FirstFT: Magnitude of Truss’s economic challenge forces pound down

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Good morning. The pound has fallen to its weakest levels since 1985, reflecting the daunting scale of the financial problem new prime minister Liz Truss faces as she prepares to unveil an emergency power bundle at present.

Truss will define particulars of the deliberate state intervention to defend households and firms from hovering power payments. Authorities insiders stated the overall gross price over two winters may hit £150bn, however ministers have been nonetheless attempting to finalise the main points of enterprise sector assist yesterday.

The bundle will probably be funded by authorities borrowing, including to demand within the economic system at a time when inflation is above 10 per cent; bond markets are already nervous about rising rates of interest.

Requested whether or not the extent of presidency bond gross sales may turn out to be “indigestible”, Financial institution of England governor Andrew Bailey stated the central financial institution didn’t intend to destabilise markets. “Our group retains this below very shut consideration,” he stated.

Truss’s emergency bundle will cap common family energy payments at about £2,500 a yr at an estimated price of £90bn over two years, with the enterprise component costing maybe £60bn. Increased wholesale gasoline costs would push the invoice increased.

The pound sank as little as $1.1406, decrease than the aftermath of the Brexit vote of 2016 and exceeding the depths of March 2020 within the midst of the Covid-19 disaster. Sterling has fallen 15 per cent towards the greenback this yr.

Thanks for studying FirstFT Europe/Africa. Right here is the remainder of the day’s information — Gary

1. Poland towards windfall levy on energy producers Forward of an emergency EU assembly on Friday, Poland’s prime minister has pushed back on a proposed windfall levy on energy producers, saying it shouldn’t be a precedence and backing a suspension of the bloc’s emissions buying and selling scheme, in an indication of a attainable rift over Brussels’ power disaster plans.

2. Europe tops US on Chinese language listings for first time Chinese language corporations have raised more than five times as a lot cash via share gross sales in Europe than within the US this yr, a fundraising haul for exchanges in London and Zurich that exceeded New York for the primary time amid fraying geopolitical ties between the superpowers.

3. Sharp divide in European most cancers therapy The European Most cancers Organisation has calculated that about 100mn most cancers screening checks have been missed throughout Europe and 1mn cancers went undiagnosed throughout the first yr of the coronavirus pandemic. However some international locations maintained higher standards of treatment than others.

4. Melrose to spin off auto enterprise in GKN break-up Melrose Industries plans to spin off GKN’s automotive division as a UK-listed firm in a break-up of considered one of Britain’s oldest engineering companies. The FTSE 100 turnround specialist acquired the automobile elements and aerospace parts producer in a bitter £8bn takeover in 2018.

5. India and China undercut Russia’s oil sanctions ache A Monetary Occasions evaluation exhibits India and China imported 11mn extra tonnes of oil from Russia within the second quarter of 2022 in contrast with the primary quarter, offsetting many of the fall in shipments to Europe and raising questions about the impact of sanctions on Moscow which have led to hovering power payments for European shoppers.

The day forward

ECB fee resolution Expectations are rising that the European Central Financial institution will announce a 0.75 percentage point increase in rates of interest at present. In July, the central financial institution raised borrowing prices for the primary time in additional than a decade, by a sharper than anticipated 0.5 proportion factors to zero.

Financial information France releases July commerce figures and the US publishes month-to-month motorized vehicle gross sales. Within the UK, the Royal Establishment of Chartered Surveyors releases its month-to-month residential market survey. The OECD delivers its employment outlook, plus the Recruitment & Employment Confederation and KPMG launch their month-to-month jobs report within the UK.

Company earnings British-American cyberdefence specialist Darktrace, business lender Funding Circle, producer Melrose and F&B chain The Restaurant Group report earnings.

Correction: Earlier this week we incorrectly acknowledged the date of the Lebanon presidential election. We apologise for the error.

What else we’re studying

How a tiny particle that may journey via concrete may save lives Engineers use X-rays, ultrasound and radar to hunt for indicators of corrosion and potential failure in concrete. However all have limitations. Now, utilizing particles from house, scientists are growing know-how to securely and cheaply see via virtually any construction on the planet. Believers say the muon revolution is just two or three years away.

Menace of laborious touchdown for transport trade In simply three years, the container transport trade could have made as a lot cash because the earlier six many years, propelled by hovering demand throughout the pandemic. However analysts imagine the cycle might have peaked and after a “once in a lifetime’” profit surge, there may be now the true threat of a crash.

‘They’re not treating us like human beings’ China’s frontline Covid employees, referred to as “Huge White” after their PPE, have been hailed as nationwide heroes for his or her pivotal function in quashing outbreaks. However many complain of brutal conditions, pay cuts and lengthy working hours because the pandemic drags into a 3rd yr.

Monsoon catastrophe piles distress on Pakistan The nation’s local weather change minister referred to as it “the climate catastrophe of the decade” and “a super-flood to beat all”. Monsoons and flooding, following a spring of baking temperatures, have made Pakistan a case research for international locations susceptible to local weather change, with interlinked humanitarian, financial and political crises.

What John Lewis will get proper about British consumers John Lewis has referred to as the tip of the “expertise economic system”. As a replacement, in response to center England’s most well-liked retailer, we now have the “moments economic system”. Inside this apparent advertising guff, writes Cat Rutter Pooley, there may be the kernel of a smart technique.

Books

The 2022 Booker Prize shortlist, introduced this week, showcases novels based mostly on real-life occasions, from Robert Mugabe’s dictatorship to the Magdalene Laundry abuses.

The six books on the Booker Prize shortlist
This yr’s Booker Prize shortlist contains six authors throughout 5 completely different nationalities, and the oldest creator ever to make the reduce

Disrupted Occasions — Documenting the adjustments in enterprise and the economic system between Covid and battle. Enroll here

Asset AdministrationSign up here for the within story of the movers and shakers behind a multitrillion-dollar trade



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