Revolut has frus­trated its own board and raised eye­brows in the account­ing industry after por­tray­ing a crit­ical audit report as a clean bill of health. The fintech com­pany issued a pub­lic state­ment and hired law­yers this month to insist that an opin­ion by aud­it­ors BDO «con­firmed that ‘the fin­an­cial state­ments give a true and fair view’» of the com­pany’s affairs. In fact, BDO had warned that rev­en­ues «may be mater­i­ally mis­stated» and said the over­due 2021 accounts gave a true and fair view «except for the pos­sible effects of the mat­ters described in the ‘basis for qual­i­fied opin­ion’ sec­tion of our report». This sec­tion noted short­com­ings in Revolut’s IT con­trols and said BDO had been unable to sat­isfy itself of the «com­plete­ness and occur­rence» of rev­en­ues within three busi­ness divi­sions totalling £477mn, 75 per cent of the group’s total repor­ted rev­en­ues for 2021. Revolut’s state­ment also cri­ti­cised «mis­re­port­ing» of the audit opin­i

 Infla­tion fell rap­idly in two of Europe’s largest eco­nom­ies in March after a sharp drop in energy costs des­pite rises in the price of other goods and ser­vices. Ger­man con­sumer prices rose 7.8 per cent year-on-year on a har­mon­ised basis, down from the pre­vi­ous month’s rate of 9.3 per cent but higher than the 7.5 per cent fore­cast by eco­nom­ists polled by Reu­ters. The fig­ures came hours after Spain’s annual infla­tion rate almost halved to 3.1 per cent for March, from 6 per cent the pre­vi­ous month. Euro area gov­ern­ment bonds sold off after the coun­try’s infla­tion fig­ures were pub­lished. Yields on Ger­man two-year debt rose 0.13 per­cent­age points to 2.8 per cent as investors bet that bor­row­ing costs in the euro­zone would rise fur­ther. The ECB has raised interest rates swiftly in response to a surge in infla­tion over the past year, rais­ing its bench­mark deposit rate from minus 0.5 per cent the last sum­mer to 3 per cent. However, some mem­bers of the gov­e

  The UK today unveiled an agree­ment to join an 11-mem­ber Asia-Pacific trade bloc, with Prime Min­is­ter Rishi Sunak claim­ing it proved his gov­ern­ment was seiz­ing "post-Brexit freedoms". Talks on Bri­tain becom­ing a mem­ber of the Com­pre­hens­ive and Pro­gress­ive Agree­ment for Trans-Pacific Part­ner­ship were finally wrapped up after two years of hag­gling over quotas and tar­iffs. The UK will be the first coun­try to join the CPTPP since the group was estab­lished in 2018. Sunak said the trade deal would bring eco­nomic bene­fits and boost his "Asia-Pacific" tilt to for­eign policy. Sunak said: "We are at our heart an open and free-trad­ing nation, and this deal demon­strates the real eco­nomic bene­fits of our post-Brexit freedoms. Down­ing Street said more than 99 per cent of UK goods exports to CPTPP coun­tries would be eli­gible for zero tar­iffs, includ­ing products such as cheese, cars, chocol­ate, machinery, gin and whisky. But the eco­nomic g

  Europe should reject Wash­ing­ton’s demands to curb trade with Beijing, a senior Chinese dip­lo­mat has warned, say­ing that any coun­try that shred­ded busi­ness ties with his nation would do so «at their peril». Fu Cong, China’s EU ambas­sador, said the US would «stop at noth­ing» to dis­rupt nor­mal ties between the bloc and China, adding that a «pro­tec­tion­ist tend­ency» was on the rise in Europe. «Who in their right mind would aban­don such a thriv­ing mar­ket as big as China?» Fu told the Fin­an­cial Times, warn­ing politi­cians not to under­mine pos­it­ive busi­ness sen­ti­ment towards China. «It will only be at their peril». «We do hope that the European gov­ern­ments and the European politi­cians can see where their interests lie and then res­ist the unwar­ran­ted pres­sure from the US,» Fu said. Refer­ring to the Neth­er­lands, he added: «They need to be mind­ful of the fact that China can­not just sit there and see its interests being trampled like this without tak­ing a

