitened budgets, might well respond to proposals for new investor tax breaks with stony faces. But the economic argument is sound: if the money is mobilised to finance innovation, boost productivity and generally underpin growth, this surely is just how an economy could and should leverage private wealth.There are risks: for as long as European companies underperform their US rivals, why would your average European investor favour European tech over the Magnificent Seven, or Volkswagen over Tesla? A knee jerk restriction of tax breaks to domestic investment would either render the scheme unattractive or drive a poor capital allocation.And yet it is possible to imagine a benign scenario, unfashionable as it might seem amid today’s European gloom. The willing-coalition principle offers a chance to create opt-in mechanisms for keen member states. Advocates cite the SE European corporate structure, taken up by thousands of groups from Airbus to Allianz, as a useful precedent.What, then, if both a tax-incentivised retail investment structure and a securitisation initiative were conceived under such an umbrella and communicated as part of a broader growth agenda by a compelling line-up of stable political leaders? Those are some big ifs. But with the wind in the right direction, international asset managers might just be persuaded to rethink their conviction that Europe is a stagnant backwater that simply can’t compete with the US.patrick.jenkins@ft.com More

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    Trump is playing high-stakes poker on tariffs

    Standard DigitalStandard & FT Weekend Printwasnow $29 per 3 monthsThe new FT Digital Edition: today’s FT, cover to cover on any device. This subscription does not include access to ft.com or the FT App.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

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    The risk of Mexico being shut out of North America is rising

    Standard DigitalStandard & FT Weekend Printwasnow $29 per 3 monthsThe new FT Digital Edition: today’s FT, cover to cover on any device. This subscription does not include access to ft.com or the FT App.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

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    Chinese exporters front-load shipments in bid to dodge Trump tariffs

    Standard DigitalStandard & FT Weekend Printwasnow $29 per 3 monthsThe new FT Digital Edition: today’s FT, cover to cover on any device. This subscription does not include access to ft.com or the FT App.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

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    Biden embarks on first and final Africa trip as US president with Angola visit

    $1 for 4 weeksThen $75 per month. Complete digital access to quality FT journalism. Cancel anytime during your trial.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

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    Australia’s retail sales growth picks up pace amid early discounting

    Data from the Australian Bureau of Statistics (ABS) on Monday showed retail sales firmed 0.6% in October from September, when they rose a meagre 0.1%. Analysts had looked for a gain of 0.4% in October. Sales were up 3.4% on a year earlier at A$36.7 billion ($23.9 billion), with the ABS noting some retailers had taken to discounting early ahead of the November Black Friday events.”After a steady result last month retailers told us that sales activity grew in October ahead of the Black Friday sales,” said Robert Ewing, head of business statistics at the ABS. “The rise in discretionary spending was driven by online discounting events while people also spent more on electrical goods, particularly televisions and other audio-visual equipment.” The outlook for sales has been helped in part by a slowdown in inflation and the large cuts to income taxes. Consumer sentiment jumped for a second straight month in November and reached a 2-1/2-year high.The Reserve Bank of Australia (RBA) had expected household spending to rebound this year given the billions in tax cuts delivered from July. It has kept interest rates at 4.35% for an entire year now.Markets imply almost no chance of a cut in the 4.35% cash rate at the RBA’s next meeting on Dec. 10, and only a 24% chance of a move in February. A rate cut is not fully priced in until May next year, in part due to the remarkable resilience of Australia’s labour market. ($1 = 1.5387 Australian dollars) More

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    Bank of Korea to cut rates in Feb following Thursday’s surprise move as economy wavers: Reuters poll

    BENGALURU (Reuters) – The Bank of Korea will take a pass in January but cut interest rates by a quarter-point in February following an unexpected reduction on Thursday to support a weakening economy, according to economists in a Reuters snap poll.To boost activity in Asia’s fourth-largest economy, which narrowly avoided a recession last quarter, the BOK cut rates for a second meeting in a row on Nov. 28 – the first back-to-back reductions since early 2009. Inflation has largely stayed under control.However, BOK Governor Rhee Chang-yong said the future remains uncertain given President-elect Donald Trump’s plans to hike tariffs. The U.S. is one of South Korea’s largest export destinations.A strong majority of economists, 16 of 22 in a snap poll conducted Nov. 28-29, forecast the BOK would cut its base rate by 25 basis points to 2.75% in February.The other six predicted the next quarter-point cut would come in January.”We now expect one more cut as early as February 2025 and a faster recalibration of policy stance to neutral … while acknowledging uncertainties related to U.S. trade policy – the timing of the tariffs, their coverage, and their magnitude – could alter the path,” Bum Ki Son, economist at Barclays (LON:BARC), said.He was one of the few economists to correctly predict the surprise November cut.”With the BOK’s concern on growth also becoming structural, given intensified competition and China’s aggressive investment, we believe the speed of policy normalisation to neutral could be faster than we expected,” Bum Ki Son added.Median forecasts indicated a cumulative 75 basis-point cut next year, bringing the policy rate to 2.25% by end-September, compared with 2.50% expected in a poll taken before Thursday’s central bank meeting.But there was no clear consensus on the rate at end-September, with 11 of 22 economists forecasting 2.25%, 10 saying 2.50% and one 2.00%.”The tone of the statement and Governor Rhee’s press conference makes clear that further easing is on the way and that supporting economic growth was now the central bank’s main priority,” Gareth Leather, senior Asia economist at Capital Economics, said.”We expect growth to struggle over the coming year. Although exports should continue to perform strongly, this is likely to be offset by further weakness in the labour market and the continued struggles of the property sector.”The BOK downgraded its forecast for economic growth in 2025 to 1.9%, weaker than the previous forecast of 2.1%.(Other stories from the November Reuters global economic poll) More