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It is summertime in the UK, but the living is anything but easy. The Office for National Statistics confirmed today that the country is likely to hit the Bank of England’s forecast of double digit inflation this year with the measure hitting another 40-year high — of 9.1 per cent — in May.
The escalating cost of living is at the heart of another unfolding misery for Britons, the series of rail worker strikes that began yesterday. Since so many workers are now well equipped to work from home, the action caused less disruption than it might have before the pandemic, but it still exacted a significant price on an economy lurching from pandemic crisis to stagflation misery.
Talks between the rail union bosses and employers resumed today but the industrial action is set to continue this week due to the gulf in expectations on both sides, and the government urging the industry to “hold the line” on productivity improvements. Yesterday, rail bosses asked unions to accept almost 2,000 job losses in return for a 3 per cent pay rise, far below the 7-8 per cent being sought by the RMT rail union, whose members voted for this week’s walk out.
More worrying for the government, the demands for significant wage increases are spreading across other key professions. The UK’s main teaching unions are threatening to strike in the autumn if the government cannot provide an inflation-busting 12 per cent pay rise for their members.
Rolls-Royce’s attempt to allay its workforce’s concerns about the rising cost of living with the offer of a 4 per cent pay rise and a £2,000 cash lump sum rebounded on the engineering group when it was rejected by the Unite union, which represents thousands of the company’s staff.
Enabling key employees to accept pay awards that enable them to maintain their standard of living without fuelling inflation is going to be tricky in this climate. FT columnist Stephen Bush argues that curbing pay deals now may come back to bite the government if it means that, at election time, key public services are struggling because they cannot fill vacancies. The FT board urges pay negotiators to agree each deal on its own merit.
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Need to know: the economy
Rumours of the death of globalisation have been greatly exaggerated, as the FT’s chief economic commentator Martin Wolf eloquently explains, with the aid of some excellent charts.
We might be heading into a new world for international trade, Martin says, but the anti-globalisers are mistaken in their belief that trade is optional and have greatly exaggerated the benefits of self-sufficiency.
Latest for the UK and Europe
The International Energy Agency has warned that Europe must prepare immediately for the complete severance of Russian gas exports this winter, urging governments to take measures to cut demand and keep ageing nuclear power stations open. “Europe should be ready in case Russian gas is completely cut off,” Fatih Birol, the head of the IEA, told the Financial Times.
Billions of pounds have been added to British household energy bills because the UK energy regulator Ofgem developed a market that left the risk and costs of supplier failures with consumers, an investigation by parliament’s spending watchdog has found.
Tomorrow it will be six years to the day since the UK voted to leave the EU. But the trade relationship that has since developed between the UK and the 27-nation bloc is now needlessly dysfunctional, in stark contrast to British trade policy with other parts of the world — according to the FT’s senior trade writer Alan Beattie.
The impact of the war in Ukraine on key agricultural commodities such as fertiliser, animal feed and sunflower oil will mean that food prices in the eurozone will keep rising at near-record rates for at least another year, despite the region’s largely self-sufficient agriculture sector, the European Central Bank has warned.
Escalating fuel prices are deepening tensions between the White House and domestic oil and gas providers. President Joe Biden has hit out at Chevron chief executive Mike Wirth, calling the oil major boss “sensitive” after he criticised the US administration’s energy policy.
In China, pork prices determine inflation rates. But it will not be easy for the country’s food companies to quickly pass on rising costs to consumers, not least because of pressure from Beijing to keep prices down, according to the FT’s Lex column.
Need to know: business
Moderna has struck a £1bn deal with the British government to build the country’s first manufacturing centre for messenger RNA vaccines. The contract has been billed as an aide to the UK becoming a leader in responding to pandemics, something that did not quite go to plan last time round. Boston-based Moderna is also lobbying regulators worldwide to authorise its new two-strain Covid-19 vaccine booster.
In the battle for supremacy in the market for comfort food, much needed in these disrupted times, Mars has given a rare glimpse into its financial metrics and revealed not only a healthy top line but sales that now outpace arch rival Coca-Cola. The catalyst for this burst of openness from the family-owned business was the announcement that Grant Reid is stepping down as Mars’s chief executive after eight years in the role, having generated “unprecedented” growth for the company.
Will we continue to pay over the odds to get a bacon sandwich delivered to our door in minutes in a world free of pandemic lockdowns? DoorDash, which has signed an exclusive deal to build warehouses for Canada’s largest grocery chain Loblaw, thinks so.
Ford has warned of “significant” job cuts in its European factories as it shifts production from diesel and petrol vehicles to all electric models because the latter require fewer people to make them.
The World of Work
Frank Sinatra was not alone in having a few regrets in life. But is there a way of turning these feelings into something that can help us improve our careers? Daniel Pink, bestselling author of The Power of Regret, thinks that there is. In the latest Working It podcast he talks to Andrew Hill, the FT’s senior business writer, about the best way to do this.
Covid cases and vaccinations
Total global cases: 533.6mn
Get the latest worldwide picture with our vaccine tracker
Do you have your summer reading list sorted? Let the FT help with a selection of genres recommended by specialist writers. Today, deputy books editor Laura Battle gives her take on the best fiction titles.
Also, the entry period for the 2023 list of the UK’s Leading Management Consultants compiled by the FT and Statista, is now open. Clients and peers are invited to rate firms for their specialist expertise.
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