  Bri­tain and the EU are boost­ing coordin­a­tion of efforts to tackle cli­mate change and respond to a vast US green sub­sidy pro­gramme, in a sign of warm­ing rela­tions between the two sides. Rishi Sunak, prime min­is­ter, said this week that Bri­tain and the EU could coordin­ate moves on a car­bon bor­der tax that would place a levy on impor­ted car­bon-intens­ive goods arriv­ing in Europe. The gov­ern­ment will today launch a con­sulta­tion on intro­du­cing a «car­bon bor­der adjust­ment mech­an­ism» as part of a broader net zero strategy. Grant Shapps, energy sec­ret­ary, said the con­sulta­tion would address the risk of future «car­bon leak­age», where busi­nesses move pro­duc­tion to a coun­try with weaker cli­mate reg­u­la­tions to avoid pay­ing a car­bon levy. Offi­cials said the aim was to work with like-minded coun­tries and that the UK and EU were giv­ing ser­i­ous con­sid­er­a­tion to link­ing their car­bon pri­cing sys­tems. «It makes sense,» said one. Mean­while, Kemi

EU draws up anti coercion trade tool   The EU has agreed to a new trade defence tool to retaliate against countries that use punitive measures, such as China's blocking Lithuanian imports over its relationship with Taiwan. The agreement among the European Parliament, Member States and European Commission was reached on Monday and is still subject to approval in the coming weeks. This instrument aims to deter third countries from targeting the EU and its Member States with economic coercion, and it will consider the impact on businesses. It can include increased customs duties, withdrawal of import or export licenses and restrictions in services and public procurement. The Commission is obliged to investigate any case of coercion, and if a qualified majority of Member States agree, the Commission can draw up a list of potential countermeasures. The EU has also proposed a ban on products made with forced labour. These measures demonstrate the strength of the Commission in defending E

  China has sig­ni­fic­antly expan­ded its bail­out lend­ing as its Belt and Road Ini­ti­at­ive blows up fol­low­ing debt write-offs, scan­dal-rid­den projects and alleg­a­tions of cor­rup­tion. A study pub­lished yes­ter­day shows China gran­ted $104bn worth of res­cue loans to devel­op­ing coun­tries between 2019 and the end of 2021. The fig­ure for these years is almost as large as the coun­try’s bail­out lend­ing over the pre­vi­ous two dec­ades. The study by research­ers at Aid­Data, World Bank, Har­vard Kennedy School and Kiel Insti­tute for the World Eco­nomy is the first known attempt to cap­ture total Chinese res­cue lend­ing on a global basis. Between 2000 and the end of 2021, China under­took 128 bail­out oper­a­tions in 22 debtor coun­tries worth a total of $240bn. China’s emer­gence as a highly influ­en­tial «lender of last resort» presents crit­ical chal­lenges for west­ern-led insti­tu­tions such as the IMF, which have sought to safe­guard global fin­an­cial sta­bil­ity

  The US has accused former FTX chief exec­ut­ive Sam Bank­man-Fried of pay­ing a $40mn bribe to one or more Chinese gov­ern­ment offi­cials in a revised indict­ment filed in fed­eral court in Man­hat­tan yes­ter­day. Pro­sec­utors allege that Bank­man-Fried sent the bribe in crypto­cur­rency to Chinese offi­cials to regain access to trad­ing accounts frozen by law enforce­ment in the coun­try. The accounts were linked to Alameda Research, FTX’s sis­ter com­pany. Bank­man-Fried was ini­tially charged with eight crim­inal counts in Decem­ber after being extra­dited from his home in the Bahamas over what pro­sec­utors called «one of the biggest fin­an­cial frauds in Amer­ican his­tory». The gov­ern­ment last month broadened its case against Bank­man-Fried to include charges of secur­it­ies fraud and con­spir­acy to com­mit bank fraud. Accord­ing to the latest indict­ment, Bank­man-Fried repeatedly tried to unfreeze accounts in China linked to Alameda Research, includ­ing hir­ing attor­ne

