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headlines today
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German Chancellor Olaf Scholz has vowed to boost economic growth by stamping out “bureaucratic corruption” as he faces intense pressure to tackle economic problems that fuel far-right support. A new forecast expects the economy to shrink 0.5% this year.
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“It’s fundamentally wrong that a washing machine’s 30-second recording gets paid the same as Harry Styles’ latest single.” The Financial Times reveals a Universal Music deal that could reshape the music streaming economy , the first major shift in the business model since Spotify launched in 2008.
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Britain’s aviation regulator will examine the “error of logic” that led to last week’s air traffic control system failure.
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Good evening.
New statistics from the UK and the euro zone today underscore the perilous state of the homebuilding industry hit by rising interest rates, skills shortages and high inflation.
According to the S&P Global/Cips UK Construction Purchasing Managers Index, UK homebuilding fell in August at the second-fastest rate since the first coronavirus lockdown, as concerns about the economic outlook dampened demand for new construction, especially in the residential sector. need.
Big developers such as Crest Nicholson, Taylor Wimpey and Persimmon have warned of profits under a “perfect storm” of events, including rising borrowing costs as the government withdraws its Help to Buy scheme for state-subsidized loans for first-home buyers. .
Barratt Developments, the UK’s largest home builder, warned today that it will take at least two years for the new housing market to recover. Meanwhile, construction firms are closing at the fastest pace in a decade.
Soaring mortgage rates are also contributing to a squeeze on living standards in the UK, which is expected to persist for some time, according to separate survey data today. Interest rates are still at a 15-year high of 5.25%, despite Bank of England Governor Andrew Bailey suggesting today that the UK is nearing the peak of its policy tightening cycle.
Tenants face the same difficulties, as our “Extreme Rentals” series demonstrates. Residents in London have been hit particularly hard as landlords pass on higher borrowing costs, but the picture is equally bad across Europe.
In the euro zone, home construction fell at the fastest rate since the outbreak. Overall construction has fallen sharply in France and Italy, but it has been particularly severe in Germany, where the sector is in crisis as more and more large developers go bankrupt.
“We are at the tail end of a 10-15 year housing boom,” said Moritz Schularick, director of the Kiel Institute for World Economics. “The way the financial cycle is now, every day there is another Real estate developers go bankrupt . . . the old financing model is no longer sustainable.”
It was a different story across the Atlantic, where shares of big homebuilders surged despite higher mortgage rates amid a rebound in the new housing market. The market even attracted an $814 million bet from Warren Buffett’s Berkshire Hathaway.
Need to know: UK and European economies
British school building at risk of collapse low strength concrete Forced Prime Minister Rishi Sunak to take the defensive. Economics editor Chris Giles said the incident highlighted a decades-old lack of spending on construction and maintenance.today’s government Publish the list of affected schools.
The UK has recovered less than 2% of more than £1bn in taxpayer-funded fraud and errors lost to businesses during the pandemic, a parliamentary report said. Pandemic.
European Commission appoints Belgian politician Didier Reynders as EU competition chief, while incumbent Margrethe Vestager is on leave to run for the top job at the European Investment Bank.
president of turkish Recep Tayyip Erdogan Ditching its longstanding hostility to rate hikes, it has vowed to use “tighter monetary policy” to cool inflation, which is now expected to hit 65% by the end of the year.
PolandThe central bank is expected to cut rates despite double-digit inflation, raising concerns that its decision is politically driven in a key election year. The National Bank of Poland, one of the first central banks to raise interest rates in autumn 2021, will now lead the way in cutting rates.
Need to Know: The Global Economy
this Financial Stability BoardThe world’s most powerful financial watchdog has warned of “further challenges and shocks” ahead as high interest rates threaten the economic recovery.
A senior Fed official said US interest rates The program will be suspended when the next decision is made on September 20.
oil price Gold topped $90 for the first time this year as Saudi Arabia and Russia extended output cuts. The move could reignite global inflation concerns and pose problems for U.S. President Joe Biden ahead of next year’s election.
transnational criminal group The scale of the criminal activity involved in drug trafficking, migrant smuggling and extortion is hurting Latin America’s economic performance, the IMF said.
Taxes are set to rise around the world as countries invest heavily in defence, welfare and green transitions: our new series heralds the return of big government.
central bank digital currency Might hasten the introduction of a cashless society, much to the dismay of conspiracy theorists of all sorts. Read more in this in-depth study.
Anger over soaring electricity prices sparks protests Pakistan This could derail the IMF agreement. In June, the country narrowly avoided default after securing a $3 billion loan with strict conditions attached to overhaul the country’s economy, including cuts to energy subsidies and new taxes on the power sector.
president of kenya William Ruto Called for debt relief for African countries to help them tackle climate change. Nearly half of the countries in sub-Saharan Africa, including Kenya, are either in debt distress or at high risk of debt distress.
Need to Know: Business
European Tourism Industry The country had its best summer since before the pandemic as a rise in U.S. tourists offset sweltering heat and stubborn inflation.
European automakers believe that “electronic fuelThe bill could allow them to continue selling combustion-engined vehicles despite plans by the European Union to ban the sale of combustion-engined vehicles from 2035. Activists say the e-fuel exemption is a “Trojan horse” for fossil fuels.
more than one eighth british bank branch Networks opened in early 2023 will close in December, with nearly three-fifths of networks since 2015 gone, according to an analysis by the Financial Times.
Britain withdraws from conflict with Great Britain big tech company Private messaging measures in its Online Safety Act. The industry still faces a host of new legal obligations under new EU law designed to limit its powers.
world of work
Britain is going backwards sickness allowance Reach more people with disabilities and those with chronic health conditions and encourage them to return to the workforce. Critics say the move will leave disadvantaged groups stranded without a significant increase in employment.
why is British management So bad, what can we learn from the US experience? Listen to the new “Working It” podcast.
staff shortage accounting firm A movement is underway in US states to ease the education requirements to join the industry. The state legislation could have dire consequences, undermining the system that allows accountants to practice nationwide, regulators said.
read how business school Lessons learned helped victims of the war in Ukraine and more in our special report on the Master in Management.
some good news
Some of this year’s entries Wildlife Photographer of the Year contest by british natural history museum Now online ahead of next month’s awards and exhibition. This photo captures the moment a baby monkey catches a passing sika deer on Yakushima, Japan.
![monkey on stag back](https://i0.wp.com/www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2F46d9e9df-f4f3-45ed-b232-4f791628a82e.jpg?w=640&ssl=1)
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