Economy

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Finance ministers meeting in Brussels were unable to strike a deal on reforming EU rules on government debt and deficits despite over eight hours of negotiations stretching into Friday morning.Their failure to reach an agreement underscores deep divisions between EU countries on fiscal policy, as rules suspended during the Covid-19 pandemic are set to start in January. Germany is insisting on stricter limits to spending despite being chided at home over its own off-budget debt instruments, while France and Italy are pushing to maintain room for manoeuvre under the new rules.“We now agree on 95 per cent of the text,” said French finance minister Bruno Le Maire. “I really think that on the remaining 5 per cent we can get an agreement before the end of the year.”Lingering disagreements include how stringent annual spending limits should be, and how to treat debt servicing costs when calculating if a country is in breach of a 3 per cent annual deficit threshold.“Excessive deficits have to be reduced, not excused,” said the German finance minister, Christian Lindner.A possible solution now under consideration would be to treat high interest costs on public debt as a mitigating factor for the period 2025 to 2027 when the European Commission assesses national budgets against the rules.The commission has already said that a number of national budgets for 2024 would not be in line with the rules, known as the Stability and Growth Pact, and will probably be sanctioned.Germany has been insisting on adding ‘safeguards’ to the original commission proposal to ensure that countries reduce excess debt by a minimum amount per year, as well as limit annual spending to ensure that deficits do not exceed 1.5 per cent of GDP.Lindner’s requests were largely if reluctantly taken on board but differences remain on the exact numbers. “We have not yet a common understanding about which numbers are sufficient,” he said.Spain, which is chairing the talks, is likely to convene another ministerial meeting in two week’s time. EU economy commissioner Paolo Gentiloni said he was “quite optimistic” of reaching a deal before the end of the year.EU leaders meeting in Brussels next week could also seek to build momentum for a deal, though their summit’s agenda has several other intractable issues including on whether to start membership talks with Ukraine and a controversial top up to the bloc’s budget. More

KUALA LUMPUR -Malaysian conglomerate YTL’s utilities unit said on Friday it would partner with U.S technology giant Nvidia to develop artificial intelligence (AI) infrastructure in the Southeast Asian country.The first phase is expected to be operational by mid-2024, YTL Power International said in a statement.Reuters exclusively reported earlier on Friday, citing sources, that Nvidia (NASDAQ:NVDA) and YTL were in advanced talks to partner over AI infrastructure, with the project to be hosted at a data centre in the southern state of Johor.Under the deal, the companies will collaborate on building Malaysia’s fastest supercomputers using Nvidia AI chips and with YTL Power International also utilising Nvidia’s AI cloud computing platform to build a large language model in Malay, YTL Power said.The announcement confirmed the project would be hosted at YTL’s data centre park in Kulai, Johor.The partnership is set to strengthen Southeast Asia’s fast-growing AI ecosystem as well as Malaysia’s ambitions as a semiconductor manufacturing power. The country has seen rising multi-billion dollar investments from global semiconductor players in recent years, including from Intel (NASDAQ:INTC) and Infineon (OTC:IFNNY).”Malaysia is an important hub for Southeast Asia computing infrastructure, which requires access to land, facilities and power, and YTL could play a great role in that,” Nvidia CEO Jensen Huang told reporters earlier in the day, without directly confirming the deal. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The British public’s expectations for price growth in the year ahead fell to the lowest level in two years last month, supporting the view that the Bank of England will not need to raise interest rates at its meeting next week.The average expectations of the rate of inflation over the next 12 months dropped to 3.3 per cent in November, from 3.6 per cent in August, when the question was last asked, according to the Bank of England.The figure from a quarterly survey of public attitudes to inflation published on Friday was the lowest since November 2021, when prices started surging on the back of supply chain disruptions and rebounding demand.Inflation rose further in 2022 following the increase in energy and food prices after Russia invaded Ukraine — the BoE survey showed a peak figure of 4.9 per cent that summer.Public inflation expectations matter for the BoE because they shape wage and spending behaviours. Workers and consumers may seek higher wages or spend more cautiously if they expect strong price growth.The survey, which was conducted in the first week of November by Ipsos, also showed that Britons’ expectations of inflation in five years’ time rose to 3.2 per cent, up from 2.9 per cent in August and the highest in a year.In October, headline inflation eased sharply to 4.6 per cent, down from 6.7 per cent in September but still well above the BoE’s 2 per cent target.The data came ahead of the BoE’s monetary policy meeting on December 14, when markets expect rates to be kept at a 15-year high of 5.25 per cent.A decision to hold rates would mark the third meeting with no change in interest rates after 14 consecutive increases from a record low of 0.1 per cent in November 2021. The findings are “good news for the Bank of England and households wage demand going forward”, said Tomasz Wieladek, chief European economist at the investment company T Rowe Price.But he added the longer-term outlook meant the recent “more hawkish communication from the Bank of England remains appropriate”.Policymakers have pushed back against market pricing that the BoE will cut rates by the middle of next year.Last week Jonathan Haskel, an external member of the central bank’s Monetary Policy Committee, said there was no scope to cut UK interest rates “anytime soon” as the labour market remained tight. Friday’s survey showed a boost in public satisfaction with how the BoE is tackling inflation. Last month, 34 per cent of the population was dissatisfied with how the central bank was handling inflation, according to the survey, down from 40 per cent in August. More

