Economy

LONDON (Reuters) -British Finance Minister Rishi Sunak and his Canadian counterpart Chrystia Freeland walked out of an International Monetary Fund (IMF) meeting in Washington to protest the invasion of Ukraine when Russia’s delegate spoke on Thursday, a British finance ministry spokesperson said.Before walking out, Sunak “described (Russian President Vladimir) Putin’s assault on Ukraine as an assault on the rules and norms that are the foundation of our economic way of life,” the spokesperson said.Bank of England Governor Andrew Bailey, who walked out of a G20 meeting in Washington on Wednesday for the same reason, said on Thursday there should be “no appeasement” of Russia due to the economic problems caused by the invasion of Ukraine.The G20 includes Western countries that have accused Moscow of war crimes in Ukraine, as well as China, India, Indonesia and South Africa which have not joined Western-led sanctions against Russia over the conflict.G20 finance ministers and central bank governors met on the sidelines of a semi-annual conference held by the IMF and World Bank in Washington, with the Ukraine war, food security and ongoing recovery from the coronavirus pandemic the key topics.After Canada’s Freeland returned to the meeting, she directly addressed Russian Finance Minister Anton Siluanov, who was attending virtually, a source familiar with what happened in the meeting room said.”It is perverse and absurd to hear you speaking today when your war is making us poorer,” she said, according to the source. “Your war is causing food prices to rise and will cause people to go hungry. Your war is causing energy prices to rise. Your war is driving inflation, which hurts the most vulnerable.”Canada’s finance ministry declined to comment.Russia calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory, but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.Freeland, who is of Ukrainian descent and has made impassioned pleas on behalf of the country, went on to speak about how women were “the particular targets of this war.””Rape is being used systematically as a weapon of war by Russia,” Freeland said, according to the source.Addressing Siluanov by name, she concluded by saying Ukraine would win the war and “Russia and the Russian leadership will bear full responsibility for the crimes being committed today”. Earlier on Thursday, Britain ramped up trade sanctions on Russia, targeting luxury goods including caviar, silver and diamonds through import bans and higher tariffs, seeking to punish Moscow for its invasion of Ukraine. More

Boris Johnson has vowed that he will not retreat on his green agenda in spite of claims by parts of the Conservative party that the cost of developing renewable energy is driving up electricity bills.The UK prime minister, while on a trip to India, said the government was tackling the cost of living crisis and insisted that Rishi Sunak, the under-fire chancellor, would still be in his job to deliver a crucial Budget in the autumn.But Johnson rejected calls from some Tory MPs that he should scrap the “green levy” on electricity bills to help households immediately, as the squeeze on living standards intensifies. “I want to do everything we can to alleviate the cost of living,” he said on Thursday. “But there’s a lot of prejudice against the green agenda.” The so-called green levy is made up of several taxes used to help fund investment in low-carbon generation, including nuclear and wind farms, and paying energy companies to insulate homes for poorer households. Oliver Dowden, Tory chair, recently denounced “net zero dogma” while Conservative MPs and peers in the “Net Zero Scrutiny Group” have called for the scrapping of the green levy from consumer bills.The Daily Telegraph reported on Monday that government officials were considering whether to scrap the levy. But Johnson insisted: “Actually green technology, green, sustainable electricity can help to reduce bills. Overall, if you look at what we have done with renewables it has helped to reduce bills over the last few years and will continue to do so.”Johnson’s allies say the prime minister has no intention of removing the green levy, arguing that the money would have to be found elsewhere, probably from general taxation.Electricity bills for most households jumped in April when the government’s energy cap increased 54 per cent to nearly £2,000. The levy currently makes up £153 of that figure. The main reason for the jump in bills, which are set to rise further in October by another estimated £600 when the cap is again increased, is the spiralling global wholesale price of gas, accentuated by Russia’s invasion of Ukraine. The green levy is designed to subsidise a shift towards low-carbon, homegrown sources of power, which are less vulnerable to geopolitical events, according to the government. However, energy company chiefs have suggested shifting the levy to general taxation as one way to help hard-pressed households, along with cutting VAT on energy and increasing the “warm homes discount” for people on low incomes. In February, Sunak announced a package of council tax rebates and loans to help households, but has since acknowledged that this may need beefing up in the autumn. Johnson, asked whether the government would wait until then before launching a new package to help struggling households, said: “We’ll do whatever we can to help.”The prime minister tried to quell rumours that he could sack Sunak in a summer reshuffle, following criticism of the chancellor’s Spring Statement and a subsequent row over his wife’s tax arrangements.

