Economy

Conservative MPs on Monday expressed concern that a row about the tax affairs of chancellor Rishi Sunak’s family will hurt the Tories in the local elections on May 5.Sunak has been under fire after revelations that his wife has enjoyed UK tax perks after securing non-domiciled status in Britain, and that he held a US green card that put him on a potential path to American citizenship. Health secretary Sajid Javid, who preceded Sunak as chancellor, has also admitted he held non-dom status before entering politics.Several senior Tories privately criticised Sunak’s handling of the row about his wife’s tax status, saying it was likely to damage the party in the local elections. The Conservatives are already braced for losses amid the cost of living crisis and revelations about Downing Street parties held during Covid-19 lockdowns. One minister said May 5 was “already going to be bad, but there’s no doubt having a chancellor that looks like he’s dodging tax in his own household makes it worse”.

Another member of the government added: “Everyone is primarily concerned about the local elections and the Rishi stuff is making our situation worse. People are already concerned about the cost of living and partygate, but this has handed Labour another way to kick us.”Some Tories have questioned whether the controversy over the Sunak family’s tax affairs will undermine the chancellor’s ambitions to succeed Johnson as party leader.One Conservative MP said: “The local elections [in May] will be awful, but at least this way they have someone to blame. Time will tell whether [Sunak] can actually survive all of this.” Another Tory MP criticised Sunak’s handling of the controversy, saying: “I loathe the idea of dragging political spouses into the political fray, but clearly non-dom status and a green card and being chancellor doesn’t work. What was he thinking?”Downing Street said on Monday that Boris Johnson had approved Sunak’s request that Lord Christopher Geidt, the government’s independent adviser on ministerial standards, investigate whether the chancellor has properly declared all his interests since becoming a minister.Number 10 added that the prime minister had full confidence in Sunak, who said on Sunday he had always followed the rules.Sunak’s wife, Akshata Murty, last week announced she would pay UK tax on all of her worldwide earnings after it emerged she was a non-dom.By being a non-dom, Murty, who holds Indian citizenship, was entitled to not pay UK tax on her global income. She owns a stake in Indian technology company Infosys, estimated to be worth more than £500mn, and received £11.6mn in dividend income last year.The controversy around the Sunak family’s tax affairs has provided a second political hit to the chancellor in quick succession: he was criticised last month for not doing more in his Spring Statement to help Britons with the cost of living crisis.

Rishi Sunak and his wife Akshata Murthy at Lord’s cricket ground in London in August 2021. © Zac Goodwin/PA

Asked whether he was out of touch with the British public, Sunak said on Monday: “On cost of living, I know it’s difficult for people . . . I want to make sure that we can do, and I can do, everything we can to get through what are some challenging months ahead.”Labour leader Sir Keir Starmer sought to contrast the behaviour of ministers with the plight of ordinary families contending with the cost of living crunch. “It really is one rule for them and another for everyone else,” he said. Starmer called on Downing Street to come clean on the tax status of all ministers and their spouses. Number 10 was unable to say on Monday whether any other ministers had non-dom spouses. MPs are not allowed to be non-doms under British law.Sunak and his wife said last week that all due tax in the UK was paid by them. The chancellor, who worked in the US before entering politics and has a home in California, relinquished his green card in October last year after consulting with American authorities.Labour meanwhile raised questions about whether Sunak has overseen any tax changes as chancellor that have benefited people with non-dom status.Law firm Vinson & Elkins claimed that a tax scheme in February’s finance act could potentially provide benefits to non-doms.But the Treasury said the scheme was only available to fund managers rather than individuals.Labour also questioned whether Sunak declared a potential conflict of interest when the Future Fund he set up as chancellor during the pandemic to support start ups provided a £650,000 convertible loan to Mrs Wordsmith, an education company.Catamaran Ventures, an investment company controlled by Murty, was a minority shareholder in Mrs Wordsmith, which collapsed less than six months after receiving the loan.Sunak said on Sunday he was confident the review by Geidt would find “all relevant information was appropriately declared”. More

