Economy

Keeping millions of customers in Ukraine supplied with electric power amid the Russian invasion is, to say the least, challenging. Especially when the electrical grid itself becomes a target. “What we see now is that they attack transmission lines, substations, power generating stations,” said Maxim Timchenko, chief executive of DTEK, a large private Ukrainian energy company. In the early days of the war, he said, the Russian military seemed to be wary of wrecking critical civilian infrastructure.Now, he said, “they are not selective anymore.”In a video call from an undisclosed location in western Ukraine, Mr. Timchenko described how DTEK, which supplies about 20 percent of Ukraine’s electricity, and other Ukrainian utilities were scrambling to keep the lights on during the Russian onslaught.Amid the urgency, Ukraine, which is not a member of the European Union, has also managed to achieve something in a matter of weeks that it had worked on for years: a linkup to the power grids of neighboring E.U. countries, including, according to Mr. Timchenko, Romania, Slovakia, Poland and Hungary.“This will help Ukraine to keep their electricity system stable, homes warm and lights on during these dark times,” said Europe’s energy commissioner, Kadri Simson, in a statement. “In this area, Ukraine is now part of Europe,” she added.In case of a major hit to its power system, Ukraine could now apply for emergency electricity supplies from the European system, Mr. Timchenko said. Ukraine also severed its electricity links to Russia and Belarus just before the invasion to establish independence from power sources in hostile countries.When its transmission lines are damaged or severed, DTEK arranges for Ukrainian soldiers to escort its emergency repair crews, dressed in flak jackets, to reach affected sites. Mr. Timchenko said six of DTEK’s roughly 60,000 employees had been killed during the war, although not while performing duties for the company.The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More

This was supposed to be the year the world economy recovered from the shock of Covid-19. By the end of 2022, official forecasters expected the US, European and Chinese economies almost to have returned to the paths they were cruising along before the pandemic. Other emerging economies were lagging behind, but they also expected to be growing at rapid rates and slowly getting back to normal. Inflation was a problem, for sure, the IMF said in its October assessment, but it said that rapid price growth “should gradually decrease as supply-demand imbalances wane in 2022 and monetary policy in major economies respond”.The fund was not naive. It noted geopolitical and pandemic risks in its assessment, but hoped they would be dodged. Three months into 2022, those warnings have become reality and the global economy is now facing the risk of a sharp deterioration. Russia’s invasion of Ukraine is imposing a severe stagflationary shock, raising prices as energy supply is threatened and squeezing household and corporate incomes as essential commodities become more expensive.

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With the largest war on European soil for almost 80 years, the threat of escalation undermines confidence to spend and Europe must deal with an even larger influx of refugees than in 2015. The return of coronavirus to China once again threatens global supply chains, amplifying upward pressures on prices and downward pressure on output. These developments all undermine global economic prospects. But they are also shrouded in so much uncertainty that Mathias Cormann, head of the OECD, said this week that the organisation was “not in a position to present” its usual global economic outlook.Nathan Sheets, global chief economist at Citi and a former US Treasury official, has been more willing to put a very rough estimate on the potential harm. Before the war, global growth was expected to be in the region of 5 per cent in 2022, but Sheets reckons “if the [Ukrainian] tensions are prolonged or escalate further, the markdowns to this year’s growth outlook may need to be denominated in percentage points”. Across the world, policymakers have been taking action and pivoting towards a more gloomy outlook. A little over a month ago, Christine Lagarde, president of the European Central Bank, presented an upbeat view of the eurozone outlook, predicting “growth should rebound strongly”, but this week she changed her tune, saying recent events “posed significant risks to growth”. Worrying about the surge in US inflation, Federal Reserve chair Jay Powell initiated a series of interest rate increases, saying he was “acutely aware of the need to return the economy to price stability and determined to use our tools to do exactly that”. China’s top economic official, Liu He, was sufficiently worried about the situation to make a rare intervention on Wednesday, promising the government would “boost the economy in the first quarter”, as well as introduce “policies that are favourable to the market”.