  The chair of Saudi National Bank, Ammar Alkhudairy, resigned cit­ing per­sonal reas­ons after the king­dom’s largest lender was thrust into the lime­light amid tur­moil at Credit Suisse. The chief exec­ut­ive, Saeed Al Ghamdi, will replace Alkhudairy as chair, the bank said yes­ter­day. As a result, Talal Al-Khereiji becomes act­ing chief exec­ut­ive. In a tele­vi­sion inter­view this month, Alkhudairy said that SNB, which bought a 9.9 per cent stake in Credit Suisse last year, would not provide any more fin­an­cial assist­ance. Alkhudairy’s com­ments reflec­ted estab­lished policy at the bank but sent Credit Suisse’s share price into a tailspin, set­ting in frantic train nego­ti­ations that cul­min­ated in a hasty mer­ger with Swiss rival UBS. «The issue of the chair­man’s state­ment did not go unnoticed among the senior decision-makers,» said one Saudi Ara­bia-based banker. Regional exec­ut­ives said he had drawn undue atten­tion to SNB and the king­dom’s broader eco­nomic agenda.

China’s eco­nomic rebound has been weaker than expec­ted as con­sumers emerge «stunned» from pan­demic-led dis­rup­tions and a real estate melt­down last year, warned AP Møller-Maersk. Vin­cent Clerc, the new chief exec­ut­ive of the con­tainer ship­ping group, said, however, that trad­ing volumes linked with the eco­nomy remained resi­li­ent, with little sign of neg­at­ive impact from US-led efforts to «decouple» from China. «When we star­ted the year, there was this hope that as China reopens after Covid, we would see a strong rebound,» Clerc said in Beijing. China has set a growth tar­get of 5 per cent this year, its low­est in dec­ades, after the world’s second-largest eco­nomy under­shot expect­a­tions in 2022 as a res­ult of Pres­id­ent Xi Jin­ping’s strict zero-Covid strategy. The IMF is pre­dict­ing growth of 5.2 per cent in China this year. «This is not quite the Roar­ing Twen­ties-type mood that one could have expec­ted after this long inter­rup­tion,» said Clerc, who was amo

The fall in euro­zone bank depos­its, which star­ted a few months after the ECB began rais­ing rates last sum­mer, marks a reversal from the money that had been pour­ing into banks, par­tic­u­larly since the pan­demic star­ted. In Feb­ru­ary, the decline accel­er­ated as depos­it­ors cut their hold­ings at euro­zone banks by €71.4bn, the biggest reduc­tion since records began in 1997. House­hold depos­its fell by €20.6bn, the most significant fall since that data star­ted to be col­lec­ted in 2003. The with­draw­als in the five months since Octo­ber amoun­ted to 1.5 per cent of the almost €14tn euro­zone banks held for depos­it­ors and were less than the $500bn of depos­its that have been pulled out of US banks in the past year. In the UK, there have been sim­ilar out­flows of depos­its by cor­por­ate cus­tom­ers, which with­drew £20.3bn from banks and build­ing soci­et­ies in Janu­ary, a record since this data began in 2009, accord­ing to Bank of Eng­land fig­ures. However, UK house­h