Asked whether Sunak would deliver the autumn Budget, Johnson replied: “The answer to that is yes.” The chancellor, on a visit to Washington, refused on Friday to say whether he considered resigning after being issued with a police fine over the partygate affair.Meanwhile, Johnson declined to say whether he could offer the same job guarantee to other cabinet members, including Priti Patel, the home secretary, who has been criticised in the past for her handling of cross-channel migration.Johnson said Patel’s policy to ship migrants to Rwanda to have their asylum claims processed was “a sensible, brave and original policy. I think Priti has come up with something that is extremely difficult to pull off. I think she has done an outstanding job.” More

How well did you keep up with the news this week. Take our quiz. Boris Johnson will offer increased defence co-operation to Narendra Modi during talks in New Delhi today, in a bid to break India’s reliance on Russian weaponry. The UK prime minister will hold out the prospect of closer military ties in talks with his Indian counterpart on the final day of his visit. He has already said he has no plans to confront Modi over India’s refusal to condemn the invasion of Ukraine by Russia, which supplies the majority of the country’s weapons.The talks will focus instead on boosting security and defence collaboration, as well as building momentum around an ambitious target to finalise a free trade agreement by the end of this year. “The world faces growing threats from autocratic states which seek to undermine democracy, choke off free and fair trade and trample on sovereignty. The UK’s partnership with India is a beacon in these stormy seas,” Johnson said.Do you think Johnson should confront Modi over India’s refusal to condemn Russia’s invasion? Tell me what you think at [email protected]. Thanks for reading FirstFT Asia. — EmilyThe latest from the war in UkraineMilitary developments: Vladimir Putin hailed Mariupol’s “liberation” after a two-month battle, a victory that would mark a major success, but Ukraine rejected the declaration.Sanctions: With Russia under intense pressure from western sanctions, analysts are assessing what the North Korean example can teach western policymakers — not least China’s role in alleviating economic pressure on Moscow.Energy: Industry leaders and economists say a German ban on Russian gas would be catastrophic for the country’s economy, but many companies expect it to happen anyway. For more subscribe to our Energy Source newsletter. Opinion: Heavy weapons and more far-reaching sanctions on Russia would help end its war of unprovoked aggression, writes Ukrainian prime minister Denys Shmyhal.Five more stories in the news1. Elon Musk unveils $46.5bn financing package to fund Twitter bid The billionaire chief executive of Tesla has lined up $25.5bn in debt — including a margin loan of $12.5bn against his shares in the electric vehicle maker — from a group of banks led by Morgan Stanley, his financial adviser. Separately, he said he would provide $21bn of equity for the deal. 2. Goldman flagged Morgan Stanley block trades to Hong Kong regulator The US bank reported its Wall Street rival Morgan Stanley to Hong Kong’s financial regulator over a series of block trades, according to people familiar with the matter. News of the previously unreported discussion comes as Morgan Stanley faces a US federal investigation into its block trading business.3. Foreign investors ditch Chinese debt at record pace Foreign investors ditched a record $18bn worth of renminbi-denominated debt last month, with selling accelerating as soaring US bond yields dulled the allure of holding Chinese debt. Meanwhile, Jay Powell has sent his strongest signal so far that the Federal Reserve is prepared to raise interest rates by half a percentage point next month.4. China to launch private pensions China has said it will launch an official private pension scheme that aims to push more of the country’s vast household savings into the financial market, as the government grapples with an ageing population.5. Serena Williams and Lewis Hamilton join bid for Chelsea FC The US tennis legend and British Formula One driver are backing the bid led by City grandee Martin Broughton and private equity billionaires Josh Harris and David Blitzer, according to people with knowledge of the matter. Sign up for our Scoreboard newsletter for more on the business of sport. The days aheadEuropean leaders in New Delhi Following UK’s Boris Johnson’s meeting India’s Narendra Modi today, the EU’s Ursula von der Leyen will be in New Delhi on Sunday. The visits come at a time of simmering anxiety over its relations with Russia. More details in the latest Europe Express. Opinion: As Boris Johnson visits India, there is a rare opportunity for a bilateral reset on trade and defence, writes Rahul Roy-Chaudhury, member of the UK-India Advisory Council.French presidential election France on Sunday will vote on whether to give President Emmanuel Macron a second five-year term or entrust the presidency to his rightwing challenger Marine Le Pen. In Thursday’s debate, Macron accused his rival of being beholden to Vladimir Putin and of risking civil war with her plans to curb Islamism. But there are signs French Muslims have lost faith in Macron.Poll tracker: The race is a repeat of the 2017 election, in which Macron decisively defeated Le Pen with 66 per cent of the vote. The latest polling points to a far narrower outcome in this election.