The French president spent several hours mingling with crowds in Denain, where roughly 15% of voters backed him in Sunday’s ballot, compared to 42% who opted for Le Pen. In the evening in Carvin, another town in the area, he sat in a cafe for a live interview with BFMTV and spoke for 20 minutes about pensions, purchasing power and unemployment.Macron said he sees “the divisions and people’s difficulties” and defended his social record, especially a cap on energy bills. He vowed to listen to unions and charities, and said workers should have the same benefits as shareholders when companies are profitable.The trip was a clear attempt by Macron, 44, to try to shed his image as “a president of the rich” as he tries to convince more voters to keep him at the helm of Europe’s second-largest economy on April 24.Le Pen finished 4.7 percentage points behind Macron in Sunday’s first round. While polls give him an advantage heading into the final phase of the campaign, Le Pen has already added more than 10 points to her showing in the 2017 election. To win, she needs to build an anyone-but-Macron coalition and many left-wing voters would have to abstain, or back her. The 53-year-old nationalist didn’t waste any time getting out on the stump, either. She gave a brief press conference in the afternoon and later in the day was in Yonne, a couple hours drive south of Paris, where she spoke about agriculture, food sovereignty and surging food and energy costs.Investors are watching this stage of the election especially closely. If Le Pen were to unseat Macron, it would create a shock for the European Union to compare with Donald Trump’s U.S. election win of 2016. When the gap between them narrowed last week, French 10-year yields held near a seven-year high.Le Pen’s Resilience Makes France’s Election a Much Closer RaceWhile Le Pen has benefited from a tailwind largely thanks to her focus on retail politics, Macron’s momentum stalled amid criticism that he was snubbing voters and neglecting domestic matters because of the crisis in Ukraine. Why France’s Macron Needs Every Vote to Beat Le Pen: QuickTakeAs the president began his charm offensive, his allies were zeroing in on Le Pen’s links to Russia. Finance Minister Bruno Le Maire told RTL radio on Monday that voters have a choice between a president who had put France at the forefront of Europe and an “ally of Vladimir Putin.” It’s not clear how successful that strategy will be. Le Pen secured a loan for her party from a Russian company in 2014 and visited Putin in Moscow in 2017. But she distanced herself from the Russian president after his invasion of Ukraine even as some people close to her have continued to express sympathy. So far, polls show voters don’t care. For his part, Macron has been speaking to Putin regularly first to try to stop Putin’s invasion of Ukraine, and then to try and end the war. His rivals have accused him of naivety in his interactions with the Russian leader who he invited to Versailles within weeks of taking office five years ago.In Denain, Macron was asked if he’ll sit down with Le Pen as planned on April 20 after having refused to debate the other presidential hopefuls. “It’s program against program, so now there will be a debate,” he replied. Read more: France’s Stunning Economic Rebound May Seal Macron’s Re-Election(Updates with comment throughout.)©2022 Bloomberg L.P. More

(Reuters) -Chicago Federal Reserve Bank President Charles Evans on Monday signaled he would not necessarily oppose getting interest rates up to a neutral setting of 2.25% to 2.5% by the end of the year, a pace that would require a couple of 50 basis-point rate hikes at upcoming Fed meetings.”Fifty is obviously worthy of consideration; perhaps it’s highly likely even if you want to get to neutral by December,” Evans told the Detroit Economic Club. But, he added, the Fed should not raise rates so fast that it doesn’t have enough time to assess inflation pressures and adjust policy in response. “I think the optionality of not going too far too quickly is important,” he said. “I would focus the attention on where do we want to be at the end of the year.”The Fed raised rates last month for the first time in three years, and with inflation accelerating is expected to ramp up its pace of rate hikes with half-percentage-point increases for a couple meetings instead of the usual quarter-point increments. Evans, long on the dovish end of the Fed policymaker spectrum, said he had thought the Fed should get interest rates up to a 2.25% to 2.5% range over the next year, but on Monday said he doesn’t think that speeding that process up by three months will hurt the economy. “I think there’s good momentum for the economy” and vibrant labor markets will continue as rates rise toward neutral, he said. But once rates get there, he said, the Fed needs to be “mindful” of the outlook for the economy and the state of inflation.A government report on Tuesday is expected to show consumer prices rose 8.4% last month, far above the Fed’s 2% inflation goal. Fed policymakers like Evans say they expect pressures to recede this year as supply constraints ease and as higher borrowing costs squeeze demand. By the end of this year, Evans said, the Fed will know a lot more.”Is it going to be that some of these pricing pressures have crested, and they start coming down? Or are they going to stay high — or are they going to be higher?” Evans said. “And if it’s because of supply concerns, real resource pressures, there’s going to be a lot of gnashing-of-teeth angst over the inflation versus the concern for the economy. And I think finding the right balance is going to always be at a premium.” More

