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Today's top stories
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The Bank of England needs to overhaul its economic model to avoid failing again to predict rising inflation, according to research by former Federal Reserve Chairman Ben Bernanke.
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The US proposed taking on tens of billions of dollars in debt to finance Ukraine with profits from frozen Russian state assets.
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The dollar posted its strongest weekly performance since 2022 after hot U.S. inflation numbers sent ripples through global markets and prompted traders to trim bets that the Federal Reserve would soon cut interest rates.
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Good evening.
British Prime Minister Rishi Sunak received a much-needed dose of positive economic news this morning as new data raised hopes that the country is emerging from recession.
Gross domestic product rose 0.1 percent in February, compared with a revised 0.3 percent in January, but was in line with expectations, thanks to improved output in sectors such as auto manufacturing and food. The news helped the benchmark FTSE 100 index hit a record high.
The data points to a likely expansion of the UK economy in the first quarter. That would mark the end of the technical recession that the UK fell into at the end of 2023, which was characterized by two consecutive quarters of negative growth. Retail industry data released earlier this week also pointed to signs of recovery as price pressures eased.
Whether a slowly improving economy will be enough to save Sunak from defeat in the upcoming general election is another question.
The opposition Labor Party, which the FT poll shows is about 19 points ahead of the Conservatives, is putting the economy at the heart of its election campaign. She makes clear what she sees as the government's long-term failure.
Rachel Reeves, shadow chancellor, said the Conservatives “can’t fix the economy because they are the reason it’s broken”.
“After 14 years of Conservative economic failure, Britain is doing worse with low growth and high taxes,” she added.
Hopes that Sunak's party could benefit from lower mortgages have faded after higher-than-expected inflation in the US dampened hopes of imminent interest rate cuts on both sides of the Atlantic.
Traders expect only two interest rate cuts from the Bank of England this year, down from the more than six that markets expected in January. This scenario was believed by BoE policymaker Megan Greene, who wrote in the FT yesterday that investors had underestimated the risk that inflation would remain high in the UK for longer than in other advanced economies.
Chancellor Jeremy Hunt admitted in December that interest rate cuts were crucial to the Tories' re-election prospects. He told the FT that falling interest rates were “probably the moment when people start to have more confidence in their own personal prospects and the prospects of their family”.
Meanwhile, Brits are still battling a severe cost of living crisis: data this week showed the population is increasingly reducing their savings and investments as price rises continue to strain household finances.
But if all else fails, Sunak has other irons in the fire.
As we reported yesterday, the Prime Minister has developed a close relationship with Blackstone bosses, fueling speculation about his future after the election. At the groundbreaking ceremony for the private equity giant's new London headquarters, the prime minister quipped, “Where's my office?” according to people who witnessed or were briefed on the event.
Things to know: Economics in Great Britain and Europe
Private investors have registered British government bonds This year we want to secure attractive returns while interest rates remain at a 16-year high.
The return to growth in mortgage demand was further evidence that the British property market stabilizes.
The European Central Bank The central bank left interest rates at 4 percent but indicated it would consider cutting rates at its next meeting in June. Officials sought to play down the impact of higher-than-expected U.S. inflation data.
Interesting facts: global economy
The global economy IMF Managing Director Kristalina Georgieva warned that while the country may have avoided recession, it faces a decade of “tepid growth” and “popular discontent.” She added that “inflation has not yet been completely defeated, fiscal buffers are being depleted and debt is rising, posing a major challenge to public finances in many countries.”
China's exports In U.S. dollar terms, China fell sharply in March as lower prices for its goods hit producers, highlighting the challenges Beijing faces as it focuses on manufacturing and trade to boost the economy. Meanwhile, weak inflation data has heightened concerns about consumer demand in China.
In sharp contrast to the OPEC cartel, said the International Energy Agency Oil consumption slowed after a mild winter and normalizing demand from China. Prices have risen steadily due to supply shortages caused by conflicts in the Middle East and Ukraine.
Industrial metals including copper and zinc have outperformed global stocks this year as traders bet on a revival in demand. This meant new capacity and a slowdown in project completions in the US and EU global coal consumption rose last year for the first time since 2019.
Forget Boomers vs. Millennials, the next conflict is Millennials against each other, as part of the cohort benefits from inherited family wealth, writes chief data reporter John Burn-Murdoch.
Fun fact: Business
US banksEarnings season is underway. JPMorgan Chase's first-quarter profit rose 6 percent despite the bank paying an additional $725 million in charges to cover the costs of regional bank failures last year. Citigroup reported a better-than-expected profit of $3.4 billion after cutting thousands of jobs in a restructuring. Thanks to strong stock markets and the popularity of its new spot Bitcoin exchange-traded fund, BlackRock reported a record $10.5 trillion in assets under management. Wells Fargo's profits fell from $5 billion to $4.6 billion.
Private equity pioneer KKR predicts a revival in global IPOs and acquisition activity after a two-year slowdown.
TSMC'Washington's decision to bring its latest technology to the US gives a boost to President Joe Biden's push for supply chain security, but still leaves Washington unable to produce the most complex chips needed for AI in the US to produce completely.
The electric vehicle The revolution is running out of steam, says the FT editorial team. Governments must do more to address barriers such as the lack of reliable charging networks.
Western film pharmaceutical company are looking for alternative suppliers after the US cracked down on Chinese ingredient manufacturers.
Other types of pressure are increasing Japanese companies: Shareholder activists are calling on them to reveal the value of their often fabulous treasures of works of art.
Summary of science
Sea surface temperatures In March they were the warmest on record for the 12th month in a row, while on land they reached new highs for the 10th month in a row. A scientist at the Copernicus Climate Change Service was asked whether this year was “a blip, a phase change, whether the climate system is broken and behaving differently than we expect”.
The widely used prostate-specific antigen or PSA screening test for Prostate cancer Minor cases are being overdiagnosed, while some of the most aggressive cancers are still being missed, according to a new study.
Although Brain-computer interfaces Although BCIs have been around since the 1990s, Elon Musk's Neuralink has generated significant interest and helped attract huge sums of money for startups that see BCI applications beyond medical technology.
professor Peter HiggsThe Nobel Prize-winning particle physicist whose prediction of the Higgs boson helped revolutionize our understanding of the universe died this week at the age of 94. His groundbreaking theoretical work in the 1960s was triumphantly confirmed almost half a century later by experiments at the Cern particle accelerator.
Some good news
New excavations at Pompeii, the ancient Roman city buried by an eruption of Mount Vesuvius in 70 AD, has discovered stunning new works of art. The frescoes, said to be among the finest yet found in the ruins, will be featured in a ` documentary later this month.
One of the newly uncovered frescoes depicts mythological figures inspired by the Trojan War © via REUTERS
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