FirstFT: Truss and Sunak united over powers to override City regulators

Good morning. Liz Truss is facing a fight with the Bank of England if she becomes UK prime minister after signalling that she would give ministers powers to override City regulators seen as holding back post-Brexit reform.

The foreign secretary has vowed to press ahead with a law allowing ministers to “call in” regulatory decisions in the public interest if they feel watchdogs are being excessively cautious.

The plan was originally proposed by her rival Rishi Sunak, who said in his Tory leadership bid that Brexit was a chance to shift accountability for regulation to parliament and away from “faceless regulators”.

The controversial “call in” power, which infuriated BoE governor Andrew Bailey, was omitted from the draft of a financial services bill last month by Chancellor Nadhim Zahawi, who put the issue on ice pending the election of a new Tory leader in September.

Truss has told allies that she will “definitely” continue with the override power as party leader — a rare show of policy unity with Sunak.

Speaking at the latest hustings for party members in Darlington yesterday, Truss rejected pleas to meet Boris Johnson and Sunak to “agree a common pledge” to tackle the cost of living crisis.

Do you think Johnson, Truss and Sunak should find a consensus on how to tackle rising fuel bills? Let us know by voting in our poll, or sharing your thoughts at firstft@ft.com. Thanks for reading FirstFT Europe/Africa — Jennifer

Five more stories in the news

1. Carlyle boss quit after being denied $300mn pay package Ousted chief executive Kewsong Lee resigned from the US private equity group after its co-founders refused to discuss his request for a package worth up to $300mn over five years, people with knowledge of the matter said.

2. UniCredit chief’s push to repair relations with Rome Andrea Orcel, chief executive of Italy’s second-largest bank, has hired a top public relations firm to mend his battered reputation with government officials following last year’s collapsed takeover of the majority state-owned Monte dei Paschi di Siena.

3. Russian oil halted through pipeline to central Europe Russian crude flows through a critical pipeline to central Europe have been suspended amid a row over transit payments to Ukraine because of western sanctions on Moscow-owned entities, threatening supplies and exposing the EU’s continued reliance on Russian energy imports.

4. Foxconn stake in Chinese chipmaker under scrutiny Taiwanese national security officials want to force the Apple supplier to unwind an $800mn investment in Tsinghua Unigroup as Taipei seeks to align itself more closely with the US in the face of escalating threats from Beijing.

5. London faces hosepipe ban Millions of people in the UK capital and south-east England face the prospect of a hosepipe ban as Thames Water, the UK’s biggest water group, yesterday became the fourth company to announce restrictions “in the coming weeks” because of unusually hot and dry conditions.

The day ahead

Rishi Sunak BBC interview The former chancellor and Conservative party leadership contender will be interviewed by Nick Robinson. Opponent Liz Truss has a clear lead in the betting market.

Northern Ireland council strike More than 1,000 staff at Armagh City, Banbridge and Craigavon Borough Council, one of the region’s largest local authorities, will walk out in a dispute over working conditions, disrupting refuse collection, planning and leisure services.

Inflation data US July headline consumer prices are expected to have risen 0.2 per cent from June, according to economists polled by Reuters, with core inflation — stripping out food and energy costs — up 0.5 per cent. Germany, Russia and the Czech Republic also have July CPIs, while Egypt publishes inflation data.

Corporate earnings All eyes will be on Admiral’s half-year results to see whether its profitability and guidance could withstand inflationary pressures. Other companies reporting include ABM Amro, Aviva, Deliveroo, Prudential, Tui Travel and Walt Disney. A full list is in our Week Ahead. Sign up here to receive the newsletter in your inbox every Sunday.

What else we’re reading

Why are British household energy bills so high? The typical household energy bill is forecast to soar to £4,420 next April, more than three times the level at the start of 2022. Energy editor David Sheppard breaks down why the energy price cap has climbed so high and how it compares with what families pay across Europe.

Rich and poor should mingle more New research suggests that children from low-income families who are friends with wealthier peers will earn more later in life. “Economic connectedness” — in short, having rich acquaintances — can be a valuable early rung on the economic ladder, writes Anjana Ahuja.

Lessons from Irish history on the famine in Somalia The UN has warned that following a drought that killed 3mn animals and caused crops to fail, parts of Somalia could face full-blown famine next month. Looking back to Ireland in 1846 in the midst of a potato famine gives insight into the potential scale of the devastation, writes Jude Webber.

Europe can withstand a winter recession There is virtually no way to escape a Europe-wide recession after Russia tightened natural gas supplies, but it need be neither deep nor prolonged. Substitution, solidarity and conversation can help overcome a gas embargo, writes Chris Giles.

Don’t rule out a fifth term for the Tories Why, vice and boredom aside, does Janan Ganesh trawl betting markets for the odds on a fifth Conservative term? And why does such an undeserved thing seem also underpriced? It is probably because Labour is still overvalued, he argues.

Sport

Tennis star Serena Williams will retire after the US Open tournament, concluding a career of 23-time Grand Slam titles that made her a powerful ambassador for black women in business. In a first-person essay for Vogue, Williams attributed the decision to her desire to have more children.