  In a speech at the Lon­don School of Eco­nom­ics, Bailey stressed the UK fin­an­cial sys­tem was «resi­li­ent, with robust cap­ital and liquid­ity pos­i­tions, and well placed to sup­port the eco­nomy». However, he made no ref­er­ence to the pos­sib­il­ity that lend­ing might be cur­tailed, instead reit­er­at­ing the BoE’s pos­i­tion that interest rates would need to rise fur­ther if «any signs of per­sist­ent infla­tion­ary pres­sures» were detec­ted. « If they become evid­ent, fur­ther mon­et­ary tight­en­ing would be required,» he said. In ques­tions after his speech, Bailey insisted that noth­ing had recently happened in fin­an­cial mar­kets to make the nine mem­bers of the Mon­et­ary Policy Com­mit­tee, who set the base rate, act in ways to soothe ten­sions. «Mon­et­ary policy has to take into account credit con­di­tions. » Bailey’s speech focused mainly on the import­ance of con­sid­er­ing the abil­ity of the eco­nomy to sup­ply goods and ser­vices without gen­er­at­ing infla­t

  The recent bank­ing industry tur­moil has increased the risks to fin­an­cial sta­bil­ity; the IMF has warned, as investors seek­ing safety pile hun­dreds of bil­lions of dol­lars into money mar­ket funds. IMF's managing director Kristalina Geor­gieva said, «Risks to fin­an­cial sta­bil­ity have increased at a time of higher debt levels,». «The rapid trans­ition from a pro­longed period of low-interest rates to much higher rates neces­sary to fight infla­tion inev­it­ably gen­er­ates stresses and vul­ner­ab­il­it­ies, as we have seen in recent devel­op­ments in the bank­ing sec­tor». That makes it the biggest month of inflows since the depths of the Covid-19 crisis. The surge helped push over­all assets in money funds to a record $5.1tn last week, accord­ing to research from Bank of Amer­ica. Gold­man's US funds had taken in nearly $52bn, a 13 per cent increase, since March 9, the day before SVB was taken over by US author­it­ies. JP Mor­gan's funds received nearly $46bn,

  Thousands of shops, and almost one in twelve offices in London, risk being made unleasable  from Saturday as new energy efficiency rules take effect. From April 1, all tenanted commercial property buildings across the UK, including shops, offices and warehouses, need an energy performance certificate rating of at least an E. The certificates indicate the energy efficiency of a building and are ranked from A, the most efficient, to G, the least. To get an A rating, a building needs to receive a score of 25 or under from an assessor. An E rating is given to commercial properties that score between 101 and 125 points. Savills, the estate agent, estimated that about 185 million sq ft of retail space across the country is graded F or below. There are exemptions. For example, if improvement works are not expected to pay for themselves within seven years, landlords are not required to carry them out. Despite the likelihood of many commercial properties falling into the substandard category,

  Brexit has damaged UK economic growth by as much as Covid or the energy crisis caused by President Putin’s invasion of Ukraine, the head of the government’s economic watchdog has warned. Richard Hughes, the chairman of the Office for Budget Responsibility, said Britain’s departure from the European Union had reduced economic output by around 4 per cent compared to if the UK had remained in the bloc. He added that this was a contributing factor to the "biggest squeeze on living standards" that the country had ever faced with household incomes unlikely to return to pre-pandemic levels until the late 2020s. Speaking to the BBC’s Sunday With Laura Kuenssberg programme, Hughes was asked to quantify the 4 per cent drop in UK economic output that the OBR has attributed to Brexit. "All major advanced economies experienced a collapse in trade during the pandemic, but the latest ONS data suggest that UK trade volumes remain 3.0 per cent below their 2019 level in the third quarte

 Chaos in the U.S. banking sector has caused bond markets to experience record volatility this month, prompting the Federal Reserve to abandon plans to raise interest rates faster. But the crisis has no impact, according to moves in the major stock indices on Wall Street. The S&P 500 has dropped just 0.7% this month, and volatility indicators indicate investors are not expecting any wild swings over the coming weeks. It is pretty impressive just how much of a strong performance the market has had. Traders and investors largely agreed on the factors that helped keep the S&P afloat during the upheavals, which began with the failure of the Silicon Valley bank. Cautionary positioning ahead of the crisis limited losses, and the calm on the index floor has obscured a major reversal in some sectors - banks, most notably. It hit a high of nearly 31 just after the SVBs crash but has since fallen below 23, a little higher than its long-term average. The stock's lighter position sharp