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Register here to attend the FT’s first Crypto and Digital Assets Summit on April 26-27. Be sure to check out the full line-up of events, including remarks from Changpeng Zhao, founder and chief executive of Binance.What else we’re readingThe Climate Game — can you reach net zero? Today the FT launches a game that puts you in charge of solving climate crisis. Can you cut emissions to net zero by 2050 while protecting nature and preserving livelihoods?

Global demographic trends create tough choices Richer countries that welcome and successfully integrate migrants will be able to smooth many of the financial pressures of ageing. Others will try to offer financial incentives to increase birth rates, even though they have scant evidence of their effectiveness. Cultural change to make lives easier for parents, especially mothers, will also be needed, writes Chris Giles.Will women leaders change the future of management? Office temperatures (mostly set at levels that suit men better than women) are a tiny reflection of a startling larger truth: the minimal imprint women have so far left on the “official” theory and practice of management. And as the technology of work directly affects the daily life of every employed human on the planet, that matters.Welcome to libertarian paradise The island of Sark in the English Channel is independently governed as part of the Bailiwick of Guernsey, one of Britain’s three Crown dependencies. It has no income tax, no inheritance tax, no capital gains tax, no VAT and no employment laws of any kind. But is it the Ayn Rand-style haven it’s cracked up to be?Few galleries selling NFTs, despite the hype According to the 2022 Artsy Gallery Insights report by online sales platform Artsy, only 11 per cent of galleries sold NFTs in 2021, while 67 per cent say that their clients hadn’t even asked about them. Of those that did sell NFTs, half say their total sales value was $5,000 or less.Food & DrinkSince the invasion of Ukraine, bars and retailers have been delisting Russian brands in protest and, in some cases, theatrically pouring the liquor down the drain. What’s the alternative? Kyiv vodka, of course. More

WASHINGTON (Reuters) -A White House adviser on Thursday suggested the United States could lower tariffs imposed on a host of non-strategic Chinese goods such as bicycles or apparel to help combat inflation.Deputy National Security Adviser Daleep Singh said tariffs imposed by the former Trump government may have given the administration some negotiating leverage, but these tariffs served no strategic purpose, and China had similar non-strategic retaliatory tariffs in place.”So that’s the opportunity,” he told an event hosted by the Bretton Woods Committee. “It could be that in this moment of elevated inflation and China having its own very serious supply chain concerns … maybe there’s something we can do there.” Inflation is a critical concern for President Joe Biden, whose approval ratings are falling as the costs of energy, food and other staples increase, and his Democrats are at serious risk of losing their majorities in Congress in midterm congressional elections in November.U.S. Trade Representative Katherine Tai has restarted an exclusion process that could lower tariffs on some Chinese goods, but has made no major moves to wholesale remove tariffs on hundreds of billions of dollars of Chinese goods.The United States could use tariffs to advance strategic priorities such as strengthening critical supply chains and maintaining U.S. preeminence in foundational technologies and to support national security, Singh said.”For product categories that are not implicated by those objectives, there’s not much of a case for those tariffs being in place,” he said. “Why do we have tariffs on bicycles or apparel or underwear?” U.S. Treasury Secretary Janet Yellen in December said lowering Trump-era tariffs on imported goods from China through a revived exclusion process could help ease some inflationary pressures, although she stressed it would be no “game-changer.” Singh’s comments come as Washington is urging Beijing to refrain from undermining sweeping sanctions imposed on Russia over its war in Ukraine.Singh said the Biden administration believed Chinese banks and companies were largely being cautious and steering clear of helping Russia to evade Western sanctions, and underscored China’s interest in continuing to trade with the West.Singh said it was clear that Chinese President Xi Jinping wanted to achieve supremacy through economic and technological dominance, but there were areas where the two countries could cooperate, including to combat climate change.He said Xi was likely to continue to rely on state-owned enterprises and national champions, and they would continue to receive very heavy government subsidies. More