Moyo Studio | E+ | Getty Images

As the coronavirus pandemic wears on and government aid sent at the beginning of the crisis runs out, Americans are feeling the impact of tight budgets.
One-quarter of Americans said that they felt financially stressed all the time last year, according to a CNBC + Acorns Invest in You survey, conducted by Momentive. The online survey of nearly 4,000 adults was conducted March 23-24.  

Another 41% said they feel financially stressed sometimes, and 33% said they felt rarely or never financially stressed in the last year.
More from Invest in You:Inflation could mean a big heating bill this winter. How to prepareAs inflation rises, where to find opportunities to make and save moneyYour financial wrap-up: 4 savvy money moves to make before year-end
The main cause of financial stress has been rising prices, as Americans grapple with the highest inflation in 40 years. Many people were unprepared to deal with these price hikes, said Susan Greenhalgh, an accredited financial counselor who runs Mind Your Money in Hope, Rhode Island.
“We don’t really know how to deal with them, and how to address them,” she said, adding that having your eyes focused on your spending is always a good strategy.
Shifting the budget
Financial stress appears to be hitting those with lower incomes the hardest.

Nearly 60% of people who had a household income of less than $50,000 said they’re under more financial stress now than they were a year ago, the survey found.
That’s compared with 53% of people in households making between $50,000 and $100,000 annually and 45% of people making more than $100,000 who said the same thing.

Those who are struggling the most may have to make some serious choices with their finances, said Tania Brown, an Atlanta-based certified financial planner and founder of FinanciallyConfidentMom.com. She recommends prioritizing the essentials before anything else — that includes, rent, food, utilities and basic medical expenses.
“In this environment, legitimately other bills may have to go by the wayside,” she said. “Depending on your income, you’re fighting just to keep your home.”
She also suggested reaching out to creditors for help and looking for programs that may lower the cost of utilities depending on income. It may also be a time to look at other monthly expenses and subscriptions to see what can be reduced or cut, including the cost of internet or cable.

You have to be a lot more proactive in reviewing your budget.

Tania Brown
founder of FinanciallyConfidentMom.com

There are also a few ways to find deals on gas, such as using GasBuddy, carpooling or scheduling errands all at once to avoid making multiple trips.
People can also make other changes to bring down bills, such as using heat and air conditioning less, or opting for meals without meat.
In addition, if a family must dip into their emergency savings to stay afloat right now, Brown said they shouldn’t feel bad — the point of having such an account is for such situations.
“You’re using it as intended,” she said.
Prices may keep rising

