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World leaders step up pressure on Russia

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Pressure on Russia over the war against Ukraine has increased today. NATO strengthened its military defenses in Eastern Europe, while G7 leaders agreed new sanctions to prevent Moscow from importing technology for its arms industry and tightened measures against those responsible for war crimes and those who “steal and export Ukrainian grain ”.

The G7 summit in the Bavarian Alps comes as Western leaders grapple with a range of crises sparked by the invasion, ranging from concerns over food and energy supplies to galloping inflation rates, all of which are putting severe strain on the global economy. .

The meeting discusses a price cap for Russian oil as part of efforts to hinder Moscow’s ability to fund the war. Non-G7 countries such as India, which has been a major importer from Russia, are also participating. The EU has already agreed on a gradual ban on shipments by sea, but will allow crude oil deliveries to continue through pipelines, while the US has banned all oil imports and the UK plans to do so by the end of the year. year to do.

Energy sanctions should have an effect in the medium term, the Lex column says, but in the meantime, implementing them will be painful. “What started as an economic shock-and-awe campaign is turning into a war of attrition,” it concludes.

Meanwhile, the global economic outlook continues to deteriorate and the rise in inflation shows little sign of easing.

The Bank for International Settlements, the body that provides services to the world’s central banks, warned yesterday that the leading economies were about to “tipping” into a high-inflation world where rapid price increases are normalized, a process that will take quite a while. difficult to turn around.

“Perhaps we will reach a tipping point, after which an inflationary psychology will spread and become entrenched. This would represent a major paradigm shift,” according to the BIS report. The key for central banks has been to “act quickly and decisively before inflation becomes entrenched,” BIS director Agustín Carstens said.

Food shortages are also a growing concern as blockades of Ukrainian ports threaten supplies to developing countries, especially in Africa, where millions are starving. Sharp spikes in food prices have exacerbated the problems caused by the pandemic, threatening an “unprecedented food emergency”. Unrest about food and fuel prices is also increasing in Latin American countries such as Ecuador.

Bar Chart of Share of Wheat Imports (%) with Countries Dependent on Wheat from Russia and Ukraine

A de facto naval blockade means Ukraine, one of the world’s largest grain producers, has been unable to export most of the grain stored in its silos, pushing prices to record highs. Turkey and Russia will hold UN-mediated talks with Ukraine in the coming weeks to break the deadlock.

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Need to know: the economy

Russia For the first time since 1998, it was on track to default on its debt after it missed a deadline for interest arrears. The country is rich in foreign exchange thanks to its oil and gas revenues and has repeatedly said it wants to continue to pay off its debts, accusing Western governments of trying to force the country into an “artificial” bankruptcy.

“Bad times lie ahead. The question is how bad.” That is the conclusion of chief economics commentator Martin Wolf while assessing the stark impact of high inflation and low growth on the UK.

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Latest for UK and Europe

UK taxpayers now have a stake in kill kittensa sex party organizer known for its exclusive events, under a government scheme set up to help innovative companies hit by the pandemic.

Chaos air travelConcerns over the cost of living and a weak pound making trips abroad more expensive have sparked a wave of bookings by Brits for domestic summer holidays.

Plans to end production at the Groningen reserve in the Netherlands, Europe’s largest gas field, could be put on ice if the war in Ukraine cuts supplies – despite links to earthquakes that have led to more than 160,000 claims for damages.

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Worldwide last

New data today showed that industrial gains in China shrank again in May as the country’s businesses were hit by Beijing’s zero-covid strategy. As our Big Read explains, “runxue” – the study of leaving the country altogether – is the new buzzword of those who are getting tired of incessant lockdowns. However, there was better news in Shanghaiwhere authorities declared victory over the recent outbreak of infections, which sent stock prices soaring.

authorities in Tokyo told business and the public today to conserve power to avoid a blackout, reviving debate over whether the country should restart its nuclear responses.

The business model of American agriculture with its emphasis on producing cheap food with little regard for nutrition (or the health of the planet), needs to be fundamentally overhauled, writes global business columnist Rana Foroohar. In the meantime, “food deserts— places with no easy access to healthy food — amplify racial inequalities in American cities.

Investors, homeowners and commercial landlords around the world are all asking the same question: Could there be a crash? Property correspondent George Hammond assesses the impact of rising interest rates and the end of the cheap debt era.

Brazilian economy has grown just 2 percent since the right-wing populist Jair Bolsonaro became leader in 2019, while also suffering the world’s second-highest death toll from Covid. Our Big Read looks at what Bolsonaro plans to keep in office if he loses in the October election.

Need to know: business

Rising material and labor costs are paid in the thousands local construction companies in the United Kingdom. In the year to April, more than 3,400 went into administration, the highest number since the financial crisis.

Line chart of UK building materials inflation (yearly change in %) showing that building costs continue to rise

There is no S&P Insult Index, writes US business editor Andrew Edgecliffe-Johnson, but if there were, it would certainly increase. Executives at fossil fuel companies, in particular, are feeling the heat from angry consumers over excess profits.

the bankruptcy of Revlon, the 90-year-old American beauty giant, highlights how the industry has changed into a much more competitive and fast-paced model, requiring massive investments in digital marketing and product innovation. “It’s like the big established beauty companies are like a tortoise, racing not against one hare, but against hundreds,” said one analyst.

Chinese chip company YMTC is expanding, with a second factory in Wuhan, as it aims to close the technology and output gap with major players such as South Korea’s Samsung and Micron in the US. Meanwhile, Japan’s largest semiconductor companies warned that a shortage of engineers could destroy the government’s plans to revive the domestic chip industry. Asian business editor Leo Lewis says Tokyo is not keeping pace with other global financial centers.

Have we reached the bottom yet? not according Société Générale who has looked at 56 “crisis periods” in the US stock market over the past 150 years and concluded that the S&P index will be 30 to 40 percent lower than its 2022 peak in the next six months. hedge funds appear to be in agreement as they brace for further market turmoil. Listed investor in distressed debt Howard Marks believes that the time is right to do some “bargains”.

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The world of work

The decision to quit your job, like so many did during the pandemic, is a life-changing step, but equally important: how do you leavewrites Naomi Shragai, the author of The man who mistook his job for his lifeIf you do stay put, try nail biting and lip chewing: A new study shows that the more we show signs of tensionthe more sympathetic we seem to become, writes columnist Pilita Clarke.

Fear that the switch to remote working could cause deadly damage to the London office market eased with a new analysis showing the number of companies renting facilities hit a record last year. A third were companies relocating from outside London and the rest were start-ups signing their first office lease in the city.

A city that has been particularly hard hit by working from home is San Francisco, which is lagging behind other locations in getting people back to the office, much to the ire of local politicians desperate for tax revenue. Read about this and more in our new special report: The Future of Cities.

Covid cases and vaccinations

Total number of cases: 538.0mn

Total Doses Administered: 12.0 billion euros

Get the latest global photo with our vaccine tracker

And finally…

From literary thrillers to novels about the cold war and the post-pandemic case for a new settlement, editor Roula Khalaf and FT writers pick their must-read titles in our special summer books.

© Cat O’Neil

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