WhatsNew2Day
Latest News And Breaking Headlines

Low inflation era is over, says ECB chief

This article is an on-site version of our Disrupted Times newsletter. Register here to receive the newsletter directly in your inbox three times a week

Good evening,

Finally some better news in the fight against inflation. Germany reported today that the CPI fell from 8.7 percent last month to a better-than-expected 8.2 percent in the year to June, aided by government measures such as fuel tax cuts and a special discount on public transport.

The data was not a turning point, “but rather proof that at the moment it is governments and not central banks that can cut inflation,” said Carsten Brzeski, head of macro research at ING.

The news contrasted sharply with data from Spain earlier in the day, which showed prices rose the fastest in 37 years, reaching 10 percent in June, driven by sharp increases in energy and food. The underlying interest rate, excluding these two volatile items, reached 5.5 percent, the highest level in the country since 1993.

Prime Minister Pedro Sánchez has announced proposals to expand Spain’s €16 billion bailout package and increase it by €9 billion, including cuts in electricity taxes and public transport costs, assistance for retirees and one-off payments for lower incomes.

The easing of inflationary growth in Germany will be cautiously welcomed by European Central Bank policymakers at their central bank forum in Sintra, Portugal.

Yesterday, ECB President Christine Lagarde hardened his message on inflation, saying the central bank would act “with determination and perseverance”, especially if consumer and corporate price expectations rose sharply.

Today, she added:“I don’t think we’re going to go back to that low inflation environment. † † powers have been unleashed. † † what we are now confronted with will change the image and landscape in which we operate.”

Inflation data for the combined eurozone is expected to hit a new all-time high of 8.3 percent when released on Friday.

The ECB plans to raise interest rates in July for the first time since 2011, starting with a quarter of a percentage point increase, followed by a larger hike in September. However, the new tool to tackle the fragmentation of the eurozone’s financial markets could spark another crisis if it falls short, commentator Megan Greene said.

US Federal Reserve Chairman Jay Powell spoke too during a panel discussion in Sintra ahead of tomorrow’s key personal consumption expenditure data, the Fed’s preferred measure of inflation.

Powell said the US economy was in “excellent shape”, but warned: “If you look at the broad scope of short-, medium- and long-term expectations, you would still say we are credible. [and] that they are well anchored, but here is a clock running.”

View the data per country with our global inflation tracker

Latest news

For current news updates, visit our live blog

Need to know: the economy

G7 countries agreed to do more to prevent Russia from taking advantage of rising energy prices. Here’s our explanation of their plan. The UK said it would halt gas supplies to mainland Europe if it were hit by severe shortages. However, blocking the two-way interconnector pipelines threatens to undermine international energy cooperation.

Latest for UK and Europe

The UK said it would extend tariffs on imports of steel for two years to protect domestic manufacturers in a move that risks legal challenge from the World Trade Organization.

The UK also has doubts about imposing a windfall tax on electricity generators. However, power distributors have been targeted by the energy regulator, who told them to invest more while keeping customer charges stable.

Trade organization UK Finance warned of a fraud “epidemic” following a spate of scams in which victims are tricked into parting with their money. Consumer editor Claer Barrett examines why the country is so vulnerable and what can be done about it.

Companies in Northern Ireland say Westminster’s intention to break post-Brexit trade arrangements, which have helped the county’s economy outperform much of the rest of the UK, will do real damage.

British public finances have been boosted by rising inflation, writes economics editor Chris Giles, but the temporary advantage will soon be lost under the pressure of rising debt, falling wages and pressure on services.

Our latest Big Read is a study on how Russia exports food from Crimea in defiance of international sanctions.

Satellite images of Russian ships moored at Sevastapol in Crimea
© FT/Planet Labs

Worldwide last

The G7 has been accused of “falling back” on climate targets as member states try to bolster energy security. The criticism has been particularly strong in the UK, where a parliamentary report said there was “little evidence” that the government was implementing climate change targets. The EU, meanwhile, is continuing with measures, including a ban on the sale of combustion engines by 2035.

ExxonMobil chief executive Darren Woods told the Financial Times that investment in fossil fuel production would enjoy a resurgence as global efforts to cut production outpaced efforts to cut consumption, suggesting an “optimistic picture” of the speed of the transition to cleaner energy.

Launching on Sunday, our new newsletter The Climate Graphic: Explained helps you understand the week’s key climate data, with insights and analysis from FT specialists. Register here

After the period of liberalization from the late 1940s to the 1970s and the “neoliberalism” that began in the 1980s, we are now living a new era of world disorder, says chief economics commentator Martin Wolf. Open trade is now at risk, he says, unless action is taken to strengthen the global commons.

China has halved quarantine restrictions on international travelers to one week as it tries to revive an economy hit hard by pandemic curbs. The countries Covid health apps have been criticized for being used as “digital handcuffs”, or tools of social control.

On the other hand, the erosion of wider freedoms in Hong-Kong does little to deter companies and investors, says Beijing bureau chief Tom Mitchell. Meanwhile, the city’s elite snag bargains in Tokyo.

Image showing how health codes have come to be central to life in China

Need to know: business

Hedge fund manager and renowned shortseller Jim Chanos is betting against “legacy” data centers, which he predicts will fall victim to cloud services from the trio of Amazon Web Services, Google Cloud and Microsoft Azure.

The latest victim of turbulent markets is: Walgreen’s sale of British pharmacy chain Boots, which has been shut down due to a lack of suitable offers. Boots accounts for approximately 5 percent of Walgreen’s annual revenue of $132 billion.

More encouraging were the results of: H&M, the world’s second-largest clothing retailer, beat quarterly earnings expectations by slashing discounts. Chief executive Helena Helmersson said supply chains are still under pressure and that closing operations in Russia, Ukraine and Belarus would represent 5 percentage points from a projected 6 percent year-on-year decline in June.

The shift to electric cars puts more than 20,000 jobs in the UK at risk, the industry association has warned as jobs in engines, exhaust systems and fuel tanks disappear as the country gears up for the end of sales of petrol and diesel-powered vehicles by 2035. up will be one of Europe’s first refineries for lithiumone of the main materials used in electric car batteries.

London Heathrow Airport was ordered by British regulators to lower landing charges after a major argument with airlines. Business columnist Helen Thomas says the system for allocating take-off and landing slots needs an overhaul.

However, it’s all a smile at the high end of the airline market, at least in the US, as corporate spending on private jets for personal use has reached its highest point in 10 years.

The world of work

Positive employment trends for young women mask an increase in the share of inactive young menEmployment columnist Sarah O’Connor writes about the changing demographics of the British workforce.

If you often feel underqualified and plagued with self-doubt at work, you may experience: impostor syndrome† In our latest The work podcast, Isabel Berwick and guests discuss how it can actually improve your performance in some cases.

Covid cases and vaccinations

Total number of cases: 538.9mn

Get the latest global photo with our vaccine tracker

And finally . † †

Ever suffer from? jet lag? Here are some tried and true tips from a source you can trust: a long-haul pilot.

Illustration of an airline cockpit that appears to have sleepy eyes
A pilot’s guide to beating jet lag © Universal Images Group/Getty

the work — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work and career editor Isabel Berwick. Sign Up here

FT Asset Management — The inside story on the movers and shakers behind a multi-billion dollar industry. Sign Up here

Thanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here receive future numbers. And share your feedback with us at disruptedtimes@ft.com. Thank you

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More