In his Statement on Developmental and Regulatory Policies, Governor Shaktikanta Das highlighted the importance of increasing transparency and improving the borrower’s experience. The need for regulation was underscored by findings from the Working Group led by Jayant Kumar Dash, whose recommendations at the end of August 2022 have now paved the way for these forthcoming changes.The RBI’s planned guidelines are expected to assist customers in better navigating online loan offers. The focus will be on web aggregators, providing a platform for potential borrowers to make clear comparisons and informed choices among the numerous lending options available digitally. These measures are part of a broader effort by the RBI to ensure that the burgeoning digital lending ecosystem operates in a manner that is fair, transparent, and beneficial for consumers.As the RBI prepares to roll out these detailed guidelines, stakeholders within the financial services industry are anticipating how these changes will shape the future of digital borrowing in India. The central bank’s commitment to bolstering consumer protection in this sector is seen as a significant step towards creating a more trustworthy and customer-friendly financial environment.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

(Reuters) -U.S. stock index futures edged lower on Friday as investors geared up for the crucial monthly payrolls report for more insight into the labor market, which could dictate the Federal Reserve’s stance on monetary policy for the upcoming year.The Labor Department’s closely watched report, due at 8:30 a.m. ET, is expected to show U.S. job growth likely picked up steam in November as workers in sectors ranging from automobiles to casinos returned after their hard-fought strikes.Nonfarm payrolls likely increased by 180,000 jobs last month after rising 150,000 in October, according to a Reuters poll of economists. The unemployment rate is forecast to remain unchanged at nearly a two-year high of 3.9%.A slew of data this week has indicated a softening labor market, fuelling bets that the Fed was at the end of its tightening campaign and could pivot to lower rates soon.Some analysts have warned that a stronger-than-expected reading could pour cold water on such hopes.”The fact that the data released earlier this week hinted at a clear loosening in the U.S. jobs market makes many investors think that today’s official data will also follow the loosening trend,” Ipek Ozkardeskaya, senior market analyst at Swissquote Bank, wrote in a note.”If the data is soft enough, the rally in U.S. bonds could continue … while a stronger-than-expected figure could help scale back dovish (Fed) expectations.”Optimism around peaking interest rates and upbeat quarterly earnings have led to a strong rebound in equities towards the end of the year, while the 10-year Treasury yield has plunged from its October peak of about 5%. The S&P 500 has risen 19% so far in 2023 and is within the spitting distance of its highest intraday level of the year hit in July.The Fed is due next week to hold a monetary policy meeting, where it is widely expected to keep rates unchanged. Bets that the central bank will deliver a rate cut of at least 25 basis points in March currently stand at 58.5%, according to the CME Group’s (NASDAQ:CME) FedWatch tool.At 7:04 a.m. ET, Dow e-minis were down 44 points, or 0.12%, S&P 500 e-minis were down 7.25 points, or 0.16%, and Nasdaq 100 e-minis were down 54 points, or 0.34%.Among major movers, Qualcomm (NASDAQ:QCOM) slipped 1.1% in trading before the bell as Morgan Stanley downgraded the chip firm to “equal weight” from “overweight.” Lululemon Athletica (NASDAQ:LULU) fell 2.4% after the premium apparel retailer forecast fourth-quarter results below expectations. Investors will also watch out for the University of Michigan’s preliminary consumer sentiment data for December later in the day. More

