Economy

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.This article is an onsite version of our Europe Express newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday and Saturday morning. Standard subscribers can upgrade to Premium here, or explore all FT newslettersGood morning. Spain’s Prime Minister Pedro Sánchez has said he’s considering quitting in response to corruption allegations against his wife, and will announce whether to end his almost six-year-long premiership next Monday.Meanwhile, the Belgians have activated an EU crisis response mechanism over concerns about disinformation ahead of bloc-wide elections in June. Today, we report on how the Chinese company raided by the EU’s anti-subsidy watchdog has been earning . . . EU money. And our Paris bureau chief previews Emmanuel Macron’s big speech on the future of Europe this morning.Baggage handlersWhen EU investigators start going through documents from the raided offices of Chinese security equipment supplier Nuctech, they will find some familiar names in their business dealings: the bloc’s governments are some of its biggest clients.Context: Nuctech’s offices in Rotterdam and Warsaw were raided on Tuesday morning by EU investigators probing the company for breaching foreign subsidy rules. It is part of a slew of increasingly forceful trade measures being taken by Brussels against Beijing.The European Commission is accusing the company — which makes airport, freight and baggage scanners — of receiving unfair subsidies from Beijing that “distort” the market. But awkwardly, the commission has also signed off on spending EU funds to buy those products for use by national customs authorities.The company’s products are ubiquitous across Europe. From scanning the tens of millions of containers transiting the EU’s two biggest container ports — Rotterdam and Antwerp — to the luggage of passengers at Brussels’ Eurostar terminal. Some of those devices were put there thanks to EU funding, under the Customs Control Equipment Instrument, which has a budget of over €1bn to help member states update their equipment.Even before Tuesday’s raids, Nuctech had been triggering concerns. The US has since 2020 warned of “its involvement in activities contrary to the national security interests of the US” and “security risks posed by Nuctech equipment . . . given the company’s control by the PRC government”.European parliament lawmakers have also demanded action against the company, and condemned a 2022 decision to purchase Nuctech scanners by Strasbourg airport — the terminal many of them use to get to their monthly plenary sessions.“There is a reasonable ground to exclude companies like Nuctech because they are from a country with espionage programmes, which can compel all their businesses or citizens to comply with any request form their services,” said Bart Groothuis, a Dutch liberal MEP. “They will weaponise dependencies against us.”Nuctech has denied the allegations and said it “is committed to defending its reputation of a fully independent and self-supporting economic operator”.Chart du jour: Greek tragedyGreece’s strong economic recovery has made it one of the best performers in the eurozone. But that has come with brutal costs for its long-suffering population, writes Valentina Romei.Mr EuropeWhen French President Emmanuel Macron delivered a landmark speech on the future of Europe at the Sorbonne University back in 2017, he sketched out an audacious vision to turn the bloc into a more independent, sovereign power by 2024. Today, a more experienced, crisis-hardened Macron will take to the same stage for what his advisers are billing as Sorbonne II, writes Leila Abboud. Context: An ardent pro-European, Macron will argue for moving on from his earlier “agenda for sovereignty” — much of which France believes has been achieved — to an “agenda for European power”, following the full-scale invasion of Ukraine and the Covid-19 pandemic. Macron’s 2017 speech is like a time capsule of the early months of his first presidency, when he swept into power by demolishing old French political parties and seeking to disrupt consensus in both Paris and Brussels. “The Europe of today is too weak, too slow and too ineffective, but only Europe can give us a true ability to act to face the big global challenges,” he said then.He will doubtlessly be less harsh today, given that he is now partly responsible for the state of the EU. What has changed is that other countries, crucially Germany, have come around to some of his positions — although Macron’s grandstanding and off-the-cuff remarks still rankle in many capitals. “The EU has never been more French,” said Georgina Wright, an analyst at the Montaigne Institute in Paris. “To an extent he was ahead of the curve — the ideas of sovereignty and industrial policy are no longer taboo, and the bloc is doing more on security and defence than ever.” Macron’s advisers are promising Sorbonne II will be more than a victory lap, and include specific proposals for where the EU should go next. One thing is clear: Europe’s disrupter-in-chief already has his eye on his legacy with three years left in office, and he wants Europe to be a big part of it.What to watch today Nato secretary-general Jens Stoltenberg visits Germany, meets defence minister Boris Pistorius.Latvian Prime Minister Evika Siliņa visits Sweden.Now read theseRecommended newsletters for you Britain after Brexit — Keep up to date with the latest developments as the UK economy adjusts to life outside the EU. Sign up hereChris Giles on Central Banks — Your essential guide to money, interest rates, inflation and what central banks are thinking. 