To be sure, most Americans aren’t feeling as stressed all the time about the pressures of inflation. Still, they might be in a very different financial situation now due to rising prices — some 52% said they’re under more financial stress now than they were a year ago.
Because the cost of goods is likely to continue to rise in the short term, people should be checking in with their budgets on a more frequent basis because of how quickly prices are changing, said Brown.
“You have to be a lot more proactive in reviewing your budget and actually looking at what you spent last month because the numbers may change,” she said. “Give yourself a lot more wiggle room.”
That may mean saving less for a few months, rethinking your short-term financial goals or even looking for a raise or a job that will pay you more.
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The writer, former head of the IMF’s European department, is chief economic adviser at Morgan StanleyAfter yet another nasty inflation surprise last month, and with European Central Bank president Christine Lagarde no longer ruling out interest rate hikes in 2022, financial markets have got the message that policy tightening is afoot. Long-term rates have started rising across the eurozone, especially in Italy and Greece, where risk spreads have risen to their highest since the outbreak of the pandemic (165 and 230 basis points, respectively).While it is right that interest rates should rise to cool demand and prevent high inflation from becoming entrenched in expectations, the process may prove to be messy. This is because the ECB, which meets this week, has repeatedly said it will not raise policy rates until it has ended its sovereign asset purchase programme. Officially, there is no terminal date for the programme. In practice, however, the ECB began tapering purchases this month, and markets have been given the sense that the programme underpinning low and stable bond spreads since 2015 will end by early summer.Given the current low levels, there is certainly room for interest rates and spreads to rise. But it is also important that spreads be bounded in some way — not least because spiking and volatility in them impede the transmission of monetary policy across the eurozone.As things stand, there are three paths to monetary tightening.First, the ECB could quickly conclude asset purchases and accept higher long-term interest rates and spreads, and tighter financial conditions; near-term policy rates could be raised shortly thereafter. This strategy could work — but only so long as that other anchor of European stability, head of Italy’s national unity government Mario Draghi, remains in place. A change in the circumstances could easily lead to a spike in spreads in many periphery countries.Second, the ECB could ditch its self-imposed constraint that quantitative easing must end before rates rise. The rationale for this sequencing is that higher rates contract demand, while continued asset purchases stimulate it — so pursuing both at once sends conflicting economic and market signals, akin to driving with one foot on the brake and the other on the accelerator. The concern over mixed signals and uncertain macroeconomic effects is exaggerated. For one, the ECB would be raising policy rates from negative levels, which — on account of banks’ traditional reluctance to pass on these rates to retail depositors — would probably have only limited effect, and so should not be very disruptive at the start. Thereafter, nothing would prevent the ECB from calibrating rate hikes and asset purchases such that the net effect is contractionary. Moderate asset purchases, of say €20bn-€30bn a month, may suffice to maintain stability in bond markets, while allowing a net tightening in monetary conditions. It is not unheard of for central banks to engage in opposing transactions in near-term and long-term assets: the US Federal Reserve has done so more than once with its Operation Twist.Third, eurozone governments could relieve the ECB of the burden of keeping a lid on sovereign spreads. The most straightforward way of doing so would be to create a centralised fiscal facility, like the EU’s coronavirus recovery fund, providing loans and grants to member states facing temporary difficulties. Although the ECB is credited with having kept sovereign spreads low and stable during the pandemic, much of the credit is due to the recovery fund, which is a more tangible signal of European political and economic solidarity than emergency ECB action can ever be. Access to such a facility must come with some safeguards. But the conditions should not be as onerous as the adjustment programmes required by, say, the ECB’s Outright Monetary Transactions facility, which is a political non-starter in countries such as Italy.This option would be the most sensible economically, both facilitating the near-term need for monetary tightening and addressing the long-term gap in the eurozone’s financial architecture. It would also have the benefit of separating monetary considerations from financial stability concerns, allowing the ECB to focus on its core inflation mandate. The upcoming reform of the Stability and Growth Pact is an opportunity to make a centralised fiscal facility a reality, possibly with a more rigorous standard of fiscal probity if member countries so choose.While the case for monetary tightening is becoming urgent, the best solution economically is for now not politically realistic. That being the case, the ECB should drop its current guidance on the sequencing of monetary tightening. The worst thing it could do would be to ignore political and economic realities and simply proceed full speed ahead with the termination of asset purchases and the raising of ECB policy rates. More

A motorist pumps gas at a Valero station along Encinitas Blvd in Encinitas, CA on Tuesday, April 5, 2022.
Sandy Huffaker | The Washington Post | Getty Images

Worries are increasing over inflation, with new Federal Reserve data showing a record-high fear over surging prices.
Consumers now see inflation hitting 6.6% over the next year, according to the New York Fed’s survey in March, released Monday. That’s a 10% increase in the median expectation just over the past month and the highest level in a series that dates to 2013.