 China has released a top chip investor after an eight-month deten­tion as the coun­try battles to bol­ster its semi­con­ductor industry in the face of Wash­ing­ton’s con­tain­ment efforts. Chen Datong, head of Yuanhe Puhua Invest­ment Man­age­ment, also known as Hua Cap­ital, was released this month as Beijing seeks help from chip experts to nav­ig­ate tough west­ern sanc­tions, accord­ing to two people with dir­ect know­ledge of the mat­ter. Hua Cap­ital, an Rmb10bn invest­ment firm that has seeded more than 150 Chinese chip com­pan­ies, was at the fore­front of Beijing’s efforts to boost its domestic chip pro­duc­tion. Chen was detained in August last year amid a storm of invest­ig­a­tions into China’s chip industry, with offi­cials irate that tens of bil­lions of dol­lars poured into end­ing China’s reli­ance on for­eign semi­con­duct­ors had failed to seed any big break­throughs. The coun­try’s top anti-cor­rup­tion agency launched mul­tiple probes last year into groups tied to th

  Fed­eral Reserve offi­cials yes­ter­day defen­ded their decision to press ahead with their mon­et­ary tight­en­ing cam­paign this week des­pite ongo­ing stress across the US bank­ing sec­tor, cit­ing con­cerns about elev­ated infla­tion. On Wed­nes­day, the cent­ral bank raised rates by a quarter point for the second time in a row, lift­ing the fed­eral funds' rate to a tar­get range of 4.75 per cent to 5 per cent, even as mid­sized lenders struggled to weather the fal­lout from the implo­sion of Sil­icon Val­ley Bank. «There was a lot of debate . . . but at the end of the day, what we decided was there are clear signs that the bank­ing sys­tem is sound and resi­li­ent,» said Raphael Bostic, pres­id­ent of the Atlanta Fed, in an inter­view with NPR yes­ter­day. In remarks yes­ter­day, Bul­lard played down the eco­nomic impact of the bank­ing tur­moil, sug­gest­ing it was unlikely to res­ult in a mater­ial shock. «Fin­an­cial stress can be har­row­ing but also tends to reduce the

  The EU remains dead­locked over whether to recog­nise nuc­lear power as equal to renew­able energy, as France and Ger­many sparred at a sum­mit yes­ter­day. French pres­id­ent Emmanuel Mac­ron told journ­al­ists after a meet­ing with Ger­man chan­cel­lor Olaf Scholz that he was hope­ful of find­ing an agree­ment with Ger­many, which is one of the sev­eral coun­tries oppos­ing French efforts to have nuc­lear recog­nised as a low-car­bon energy source. But no accord was reached. Ger­many is not opposed to the use of nuc­lear in the pro­duc­tion of hydro­gen, which was the topic of a joint declar­a­tion with French min­is­ters on Janu­ary 22. But Ber­lin is not will­ing to treat nuc­lear energy as equi­val­ent to renew­ables such as wind or solar, which would give it priv­ileged access to EU fund­ing. Ursula von der Leyen, European Com­mis­sion pres­id­ent, said on Thursday that nuc­lear could «play a role» in Europe’s decar­bon­ising effort, adding that only «cut­ting edge» nuc­lear te

  Olaf Scholz has rejec­ted com­par­is­ons between Deutsche Bank and Credit Suisse as a slump in the Ger­man lender’s shares sparked another day of tur­moil for the bank­ing sec­tor. Speak­ing after Deutsche shares fell as much as 14 per cent yes­ter­day, the Ger­man chan­cel­lor sought to shore up con­fid­ence in the coun­try’s biggest bank, with investors still nervous after the forced takeover of Credit Suisse. «Deutsche Bank has fun­da­ment­ally mod­ern­ised and reor­gan­ised its busi­ness and is a very prof­it­able bank,» Scholz said at a sum­mit in Brus­sels after being asked if the lender was the new Credit Suisse. «There is no reason to be con­cerned about it». He insisted that the cap­ital con­trols of European banks were «robust, thanks to work over the past few years and also to the efforts of the banks them­selves». His com­ments came as part of a con­cer­ted bid by European lead­ers to calm mar­ket nerves as shares slid in the region’s biggest banks. Ana­lysts said there w