Boris Johnson is to order another delay to the introduction of post-Brexit border checks on goods entering Britain from the EU, in an admission that piling new costs on imports would exacerbate the cost of living crisis.Full checks on imports from the bloc were supposed to come into effect on July 1, but the prime minister has sided with Tory rightwingers who argue that Brexit is an opportunity to cut red tape at the border.Johnson’s allies said it was “inevitable” that checks would be delayed again — for the fourth time since the end of the Brexit transition period in December 2020. There is a live debate on the length of any new grace period.The prime minister signalled the move on a visit to India. “I’m generally in favour of minimal friction at all junctures between the UK and the EU,” he told reporters.“New technology will make some of the checks we have obsolete.” That was a reference to a promise by the government to create “the world’s most effective border” by 2025.Johnson’s allies confirmed one option being considered by ministers — and promoted by the likes of the Brexit opportunities minister, Jacob Rees-Mogg — was to refrain from new checks until the new border systems were in place.“Now is not the time to be piling new costs on companies,” said one colleague of the prime minister. It could mean that EU goods would enter the British market with minimal checks for years after the UK had left the bloc.Critics of Brexit have noted the irony that British exporters now face border costs when selling goods into the EU, while their counterparts in mainland Europe have their products waved through at the UK border with only loose checks.Goods arriving from the EU are not subject to safety and security declarations, while food and plant products are not physically checked. Rees-Mogg and former Brexit minister Lord David Frost have urged Johnson to extend the border checks “grace period”, which has been largely welcomed by companies that rely on a pan-European supply chain.But it is contentious within government with industry executives reporting that both the Department for Environment, Food and Rural Affairs and the Department for International Trade initially resisted a fourth delay.

Agrifood industry groups have broadly welcomed the move, given the additional pressures on supply chains caused by the Ukraine crisis.Dominic Goudie, head of international trade at the Food and Drink Federation, said that Ukraine was causing ingredient shortages and rising costs across the food and drink industry, with wheat, sunflower oil and white fish particularly affected. Nick Allen, chief executive of the British Meat Processors Association, added that a decision to delay checks again comes as no surprise, given that not all government systems and sites would be fully ready by July. “On balance, it’s better that these checks are introduced when preparations are fully complete,” he added. Shane Brennan, chief executive of the Cold Chain Federation, said that while a further delay entrenches unfairness between UK food exporters and EU-based businesses importing into UK, it was the correct move.“We import at least three times as much food from the EU than we export. The impact of additional cost and uncertainty for our imports will be felt across the UK food supply chain if the checks go ahead,” he added.The CBI, the employers’ organisation, said that while the move was “understandable”, given the strains on supply chains caused by the coronavirus pandemic and the war in Ukraine, in the longer term not applying checks “disadvantages UK exporters at a time when trade is already acting as a drag on growth”. More