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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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.A quarter of a century later it remains a resonant and notorious image of European arrogance. Michel Camdessus, then the French managing director of the IMF, stands over Suharto with arms imperiously folded as the Indonesian president, head bowed, signs a humiliating and wildly excessive list of conditions in return for an emergency loan during the Asian financial crisis in 1998. Now Indonesian accusations of oppression by Europeans are being aired again, this time over Brussels’ demands that palm oil producers prove that their exports to the EU do not cause deforestation. Indonesia’s economy minister has accused the EU of “regulatory imperialism”; the Indonesian foreign ministry’s videoed annual address last year contained an image of a jackboot marked with the EU logo stamping on a palm oil plantation.As Brussels’s attempts to manage its trading partners’ production processes proliferate — from standards on renewable fuels to deforestation to carbon emissions to plastic packaging and employment conditions — so do accusations of condescending heavy-handed coercion from those who have to comply.The bureaucratic intrusiveness of the deforestation regulation has aroused particular resentment. The EU has made some effort towards lightening the load: last year it set up a task force with Indonesia and Malaysia on implementing the rules. But there does not seem to be much appreciation of the dark historical resonances.Many of the countries affected by the deforestation regulation are former European colonies still growing colonial-era crops. The oil palm is native to west and central Africa, not south-east Asia. It was brought to the then Dutch East Indies by 19th-century European colonists and grown in plantations worked by indentured and forced labour shipped in from around the region.One of the large palm-growing companies active in Indonesia, Socfin, has a holding company listed on the Luxembourg stock exchange. It was originally founded in 1909 by a Belgian, Adrien Hallet, who grew rubber and palm oil in the Congo. The Belgian colonial presence in the Congo included viciously extractive colonists who cut children’s hands off as punishment for failing to meet rubber-tapping quotas.Indonesia won its independence from the Netherlands (which, like the rest of western Europe, razed most of its own forests centuries ago in the process of getting rich) in a bloody war in the 1940s. But the country’s palm-oil growers are still being forced to follow rules dictated in Europe. Large-scale foreign-owned producers such as Socfin will almost certainly find it easier to comply than will Indonesian smallholders.Framed like that, you can see how the EU’s pious insistence that its trade policy furthers “European values” might grate just a tiny little bit. It’s not the first time that clodhopping European insensitivity has irritated former colonies. During fractious negotiations on preferential trade agreements with the African-Caribbean-Pacific grouping of countries in 2007, then-trade commissioner Peter Mandelson unwisely said Nigeria “wants to sit like an elephant in the middle of the road” and obstruct progress. The Democratic Republic of Congo in 2010 banned the Belgian official Karel De Gucht, then the EU’s development commissioner (and later trade commissioner), from the country over comments he made about the former Belgian colony. In 2022 Josep Borrell, the EU’s foreign policy chief, was rightly criticised for describing Europe as geopolitically a “garden” and most of the rest of the world as a “jungle”, and suggesting that EU ambassadors were sent forth to tame the wilderness.Meanwhile, in post-Brexit Britain, the then home secretary Suella Braverman imperilled trade talks with India in 2022 by singling out Indians for overstaying their visas when visiting the UK. In practice, many middle-income countries show reserves of pragmatic tolerance that Europeans do not necessarily deserve. Indonesia, for example, continues to negotiate a bilateral trade deal with Brussels. Brazil, along with the other three South American countries that make up the Mercosur grouping, is ready to sign a trade agreement with the EU despite its own resentment over the deforestation regulation. Delhi appeared to use the outrage in India over Braverman’s unwise remarks as leverage to press its demands for more work visas in the UK-India trade talks rather than abandon the deal altogether.We are, after all, where we are. The pumping of carbon dioxide into the atmosphere by rich countries cannot be undone: the cities of Europe will not be flattened to allow the land to return to forest. No solution to climate change will be possible without the big middle-income countries reducing carbon emissions, though huge amounts of development aid to help the transition wouldn’t go amiss. But EU policymakers might just reflect that exploitative imperialism is a traditional European value too, and that what looks like progressive principle in Brussels can come across as hypocritical coercion on the receiving end.alan.beattie@ft.comClimate CapitalWhere climate change meets business, markets and politics. Explore the FT’s coverage here.Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here More