  There’s a colossal shift going on in arti­fi­cial intel­li­gence — but it’s not the one some might think. While advanced lan­guage-gen­er­at­ing sys­tems and chat­bots have dom­in­ated news head­lines, private AI com­pan­ies have quietly entrenched their power. Recent devel­op­ments mean that a hand­ful of indi­vidu­als and cor­por­a­tions now con­trol much of the resources and know­ledge in the sec­tor — and will ulti­mately shape its impact on our col­lect­ive future. The phe­nomenon, which AI experts refer to as «indus­trial cap­ture», was quan­ti­fied in a paper pub­lished by research­ers from the Mas­sachu­setts Insti­tute of Tech­no­logy in the journal Sci­ence this month, call­ing on poli­cy­makers to pay closer atten­tion. Its data is increas­ingly cru­cial. Gen­er­at­ive AI — the tech­no­logy under­ly­ing the likes of Chat­GPT — is being embed­ded into soft­ware used by bil­lions of people, such as Microsoft Office, Google Docs and Gmail. And busi­nesses from law firms to th

  Hours after the deal was announced, other reg­u­lat­ors dis­tanced them­selves from the decision, fear­ful that it would endanger banks’ abil­ity to raise cap­ital. Enraged bond­hold­ers have pledged to sue the Swiss gov­ern­ment and Finma. Finma, the Swiss regulator, said yes­ter­day that all the con­trac­tual and legal oblig­a­tions had been met for it to act uni­lat­er­ally given the urgency of the situ­ation. «On Sunday, a solu­tion was found to pro­tect cli­ents, the fin­an­cial centre and the mar­kets,» Finma chief exec­ut­ive Urban Angehrn said. «Res­ol­u­tion in those cir­cum­stances would have triggered a big­ger fin­an­cial crisis, not just in Switzer­land but glob­ally». AT1s are a type of hybrid instru­ment cre­ated after the crash of 2008 to give banks greater cap­ital flex­ib­il­ity in the event of crises. As part of the acquis­i­tion deal by UBS, the com­bined bank will receive SFr9bn of gov­ern­ment guar­an­tees and an SFr100bn liquid­ity life­line from the SNB. An ad

 Author­it­ies in Montenegro have arres­ted an indi­vidual believed to be South Korean fugit­ive Do Kwon, the crypto entre­pren­eur behind the $40bn implo­sion of the ter­raUSD and luna digital tokens last year. In a state­ment on Twit­ter, Montenegro’s interior min­is­ter Filip Adzic said «the former crypto­cur­rency king» was detained by police at Podgor­ica Air­port with fals­i­fied doc­u­ments. The col­lapse of ter­raUSD coin last year unleashed an unpre­ced­en­ted crash in crypto mar­kets which engulfed many of the industry’s lead­ing com­pan­ies. Kwon, the co-founder of Ter­ra­form Labs, was charged with fraud and breaches of cap­ital mar­kets law in his home coun­try and sparked an inter­na­tional man­hunt. «We are wait­ing for offi­cial con­firm­a­tion of iden­tity,» Adzic added. The melt­down of ter­raUSD and luna coins affected hun­dreds of thou­sands of investors, many of whom were drawn in by a scheme in which cli­ents could lend their terra coins for a yield of up to 20 pe