LONDON (Reuters) – After huge rallies fed by blockbuster commodity price surges, the tide may be turning for currencies such as the Aussie dollar and Colombian peso as fears of a global growth slowdown take hold in markets.As inflation and higher borrowing costs crimp business and consumer spending, the International Monetary Fund and World Bank this week slashed global growth forecasts by nearly a percentage point and flagged the risk of further drops stemming from China’s COVID lockdowns and sanctions on Russia. The warnings knocked prices of oil and metals, though tight supply of most commodities has so far capped losses. Brent crude futures remain above $100 a barrel while the Refinitiv CRB commodity index is still up nearly a quarter this year.Eight of the top 30 currency performers this year in a group monitored by Societe Generale (OTC:SCGLY) are commodity-linked. In a smaller G10 grouping, four of the top five are from commodity exporting countries, Refinitiv data shows. Societe Generale strategist Kenneth Broux reckons however, that the rally is “running on fumes” with a big test for commodity currencies coming from U.S. real yields – or inflation-adjusted 10-year Treasury yields – turning positive this week for the first time in two years.Central banks are also polishing their hawkish credentials, especially the U.S. Federal Reserve.A BofA investor survey this week predicted the Fed would hike rates more than seven times this year, up from four times in a March survey. Anticipation of the resulting growth slowdown may be already taking the edge off commodities and commodity currencies such as the Australian dollar, which rose 10% versus the greenback between end-January and late-March. The Brazilian real has gained 18% this year and the Colombian peso 8%. “Long Latin American energy exporters and short Asian importers” has been this year’s most concentrated foreign exchange trade, the head of a U.S. bank’s currency desk said.April has brought a turnaround, however. The Chilean peso for example, has shed almost half its first-quarter gains as copper prices ease, while signs of a Chinese slowdown have weighed on the Aussie and Kiwi dollars. Morgan Stanley (NYSE:MS)’s proprietary FX positioning tracker, calculated off client option market positions, reflects the shift, said James Lord, the bank’s global head of foreign exchange.”Usually exchange rates tend to be very correlated and tend to go in the same direction, but we have seen a huge decoupling between commodity exporting and importing currencies since the start of the year,” Lord said. On Morgan Stanley’s scale of minus 100 to plus 100, where 0 is neutral, positioning on commodity currencies reached 75 in March, the highest according to data going back to 2014. The score has since eased, albeit to a still-bullish 62.”Commodity exporters’ currencies may start to weaken from here because global growth is slowing,” Lord said, noting that extreme positioning means there were “a lot of flows that can go the other way”.LOT OF OPTIMISMThe catalyst could be China. The yuan, crucial to the trajectory of commodities, has fallen to a two-month low against a basket of currencies and a Reuters poll shows analysts are “short” yuan for the first time since October.. With swathes of China under COVID lockdowns, a gauge of hedge fund positioning compiled by the U.S. CFTC shows a sharp decline in Aussie dollar net longs – currently $2.1 billion versus six-year highs of about $6.5 billion in January. Brazilian real net longs have held up better, though they too are off early March’s record highs of nearly $1 billion. Hedge funds have also stopped buying the kiwi and the Canadian dollar, the data shows. If growth does slows sharply, currencies’ exalted valuations will be hard to justify – the Norwegian crown’s value on a trade-weighted basis is near its highest, relative to its median value, for the last 50 years. The Aussie and Kiwi dollars are also well above historic averages on a trade-weighted basis, according to Refinitiv data.Current exchange rates are pricing a lot of bullishness, said Francesca Fornasari, head of currency solutions at Insight Investment, noting for instance “when it comes to the Aussie, there is a lot of optimism baked in about China, commodity markets and the central bank rate trajectory.” More