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Being closest both geographically and economically to Ukraine, Europe’s economy is most vulnerable. While the OECD did not produce forecasts, it published a simulation of the likely effects of the war and commodity price changes lasting all year. This showed drops in growth almost twice as large in the eurozone as in the US. “There is a real difference between US and Russian gas prices and the shock is larger [in Europe] because it has much more dependence on Russian gas,” says Laurence Boone, chief economist of the OECD. The organisation simulated a 1.4 percentage point hit to Europe’s economy in 2022, based on the effects so far, but officials are worried this underestimates the true economic impact. Although oil prices have fallen this week, partly as a result of a worse global economic outlook, officials are not taking much comfort from these developments. Speaking privately to the Financial Times, one senior European economic official was worried about “a really big confidence effect” on households and companies once the true consequences of Russia’s actions and disruptions to European supply chains were felt. The official added that the conflict would also require huge pan-European solidarity with Poland and other eastern European countries facing the largest burden of finding accommodation and support for the 3mn refugees that have already crossed the Ukrainian border, with many more millions expected. Protesters in Athens rally against the rising cost of living. Governments are cranking up their policy levers to protect households from higher commodity prices © Louisa Gouliamaki/AFP/Getty ImagesAlready, governments in Europe are cranking up their policy levers in a bid to protect households from some of the worst effects of higher commodity prices on their living standards. The French and Irish governments have agreed to subsidise higher fuel costs, with Germany signalling it would soon follow suit. But these actions are not preventing economic effects of the invasion becoming all too visible to consumers and companies. German carmakers have idled factories due to shortages of parts made in Ukraine, and some Italian supermarkets are even running short of pasta. Spanish truck drivers went on strike this week in protest at high fuel costs, creating empty shelves in supermarkets. Herbert Diess, the chief executive of Volkswagen, told the FT this week that a prolonged war in Ukraine risked being “very much worse” for the European economy than the coronavirus pandemic, due to supply chain disruption, energy scarcity and inflation.Global supply chains have already been heavily disrupted by the pandemic and bottlenecks, but the war in Ukraine presents a fresh risk to the supply of key materials. For instance, Ukraine supplies 70 per cent of neon gas, which is needed for the laser lithography process used to make semiconductors, while Russia is the leading exporter of palladium, which is needed to make catalytic converters.People queue for Covid tests in Shenzhen, China, where a resurgence of the virus once again threatens global supply chains © AFP/Getty ImagesThe worst-case scenario modelled by economists and central banks is if Russian energy supplies to Europe are cut off. Jan Hatzius, chief economist of Goldman Sachs, estimates an EU ban on Russian energy imports would cause a 2.2 per cent hit to production and trigger a eurozone recession, defined as two consecutive quarters of economic contraction. Rishi Sunak, UK chancellor, has been telling colleagues the hit would be larger and would quickly cause a downturn worth £70bn, or 3 per cent, of gross domestic product in the UK, given its still-close ties to the continental European economy. While there were hopes that Europe’s economy might grow faster than the US in 2022, few now think that likely. Vitor Constâncio, the former vice-president of the ECB, warns a recession is possible, regardless of what happens in the war, if confidence is lost. “With quantitative shortages growth could go down even more and perhaps even turn negative this year, because we would have panic and animal spirits would be very low, while savings would increase.”Lorries queue at the Ukraine-Poland border. VW CEO Herbert Diess says supply chain disruption caused by the war risked being ‘very much worse’ for the European economy than the pandemic © Angel Garcia/BloombergFew policymakers are yet in panic mode, but, far removed from eastern Europe, they are all now seeking to maintain confidence to prevent much worse economic outcomes in 2022. Actions differ because the problems are not uniform in the major economies. In contrast to Europe, the US economy is running too hot, with unemployment at 3.8 per cent in February almost back to the pre-pandemic rate of 3.5 per cent, and inflation at a multi-decade high last month, with consumer prices 7.9 per cent higher than a year earlier. After imposing the first interest rate rise since the pandemic, the Fed signalled this week it intended to repeat the process