 The Bank of Eng­land has increased interest rates by a quarter of a per­cent­age point to 4.25 per cent, des­pite the tur­moil that has engulfed bank­ing in recent weeks. The rise, in line with eco­nom­ists’ fore­casts, came a day after data showed that the annual rate of infla­tion jumped from 10.1 per cent to 10.4 per cent in Feb­ru­ary. «If there were to be evid­ence of more per­sist­ent pres­sures, then fur­ther tight­en­ing in mon­et­ary policy would be required,» it said, echo­ing guid­ance it gave at its Feb­ru­ary meet­ing. Com­ment­ing days after the forced takeover of Credit Suisse and the earlier col­lapse of Sil­icon Val­ley Bank, the BoE said it judged UK banks to be «resi­li­ent» and «well placed to con­tinue sup­port­ing the eco­nomy in a wide range of eco­nomic scen­arios, includ­ing in a period of higher interest rates». But the BoE said that con­sumer price infla­tion was «still expec­ted to fall sig­ni­fic­antly» in the second quarter of this year «to a lower rate t

  The European Cent­ral Bank’s pres­id­ent has warned of the risk of a «tit-for-tat dynamic» between com­pan­ies and work­ers that pushes up profit mar­gins and wages, increas­ing price pres­sures as both groups try to avoid a hit from higher infla­tion. Christine Lagarde said yes­ter­day that the ECB’s recent increases in bor­row­ing costs were «only start­ing to take effect now», and signs that infla­tion was per­sist­ing at high levels meant it had to «bring rates to suf­fi­ciently restrict­ive levels to damp demand». «This makes a robust strategy going for­ward essen­tial. So far, we do not see clear evid­ence that under­ly­ing infla­tion is trend­ing down­wards. Instead, we see two forces push­ing under­ly­ing infla­tion in dif­fer­ent dir­ec­tions». Lower energy prices are push­ing infla­tion down, but buoy­ant domestic demand is off­set­ting this, as com­pan­ies raise profit mar­gins and work­ers seek higher wages in tight labour mar­kets. The euro climbed after Lagarde spoke, r

  The unex­pec­ted jump in infla­tion in Feb­ru­ary, coupled with tur­moil in the global bank­ing sec­tor, leaves Bank of Eng­land rate-set­ters facing an even more challenging decision than usual today. The latest data, show­ing infla­tion at 10.4 per cent, has rein­forced fears that price rises are increas­ingly being driven by domestic pres­sures in the ser­vices sec­tor rather than the external shock of high energy prices. As these pres­sures tend to be more per­sist­ent, the data has cemen­ted mar­ket expect­a­tions that the BoE will raise interest rates again. But, in the past fort­night, con­cerns over the health of the global bank­ing sec­tor have intens­i­fied. But price rises were broad-based, includ­ing in sec­tors such as hos­pit­al­ity, where labour costs play a big role. Annual ser­vices infla­tion, con­sidered a bet­ter meas­ure of domestic price pres­sure, accel­er­ated to 6.6 per cent. In the hos­pit­al­ity sec­tor, it rose to its highest rate on record. Core infla­tio

  US dis­tressed debt investors and cor­por­ate lit­ig­at­ors are pre­par­ing to fight the Swiss gov­ern­ment for writ­ing down $17bn of Credit Suisse bonds as part of the bank’s shot­gun mar­riage with UBS. Switzer­land pro­voked the ire of bond investors when the gov­ern­ment used an emer­gency ordin­ance to write down the bonds to zero, even as it orches­trated a deal where UBS will pay $3.25bn to share­hold­ers. AT1s are a class of debt designed to take losses when insti­tu­tions hit trouble but are believed to rank ahead of equity on the bal­ance sheet. Tep­per is among the most suc­cess­ful investors in troubled fin­an­cial com­pan­ies, mak­ing bil­lions of dol­lars on a 2009 wager that US banks would not be nation­al­ised dur­ing the last crisis. Appa­loosa bought a range of Credit Suisse debt as it des­cen­ded into chaos. Mark Dowding, chief invest­ment officer at RBC Blue­Bay, which held Credit Suisse AT1 bonds, said Switzer­land was «look­ing more like a banana repub­lic». Go