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SINGAPORE (Reuters) – The yen was pinned on the weaker side of 155 per dollar on Thursday as the Bank of Japan (BOJ) kicks off its two-day rate-setting meeting, leaving traders nervous as to whether Tokyo will intervene while policy deliberations are still underway.Having traded in a tight range over the past few days, a buoyant dollar finally broke above the 155 yen level for the first time since 1990 in the previous session, and was last steady at 155.34 yen in early Asia trade.Intense speculation of intervention from Japanese authorities to shore up the yen had hampered the dollar’s ascent towards the psychologically key level, seen by some market participants as a line in the sand that would prompt Tokyo to take action.The breach of the 155 yen level comes as the BOJ meets to discuss monetary policy, though expectations are for the central bank to keep its short-term interest rate target unchanged following last month’s landmark exit from negative rates.”We expect the BOJ meeting to deliver a marginally hawkish hold outcome,” said Carl Ang, fixed income research analyst at MFS Investment Management.”As for policy signalling, April seems a little early to pivot away from the BOJ’s March communication that accommodative financial conditions will continue for the time being.Continued expectations of gradual policy tightening and a low terminal policy rate make it difficult for the yen to appreciate significantly, even if at historically depressed levels.”BOJ Governor Kazuo Ueda said this week the central bank will raise interest rates again if trend inflation accelerates toward its 2% target as expected.In the broader market, the dollar was on the front foot, recouping some of its losses after a slight tumble earlier in the week following upbeat business activity data in the euro zone and the UK, which had in turn sent the euro and sterling higher.The euro was last 0.04% higher at $1.0702, but edged slightly away from an over one-week high hit on Wednesday, while sterling was off 0.01% at $1.2463.The dollar steadied at 105.79 against a basket of currencies, pulling away from a nearly two-week low hit in the previous session.Trading in Asia was thinned with Australia out for a holiday.The Aussie tacked on 0.04% to $0.6500, buoyed by receding bets of rate cuts from the Reserve Bank of Australia (RBA) this year after the country’s consumer price inflation slowed less than expected in the first quarter.”Inflation is moderating but it has some way to go before the RBA can be confident it will return to the 2–3% target range on the desired timetable,” said Justin Smirk, senior economist at Westpac.”As such, we expect the RBA to remain on hold in May and have pushed back the date of our first rate cut to November, from September previously.”The New Zealand dollar gained 0.08% to $0.5940. More

SYDNEY/LONDON (Reuters) – British multinational miner Anglo American (JO:AGLJ) said on Thursday it had received an all-share buyout proposal from the world’s largest listed mining company, Australia’s BHP Group (NYSE:BHP).London-listed Anglo American, which owns mines in countries including Chile, South Africa, Brazil and Australia, had a market capitalisation of $36.71 billion as of Wednesday’s close, according to LSEG data.The deal, if agreed, would give BHP access to more copper, one of the most sought after metals in the clean energy transition, and potash, two of its strategic commodities, as well as more coking coal in Australia.It could also trigger a wave of transactions for any unwanted assets such as iron ore, nickel and diamonds, where Anglo owns 85% of industry giant De Beers.”There can be no certainty that any offer will be made nor as to the terms on which any such offer might be made,” Anglo American said in a statement, adding the unsolicited proposal is non-binding and highly conditional. The company said its board was reviewing the proposal and did not disclose the share ratio on offer.BHP declined to comment when asked about earlier reports about preliminary talks with Anglo American. A deal would be conditional on being preceded by separate demergers by Anglo American of its entire shareholdings in Anglo American Platinum and Kumba Iron Ore to its shareholders. Under UK takeover rules, BHP has until May 22 to make a firm offer.BHP, best-known for mining iron ore, copper, nickel and coking coal, had a market capitalisation of about $149 billion as of Wednesday. The Australian market is closed on Thursday for a public holiday.If the Anglo American deal came to fruition, it would be the second major acquisition for BHP in about a year after its 2023 purchase of Oz Minerals.The proposal comes as BHP chair Ken MacKenzie approaches the final stretch of a nine-year term at the miner he has steered since 2017.Anglo American said in February it would embark on a review of assets after a 94% plunge in annual profit and a series of writedowns. It has seen a fall in demand for most of the metals it mines and took a $1.6 billion impairment charge on its De Beers diamond business. The global mining sector has seen a recent slew of merger and acquisitions despite rising concerns around the economic outlook of one of the world’s largest metals buyer, China.More broadly, M&A activity has registered an uptick in the first few months of this year, including mega deals.Both of the mining firms have recently identified potash as an important business which would complement their mining operations as food demand grows.BHP is currently focusing on its Jansen potash project in the Canadian province of Saskatchewan whereas Anglo American has its hopes on the Woodsmith potash mine in Yorkshire.($1 = 1.5396 Australian dollars) More