The survey showed that median expectations over a three-year span actually decreased by 0.1 percentage point to 3.7%, largely due to a declining outlook from those with annual household incomes below $50,000.
However, uncertainty about inflation over both the one- and three-year spans showed record highs.
Household spending expectations rose sharply, climbing 1.3 percentage points to 7.7%, also a new series high.
The data comes a day before the release of the March consumer price index, which is expected to show prices rising at an 8.4% pace over the past 12 months, according to Dow Jones estimates. If that forecast is accurate, it would be the highest number since December 1981.
To fight inflation, the Fed last month approved its first interest rate hike in more than three years. Additional increases are expected throughout the year as inflation runs well above the central bank’s longstanding target of 2%.

Consumers see the fastest increases coming from rent (10.2%), which accounts for about one-third of the CPI. Medical care, food and gasoline are expected to jump by 9.6%. The outlook for college costs decreased by 0.5 percentage point to 8.5%.
Anticipated wage gains held steady at 3%, while 36.2% said they think the unemployment rate will increase over the next year, the highest level since February 2021. Unemployment is currently at 3.6%, just above where it was prior to the Covid pandemic though labor force participation remains 1 percentage point lower.
Anxiety increased slightly over job stability, with the probability of losing one’s job over the next year rising to 11.1%, a 0.3 percentage point gain that is still well below the 13.8% pre-pandemic level.

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If there’s one dominant theme in our inbox at the moment — beyond the usual cacophony of ESG and crypto nonsense — it’s how everyone seems to be freaking out about the chances of a looming recession.The US yield curve inverting was obviously one big trigger. People that want to better understand the pros and cons of the yield curve’s soothsaying abilities should check out this FT piece from 2019. The arguments have changed remarkably little since then. (If you fancy a different perspective on the yield curve, our data viz wizard colleague Alan Smith set it to music here.)But whatever the yield curve is doing, there are clearly rising fears that uncomfortably high inflation will push central banks, led by the Federal Reserve, into jacking up interest rates faster than anticipated just a few months ago. Hell, even Lael Brainard has now got her hiking face on.Deutsche Bank became the first big bank to predict a recession last week, with its top economists David Folkerts-Landau and Peter Hooper arguing:Two shocks in recent months, the war in Ukraine and the build-up of momentum in elevated US and European inflation, have caused us to revise down our forecast for global growth significantly. We are now projecting a recession in the US and a growth recession in the euro area within the next two years.The war, which has transitioned into a stalemate that is unlikely to be resolved any time soon, has disrupted activity on a number of fronts. These include upheavals in markets for energy, food grains, and key materials, that have in turn further disrupted global supply chains. We assume that the critical flow of gas from Russia to Europe will not be cut off, keeping the crisis from substantially deepening costs to the European and global economies, but that remains a downside risk. Inflation in the US and Europe is now pushing 8%, well in excess of what was expected as recently as December. More troubling, especially in the US, are signs that the underlying drivers of inflation have broadened, emanating from very tight labour market conditions and spreading from goods to services. Inflation psychology has shifted significantly, and while longer-term inflation expectations have not yet become unanchored, they are increasingly at risk of doing so. The Fed, finding itself now well behind the curve, has given clear signals that it is shifting to a more aggressive tightening mode. We now expect the Fed funds rate to peak above 3-1/2% next summer, with balance sheet rundown adding at least another 75bp-equivalent in rate hikes. With EA inflation likely to be sustained at 2% or more, we see the ECB raising rates 250 bps between this September and next December. This tightening is expected to yield negative growth in the US for two quarters during the fall-winter of 2023-24 and to reduce EA growth to modestly above zero that winter. Growth is seen recovering thereafter as inflation recedes and the Fed reverses some of its rate hikes. We acknowledge huge uncertainty around these forecasts, but also note that the risks to the downside and of a deeper downturn are considerable.At first FT Alphaville sniggered a little at the two-year forecasting horizon, but the floodgates have opened. Recession fears are clearly rising. Usual caveats etc, but take a look at how Google searches for “recession” have spiked worldwide of late.Outside of actual recessions in March 2020 and the financial crisis, this is the biggest uptick since the yield curve last inverted in 2019, and the eurozone shenanigans in 2011:

In addition to the factors listed by Deutsche Bank, Barclays’ economists highlight how the new Covid outbreak in China “can no longer be ignored”, given 30 out of China’s 31 provinces are now affected, and Shanghai — which alone represents almost 4 per cent of China’s economic output — has been in full lockdown since March 28. Here’s Barclays:Downside risks to global growth are rising, as China’s lockdowns expand, Europe moves towards sanctioning Russian energy, and the Fed signals more aggressive tightening. At the same time, high inflation will likely pressure the ECB next week to signal its willingness to act, while France elections create political risk.Ed Yardeni, a veteran Wall Street analyst who has for the most part been on the optimistic side, now pins the odds on a 2022 recession in Europe at 50 per cent, and in the US at 30 per cent.Yardeni thinks inflation will begin to moderate in the second half of the year, but highlights how every voting and non-voting member of the Fed’s interest rate setting board has become a hawk lately. That has created expectations of a series of larger-than-usual 50 basis point rate increases that could produce a recession. Here’s Big Ed:The war in Ukraine has heightened the odds of higher-for-longer inflation, tighter-for-longer monetary policy, and recession in the US and Europe, which we peg at 30% and 50%, respectively . . . The global economy is stagflating, indicators suggest . . . Will reining in inflation take just a nudge from the Fed or an all-out recession-triggering shove? AV’s gut feeling is that as long as labour markets remain strong and consumption buoyant then a recession is unlikely. With inflation still likely to moderate later this year, that might mean some Fed doves-turned-hawks revert to type. Other major central banks like the ECB, BoJ and the People’s Bank of China are not likely to be aggressive anyway, given their respective challenges. However, none are as influential for the financial system as the Fed. If the US central bank does embark on a string of 50 bps hikes we are fast going to find out just how resilient the global economy is to higher rates. More