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Calviño’s career highlights include senior roles under former Spanish Prime Ministers Jose Maria Aznar and Jose Luis Rodriguez Zapatero and a stint as director general of the EU Commission’s budget department. In 2018, she made her political debut in Prime Minister Sanchez’s cabinet and has since been a key figure in Spain’s economic landscape. Notably, she has chaired the IMF’s monetary and financial committee since December last year.As Spain’s Economy Minister, Calviño successfully steered the country through economic challenges brought on by the COVID-19 pandemic and the Ukraine conflict. Under her guidance, Spain achieved significant growth while keeping inflation rates low.Calviño is also recognized for her dedication to gender equality. She made headlines for boycotting a Madrid employers’ federation photo opportunity due to its lack of female representation, underscoring her commitment to challenging gender disparities within power circles.Her endorsement by EU finance ministers was notably backed by Belgium’s Finance Minister Vincent Van Peteghem, reflecting broad support for her candidacy. As she prepares to succeed Werner Hoyer at the EIB, Calviño’s diverse experience and advocacy are expected to influence her leadership style at one of Europe’s key financial institutions.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

If confirmed by the EIB’s board, she would start at the European Union’s financial arm and world’s largest public development bank on Jan. 1, the EIB said in a statement.Europe’s antitrust chief Margrethe Vestager said minutes earlier that she had withdrawn her candidacy.”I am grateful and honored to get the support of my fellow finance ministers,” Calvino said, adding that the EIB’s role was set to grow in importance as it funded the green transition and provided financial support to rebuild Ukraine.The 55-year-old mother of four, a staunch defender of women’s rights, will replace German economist Werner Hoyer, 72, becoming the first woman and first Spaniard to lead the EIB.Josep Borrell, another Spaniard, has been the EU’s top diplomat since late 2019.”We are convinced that Nadia Calvino has all the qualities needed to manage the world’s biggest multilateral bank, channelling much-needed financing to businesses, and supporting investment to boost Europe’s competitiveness and sustainable growth,” said the EIB’s Belgian Chairman Vincent Van Peteghem.Under Hoyer’s stewardship since 2012, the EIB has increased its capital and lending for clean energy and security investments in Europe and financed the development of COVID-19 vaccines.Soft-spoken and typically measured in public appearances, Calvino has been the economy minister, a post that in Spain encompasses many aspects of public finances, since June 2018, when Pedro Sanchez, a Socialist, first became prime minister.Widely seen as a technocrat, she is a career civil servant and not a member of Sanchez’s party.Spain has put Calvino forward for several top jobs since 2019, including chair of the Eurogroup meeting of euro zone finance ministers and head of the International Monetary Fund, a position that eventually went to Bulgaria’s Kristalina Georgieva.Calvino spearheaded Spain’s economic response to the pandemic with an unprecedented 200-billion euro package in 2020 and has managed the implementation of the European Union’s pandemic relief package.After holding senior posts in Spain’s Economy Ministry, she went to the European Commission in 2006, and in 2014 was appointed the Commission’s director-general for the budget. She has been the chair of the IMF steering committee since December 2021. More