of quarter-point rises six more times this year and three more in 2023. The objective, in the Fed’s eyes, is to make monetary policy restrictive for the first time since the global financial crisis, with interest rates of almost 3 per cent. The enormity of this shift towards seeking to slow the US economy can be shown by how much the Fed’s messaging has changed. A year ago it was guiding that interest rates would be barely 0.5 per cent by the end of next year. A firefighter walks past a bombed apartment building in Kyiv, Ukraine. Europe is now dealing with an even larger influx of refugees than in 2015 © Vadim Ghirda/APAlthough in the US monetary policy is taking a lot of the strain in seeking to guide the economy through a difficult time, around the world there is an increasing recognition that fiscal policy is likely to be better suited to restoring confidence in economic structures. The US cannot easily offer further stimulus for its overheating economy, but that option should be used in Europe, according to Reza Moghadam, chief economic adviser at Morgan Stanley. “The policy tool really has to be fiscal this time,” he says, adding there is only so much even this can achieve. “Governments can offset some of the costs to consumers and businesses but it is difficult to offset the impact on trade or the hit to confidence from higher energy costs.”The OECD estimated that fiscal firepower — stimulus in Europe and China while delaying consolidation in the US — would be sufficient to halve the direct hits to economic output from the war in Ukraine and this would not be inflationary if it were targeted to poorer households, who are much harder hit by higher food, heating and electricity costs.China’s signal that it would bring forward a package of support as the Omicron wave threatens to extend lockdowns across large areas of the country came as the government also paused plans to expand trials of a new property tax. Liu’s pledges to support the economy were unspecific but halted a rout in Chinese equities — even if analysts were unconvinced the government was ending its punishing regulatory overhaul of business.A shopper searches half-empty shelves at a supermarket in Naples, Italy, where even supplies of pasta are running short © Kontrolab/LightRocket/Getty ImagesIn the US, the administration is leaning more on browbeating industry. President Joe Biden took to Twitter this week to lambast US oil companies for not lowering fuel prices quickly for drivers at the pumps as global oil prices fell back. “Oil and gas companies shouldn’t pad their profits at the expense of hard-working Americans,” he said. No one is confident they know how these policy responses, drawn up in haste to the fast-changing economic reality, will work. All most economists are willing to say is that the global outlook in 2022 will be worse than they previously expected and how bad depends on the war. As Joseph Capurso, head of international economics at the Commonwealth Bank of Australia, wrote this week: “War, above all else, is the ultimate expression of politics. Politicians, rather than business people or bureaucrats, have made decisions that if not reversed, could have profound implications for the world economy in the short and long term.” More

BALTIMORE (Reuters) – The rate increases projected by Federal Reserve officials this week represented a “balancing act” between the need to begin normalizing monetary policy in the face of high inflation, while guarding against a fast tightening of credit that could damage the economy, Richmond Fed President Thomas Barkin said on Friday. “The rate path we announced this week shouldn’t drive economic decline. We are still far from the level of rates that constrains the economy,” Barkin told a Maryland Bankers Association economic forum in what were his first public remarks since the U.S. central bank on Wednesday approved a quarter-percentage-point increase in the target federal funds rate.”Think of it as an indication that the extraordinary support of the pandemic era is unwinding,” Barkin said. The federal funds rate has been near zero since March of 2020.New projections showed Fed officials at the median envision raising that rate to 1.9% by the end of this year, still below the roughly 2.4% level that policymakers feel would have a neutral impact on economic decisions.Amid calls by some officials for faster hikes in borrowing costs, Barkin said the Fed could move more quickly, including in half-percentage-point increments, “if we start to believe that is necessary to prevent inflation expectations from unanchoring.”But he added that such a shift didn’t seem to be happening so far, and in the meantime it remained uncertain how quickly some of the lingering problems from the pandemic – from supply chain troubles to the skewed demand for goods – will be resolved. Until that becomes clearer, Barkin said, it will be hard to know just how fast the Fed should raise interest rates. “Setting the right pace for rate increases is a balancing act – we normalize rates to contain inflation, but if we over-correct, we can negatively impact employment, which is the other part of our dual mandate. And we have some time to get to a neutral position,” Barkin said.”Inflation and employment are still being heavily influenced by pandemic-era supply and participation pressures – and more recently, the war on Ukraine – and it will take a while for us to understand and meet the dynamics of the post-pandemic economy,” he added. More