  Google has launched its Bard chat­bot in a move to rival OpenAI’s pop­u­lar Chat­GPT, as it seeks to make up lost ground in the race to com­mer­cial­ise gen­er­at­ive arti­fi­cial intel­li­gence tech­no­logy. Google said that Bard, which provides answers to text­based ques­tions, will be run sep­ar­ately from its Google Search engine. In recent weeks, gen­er­at­ive AI has also been integ­rated into widely used pro­ductiv­ity applic­a­tions, such as Google’s Work­space includ­ing Google Docs and Gmail, and Microsoft’s Office 365 soft­ware, as well as into pop­u­lar apps such as Duolingo, allow­ing mil­lions of people to start inter­act­ing with the tech­no­logy. «We want to get feed­back and gradu­ally phase up the num­ber of people who have access to Bard, and the reason for that is we want to be able to test and learn from that before we roll it out very widely,» said Zoubin Ghahramani, vice-pres­id­ent of Google Research. Bard is built on top of Google’s AI tech­no­logy known as La

 Domi­n­ique Laboureix, chair of the Single Res­ol­u­tion Board, the body in charge of shut­ting down failed banks, said fears that addi­tional tier 1 bank debt was «not investable any­more» should not apply in the EU. The decision over­turned estab­lished assump­tions that debt hold­ers would be pri­or­it­ised over equity hold­ers. As a result, the bank’s share­hold­ers received SFr3bn from UBS, while bond­hold­ers lost $17bn. The bond mar­ket jit­ters led the SRB, the European Bank­ing Author­ity and the European Cent­ral Bank to put out a state­ment stress­ing that com­mon equity instru­ments would con­tinue to be the first ones to absorb losses, with AT1 writ­ten down only after­wards. «This type of approach would not be feas­ible under the European frame­work,» Enria told the EU Par­lia­ment yes­ter­day, adding they would wipe out bank equity before bonds, regard­less of whether a bank had to be wound down or was taken over by another lender. AT1s were intro­duced in the wake of t

Lead­ing indus­tri­al­ists have delivered a damning ver­dict on EU efforts to pre­vent com­pan­ies shift­ing invest­ment to the US, warn­ing the bloc’s com­pet­it­ive­ness is rap­idly erod­ing. Exec­ut­ives from Solvay, Merck and Dow have warned that Europe’s Net Zero Industry Act, announced last week, will not be suf­fi­cient to com­pete with $369bn of green tax incent­ives and sub­sidies on offer in the US under Pres­id­ent Joe Biden’s Infla­tion Reduc­tion Act. «Belén Gar­ijo, head of Ger­man biotech and mater­i­als giant Merck, said Europe «urgently needs a hol­istic indus­trial policy that enables sus­tain­able change and makes this change a com­pet­it­ive advant­age. » The alarm was echoed by Neil Carr, European head of Dow, the US chem­ic­als group, who warned that US incent­ives made invest­ment in the decar­bon­isa­tion of EU industry «less attract­ive» in com­par­ison. » «The act ignores the crit­ical import­ance of enabling invest­ment in indus­trial decar­bon­isa­tion to ac

  The US Fed­eral Reserve must make one of the most con­sequen­tial decisions of its rate-rais­ing cam­paign this week as it con­siders whether to imple­ment another increase without know­ing if efforts to shore up the bank­ing sec­tor will work in the long term. Cent­ral bank offi­cials were gath­er­ing yes­ter­day for their latest two-day meet­ing, at which they must decide whether to press ahead with another quarter­point rate rise or forgo an increase. The dilemma comes after global author­it­ies acted swiftly to sup­port the fin­an­cial sys­tem fol­low­ing Sil­icon Val­ley Bank’s col­lapse, the Fed rolling out a new facil­ity to aid lenders and the Swiss gov­ern­ment broker­ing a hasty takeover of a fal­ter­ing Credit Suisse by UBS. But it remains unclear whether these actions will be enough to stem the fal­lout from the crisis. «This whole thing is a dis­in­fla­tion­ary event . . . but it is very dif­fi­cult to know how dis­in­fla­tion­ary it is,» said Ian Shep­herd­son at Pan­th