WASHINGTON (Reuters) -A half-point interest rate increase “will be on the table” when the Federal Reserve meets on May 3-4 to approve the next in what are expected to be a series of rate increases this year, Fed Chair Jerome Powell said Thursday in comments that pointed to an aggressive set of Fed actions ahead.With inflation running roughly three times the Fed’s 2% target, “it is appropriate to be moving a little more quickly,” Powell said in a discussion of the global economy at the meetings of the International Monetary Fund. “Fifty basis points will be on the table for the May meeting.”In likely his last public remarks before the Fed’s next session, Powell also said he felt investors currently anticipating a series of half-point hikes were “reacting appropriately, generally,” to the Fed’s emerging fight against rising prices.His comments appeared to pin down an expected rate path much steeper than projected at the Fed’s March meeting, when policymakers at the median anticipated the target overnight federal funds rate would be increased to 1.9% by year’s end.Traders in contracts linked to the overnight federal funds rate currently expect the Fed to increase it to a range between 2.75% and 3% by then, a pace that would involve half-point hikes at three upcoming meetings and quarter-point increases at the year’s three other sessions.That would take the Fed’s target rate beyond the “neutral” level and into territory that would begin to restrict economic activity, marking one of the faster turnarounds of U.S. monetary policy. In addition, the Fed is expected to begin reducing its asset holdings in a step that will further tighten credit conditions for businesses and households.RECESSION FEARThe potential speed of the Fed’s action has led some economists to warn a recession may now be more likely if business and households cut back spending more than anticipated as borrowing costs rise, or stock and other assets prices drop in value and eat into household wealth.”I would put the probability that we enter into a recession over the next 12 months of about one in three, and that is rising,” Moody’s (NYSE:MCO) Analytics’ chief economist Mark Zandi said earlier Thursday at a session on inflation that Powell also addressed.With aggressive rate hikes and balance sheet reductions ahead, “it’s raised the risks that the Fed navigating things gracefully, and landing…the economic plane on the tarmac, is going to be much more difficult.”The interest rate on the 2-year Treasury note, the maturity most sensitive to expectations about Fed policy, rose above 2.7% for the first time since December 2018. Rising yields on both short- and long-term bonds are increasing costs for a variety of loans — most notably the 30-year mortgage commonly used to finance home purchases, where the average rate rose to over 5% this week — a key channel through which the Fed influences the economy.Equities, meanwhile, added to their losses as Powell spoke. The benchmark S&P 500 Index was last down about 1.2%.Powell acknowledged the Fed was walking a sensitive line between taming inflation and pushing the economy into a downturn.”Our goal is to use our tools to get demand and supply back in synch…and do so without a slowdown that amounts to a recession,” Powell said. “It is going to be very challenging.””Powell is intimating that avoiding a recession will not be easy. That is new,” said Tim Ghriskey, senior portfolio strategist with Ingalls & Snyder in New York.But undercutting the rapid pace of price increases, which have more than offset wage gains for most Americans and become a pressing political issue as well, is “absolutely essential” Powell said. “Economies do not work without price stability.”Until recently, the central bank had expected inflation to ease with some outside help, as the reopening of the economy from the pandemic allowed the flow of goods around the world to move back to normal. Instead, new lockdowns in China and the war in Ukraine have threatened a new round of bottlenecks, higher energy costs, and uncertainty.Powell said the Fed no longer expects any help, but will count on tighter monetary policy to curb demand for goods and services, and prompt businesses to reduce the demand for workers in an “unsustainably hot” job market.”We have had an expectation that inflation would peak around this time and come down over the course of the rest of the year and then further,” Powell said. “These expectations have been disappointed in the past…We are not going to count on help from supply side healing. We are going to be raising rates.” More

LONDON (Reuters) – China has committed to joining Zambia’s creditor committee, International Monetary Fund managing director Kristalina Georgieva said on Thursday, amid complaints from Zambia’s finance minister about delays to its debt restructuring.People’s Bank of China governor Yi Gang said that China intended to co-chair the committee, two sources with knowledge of the International Monetary and Finance Committee meeting told Reuters.Zambia became the first pandemic-era default in 2020 and is buckling under a debt burden of almost $32 billion, around 120% of GDP.”We were very pleased to hear from Governor Yi Gang… a very specific commitment to join the creditor committee on Zambia and work expeditiously for debt resolution,” said Georgieva at the International Monetary Fund (IMF) Spring Meetings.She added that he had also committed to the Common Framework debt restructuring process, launched by the Group of 20 (G20) leading economies in 2020 in response to the coronavirus pandemic.Zambia’s finance minister Situmbeko Musokotwane said at public events on Thursday that the debt restructuring process had “stalled” and that the Zambian team had “come here to complain”.An IMF spokesperson said that they did not have any more details of Yi’s statement, noting that it was at a closed door meeting.”This augurs well, for coordination, in resolving debt for various African countries,” Zimbabwe’s finance minister Mthuli Ncube tweeted of the Chinese position.Ethiopia and Chad also signed up to the Common Framework more than a year ago and have yet to receive debt relief.”China is a very significant lender to many of these low-income countries, and China needs to participate, along with the Paris Club and private creditors,” U.S. Treasury Secretary Janet Yellen said at a press conference before Georgieva’s.”I’ve called on China to specifically for example participate right away in a meeting for Zambia, that wishes to undergo debt restructuring. And I am hopeful that China will agree to play a more constructive role.”China and Chinese entities held $5.78 billion of Zambia’s debt at the end of 2021, according to the most recent Zambian government data. More