Hello, and welcome to Trade Secrets. What of last night’s first-round French presidential election results from a trade policy perspective? A good result for Macron, obviously, but a lot of votes for far left and far right candidates with various degrees of antipathy to various definitions of globalisation. We’ll probably end up with Macron as president again and France continuing to be defensive though not mindlessly destructive on trade. That’s what normally happens. Today we look at the far more unusual occurrence of India signing a trade deal, plus briefly discuss what it means for the UK to offer more market access to Ukraine. As ever, if you’ve got anything to get off your chest, I’m at [email protected] inflection point for India?India has signed a trade deal. This is not a drill. Repeat: India has signed a trade deal. This is not a drill.OK, so the deal, with Australia, is only an interim agreement. It excludes several big categories of agricultural products about which Indian farmers are highly defensive (sugar, dairy, wheat). And as Sam Lowe in the Most Favoured Nation newsletter points out, it goes out of its way to permit data localisation, in this case in financial services. (India’s determination not to do any favours for its highly competitive IT industries by restricting free data flow is a marvel of comparative disadvantage, matched only by the UK’s insistence on handicapping its financial services sector post-Brexit.)But still, India has signed a preferential deal, indeed with a developed economy, for the first time in more than a decade. (The respective trade ministers are bigging it up here.) There’s more. After reflex obstreperousness in almost all World Trade Organization issues going back to the 2000s, it’s one of the core “Quad” of four members (the others being the EU, US and South Africa) which seem to have reached some kind of tentative proposal on waiving patent rights for Covid-19 vaccines. There’s a way to go on that issue (I’ll come back to it in future Trade Secrets) but even the fact that India is engaging constructively and has come up with a text to take back to its capital for discussion is a surprise to many, including me.Does this mark an inflection point in Indian trade policy? New Delhi also has talks ongoing with the EU and the UK. Initial bursts of enthusiasm when the negotiations started quickly dissipated, though the UK is aiming for a similar interim deal to Australia’s by year-end. Whether those talks pick up again, and particularly whether India wants a big comprehensive deal with the EU will be a big test of how serious New Delhi is about opening up more to trade.The logic of why India would want to sign deals is pretty straightforward. Its foreign policy relations with China are bad, it has ambitions to be a great manufacturing power, and so any opportunity to knit into global supply chains and get access to rich-world markets should be welcome. Geopolitically, India and Australia are of course part of the other Quad, the Asia-Pacific security alliance also including Japan and the US.Hitherto that incentive evidently hasn’t been enough to overcome the traditional political toxicity of trade deals of any kind in India, even for a government such as Narendra Modi’s which has done quite a bit of unilateral domestic trade liberalisation. The ideal chance to establish India as a counterweight to Beijing would have been joining the Regional Comprehensive Economic Partnership, which he dallied with before ultimately deciding in 2019 not to commit.I’d be hanging a lot of weight on a fairly flimsy peg if I said this interim deal, plus signs of progress in the WTO patent waiver talks, marked a substantive shift. But it’s an intriguing development.As well as this newsletter, I write a Trade Secrets column for FT.com every Wednesday? Click here to read the latest, and visit ft.com/trade-secrets to see all my columns and previous newsletters too.Britain’s eye-catching offer to UkraineBoris Johnson and Volodymyr Zelensky in central Kyiv at the weekend. The UK said it would give Ukraine a special trade deal by removing all tariffs © Ukrainian Presidential Press Service/AFPAlong with UK prime minister Boris Johnson’s celebrated trip to Ukraine over the weekend — it’s hard to turn round in Kyiv these days without bumping into a head of government — Britain said it would give Ukraine a special trade deal by removing all tariffs. To be honest, this isn’t much more access than Ukraine already has to the British market. The UK replicated the Deep and Comprehensive Free Trade Agreement (DCFTA) that the EU signed with Ukraine in 2014, a deal which incidentally seems to have been the spark for President Vladimir Putin’s invasion of Crimea and the Donbas region. There’s a more fundamental issue here. Although Putin clearly (and correctly) saw the DCFTA as an attempt to pull Ukraine into the EU’s orbit, not least because of the governance aspects to the deal, it hasn’t actually done that much to improve its trade performance. The issue isn’t so much market access as having a competitive economy producing something to sell. If and when a Ukraine economically and politically orientated towards the west emerges, it’s going to take a tonne of investment and a much better business environment and less corruption to allow it to enjoy the benefits of its trade access. It will be harder and more expensive than fiddling about with tariffs, but is much more likely to make a difference.Charted watersThe Ukraine war continues to have effects worldwide, with the price of metal forecast to rise by two-thirds owing to supply chain disruption and sanctions on Russia.This looks likely to benefit Japanese titanium suppliers, with traders betting that they will capture substantially more of the global market for the metal as western companies, particularly in aeronautics and defence, are forced away from Russian producers.Shares in Toho Titanium and Osaka Titanium Technologies, among the only manufacturers of high-grade titanium in the world, have risen about 61 and 51 per cent respectively since the Russian invasion of Ukraine in February. Trade linksFood prices have hit a new record high thanks to disruption from the Ukraine war, pushing the cost of ingredients for the classic bacon, lettuce and tomato sandwich up by more than half in two years in the UK.Research by the academics Richard Baldwin and Rebecca Freeman discusses the best way for governments to decide when to intervene in supply chains.Even before the Ukraine war, higher gas prices had substantially reduced EU demand for the fuel, according to research from the think-tank Bruegel.Putin has got traders obsessed with central bank reserves all over again, says the FT’s Katie MartinThere will be no Trade Secrets next week, owing to the bank holiday. More