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It was another day of government efforts to tackle the energy crisis across Europe, including an unprecedented package of support for businesses in the UK and the biggest business bailout in Germany since the 2008 financial crisis.
In a long-awaited announcement, the UK said it would cut wholesale energy prices for businesses and public organizations by more than half this winter, intervening “to prevent business collapse, protect jobs and limit inflation”.
Businesses have given the proposals a cautious welcome, but many still expect to see their bills rise substantially from previous years. Bosses are also worried about what might happen once the six-month program ends in March, warning the lack of clarity could affect investment. On the other hand, household assistance lasts for two years. The business package is also much more complicated and offers little incentive to save energy, the Lex column says.
The EU is also facing questions over its household and business aid package, funded by a one-off €140 billion tax on energy companies, as member states demand more flexibility on how plans are implemented.
Germany, meanwhile, has announced the nationalization of the struggling utility Uniper, once the largest European importer of Russian gas. The company was hampered by having to buy more expensive gas on the spot market after Moscow cut supplies. Politicians feared its failure would have serious repercussions for Europe’s largest economy.
Alongside supporting bills, Brussels is continuing its quest for alternative energies. It is announcing today 5.2 billion euros in public support for its second hydrogen project, a sector considered essential for the transition to more sustainable energy.
However, green ambitions are meeting strong resistance from fossil fuel companies.
Former US Vice President and long-time environmental activist Al Gore told the Financial Times that European governments must push back against corporate efforts to profit from the energy crisis by locking consumers into an addiction to long term to hydrocarbons.
At least $50 billion in spending is planned by EU governments this winter for infrastructure and fossil fuel supplies to replace Russia’s shortages, but Gore insisted that the pursuit of energy security must not hinder the green transition.
“We need to act quickly despite the geopolitical situation we face – in fact, because of it,” he said.
Another reminder of the power of former oil and gas companies comes from Gore’s own country, where lawmakers are investigating ‘misleading’ PR tactics employed on behalf of the oil and gas industry that have misled the public about climate change .
Learn more about how Russia’s weaponization of gas has spurred the push for cleaner energy in our new special report: Energetic transition.
For last minute updates, visit our live blog
Need to know: the economy
The US Federal Reserve announces its interest rate decision today at 2pm ET (7pm London). Economists expect an increase of 0.75 points for the third consecutive time. Check back to FT.com for more details and reaction.
It’s a big week everywhere for central banks. The Bank of England is under pressure to announce a big rate hike tomorrow, while European Central Bank President Christine Lagarde has also stressed the need for a quick hike. Sweden’s Riksbank raised rates by 1 percentage point yesterday, its biggest increase in three decades.
Latest for UK and Europe
The challenges facing Kwasi KwartengBritain’s new Chancellor, ahead of his “mini budget” (see this Friday’s Disrupted Times for details) were underlined by new data showing government borrowing at double the level expected in August.
Meanwhile, the British Prime Minister Liz Truss said she was ready to take on “special interests” to spur economic growth. But his first meeting with US President Joe Biden today could be a bit awkward after his assertion that ‘the economy is trickling down’ – as some have labeled his ideology – “never worked”. A UK-US trade deal remains as far away as ever.
industrial magnate Carlo de Benedetti told the FT he was concerned about Italy’s relations with Brussels if, as polls suggest, a far-right coalition comes to power in Sunday’s general election.
The dollar today hit a new 20-year high against its peer currencies after Russian President Vladimir Putin called in more troops for his war in Ukraine. The greenback is widely seen as a safe-haven currency in times of geopolitical tensions and economic stress.
The Asian Development Bank cut its 2022 growth forecast for developing countries in the region from 5.2% to 4.3% in the face of lockdowns in China, war in Ukraine and rising inflation. For China itself, the AfDB cut its forecast from 5% to 3.3%.
A country in the region that bucks the trend is Indonesiawhich is currently enjoying both a booming economy and a period of political stability, as our Big Read explains.
China is increasingly in competition with the IMF by offering emergency loans to disaster-stricken countries. EcuadorThe $1.4 billion debt restructuring deal is the latest. China, however, is losing its appeal as an investment location for European companies, according to the local EU Chamber of Commerce.
One of the most serious consequences of the pandemic has been its effect on children’s educationespecially in the poorest countries where families now face new pressures from rising prices and food insecurity.
The pandemic period has also been marked by growing inequality in global wealth. The ranks of the super-rich — those worth more than $100 million — have risen 21% in 2021, according to new data from Credit Suisse.
Need to know: company
Vaccine manufacturers lost billions in market value after Biden declared “the pandemic is over” on Sunday night.
JPMorgan CEO Jamie Dimon warned that new US capital requirements pose ‘significant economic risks’ for big banks, making it harder to meet customer needs just as ‘storm clouds’ roll in piled up on the economy.
Look at this: The new movie Scandal! Bring down Wirecard, the story of how FT reporters exposed a massive fraud at the German payments company, is now available to watch on Netflix. Catch up reactions on Twitter at premieres in London, Hong Kong and New York.
The world of work
U.S. Investments and Industries Editor Brooke Masters wonders if Citigroup’s new center for junior investment bankers in Málagaa Spanish town better known for its beaches than its finances, ostensibly for offering a better work-life balance, might just be another “mom track”.
The workers of the PhilippinesThe $30 billion call center industry has won its battle to make remote work permanent after a deal was struck with tax authorities.
Middle managers who have come under intense pressure to care for staff during the pandemic still face immense challenges as they juggle demands from business leaders with workers striving for better wages and the pursuit of flexible working models.
QTWTAIN: Are the British really the worst lazy in the world? There is a problem with low levels of productivity, writes columnist Sarah O’Connor, but this is mainly due to a lack of investment in new technologies that help workers do their jobs more efficiently.
Or they could just take psychedelics. Some Silicon Valley executives believe microdosing the use of drugs such as LSD can increase concentration and productivity. Host Isabel Berwick investigates the claims in the latest episode of the Work podcast.
Covid cases and vaccinations
Total number of global cases: 606.1mn
Total doses administered: 12.7 billion
Get the latest global picture with our vaccine tracker
Some good news
In case you missed it, the World Health Organization became optimistic about the trajectory of the coronavirus after a drop in global cases. “We have never been better placed to end the pandemic,” WHO said. “We’re not there yet, but the end is in sight.”
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