Russia’s central bank governor, Elvira Nabiullina, said on Friday that the country’s economy would decline in the coming quarters and that inflation would jump further as sanctions imposed after the invasion of Ukraine took their toll. Earlier, the bank’s board of directors held interest rates at 20 percent.The bank said the doubling in interest rates on Feb. 28, from 9.5 percent, and capital controls curbing the movement of money had helped sustain financial stability in Russia and stop uncontrolled price increases. But the latest inflation data shows that, as of March 11, prices in Russia had risen 12.5 percent from a year earlier.Russia’s war against Ukraine has led to strict economic sanctions by the United States and Europe, encouraged a large number of Western companies and banks to retreat from the country, and isolated Russia from much of the global financial system.“The Russian economy is entering the phase of a large-scale structural transformation, which will be accompanied by a temporary but inevitable period of increased inflation,” the Russian central bank said in a statement Friday.Gross domestic product “will decline in the next quarters,” Ms. Nabiullina said later. Two consecutive quarters of economic decline are generally considered to be a recession.The effects of the sanctions are being keenly felt in Russia.“Today, almost all companies are experiencing disruptions in production and logistical chains and in their settlements with foreign counterparties,” Ms. Nabiullina said. Inflation was driven higher, she said, by a rise in demand for cars, household appliances, electronic devices and other goods as people rushed to buy because they feared prices would rise higher and supplies would run out. The ruble has lost about 30 percent of its value against the U.S. dollar this year.President Vladimir V. Putin put Ms. Nabiullina forward for another term as central bank governor on Friday. She has held the position since 2013. Ms. Nabiullina also said on Friday that stock trading on the Moscow Exchange would remain closed but that government bond trading will restart on Monday. Stocks haven’t been traded on the exchange since Feb. 25. More

BUENOS AIRES (Reuters) – Argentina’s $45 billion debt deal with the International Monetary Fund, approved by the country’s Congress on Thursday, now faces its final hurdle: the lender’s own board, which needs to sign off on the mega refinancing agreement.The government struck a staff-level deal with the IMF in early March to replace a failed $57 billion program from 2018 that had been unable to keep the grain-producing country from slipping into economic crisis and a private sector default.The IMF board is set to meet in the coming days to green light the deal, which would unlock an initial nearly $10 billion disbursement, with the clock ticking ahead of a $2.8 billion repayment due early next week that the country will struggle to make.”Now, the next step is the approval of the IMF board. We look forward to multilateral support. It will bring more stability to Argentina, Latin America and the world,” Economy Minister Martin Guzman said after the Senate vote.He said that without an agreement it would have been “impossible” for the country to pay back its obligations to the IMF, adding the deal was necessary – despite push-back from some lawmakers and protesters – to stabilize the economy.”In this context of geopolitical conflict that raises international inflation in food and energy, it is of particular importance to provide certainty rather than more uncertainty.”The new program would see funds disbursed over 30 months and a new repayment schedule between 2026-2034. It includes an economic program to reduce the fiscal deficit, bolster reserves, cut huge energy subsidies and push up real interest rates.Not everyone in Argentina has rallied behind the deal, with concerns that economic strings attached will put pressure on people already grappling with both high levels of poverty and inflation, which is running at over 50% annually.Gisella Lazcano, an activist protesting the deal, called it a “scam” and said the country should not pay the money back, echoing calls in recent street protests.”The payment of that illegitimate debt is a burden on the shoulders of the working class,” she said.The congressional approvals have helped buoy Argentine bonds, which have been languishing in distressed territory, despite concerns about whether the country, a serial defaulter, will be able to meet the economic targets.”There is a certain amount of fear linked to the economic situation and the likelihood of concrete measures that affect people’s wallets,” said Esteban Neme from research firm Horus.”People are afraid of the adjustments that may be caused by the agreement, mainly the impact on the prices of products and services.”^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Argentina: IMF payouts https://tmsnrt.rs/3pCpy90Argentina: IMF payouts (Interactive graphic) https://tmsnrt.rs/3MqNshGArgentina: Economic Targets https://tmsnrt.rs/3sG3w77Argentina: Economic Targets (Interactive graphic) https://tmsnrt.rs/3vEuNc1Argentina’s U.S. dollar bond prices https://tmsnrt.rs/3fz89ZsArgentina’s U.S. dollar bond prices (Interactive graphic) https://tmsnrt.rs/3FzHvdH^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ > More

