UK avoids recession but inflation fears persist

today’s best stories

• An EU watchdog says the European Central Bank has been too lax in the supervision of the largest European banks. Joachim Nagel, head of the Bundesbank and ECB policymaker, said Eurozone rate hike could continue beyond summer while underlying inflation was not yet defeated.

• Elon Musk is in talks to hire Linda Yaccarino, head of publicity at NBCUniversal, as Twitter’s new CEO. In December, Musk said he would step down as soon as he found someone “dumb enough to take the job.”

• Mike Lynch, founder of British software group Autonomy, has been extradited to the United States face trial over multiple allegations including conspiracy to commit wire fraud and securities fraud, charges he strongly contested. The case centers on allegations that Autonomy’s accounts were manipulated, leading Hewlett-Packard to pay an additional $5 billion when it acquired Autonomy in an 11-year takeover. billion dollars in 2011.

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Good evening.

British Prime Minister Rishi Sunak, 43 today, can take heart from news that the economy is showing greater resilience than expected a few months ago, albeit tempered by signs that high levels of inflation may be around longer than expected.

Official data this morning shows GDP increased by 0.1% in the first quarter, boosted by upwardly revised growth in January. Output in March was much worse than expected, however, as the services sector stuttered. The quarterly increase follows an equally anemic 0.1% rise in the last three months of last year, but at least means the economy has (just) avoided recession.

GDP is still 0.5% below pre-pandemic levels, compared to an increase of 5.3% in the United States and 2.5% in the euro zone, leaving the United Kingdom stuck at the bottom of the G7 ranking.

The Bank of England, which yesterday increased its key interest rate to 4.5%, the highest level in nearly 15 years, said growth would pick up later in the year on lower energy prices, a stronger global economy and growing business confidence and consumers. That compares with its February forecast of a recession lasting through 2023 and into the first quarter of next year.

The BoE, however, has warned that it will not reach its inflation target before 2025. It now expects the CPI to rise from the current 10.1% to 5.1% in the fourth quarter of 2023, in instead of its previous forecast of 3.9%. Any further downgrade would leave Sunak breaks promise to halve inflation by the end of the year.

The BoE, for its part, insists that it is always win the fight to bring inflation back to its 2% target, but Governor Andrew Bailey acknowledged that higher interest rates were bad news for households struggling with the cost of living crisis.

Families are particularly affected by food inflation at its highest level in 45 years. The government last week appeals to intervene rejected and a survey of supermarket “profit”. France, on the other hand, has reached an agreement with food retailers to set the “lowest possible price” on certain products for three months.

New data from the retail sector this week showed that inflation was also withhold the requestbut retailers are hoping to see a boost from May’s bank holiday glut and extra spending around the king’s coronation.

What you need to know: the economy of the UK and Europe

The United Kingdom has given up on its plan to abandon everything Legislation derived from the EU by the end of this year, a move hosted by business groups but criticized by Tory Brexiters.

More than $1 billion worth of sanctioned EU exports have disappeared in transit to Russia’s economic partners, according to analysis FT. The flow of “ghost tradeis supposed to help sustain Vladimir Putin’s war economy.

The EU plans a underwater internet cable to improve connectivity and reduce dependence on lines crossing Russia as concerns grow over vulnerable infrastructure. The €45 million cable will connect EU member states to the Caucasus via the international waters of the Black Sea.

What you need to know: the global economy

China said he would send a special envoy seek a “political settlement” to the war in Ukraine. He had talks with the United States to try to defuse recent tensions between the two countries. The head of EU diplomacy, however, warned that China would “benefit” from a Russian defeat in Ukraine and that Brussels should respond to Beijing’s global ambitions.

At the same time, US Treasury Secretary Janet Yellen calls for “coordinated action” by G7 countries against Beijing’s use of “economic coercionahead of next week’s summit in Hiroshima, Japan. Yellen said the new US investment restrictions would be “targeted at technologies where there are clear national security implications.”

Federal Reserve Politician Michelle Bowman cast doubt on the notion that the Fed was about to suspend its interest rate hike program, citing a lack of “coherent evidence” that inflation was under control.

THE South African Rand fell to one record low against the dollar after the United States accused the government of Cyril Ramaphosa of secretly supplies weapons to Russiajeopardizing commercial ties with South Africa’s second largest trading partner.

FT Magazine reveals the harrowing story of South African gangs risking their lives to supply cartels with copper scrap. The third most used metal in the world is a smuggler’s dream: malleable, recyclable and easy to melt, making its origin untraceable.

What you need to know: Company

PwC is caught in a Australian leak scandal after it emerged the company was using confidential government tax plans to advise tech clients.

A regulator will hit the biggest American banks – those with more than $50 billion in assets – with a A $16 billion bill for cleanup costs in the rescue of Silicon Valley Bank and Signature Bank in March. CEO of JPMorgan Chase Jamie Dimon called for an investigation into investors betting against bank stocks as part of official efforts to “put an end” to the turmoil of the sector.

Switzerland Richemont followed by other luxury groups such as France’s LVMH and Hermès with rising profits after a recovery in sales in Asia and particularly in China. The owner of jewelers Cartier and Van Cleef & Arpels reported a record annual turnover of 20 billion euros and an operating profit of 5 billion euros.

China’s largest contract chipmaker, International Semiconductor Manufacturing Company, experienced its largest drop in revenue in more than 10 years in a context of low demand for consumer electronics. Our big read looks at the new chip factories. Government spends billions to subsidize industry – but some back it does not make economic sense.

Germany also offers state support for Northvolt, Europe’s leading battery manufacturer, to build a factory in the country. The company had previously indicated that it may focus only on the United States unless the EU matches Joe Biden’s Green Tech Grants.

Scientific report

One in five articles published in scientific journals can contain falsified data from unauthorized “stationery” who are paid to fabricate submissions, according to a study by German researchers who used new techniques to “report” problematic articles.

UK haggles with EU over cost of reinstatement Horizon, the block’s flagship scientific research program. The €95.5 billion program is considered by many British scientists to be vital but they have been excluded since 2020 due to disagreements over post-Brexit trade relations.

The World Health Organization has declared mpoxformerly known as monkeypox, is no longer a global health emergency after causing 87,000 infections and 140 deaths.

The pharmaceutical industry is pinning great hopes on new class of drugs developed to treat Alzheimer’s. In clinical trials, the drugs slowed the progression of the degenerative disease that affects 50 minutes worldwide.

Join the CEOs of Amgen, Roche, Pfizer and more in New York City May 16-17 at the US Pharma and Biotech Summit. Register here today.

The development of defense technology such as sensors, robotics and unmanned systems – has been supercharged by war in Ukraine.

And finally, historian and contributing editor of FT Simon Schama reflects on how the primitive urges and conspiratorial suspicion of humanity have always managed to interfere with science.

Some good news

A “pan-genome” database of the biochemical letters that form the DNA of individuals has raised the prospect of improved diagnosis and treatment of genetic diseases and the supply new perspectives on human diversity.

Something for the weekend

Try your hand at the range of FT weekend and daily cryptic crosswords.