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A new report showing US business is continuing to lose faith in Britain as an investment destination because of its political turmoil (as well as Brexit and rising corporate taxes) could hardly have come at a worse time after another few days of Westminster soap opera.
The survey from BritishAmerican Business, the transatlantic trade association, showed confidence falling for the third year in a row, despite the (relative) return to normalcy under UK prime minister Rishi Sunak, who has attempted to move on from the chaos created by his two predecessors and reset relations with the EU.
The report also takes some of the shine off last week’s “Atlantic declaration” agreed by Sunak and US president Joe Biden, which aims to strengthen economic ties between the two countries and increase trade in areas such as defence, nuclear materials and the critical minerals used in electric batteries.
Although the prospect of closer co-operation on electric vehicles was welcomed by the motor industry, analysts warned that carmakers such as Jaguar Land Rover and battery makers such as China’s Envision, which has a plant in Sunderland, would not be able to qualify for US tax credits because the batteries and vehicles still had to be assembled in North America.
Biden also backed Sunak’s ideas on regulating artificial intelligence, including the hosting of the first global summit on the issue this autumn. Sunak was back on the theme at the opening of London Tech Week this morning, but any hopes for an opportunity to shine a light on the UK’s ambitions were immediately dashed by the continuing dispute over former PM Boris Johnson’s resignation honours list.
Johnson quit as an MP on Friday night, followed by two of his supporters, ahead of the publication of a Commons report on whether he misled parliament over breaches of pandemic lockdowns.
The political drama around Johnson and the spat over the government’s refusal to hand over all the evidence also threatens to overshadow the UK Covid-19 Inquiry, which holds its first public hearing tomorrow. The investigation is set to last until at least 2026 and will cost more than £100mn, with a remit ranging from preparedness and government decision-making to the impact on care homes and the health service.
Need to know: UK and Europe economy
EU carmakers said they would lose more than €4.3bn and cut production by almost 500,000 electric vehicles unless Brussels agreed to delay the imposition of tariffs between the EU and the UK, with China the biggest beneficiary.
The UK’s National Audit Office hit out at tax authorities for omitting key figures for its business case on a digital tax project, which it says will cost five times the original forecast.
Italy, the largest beneficiary of the EU’s €800bn post-pandemic recovery programme, warned that a labour shortage was hindering its ability to implement projects worth billions of euros. The country is also entering a “demographic winter” as its birth rate falls relentlessly.
Need to know: global economy
A new Big Read discusses whether US economic resilience is starting to crack as consensus breaks down over the pace of inflation and bank failures weigh on investor optimism. Leading economists polled by the FT predicted the Federal Reserve, which makes its interest rate decision on Wednesday, would have to take tougher action to cool the economy with at least two more rate rises.
Linda Yueh, author of The Great Crashes: Lessons from Global Meltdowns and How to Prevent Them, says lessons from past crises could help stave off a commercial property crash.
Argentina is turning to the IMF in a last-ditch effort to stave off devaluation. Inflation is expected to hit 145 per cent this year, a recession is on the cards and the peso has fallen almost 40 per cent against the US dollar on the black market this year.
Early moves by Nigeria’s new president Bola Tinubu to reform the country’s economy and run it along more orthodox lines have been welcomed by investors, who cheered the removal of the central bank chief and the scrapping of fuel subsidies.
The shift to greener energy sources can only happen if renewable projects can connect to electricity grids. A Big Read explains.
Need to know: business
Nasdaq is buying financial risk software company Adenza for $10.5bn in its largest-ever such deal, as the world’s big exchange operators diversify from transactions into more stable revenue streams such as data and risk management.
Iran’s strategically important car industry is in crisis because of the impact of sanctions. The plunging rial and shrinking state revenues have created shortages of crucial parts and a sudden increase in prices.
A former executive at Samsung Electronics was arrested and indicted in South Korea for allegedly stealing the company’s technology to build a copycat chip plant in China.
Markets may be fretting over the direction of US interest rates and inflation, but volatility, as measured by the Vix index, has fallen to its lowest level since the start of the pandemic.
Foreign investors are fleeing Chinese tech giants such as Tencent and Alibaba as the country continues to be hit by geopolitical tensions and faltering growth.
One sector that is doing well is Big Pharma in the US, where spending on deals has surged in the early part of this year. The jump in mergers and acquisitions is being fuelled by large cash reserves amassed during the pandemic and investor concerns about future growth prospects.
The US consulting industry is set for a year of upheaval as economic uncertainty leads to cancelled projects and clients pushing for lower fees.
The world of work
EU member states reached a long-awaited agreement on rules governing gig work, paving the way for stronger protections for the 28mn people across the bloc working for companies including Uber and Deliveroo.
How do I leave academia and move into management consultancy? FT careers expert Jonathan Black and FT readers weigh in.
The shift to homeworking continues to reshape the office property market, with billions spent converting unwanted spaces for new purposes.
Some good news
Understanding how spiders spin silk may hold clues for treating Alzheimer’s disease, say researchers.
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