Barely three weeks ago, despite Russia’s steady reversion to authoritarianism, its people — especially in the big cities — were still closely entwined with the outside world. They bought Swedish furniture, took package tours to Turkey and shared clips on TikTok. At a stroke, Vladimir Putin’s war in Ukraine has upturned their lives and prospects. Whatever the outcome of the war, Russians now face potentially years of isolation, economic struggles and a crackdown on free speech recalling Soviet days. Three decades of fitful progress towards “normal life” have been thrown into reverse.Sanctions imposed to date could ravage the economy, though that will depend in part on what happens in Ukraine, and if any are rolled back after a ceasefire. Some will be slow-burn. Though half of Russia’s $643bn foreign reserves have been frozen, swift central bank action — doubling interest rates and limiting foreign currency withdrawals — has averted bank runs.Yet the rouble has slumped by 30 per cent, stoking inflation. Imports will plunge due to shortages of foreign currency and pullbacks by foreign companies. Statistics from Yale University suggest more than 400 international companies have withdrawn from Russia, suspended operations or scaled them back. Shortages of some goods and medicines are being reported.Formal embargoes on energy exports are still limited but pressure is mounting for more. Russia itself has banned exports of 200 products including telecoms goods, agricultural equipment and machinery, fertiliser, automobiles and planes until the year-end — ostensibly to retaliate for sanctions but also to shore up domestic supplies. Consensus forecasts show Russia’s economy contracting by 7.9 per cent this year; some forecasters project as much as 15 per cent.If sanctions continue long-term, foreign investment and technology flows will be largely choked off. Either way, western countries are finally determined to phase out imports of Russian oil and gas, the lifeblood of its economy. Airspace closures and bans on western parts are starting to ground its aircraft.Russians’ lives are changing, too, in more insidious ways. As the Kremlin attempts to control an entirely deceitful war narrative, the last remaining independent media outlets have been closed. A law has introduced sentences of up to 15 years for spreading “false” information about the military. Teachers are being fired for refusing to teach the Kremlin’s version of events.In a speech dripping with venom this week, Putin said his country needed to “purify itself” by “distinguishing true patriots from scum and traitors”. Some officials are adopting the language of “cleansing”. The “Z” originally used to distinguish Russian vehicles in Ukraine is appearing on clothing, walls and posters as a symbol of support for the war and the Putin regime. In displays with fascistic overtones, young people are being filmed in Z formations. Some critics on social media have nicknamed the stylised symbol a “zwastika”.Older Russians will shudder at the echoes of some of the darkest days of the 20th century, but few of them will leave. Some young people and professionals are doing so, however; one Russian economist estimates at least 200,000 Russians departed the country in the first 10 days of the war. An accelerating brain drain will rob Russia of some of its best human talent, just as sanctions squeeze the funding and knowhow the country needs. None of this compares with the human and physical destruction being visited on Ukraine by Putin’s forces. The longer it goes on, however, the clearer it becomes that the president’s war is a calamity, too, for his own people. More

Good eveningIt’s been an important week for monetary policy as governments and central bankers across the world ramp up the fight against inflation while acknowledging the hit to growth from the crisis in Ukraine.Just a few months ago, 2022 looked set be the year of global recovery, with the US, China and Europe returning to pre-pandemic levels of growth. But yesterday, the OECD, in the first estimate by an international organisation of the costs of the war, predicted an average 1 per cent hit to growth for rich economies. This however could be halved if governments used their fiscal powers to protect the poorest from surges in food and energy prices, the OECD said.

