Today’s top stories
French far-left groups are suspected of being behind the rail line sabotage on the opening day of the Paris 2024 Olympics.
US President Joe Biden has called for sweeping Supreme Court reforms, including proposals on term limits for justices and a constitutional amendment on presidential immunity.
Venezuela’s authoritarian leader Nicolás Maduro has been declared the winner of Sunday’s election, with the opposition complaining of serious irregularities in the count.
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Good evening.
What would a Trump victory in November mean for the world economy?
The prospect has ricocheted through markets in recent days, as the former president doubles down on the protectionist rhetoric of his first term and abandons the free-market ideas that once constituted Republican political thought.
Blunt instrument tariffs, “America first” trade policy and mass deportations that would jeopardise the labour market are all on the table, departing from the liberalised trade ideals of the last few decades.
The EU is developing a two-step trade strategy and a targeted retaliatory response to threats of tariffs on the bloc, drawing up lists of American imports it could hit with duties of 50 per cent or more. The Commission wants to avoid a trade war, which would risk making things more expensive for ordinary folks already buffeted by cost of living pressures on both sides of the Atlantic.
The impact of a Trump victory would affect commerce multidimensionally. He has pledged to weaken the dollar to ameliorate the terms of trade for US manufacturers that sell goods overseas. Major shifts in the value of the dollar, the world’s reserve currency, would have consequences that stretch far beyond Washington, analysts have argued.
But critics are unsure if such a move would even be possible. “The short answer is no”, says the FT’s Katie Martin, not least because devaluation would work in conflict with the protectionist direction of travel.
Trump has also courted the crypto community. Yesterday, he vowed to end their “persecution”, promising to sack the Securities and Exchange Commission chair and end the “crusade” against bitcoin. The Biden administration’s oversight of cryptocurrency, which Trump has derided as a “repression”, has sought to safeguard Americans from scams and thwart its use in illicit online purchases. (The Harris campaign has since called for a “reset” on the relationship between the industry and the White House.)
Central bank independence is at risk too. In a recent interview, Trump said he would “let” Federal Reserve chair Jay Powell finish his term, “especially if I thought he was doing the right thing”, comments which follow earlier reports that the Trump team was drafting proposals to erode the Fed’s independence. Talking tough on inflation is likely to play well with voters, but tinkering with central bank independence risks putting monetary stability and credibility at the whim of the capricious political cycle.
The backdrop here is the strong US economy. Last week’s second-quarter GDP figures came in higher than anticipated, with robust consumer spending and investment despite high interest rates. “Any incoming president should . . . be eager to build on what is currently a resilient economy”, the FT editorial board yesterday argued — not undermine it.
Need to know: UK and Europe economy
UK Chancellor Rachel Reeves has claimed that the Conservative party left a £22bn hole in the nation’s finances.
The UK’s Labour government has offered junior NHS doctors in England a pay rise of 22 per cent over two years, hoping to end the deadlock that has fuelled multiple strikes over the past few years.
Stubbornly high UK services inflation has left Thursday’s Bank of England’s rate-setting meeting on a knife edge.
Italian prime minister Giorgia Meloni has pledged to “relaunch” her country’s relations with China, after the decision to pull out of Beijing’s Belt and Road Initiative last year.
Need to know: Global economy
Ethiopia will float its currency, in a long-delayed reform to attract foreign investment and ease chronic foreign currency shortages.
Lenders in the West Bank have too much cash idling in vaults due to a long-standing limit on the amount of money institutions can transfer to Israel’s central bank.
The shipping industry is facing a sharp rise in cyber attacks as geopolitical tensions prompt nefarious actors to target trade flows
Need to know: business
The US government has revealed new national security concerns around TikTok, alleging that the company was able to collect data based on users’ views on issues such as abortion.
NatWest is suing mortgage finance company CMIS for more than €155mn over soured securitisation deals struck in the run-up to the financial crisis.
Shares in Japanese pharmaceutical company Eisai fell sharply today, after the European Medicines Agency, the drug regulator, declined to approve a breakthrough Alzheimer’s treatment due to concerns about rare brain-swelling side effects.
McDonald’s has suffered its first global drop in sales since 2020, as the higher cost of fast food deters consumers around the world.
The World of Work
Bargaining power is shifting back to employers as cost pressures bite and the post-Covid revival abates, the FT’s Anjli Raval writes.
Whistleblowing cases have been rising in the UK’s employment tribunal system, and those sounding the alarm are facing serious repercussions.
Is there a way back after hitting a colleague? Renowned conductor Sir John Eliot Gardiner hopes so.
Some good news
The Paris 2024 Olympic Games got off to a slow start, with a rain-lashed opening ceremony and the concomitant rail network sabotage, but the sportsmanship demonstrated among athletes at the surfing events on Sunday reminds us what the competition is actually about.
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