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UK avoids recession but growth remains elusive



#avoids #recession #development #stays #elusive

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Good night.

It’s maybe an indication of the instances that information this morning of UK growth flatlining within the fourth quarter of final 12 months was hailed by chancellor Jeremy Hunt as proof that the economic system was “extra resilient than many feared”.

Output shrank greater than anticipated in December, in response to the Workplace for Nationwide Statistics, however GDP for the three-month interval was unchanged, which means the UK had, for now, dodged recession, outlined as two consecutive quarters of unfavorable development.

It stays the one G7 member to not have recovered totally from the pandemic, in distinction with the US, which was up 5.1 per cent within the fourth quarter in contrast with 2019, and the eurozone, which was up 2.4 per cent.

Line chart of Real GDP, rebased Q4 2019=100 showing The UK economy stagnated in the final quarter of 2022

One vivid spot is London, the place new knowledge yesterday confirmed the capital powering ahead of other regions in England, due to development in skilled companies, underlining the challenges forward for the federal government in delivering on its promise of “levelling up” left-behind areas.

On the constructive facet, the outlook for inflation has improved since fuel costs started to fall. Bank of England chief Andrew Bailey instructed a parliamentary committee yesterday that public sector staff wanted to take this under consideration when asking for pay rises. The BoE predicts inflation will drop from 10.5 per cent to 4 per cent by the top of 2023.

Home costs in the meantime are exhibiting their most widespread falls since 2009 as hovering mortgage charges hit purchaser demand. The typical price for brand new loans reached 3.67 per cent in December, the best in a decade, in response to BoE knowledge final week.

All of which might be on Hunt’s thoughts as he prepares for his Price range on March 15.

Enterprise foyer teams are calling on the chancellor to make use of his speech to pave the way in which for development by means of tax breaks for investment and insurance policies to sort out employee shortages. They’ve additionally voiced considerations that the forthcoming enhance in company tax from 19 to 25 per cent will hit corporations’ capital spending.

Brexit costs for business in the meantime proceed to mount, particularly in areas resembling chemical compounds the place corporations now have to stick to UK-badged laws in addition to current EU guidelines, for no tangible acquire. To not point out the query marks nonetheless hanging over the broader regulatory panorama due to the federal government’s intention to “overview or revoke” all leftover EU legal guidelines by the top of this 12 months.

As UK chief political commentator Robert Shrimsley notes, the try by Hunt and his boss Rishi Sunak to stress fiscal prudence shouldn’t be made any simpler by noises off from Tory colleagues — particularly these grouped round Sunak’s predecessor Liz Truss — pining for an additional dose of unfunded tax cuts, regardless of the final try ending in disaster.

Must know: UK and Europe economic system

Spurred by the decline in money transactions, the UK authorities and the Financial institution of England have began work on the design of a “digital pound”. Read our explainer on the way it would possibly work and FT shopper editor Claer Barrett’s piece on whether or not it will be good for consumers.

European Fee chief Ursula von der Leyen stated the EU would combat again towards “large” hidden handouts from China to its industries, in addition to responding to the US risk of inexperienced power subsidies. The finance chief of ArcelorMittal, Europe’s largest steelmaker, instructed the FT that Brussels wanted to simplify the approvals process for investments.

German inflation hit a five-month low of 9.2 per cent, however the delayed knowledge might result in an upward revision to final week’s eurozone-wide determine of 8.5 per cent.

Russia stated it will cut its oil output by 5 per cent or 500,000 barrels a day in response to the value cap imposed by the west. High power dealer Pierre Andurand stated Vladimir Putin had “lost the energy war”. Putin will ship a state-of-the-union address on February 21, three days earlier than the primary anniversary of his invasion of Ukraine.

Be a part of FT correspondents and company at our subscriber webinar on February 23 from 1300-1400 GMT to mark the anniversary and what would possibly occur subsequent. Register to your free ticket at

Must know: World economic system

China has pulled again from its participation in a subsea cable challenge linking Asia with Europe as tensions develop with the US over who builds and owns the infrastructure underpinning the global internet.

Hong Kong is pulling out all of the stops to lure enterprise again after three years of lockdowns in what it referred to as “in all probability the world’s biggest welcome ever”. Sights embody set-up funds for worldwide corporations, visas for overseas graduates and 500,000 free airline tickets to encourage tourism.

Dancers at Hello Hong Kong event
Dancers carry out on the Howdy Hong Kong marketing campaign launch occasion. © Lam Yik/Bloomberg

Must know: enterprise

Adidas is dealing with €700mn in working losses due to its pile of unsold Kanye West “Yeezy” sneakers. The group issued its fourth revenue warning since July, laying out a worst-case state of affairs by which it must write off all of the remaining stock.

Disney is to cut 7,000 jobs, about 3 per cent of its workforce, as a part of a cost-saving restructuring. The modifications led to activist investor Nelson Peltz calling off his proxy combat towards the corporate which was set to be one of many greatest company battles lately.

Credit score Suisse reported its greatest annual loss since the 2008 financial crisis as funding banking slumped and purchasers pulled cash from its wealth administration enterprise. Right here’s our Big Read on a make-or-break second for the financial institution.

The FT Journal dives into the bizarre final hours of FTX and the way Sam Bankman-Fried and his crew of millennial millionaires misplaced a $40bn crypto empire.

World traders are betting large on China’s reopening, snapping up a record $21bn of Chinese language equities because the begin of the 12 months. The development has been fuelled by constructive financial knowledge printed after the lunar new 12 months vacation.

Column chart of year to Feb 8 purchases of Chinese equities (Rmb bn) showing reopening rally reigniting global demand for China stocks

Science spherical up

The unfold of antibiotic resistance has revived curiosity within the bacteria-killing viruses known as phages, first found and used to combat an infection a century in the past. Learn extra in our particular report: Future of Antibiotics.

The inventor of the silicon know-how behind solar energy instructed the FT that combining different supplies with the silicon might increase the effectivity of photovoltaic cells that convert daylight into electrical energy from 25 per cent to more than 40 per cent.

The fusion power business referred to as for extra political assist to construct on final 12 months’s breakthrough by US scientists that demonstrated the opportunity of producing more energy from a fusion reaction than it consumed, dubbed “some of the spectacular scientific feats within the twenty first century”.

New know-how that makes use of fibre optics to seek out the causes of coronary heart illness has begun testing at London’s St Bartholomew’s Hospital. The iKOr system measures blood flow around the heart and will ultimately assist many sufferers affected by issues resembling chest pains, whose trigger can’t be recognized with present strategies.

And at last, the European Area Company is making ready for one of many most ambitious space projects ever, a 12-year mission to the outer photo voltaic system to research whether or not three of Jupiter’s moons would possibly assist life.

Diagram of the ESA Juice spacecraft and its instruments

Some excellent news

College of California researchers have recognized tiny organisms that not solely survive however thrive through the first 12 months after a wildfire. The findings might help bring land back to life after fires which are rising in each dimension and severity.

One thing for the weekend

The FT Weekend interactive crossword might be printed here on Saturday, however within the meantime why not attempt in the present day’s cryptic crossword?

Interactive crosswords on the FT app

Subscribers can now remedy the FT’s Every day Cryptic, Polymath and FT Weekend crosswords on the iOS and Android apps

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