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China was the first of the big economies to make a move, making a rare market intervention on Wednesday to reassure investors faced with slowing economic growth and a still raging battle against coronavirus as well as the effects of the war.Later that day the US Federal Reserve announced its first interest rate rise since 2018, with the lift of a quarter-point from near zero and a signal of six further increases this year. It also revised up its forecasts for inflation to 4.1 per cent by the end of the year, from 2.7 per cent in December. One official today suggested the Fed should be much bolder and raise rates above 3 per cent this year or risk “losing credibility”.The FT Editorial Board said the Fed looked to be too optimistic, arguing it was “not clear whether it is overconfident about its ability to control the inflationary pressure that has built up over the past year — pressure that it has consistently underestimated — or to limit the slowdown in the US economy and knock-on effects on unemployment from the oil shock.”On Thursday, the Bank of England’s monetary policy committee decided to raise UK rates from 0.5 per cent to 0.75 per cent — the third consecutive increase since December — meaning rates are now back at their pre-Covid level. It also said inflation could hit 8 per cent by the end of June and get even higher in October when energy prices are set to rise again.Meanwhile in Europe, which is much more reliant on Russia as an energy supplier, European Central Bank president Christine Lagarde yesterday warned of “new inflationary trends” as well as “significant risks to growth”. The ECB has already announced a scaling back of its stimulus programme ahead of a potential increase in interest rates before the end of the year.A final note of caution comes from Free Lunch writer Martin Sandbu, who cites two important lessons from the pandemic: interdependent and complex supply chains mean that small disruptions in one place can be seriously amplified elsewhere and a significant supply shock can lead to an even greater demand shock.“The standard modelling tends to work best when intricate interdependencies do not take us by surprise,” he argues. “But at the moment, it seems reasonable to fear that any surprises we get will be bad ones.” Latest newsCoronavirus infections among over-70s in the UK surge to a record-highShell submits plans to open large North Sea gasfield at Jackdaw, off the Aberdeen coast, as the UK seeks to reduce reliance on energy from RussiaFour EU and Nato member states expel total of 20 Russian diplomats for actions ‘contrary to their diplomatic status’For up-to-the-minute news updates, visit our live blogNeed to know: the economyThe International Energy Agency issued a 10-point plan to reduce global oil demand by 2.7m b/d within the next four months to help balance losses from Russian, including driving restrictions, lower speed limits and curbs on air travel. British prime minister Boris Johnson failed to get commitments from Saudi Arabia and the United Arab Emirates to pump more oil after a visit to the two Gulf countries. The bad news keeps on coming but US and European stocks keep on climbing, wiping out losses incurred since the invasion of Ukraine. Fund managers said shares in good quality companies had been sold off too hard in response to political tensions.Latest for the UK and EuropeInternational sanctions, combined with high interest rates, soaring inflation, capital outflows, lower investment and falling consumer confidence are likely to drag Russia into a deep recession this year. Rating agency Scope said the economy would shrink more than 10 per cent. An imminent default on the country’s dollar debt seems however to have been staved off. President Putin said he would increase Russian salaries and pensions to cushion the impact of the sanctions. The Ukraine crisis has led to a fresh wave of panic buying in parts of Europe. Prices of bread, pasta and meat are already rising in Italy, which imports much of its wheat from eastern Europe and 80 per cent of its sunflower oil from Ukraine. The most serious victims of supply shortages however are poor countries outside Europe, such as Somalia, that are dependent on wheat from Ukraine and Russia.UK chancellor Rishi Sunak will use his spring statement next week to pave the way for a major overhaul of Britain’s corporate tax system in an attempt to boost business investment and bolster weak prospects for economic growth. He has £12.5bn extra to play with due to inflation doubling the effect of planned income tax freezes. Consumer editor Claer Barrett looks at what Sunak could do to alleviate rising financial anxiety.The number of independent stores on UK high streets increased for the first time in five years in 2021 as they took advantage of favourable rents and landlords more willing to fill vacant spaces.Global latestIndia’s central bank is considering a rupee-rouble trade arrangement with Moscow that could let exports to Russia continue after western sanctions restricted international payment systems. This would allow India to continue buying Russian energy exports and other goods, risking anger from the US and its allies.Ehsan Khandouzi, Iran’s minister of finance and economic affairs, wrote in the FT that his country needed to change fiscal policy after the shocks of sanctions, currency fluctuations, high inflation and the pandemic. He suggested the current nuclear negotiations in Vienna could lead to positive economic outcomes, especially in banking and foreign exchange.Hong Kong’s wealthy are hurrying to sell or ship their yachts and luxury cars out of the territory as the city braces for tighter Covid restrictions. The number of infections since the fifth Covid-19 wave struck in December yesterday passed 980,000. In almost two years before that, Hong Kong recorded only about 12,600 