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Today’s top stories
Gazprom, Russia’s state-backed gas pipeline monopoly, accused Ukraine of taking gas meant for Moldova from lines running through the country and warned it might reduce supplies to western Europe from November 28. Gas prices rose in response this morning.
Looser policies and confusing signals from Beijing have stoked a growing Covid outbreak across China, with swaths of the population once again locked down. Apple iPhone factory workers clashed with police at the Foxconn plant in Zhengzhou in a protest over bonuses.
The UK Supreme Court ruled that the Scottish government did not have the authority to hold an independence referendum without agreement from Westminster, scuppering Edinburgh’s plan for a vote next year. Scotland’s first minister Nicola Sturgeon said she would make the next UK general election “a de facto referendum” on independence.
For up-to-the-minute news updates, visit our live blog
A new clutch of surveys and forecasts have highlighted the challenges ahead for both the world economy and business under the strain of rising inflation and a full-blown energy crisis.
Business activity in the eurozone shrank for the fifth consecutive month in November, according to the closely watched purchasing managers’ index from S&P Global, recording a score of 47.8, where 50 marks the divide between contraction and expansion. Although the overall result was another sign that the bloc’s output would contract this winter, there was some encouraging news on supply chain problems and cost pressures easing.
However, there were few signs of optimism in a separate survey from the European Round Table for Industry. It showed that a third of the biggest industrial companies expected to stop or scale back operations because of record energy prices and slowing demand.
Businesses have also shown concern that incentives in the US $369bn green technology initiative (aka the Inflation Reduction Act) could divert investment away from Europe.
The PMI score for the UK of 48.3, although broadly unchanged from October, was the fourth consecutive reading below 50, with new orders falling at the fastest pace in almost two years, pointing to a deepening recession. Survey panellists cited the cost of living crisis, the Ukraine war, rising export challenges, higher borrowing costs and fiscal tightening.
Many respondents cited Brexit-related problems. Cips chief economist John Glen said: “The Covid veil, now almost completely lifted, has revealed the challenges still faced by exporters struggling with customs and paperwork challenges and other Brexit constraints putting off overseas customers.”
Manufacturing company Johnson Matthey is the country’s latest casualty of soaring inflation and energy prices, today announcing cuts of up to 15 per cent in its senior management jobs.
The UK PMI result follows yesterday’s forecast from the OECD which said the country would be the worst performer in the G20 bar Russia over the next two years, with GDP falling 0.4 per cent in 2023.
The headline US PMI reading fell from 48.2 to a three-month low of 46.3 in November, with lower output across both manufacturing and services as demand was hit by inflation, rising borrowing costs and economic uncertainty, suggesting the economy was contracting at an annualised rate of 1 per cent.
The OECD expects growth of just 0.5 per cent in the US next year and global expansion of 2.2 per cent, driven by the more resilient emerging economies.
Need to know: UK and Europe economy
UK public borrowing rose in October as the government’s measures to help households and businesses with energy prices took effect. The Treasury has had to bail out the Bank of England for the first losses it has made on its quantitative easing programme since 2009, resulting from rises in official interest rates.
Brussels told EU member states to pace their spending during the energy crisis, arguing that fewer than 30 per cent of support measures in the bloc have been “well targeted”, our Europe Express newsletter reports (for Premium subscribers).
Need to know: Global economy
New Zealand, which has become a “canary in the coal mine” on inflationary pressures, increased its benchmark interest rate by a record 0.75 percentage points. The Reserve Bank of New Zealand said further monetary tightening was required to bring inflation back within its target range, even as other economies start to scale back.
Saudi Arabia’s investment in solar and wind might help the kingdom meet emissions targets — and also pump more crude to sell others. Martin Wolf says global policymakers need to work out how to accelerate the transition to green energy.
Argentina, a major player in the global food market, accounting for 8 per cent of wheat exports, 18.5 per cent of corn and 40 per cent of soyabean oil and meals, has been badly hit by drought. Farmers are in despair at the lack of help from government.
The party of Brazil’s outgoing president Jair Bolsonaro has challenged the outcome of the run-off election he narrowly lost last month, calling for the cancellation of ballots from electronic voting machines with alleged malfunctions.
Covid-stricken Hong Kong has lost its luxury shopping crown to New York. Manhattan’s Upper Fifth Avenue is now the world’s most expensive street for luxury shopping, according to a new survey, with Hong Kong’s Tsim Sha Tsui district in Kowloon in second place and Milan’s Via Monte Napoleone in third.
The US Federal Reserve will publish minutes from its November policy meeting at 2pm ET/7pm London. These are expected to provide insight into when the central bank might end its streak of jumbo rate rises. Check back at FT.com for details and reaction.
Need to know: business
Agricultural machinery manufacturer John Deere, an economic bellwether for capital spending in the US, beat earnings expectations and reported an upbeat outlook for next year as strong consumer demand and higher prices boosted revenue.
The Glazer family, US owners of Manchester United football club, said they were searching for outside investments and considering a sale, potentially making it the latest prestigious team in the lucrative English Premier League to go on the market in recent months.
They’re barely noticeable, but promoted items on digital sales platforms are at the vanguard of an industry worth tens of billions of dollars. Our Big Read looks at how retailers are reshaping advertising.
The mood in the global commercial property market has darkened in recent months as borrowing costs have shot up, raising the spectre of a credit crunch as lenders retreat and only sign off on the safest loans.
Clothing is piling up at warehouses in Bangladesh as consumers in the west tighten their belts. Clothing and textile production is by far the country’s biggest industry, accounting for 85 per cent of total exports.
The World of Work
Retirees are among those being targeted by UK bikes and car parts seller Halfords amid chronic labour shortages. About 1mn people gave up employment since the start of the pandemic, with retirement the most common reason quoted by those aged between 50 and 70.
Employee assistance programmes face a swelling wave of complex mental health problems brought to them by people with nowhere else to turn. What’s behind the increase? Sarah O’Connor explores.
Do human resources departments exist to protect employees or the company? Listen to the new Working It podcast.
Covid cases and vaccinations
Total global cases: 630.0mn
Total doses given: 13.0bn
Get the latest worldwide picture with our vaccine tracker
Some good news
Elusive British artist Banksy is among those who have responded to the war in Ukraine through an explosion of artwork celebrating the resilience and defiance of its people amid the tragedy of conflict, The Conversation reports.
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