cases.New Yorkers are experiencing some of the most dramatic increases in US electricity prices of up to 50 per cent. A record 1.3bn residents of New York state have already fallen behind on utility payments during the pandemic.Need to know: businessUK energy companies Neptune and Harbour paid out bumper dividends to shareholders as oil prices soared. FT economics editor Chris Giles says there are no good economics arguments against a windfall tax on North Sea oil and gas groups. The pharma industry is caught in a bind over its ties with Russia as it balances the needs of sick patients while also demonstrating its opposition to the war in Ukraine. “Pharma is different from, say, McDonald’s. People can live without hamburgers but they can’t live without essential medicines,” said one investment adviser.P&O Ferries dramatically sacked 800 sailors with immediate effect yesterday, bringing chaos to Britain’s ports, as it argued the company was no longer a “viable business”. P&O, owned by Dubai-based DP World, was criticised during the pandemic for a $330mn dividend payout even as it laid off staff and took government funding to keep freight services running. The FT’s Lex column hit out at the brutal sackings.UK business writer Cat Rutter Pooley says the impact of the Ukraine crisis on company earnings may be small, but its indirect effects such as increased inflation and lower economic growth could be significant. “The challenge for investors will be disentangling what can rightly be attributed to the inflationary impact of the conflict, and where companies use these to conceal broader margin problems in their business,” she writes.A huge online shopping battle is playing out in India between two of the world’s richest men: Amazon’s Jeff Bezos and Reliance Industries chair Mukesh Ambani. The long-running saga highlights the difficulties for overseas ecommerce companies trying to expand in a country with 1.4bn consumers, but where regulations give local players an advantage.The pre-pandemic years were an era of Japanese megadeals as cash-rich companies looked abroad for growth, but corporate advisers say the country’s strict travel restrictions are holding back a return to overseas dealmaking. Top companies in Japan, where since 2000, real wages have risen just 0.39 per cent, have started to raise salaries as inflation bites.The war is also hastening the end of the affordable car, says Frankfurt correspondent Joe Miller, as manufacturers focus on high-end models, a trend initially sparked by the semiconductor crisis. France’s Renault is in a tight spot as one of the larger car companies in Russia, including its controlling stake in Lada, a brand synonymous with the Soviet Union.Science round upCoronavirus cases and hospitalisations are rising across much of the world including in the UK, where new polling data showed Britons taking far fewer precautions against Covid-19 than in previous months.Our Big Read examines the development of “open-source” vaccines and their potential to narrow the inequality gap whereby more than three-quarters of people in low-income countries aged 12 and over have still to receive a single dose, compared with 10 per cent in high-income countries. AstraZeneca said it would give up on submitting its Covid-19 vaccine for approval in the US if it finds it is “banging its head against a brick wall indefinitely” with regulators. Read our new explainer on how genomic sequencing can detect the next coronavirus variant. The FT Editorial Board lauded scientific progress but warned that it would only be effective with global political collaboration.Get the latest worldwide picture with our vaccine trackerAnd finally…After two years of talking to each other through a screen, many of us are understandably a bit rusty on small talk. Could chatbots help us rediscover the art of conversation?© Anna Wray More

LONDON (Reuters) -The London Metal Exchange (LME) again widened its trading band for nickel on Friday, but for a third session in a row it hit limit down, sliding 12% as the LME faced more technical problems.The metal used to make stainless steel and electric vehicle batteries fell to $36,915 a tonne when it opened.Volumes were scant all day, with only 106 lots traded by 1745 GMT. Few buyers were willing to pay the current price, which remains well above the price on the Shanghai Futures Exchange, traders said.Shanghai’s April contract traded at 218,520 yuan, or $34,413 a tonne.The LME suspended nickel trading on March 8 after prices spiked by more than 50% to over $100,000 a tonne.It resumed trading on March 16 with an adjusted starting price of under $48,000 and a limited trading range of 5% either side.Since then the LME has steadily ratcheted up the limit, which will rise to 15% on Monday.The exchange’s electronic system LMEselect has been hit by technical glitches since it has reopened with some traders unable to enter nickel orders ahead of the open at 0800 GMT.An industry source said a few electronic trades slipped below the price limit on Friday, which will be cancelled, but it did not cause the LME to stop trading as it did on Wednesday and Thursday.For the third day running, the LME said there would be no official settlement price for nickel, which is usually set in open-outcry floor trading around midday.The exchange has said it will not publish settlement prices when nickel falls to its lower limit. The physical market, which is made up of end-users and producers, use LME settlement prices as a reference for their contracts to buy and sell nickel.The disorderly LME market has left some traders questioning whether participants might look for alternative venues.The rapid rise in prices caught out some large players who were betting on a decline in nickel prices. To cut their positions and limit their losses, they bought large amounts of the metal last week, triggering the spike above $100,000 a tonne. More